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Redevelopment is Back: Governor Brown Signs AB 2

Despite numerous attempts to revive redevelopment in California, Gov. Jerry Brown has remained steadfast until quite recently. On September 22, 2015, Governor Brown signed Assembly Bill 2 into law.

AB 2 permits local governments to form new public bodies called "Community Revitalization and Investment Authorities" ("CRIAs"). Like the redevelopment agencies dissolved by Gov. Brown over four years ago, CRIAs will have significant power to "invest in disadvantaged communities with a high crime rate, high unemployment, and deteriorated and inadequate infrastructure, commercial, and residential buildings." In part, the newly formed CRIAs will have the power to (i) issue bonds, (ii) adopt a community revitalization and investment plan, (iii) clean hazardous waste, (iv) acquire and transfer real property, and (v) incur debt.

Although redevelopment has been resurrected, there are some significant differences from the previously eliminated redevelopment laws. For example, CRIAs may adopt a community revitalization and investment plan, but the requirements are more stringent than those previously required by redevelopment law. In practicality, these stringent requirements will demand that a CRIA satisfy more criteria before it can declare an area appropriate for redevelopment. Further, AB 2 enables CRIAs to use tax increment financing like the previous redevelopment regime; however, under the new law, the taxing entities in the proposed project area must agree to divert the tax increment to the CRIA. Seemingly, this additional layer of local government intervention will limit the power of the CRIA. Finally, the new law also mandates that at least twenty-five percent (25%) of all tax increment revenues must be deposited into a separate fund to solely be used to increase, improve, and preserve the community's supply of low- to moderate-income housing. This is an increase from twenty percent (20%) under the previous redevelopment laws.

In sum, I've tried to highlight several of the new changes in redevelopment law under AB 2. Of course, there are many other changes that are not contained in this blog post including, the process by which the revitalization plan is adopted, but keep an eye out for further discussions regarding this law's more complex and detailed aspects on this blog in the coming months.

L. Sue Loftin is the Founder and Shareholder of The Loftin Firm. For questions relating to this blog or any other California real estate, corporate governance, land use, or estate planning matter, contact Ms. Loftin at (760) 814-9649. 

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