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HomeMy WebLinkAbout03-Presentation ➢ Local elected officials approve planning areas, plans and use of eminent domain ➢ Residents and property owners are involved at every step through public hearings and committees ➢ Litigation is possible at any time Redevelopment's Benefits ➢ Full and part time jobs generated ➢ State and local taxes generated ➢ Increases housing supply The Powers of Redevelopment Origins and Purposes of Redevelopment Law ➢ Elimination of Blight ➢ Prohibit Discrimination ➢ Promote Low and Moderate Income Housing, Employment Opportunities and the General Welfare Public Body, Corporate and Political ➢ A Redevelopment Agency and it's City/County are separate legal entities ➢ Formation of a Redevelopment Agency ➢ General Powers of a Redevelopment Agency ➢ Role of the `Community' and 'Legislative Body' in Redevelopment Law ➢ Acquisition of Property • Owner Participation • Acquisition Statutes • Eminent Domain • Relocation ➢ Demolition, Clearance, Maintenance and Ownership ➢ Rehabilitation ➢ Sale of Property ➢ Legal aspects of Disposition and Development Agreements and other Redevelopment Agency Agreements Tax Increment Financing ➢ Dollar Limits and Time Limits • Establishing Loans, etc. • Effectiveness of Plan • Repay Indebtedness/Receive T.I. • Eminent Domain • Total Tax Increment ➢ Financing-Bonds, Pledges and Pay-As-You-Go ➢ Infrastructure Financing Districts Affordable Housing ➢ What is Affordable Housing ➢ Inclusionary Housing ➢ Replacement Housing ➢ Low and Moderate Income Housing Fund ➢ Powers of Redevelopment Agency to carry our Affordable Housing requirements 2 I II ➢ Article XXXIV of the California Constitution Restrictions and Prohibitions Gift of Public Funds ➢ New Construction ➢ City Halls ➢ Large Undeveloped Parcels ➢ Big Box Retail Developments/Auto Dealerships ➢ Gaming ➢ Outside Redevelopment Project Areas (Exceptions) ➢ Time Limits Plan Adoption, Amendment & Merger Plan Adoption Process ➢ Survey Area ➢ Preliminary Plan ➢ Notices to Taxing Agencies ➢ Project Area Committee Formation ➢ Redevelopment Plan ➢ Owner Participation Rules ➢ Environmental Review/EIR ➢ Preliminary Report o Blight Analysis, Projects & Programs, Financial Feasibility & Urbanization ➢ Consultation with Taxing Agencies ➢ Report to City Council ➢ Joint Public Hearing ➢ Post-Hearing Filings Three-Part Blight Test 1. Have physical and economic blight and; 2. Blight must be prevalent and cause burden on the community and 3. Require redevelopment B What is Tax Increment? ➢ Tax Increment is the increase in property taxes within the redevelopment project area that result from increases in the project area's assessed value that exceeds the base year assessed value. ➢ Tax Increment is basically a redistribution of property tax from other taxing agencies ➢ No new taxes ➢ Primary funding source use by redevelopment agencies Growth in Tax Increments ➢ New construction ➢ Major rehabilitation ➢ Infill construction 3 ➢ Reassessment upon sale of property Tax Increment Sharing ➢ Pass-through agreements ➢ AB 1290 pass throughs ➢ Waiver agreements ➢ Subordination of pass-throughs ➢ Direct assistance Redevelopment Agency Borrowing Powers ➢ Borrow for `any corporate purposes' ➢ Repay form almost any revenue source • Tax Increment • Other taxes or assessments • Lease revenues ➢ No constitutional or statutory debt limit ➢ No voter approval Agencies must have Debt to receive Tax Increment ➢ Tax allocation bonds ➢ Tax allocation notes ➢ DDAs/OPAs ➢ Loans with the City ➢ Housing set aside ➢ Pass through payments Note: If there is no debt to repay, the County does not need to allocate any tax increment to the Agency. Why should an agency borrow money? ➢ Create debt to be eligible to receive tax increments ➢ Make a greater investment in your community ➢ Tax Increment tax-exempt borrowing is very efficient Qualified Expenditures ➢ New and rehabilitated public infrastructure ➢ Rehabilitation of public buildings ➢ Rehabilitation of private buildings ➢ Creation of parking facilities ➢ Assemblage of land for economic redevelopment ➢ Neighborhood improvements to affordable housing ➢ Neighborhood improvements to reduce crime Unqualified Expenditures ➢ Can not fund routine City functions ➢ Can not fund construction of city or county administration buildings ➢ If your borrowings are to be tax-exempt, you can not borrow to directly benefit a private business if the business is also helping to repay the debt. 4 Proposition 90 Official ballot title: Government Acquisition, Regulation of Private Property. Initiative Constitutional Amendment. This initiative, formerly known as "the Anderson Initiative" after its sponsor, Anita S. Anderson, deals with government acquisition of property and regulatory takings. It will appear on the November 2006 ballot. Prop. 90 Facts at a Glance • Constitutional amendment would apply to all public agencies and utilities, and all state and local goveriunent property acquisitions. • Would impact a wide variety of public projects including schools, roads and highways, levees, and affordable housing. • Would limit government's ability to adopt certain land use, housing, consumer, environmental and workplace laws and regulations, except when necessary to preserve public health or safety. • The State's Legislative Analyst says the measure would have the following fiscal impacts: • Unknown, but potentially significant future costs for state and local governments to pay damages and/or modify regulatory or other policies to conform to the measure's provisions. • Unknown, but potentially significant changes in governmental costs to acquire property for public purposes. • If passed by voters, it could only be changed by another initiative. Prop. 90 Provisions • Prohibits use of eminent domain unless the property acquired is owned and occupied by a governmental agency. • Redefines "just compensation"—Redefines"just compensation" as the sum of money necessary to place the property owner in the same position monetarily, as if the property had never been taken. It is unclear what would be included to make the property owner whole, but presumably things such as lost income, attorneys fees, and more. Redefines "fair market value" as the highest and best use the property would bring on the open market. • Changes requirements for property valuation—If a property taken by the government is to be put to use at a higher value after acquisition, the property owner must be paid at the fair market value in accordance with the government's use. For example, if a city uses eminent domain to acquire agricultural land for a municipal airport (from which the city would receive revenues from commercial leases, for example), then the owner must be paid fair market value in accordance with the city's use. The owner would be paid this higher amount regardless of whether or not he could have achieved such a use under the applicable zoning, and regardless of whether other laws would have required him to dedicate a portion of the land. (More) Distributed by the California Redevelopment Association Prop. 90 Provisions (continued) • Redefines "damage" to include many types of regulatory takings—Redefines "damage" to include govermnent actions that result in economic loss to private property, including many zoning practices such as down zoning or building height restrictions, environmental regulations, affordable housing covenants, etc. Requires compensatory payment of these damages by implementing agency. • Requires blight determinations on a parcel-by-parcel basis—Would require that blight findings be made on a parcel-by-parcel basis. Current law requires that a project area be declared blighted before eminent domain can be used, but it does not require every parcel in the area to be blighted. • Voids unpublished eminent domain court decisions—Would annul judgments in every eminent domain action that does not result in a published appellate opinion. Currently, most eminent domain decisions are not published because they are settled in Superior Courts, which never publish decisions. Only appellate decisions are published and even then they are not published in every case. ■ Pending eminent domain proceedings immediately subject to provisions—Provisions of this initiative would take effect the day following the election and would apply to any eminent domain proceedings in which no final court judgment has been obtained. I I I Distributed by the California Redevelopment Association I t Summary of Current and Proposed Blight Definitions CRL Section 33031 SB 1206 Current Blight Definitions Proposed Blight Definitions (as of 1/1/07) (a) Physical Blighting Characteristics r(1) Buildings in which it is unsafe or unhealthy for Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions can persons to live or work. These conditions may be caused by serious building code violations, be caused by serious building code violations, dilapidation and deterioration, defective design serious dilapidation and deterioration caused by or physical construction, faulty or inadequate long-term neglect, construction that is utilities, or similar factors. vulnerable to serious damage from seismic or geologic hazards, and faulty or inadequate water or sewer utilities. (2) Factors that prevent or substantially hinder the Conditions that prevent or substantially hinder economically viable use or capacity of buildings the viable use or capacity of buildings or lots. or lots. This condition can be caused by These conditions may be caused by buildings of substandard design, inadequate building size substandard, defective or obsolete design or given present standards and market conditions, construction given the present general plan, lack of parking, or other similar factors. zoning or other development standards. (3) Adjacent or nearby uses that are incompatible Adjacent or nearby incompatible land uses that with each other and which prevent the economic prevent the development of those parcels or development of those parcels or other portions other portions of the project area. of the project area. (4) The existence of subdivided lots of irregular The existence of subdivided lots that are in form and shape and inadequate size for proper multiple ownership and whose physical usefulness and development that are in multiple development has been impaired by their ownership. irregular shapes and inadequate sizes, ig ven present general plan and zoning standards and present market conditions. (b) Economic Blighting Characteristics (1) Depreciated or stagnant property values or Depreciated or stagnant property values. impaired investments, including but not necessarily limited to, those properties containing hazardous wastes that require the use of agency authority as specified in Article 12.5 (commencing with Section 33459). Impaired property values, due in significant part, to hazardous wastes on property where the agency may be eligible to use its authority as specified in Article 12.5 (commencing with Section 33459). (2) Abnormally high business vacancies, Abnormally high business vacancies, abnormally low lease rates, high turnover rates, abnormally low lease rates, or an abnormally abandoned buildings, or excessive vacant lots high number of abandoned buildings. within an area developed for urban use and served by utilities. CRA Introduction to Redevelopment Seminar—Plan Adoptions and Amendments Page 1 September 27,2006 Summary of Current and Proposed Blight Definitions CRL Section 33031 SB 1206 Current Blight Definitions Proposed Blight Definitions (as of 1/1/07) (3) A lack of necessary commercial facilities that A serious lack of necessary commercial facilities are normally found in neighborhoods, including that are normally found in neighborhoods, grocery stores, drug stores, and banks and including grocery stores, drug stores, and banks other lending institutions. and other lending institutions. (4) Residential overcrowding or an excess of bars, Serious residential overcrowding that has liquor stores, or businesses that cater resulted in significant public health or safety exclusively to adults that has led to problems of problems. As used in this paragraph, public safety and welfare. `overcrowding" means exceeding the standard referenced in Article 5 (commencing with Section 32) of Chapter 1 of Title 25 of the California Code of Regulations. (5) A high crime rate that constitutes a serious A high crime rate that constitutes a serious threat to the public safety and welfare. threat to the public safety and welfare. CRA Introduction to Redevelopment Seminar—Plan Adoptions and Amendments Page 2 September 27,2006 F 4 f ReAevelopment, BuAding Beaer Commumftes, A Primer for Citizens and Public Officials "Redevelopment is a locally-driven activity that assists local governments in revitalizing their communities. Redevelopment encourages ew development, creates jobs, increases housing stock, provides infrastructure, and generates tax revenues in declining urbanized areas by developing partnerships between local governments a d private entities. Over 380 California cities and counties have adopted local redevelopmen plans. " - California Redevelopment Association With 80%of all cities and 46%of all counties in Calif rnia In 1976,the State Legislature imposed a requirement having redevelopment agencies,redevelopment has I that 20%of the tax increment generated from project been the most successful and effective tool used by loc 1 areas must be used to improve the community's supply governments to reverse deterioration,build partnership of affordable housing. The State Legislature enacted AB with local businesses and the community,strengthen 1290 in 1993,known as the"Community Redevelopment neighborhoods,and effectively implement a communi 's Law Reform Act of 1993,"which significantly revised vision. In addition,redevelopment agencies are the largest California redevelopment law by addressing alleged F source of funding for affordable housing in California,next abuses and adding restrictions on redevelopment. The Act to the federal government. also restricts redevelopment activities to predominately urbanized areas. Redevelopment was created by state law to assist citie and counties in eliminating blight from a designated Redevelopment is primarily financed with tax increment area,as well as to achieve the goals of development, revenue. Typically,redevelopment agencies use tax reconstruction and rehabilitation of residential,comme cial, increment funds to leverage financial assistance from industrial and retail areas. Redevelopment breathes new private sources and from various agencies of the state and life into deteriorated areas plagued by social,physical,i federal governments. Other revenue sources include loans, environmental,or economic conditions which act as grants and tax allocation bonds. barriers to new investment by private enterprise. Since 1992,the State Legislature has used funds from The California Community Redevelopment Act was I local governmental entities,including redevelopment r enacted in 1945 to address problems such as urban blight, agencies,to help balance the state budget. To do this,the degrading buildings,and a lack of affordable housing. Legislature established Education Revenue Augmentation This Act gave cities and counties the authority to establish Funds(ERAF)in every county and required a portion of redevelopment agencies,and the authority and tools to property tax revenue to be reallocated to schools through attack urban decay. In 1951,the Act was renamed the this device.(An ERAF"shift"reduces dollar-for-dollar the Community Redevelopment Law,as it is known today, amount of State aid to schools.) Since 1992,the State has and it was codified in the California Health and Safety taken away funds from redevelopment agencies on five Code beginning at Section 33000. More importantly, occasions—totaling$545 million. In addition,for fiscal the authority for tax increment financing was added and years 2004-05 and 2005-06,an additional$250 million approved by the voters of California. ERAF transfer will be made each 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. Redevelopment Agencies hall or county administration building. In addition,an A redevelopment agency is a separate legal entity that agency cannot provide direct assistance to auto dealers on exercises governmental functions and has the powers non-urbanized land,to retail projects on non-urbanized enumerated in the Community Redevelopment Law. parcels over five acres in size(e.g.big box retailers), An agency must account locally and to the State for its to gambling or gaming facilities,or to relocate big-box activities. It must prepare an annual financial report,present retailers and auto dealers within the same market area. it to the legislative body(the city council or board of supervisors),and file it with the State Controller. The report describes the agency's financial condition and a summary of e eve opment agencies- its activities during the prior year. are subject to the same . To establish an agency,the legislative body of the relevant governance reC1 uirement local government must adopt an ordinance declaring the need for a redevelopment agency in that jurisdiction. The as Cities and counties,, legislative body must choose one of three organizational as Well as additional options: establish itself as the governing body of the redevelopment agency;appoint a separate governing body stipulations that a for the redevelopment agency;or, establish a community SpeCC t0 YeGleVelOpYl?enF development commission,which allows the legislative body or a separate appointed body to function jointly as a - redevelopment agency and a housing authority. °"`"" When adopting a redevelopment plan,the agency board In most cities and counties,the legislative body is also the must form a project area committee(PAC)if the plan governing board of the redevelopment agency. Five cities authorizes the use of eminent domain over private property –Bakersfield,Los Angeles,Long Beach,San Francisco, that provides residence to a substantial number of low-and and Santa Rosa–have separate boards appointed by the city moderate-income persons. In this case,the agency must council to oversee the activities of the agency. receive advice from the PAC–which consists of residents, property owners,business owners,and/or community The fundamental functions of a governing board of a organizations in the project area–on matters dealing with redevelopment agency are to establish redevelopment the displacement of the affected residents in the project project areas and to adopt and implement redevelopment area. plans for the improvement,rehabilitation,and redevelopment of blighted areas. The redevelopment plan Property contaminated by hazardous substances is acts as the agency's charter by establishing long-term common in urban areas in California and often is a major planning goals,implementation policies and procedures,and financing plans. Redevelopment agencies undertake a wide variety of 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 Now needs and desires of the property owners,businesses,and tenants in the area. The following are examples of the types Before of projects that agencies have undertaken: • Downtown Revitalization • Retail Development • Commercial Development • Industrial • Residential ° P • Mixed-Use • Public Facilities • Infrastructure Redevelopment agencies cannot pay for normal maintenance or operations of publicly-owned facilities or 2006 CRA Award of Excellence Winner—National City pay to construct,reconstruct,rehabilitate,or replace a city Community Development Commission,Education Village. i impediment to redevelopment. To provide redevelopment powers of Redevelopment Agencies agencies a means to address contaminated property,the, California Community Redevelopment Law prescribes the State Legislature enacted the Polanco Redevelopmentct Powers of a redevelopment agency. An agency has powers in 1990. The Act gives redevelopment agencies the tools to � identify,investigate,remediate,and acquire contaminat d that are typical for a local governmental agency as well as properties,commonly referred to as brownfields,without unique powers that are exercised only by redevelopment incurring the environmental liability under state and agencies. Those unique powers include: local laws that might accompany such actions. It allow • The ability to buy private property for resale to another private person or organization. The redevelopment agencies,subject to certain restrictions,to acquisition and disposition of property are central take actions that the agency determines are necessary to address hazardous substances on,under,or from prope activities of redevelopment agencies. The power of redevelopment agencies to acquire property is within its project area. In return,the agency,the developer broad,authorizing agencies to purchase,lease, of the property,and subsequent owners receive limited obtain an option on acquire b y g ift, ant bequest,uest immunity from further cleanup liability.• device or otherwise,any real or perso nal property, and any interest in or improvements on property. The administration of the redevelopment agency is carried Likewise,agencies may dispose of real or personal out by the staff of the agency. The size of the staff and property,or any interest therein,within the project scope of programs in redevelopment agencies vary wid ly. area or for redevelopment purposes. In large redevelopment agencies,the staff may be separate • The ability to use the power of eminent domain from the city or county. In mid-size and smaller agencies, to acquire private property. Eminent domain,or the administration is typically handled by existing city condemnation,refers to the right of a government or county staff in addition to their other responsibilities. to take private property for public use in exchange Furthermore,the city manager,county administrator,or a for just compensation. Redevelopment agencies department head typically serves as the executive direCtDr may exercise condemnation authority to acquire of the agency. The community development,planning, real property in the project area to eliminate blight public works,and finance departments are frequently and assist the goals of the redevelopment plan. involved in developing and administering agency programs. Agencies may use this tool to assemble parcels of land which are then sold or leased to property Redevelopment agencies are subject to the same owners or developers for redevelopment. Agencies governance requirements as cities and counties,as well as are also responsible for relocation of existing additional stipulations that are specific to redevelopment. residents or businesses. City council members and county supervisors need to • The power to collect property tax"increment" understand their role in the agency and how that position in order to finance the redevelopment program is governed by the various ethics laws and requirement . of the community. Tax increment financing is Agencies are subject to the open meeting requirements f unique to redevelopment agencies and is the the Brown Act,they must adhere to the Public Records Act, primary tool for financing the public costs of and they are subject to the"conflict of interest"provisions redevelopment activities in California. It is based of the Political Reform Act of 1974. on the assumption that a revitalized project area E I Iafiw I 2006 CRA Award of Excellence Winner—Oakland Redevel pment Agency,Mandela Gateway. I will 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 • Preservation of the affordability of low-and moderate- to 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 value four years each low-and moderate-income housing unit from within the project area and are not a debt or destroyed or removed from its project area. obligation of the city or county government or the In addition to the 20%requirement,the California general taxpayer. Community Redevelopment Law contains inclusionary 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% and Production Requirements of all units must be available to low-and moderate-income California Community Redevelopment Law requires households,with not less than 50%of those units available that not less than 20%of tax increment revenue derived to very low-income households. For new or rehabilitated from a redevelopment project area be used to increase, dwelling units developed by private or non-profit entities in improve,and preserve the supply of housing for very low-, a project area,at least 15%of all units must be available to low-,and moderate-income households. These funds low-or moderate-income households,with not less than 40% comprise the largest single source of money available of those units available to very low-income households. for the development of affordable housing in California. In addition to the new construction and rehabilitation of The following uses are authorized housing set-aside dwelling units,an agency may satisfy its inclusionary expenditures: housing obligations by constructing housing units outside a • Acquisition of real property or building sites project area on a two-for-one basis,by aggregating the units • Onsite or offsite improvements between redevelopment project areas,or by purchasing • Donation of real property to private or public persons long-term affordability covenants. or entities • Financing insurance premiums • New construction or rehabilitation of buildings or Additional Redevelopment Resources structures • Acquisition of buildings or structures The California Redevelopment Association(CRA)is a nonprofit organization representing redevelopment agencies and affiliated private organizations involved in redevelopment activity.CRA's mission includes legislative advocacy,professional education,and dissemination of information regarding redevelopment law and activities. CRA members include approximately 352 redevelopment agencies and 307 private sector companies and a.; nonprofit organizations. CRA sponsors numerous educational Before _– conferences and publications related to redevelopment in California. 2006 CRA Award of For more information,go to CRA's Excellence Winner—City of website at www.calredevelop.org or Escondido,Via Roble. call(916)448-8760. Now ,,,, Provided by the California Redevelopment Association,1400 K Street,Suite 204,Sacramento,CA 95814