A Primer for Citizens and Public Officials Yuba City California

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A Primer for Citizens and Public Officials Yuba City California Powered By Docstoc
					      generate more property taxes than before                          • Provision of subsidies to lower income households
      redevelopment and that those increased property                   • Development of plans, payment of principal, interest,
      taxes, or “increment,” should be devoted to paying                  financing or carrying costs on bonds, loans, advances
      the public costs of redevelopment. This tax                         or other indebtedness
      increment revenue must be used by the agency to                   • Preservation of the affordability of low- and moderate-
      repay indebtedness incurred to carry out the                        income housing units
      redevelopment project.                                            • Satisfaction of replacement housing requirements
    • The ability to issue tax increment bonds. Tax                     • Reasonable administrative expenses
      increment may be pledged to repay bonds issued by
      the agency to finance the costs of redevelopment             A redevelopment agency must relocate or provide housing
      (“Tax Increment” or “Tax Allocation” Bonds).                 for project area residents displaced by the agency’s
      These bonds are secured solely by the pledge of tax          activities. An agency is also obligated to replace within
      increments generated by the growth in assessed               four years each low- and moderate-income housing unit                                             A Primer for Citizens and Public Officials
      value from within the project area and are not a debt        destroyed or removed from its project area.
      or obligation of the city or county government or the        In addition to the 20% requirement, the California               “Redevelopment is a locally-driven activity that assists local governments in revitalizing their
      general taxpayer.                                            Community Redevelopment Law contains inclusionary                communities. Redevelopment encourages new development, creates jobs, increases housing stock,
                                                                   housing requirements. For new or rehabilitated dwelling
Housing Set-Aside (“Low-Mod Funds”)                                units developed by an agency in a project area, at least 30%
                                                                                                                                    provides infrastructure, and generates tax revenues in declining urbanized areas by developing
and Production Requirements                                        of all units must be available to low- and moderate-income       partnerships between local governments and private entities. Over 380 California cities and
California Community Redevelopment Law requires that               households, with not less than 50% of those units available      counties have adopted local redevelopment plans.” - California Redevelopment Association
not less than 20% of tax increment revenue derived from a          to very low-income households. For new or rehabilitated
redevelopment project area be used to increase, improve,           dwelling units developed by private or non-profit entities in
and preserve the supply of housing for very low-, low-, and        a project area, at least 15% of all units must be available to
                                                                                                                                    With 80% of all cities and 46% of all counties in California    In 1976, the State Legislature imposed a requirement that
moderate-income households. These funds comprise the               low- or moderate-income households, with not less than 40%
                                                                   of those units available to very low-income households.          having redevelopment agencies, redevelopment has been           20% of the tax increment generated from project areas
largest single source of money available for the                                                                                    the most successful and effective tool used by local            must be used to improve the community’s supply of
development of affordable housing in California. The                                                                                governments to reverse deterioration, build partnerships        affordable housing. The State Legislature enacted AB 1290
                                                                   In addition to the new construction and rehabilitation of
following uses are authorized housing set-aside                                                                                     with local businesses and the community, strengthen             in 1993, known as the “Community Redevelopment Law
                                                                   dwelling units, an agency may satisfy its inclusionary
expenditures:                                                                                                                       neighborhoods, and effectively implement a community’s          Reform Act of 1993,” which significantly revised
                                                                   housing obligations by constructing housing units outside a
     • Acquisition of real property or building sites                                                                               vision. In addition, redevelopment agencies are the largest     California redevelopment law by addressing alleged abuses
                                                                   project area on a two-for-one basis, by aggregating the
     • Onsite or offsite improvements                                                                                               source of funding for affordable housing in California, next    and adding restrictions on redevelopment. The Act also
                                                                   units between redevelopment project areas, or by
     • Donation of real property to private or public persons                                                                       to the federal government.                                      restricts redevelopment activities to predominately
                                                                   purchasing long-term affordability covenants.
       or entities                                                                                                                                                                                  urbanized areas.
     • Financing insurance premiums                                                                                                 Redevelopment was created by state law to assist cities and
     • New construction or rehabilitation of buildings or                                                                                                                                           Redevelopment is primarily financed with tax increment
                                                                   Additional Redevelopment Resources                               counties in eliminating blight from a designated area, as
                                                                                                                                    well as to achieve the goals of development, reconstruction     revenue. Typically, redevelopment agencies use tax
     • Acquisition of buildings or structures                      The California Redevelopment Association (CRA) is a
                                                                                                                                    and rehabilitation of residential, commercial, industrial and   increment funds to leverage financial assistance from
                                                                   nonprofit organization representing redevelopment
                                                                                                                                    retail areas. Redevelopment breathes new life into              private sources and from various agencies of the state and
                                                                   agencies and affiliated private organizations involved in
         Before                                                                                                                     deteriorated areas plagued by social, physical,                 federal governments. Other revenue sources include loans,
                                                                   redevelopment activity. CRA’s mission includes legislative
                                                                                                                                    environmental, or economic conditions which act as              grants and tax allocation bonds.
                                                                   advocacy, professional education, and dissemination of
                                                                   information regarding redevelopment law and activities.          barriers to new investment by private enterprise.
                                                                                                                                                                                                    Since 1992, the State Legislature has used funds from local
                                                                   CRA members include approximately 345 redevelopment
                                                                                                                                    The California Community Redevelopment Act was                  governmental entities, including redevelopment agencies,
                                                                                            agencies and 280 private sector
                                                                                                                                    enacted in 1945 to address problems such as urban blight,       to help balance the state budget. To do this, the Legislature
                                                                                            companies and non-profit
                                             After                                                                                  degrading buildings, and a lack of affordable housing. This     established Education Revenue Augmentation Funds
                                                                                            organizations. CRA sponsors
                                                                                                                                    Act gave cities and counties the authority to establish         (ERAF) in every county and required a portion of property
                                                                                            numerous educational conferences
                                                                                                                                    redevelopment agencies, and the authority and tools to          tax revenue to be reallocated to schools through this
                                                                                            and publications related to
                                                                                                                                    attack urban decay. In 1951, the Act was renamed the            device. (An ERAF “shift” reduces dollar-for-dollar the
       2004 CRA Award of                                                                    redevelopment in California. For
                                                                                                                                    Community Redevelopment Law, as it is known today, and          amount of State aid to schools.) Since 1992, the State has
       Excellence Winner —                                                                  more information, go to CRA’s
                                                                                                                                    it was codified in the California Health and Safety Code        taken away funds from redevelopment agencies on five
       Fremont Redevelopment                                                                website at www.calredevelop.org
                                                                                                                                    beginning at Section 33000. More importantly, the               occasions – totaling $545 million. In addition, for this
       Agency, Adams Avenue                                                                 or call 916-448-8760.
                                                                                                                                    authority for tax increment financing was added and             fiscal year and next (FY 2004-2005 and 2005-06), an
       Homes & Street                                                                                                               approved by the voters of California.                           additional $250 million ERAF transfer will be made each
       Improvements.                                                                                                                                                                                year producing an ERAF shift total of $1.045 billion over a
                                                                                                                                                                                                    thirteen-year period. As a result of these take-aways,
                                                                                                                                                                                                    redevelopment activities and programs have been reduced,
                                                                                                                                                                                                    delayed, and/or eliminated.

      Provided by the California Redevelopment Association, 1400 K Street, Suite 204, Sacramento, CA 95814
Redevelopment Agencies                                           hall or county administration building. In addition, an        State Legislature enacted the Polanco Redevelopment Act         Powers of Redevelopment Agencies
A redevelopment agency is a separate legal entity that           agency cannot provide direct assistance to auto dealers on     in 1990. The Act gives redevelopment agencies the tools to      California Community Redevelopment Law prescribes the
exercises governmental functions and has the powers              non-urbanized land, to retail projects on non-urbanized        identify, investigate, remediate, and acquire contaminated      powers of a redevelopment agency. An agency has powers
enumerated in the Community Redevelopment Law. An                parcels over five acres in size (e.g. big box retailers), to   properties, commonly referred to as brownfields, without        that are typical for a local governmental agency as well as
agency must account locally and to the State for its                                                                            incurring the environmental liability under state and local     unique powers that are exercised only by redevelopment
activities. It must prepare an annual financial report,                                                                         laws that might accompany such actions. It allows               agencies. Those unique powers include:
present it to the legislative body (the city council or board                                                                   redevelopment agencies, subject to certain restrictions, to          • The ability to buy private property for resale to
of supervisors), and file it with the State Controller. The             Redevelopment agencies                                  take actions that the agency determines are necessary to               another private person or organization. The
                                                                                                                                address hazardous substances on, under, or from property
report describes the agency’s financial condition and a                 are subject to the same                                 within its project area. In return, the agency, the developer
                                                                                                                                                                                                       acquisition and disposition of property are central
summary of its activities during the prior year.                                                                                                                                                       activities of redevelopment agencies. The power of
                                                                        governance requirements as                              of the property, and subsequent owners receive limited                 redevelopment agencies to acquire property is broad,
To establish an agency, the legislative body of the relevant                                                                    immunity from further cleanup liability.                               authorizing agencies to purchase, lease, obtain an
local government must adopt an ordinance declaring the
                                                                        cities and counties, as well                                                                                                   option on, acquire by gift, grant, bequest, device or
need for a redevelopment agency in that jurisdiction. The               as additional stipulations                              The administration of the redevelopment agency is carried              otherwise, any real or personal property, and any
legislative body must choose one of three organizational                                                                        out by the staff of the agency. The size of the staff and              interest in or improvements on property. Likewise,
options: establish itself as the governing body of the                  that are specific to                                    scope of programs in redevelopment agencies vary widely.               agencies may dispose of real or personal property, or
                                                                                                                                In large redevelopment agencies, the staff may be separate
redevelopment agency; appoint a separate governing body                 redevelopment.                                          from the city or county. In mid-size and smaller agencies,
                                                                                                                                                                                                       any interest therein, within the project area or for
for the redevelopment agency; or, establish a community                                                                                                                                                redevelopment purposes.
development commission, which allows the legislative body                                                                       the administration is typically handled by existing city or          • The ability to use the power of eminent domain to
or a separate appointed body to function jointly as a                                                                           county staff in addition to their other responsibilities.              acquire private property. Eminent domain, or
redevelopment agency and a housing authority.                    gambling or gaming facilities, or to relocate big-box          Furthermore, the city manager, county administrator, or a              condemnation, refers to the right of a government to
                                                                 retailers and auto dealers within the same market area.        department head typically serves as the executive director             take private property for public use in exchange for
In most cities and counties, the legislative body is also the                                                                   of the agency. The community development, planning,                    just compensation. Redevelopment agencies may
governing board of the redevelopment agency. Four cities         When adopting a redevelopment plan, the agency board           public works, and finance departments are frequently                   exercise condemnation authority to acquire real
– Los Angeles, Long Beach, San Francisco, and Santa Rosa         must form a project area committee (PAC) if the plan           involved in developing and administering agency                        property in the project area to eliminate blight and
– have separate boards appointed by the city council to          authorizes the use of eminent domain over private property     programs.                                                              assist the goals of the redevelopment plan. Agencies
oversee the activities of the agency.                            that provides residence to a substantial number of low- and                                                                           may use this tool to assemble parcels of land which
                                                                 moderate-income persons. In this case, the agency must         Redevelopment agencies are subject to the same                         are then sold or leased to property owners or
The fundamental functions of a governing board of a              receive advice from the PAC – which consists of residents,     governance requirements as cities and counties, as well as             developers for redevelopment. Agencies are also
redevelopment agency are to establish redevelopment              property owners, business owners, and/or community             additional stipulations that are specific to redevelopment.            responsible for relocation of existing residents or
project areas and to adopt and implement redevelopment           organizations in the project area – on matters dealing with    City council members and county supervisors need to                    businesses.
plans for the improvement, rehabilitation, and                   the displacement of the affected residents in the project      understand their role in the agency and how that position is         • The power to collect property tax “increment” in
redevelopment of blighted areas. The redevelopment plan          area.                                                          governed by the various ethics laws and requirements.                  order to finance the redevelopment program of the
acts as the agency’s charter by establishing long-term                                                                          Agencies are subject to the open meeting requirements of               community. Tax increment financing is unique to
planning goals, implementation policies and procedures,          Property contaminated by hazardous substances is common        the Brown Act, they must adhere to the Public Records Act,             redevelopment agencies and is the primary tool for
and financing plans.                                             in urban areas in California and often is a major              and they are subject to the “conflict of interest” provisions          financing the public costs of redevelopment
                                                                 impediment to redevelopment. To provide redevelopment          of the Political Reform Act of 1974.                                   activities in California. It is based on the
Redevelopment agencies undertake a wide variety of               agencies a means to address contaminated property, the                                                                                assumption that a revitalized project area will
projects and activities designed to improve a project area
and eliminate blight. The agency determines the type of
projects based upon the character of the neighborhood or
the needs and desires of the property owners, businesses,
and tenants in the area. The following are examples of the
types of projects that agencies have undertaken:
     • Downtown Revitalization
     • Retail Development
     • Commercial Development
     • Industrial
     • Residential
     • Mixed-Use
     • Public Facilities
     • Infrastructure

Redevelopment agencies cannot pay for normal
maintenance or operations of publicly-owned facilities or        2004 CRA Award of Excellence Winner — Alhambra                 2004 CRA Award of Excellence Winner — City of Long Beach Redevelopment Agency, CityPlace.
pay to construct, reconstruct, rehabilitate, or replace a city   Redevelopment Agency, The Plaza at the Alhambra Renaissance
                                                                 Entertainment Center.

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