AB2: A New Development in Redevelopment

A new law has given cities, counties and special districts an effective conduit of redevelopment funding to take the place of their departed redevelopment agencies. Effective January 1, 2016, Assembly Bill 2 (AB2), also known as the Community Redevelopment Law (California Govt. Code 62000 et seq.), allows a local agency to create a “Community Revitalization Authority” in economically depressed areas, i.e. those areas where more than 80% of the residents have household incomes below the California median, and/or those areas with high unemployment and crime rates and deteriorating infrastructure and buildings. The Authority would then be required to adopt a community revitalization and investment plan for each community revitalization and investment area. These Community Revitalization Authorities will have the power to fund affordable housing, brownfields cleanup, and infrastructure construction and repair. They will also be given the power to purchase property or acquire it by eminent domain and to provide direct assistance to local manufacturing and industrial businesses. This funding will be generated by issuance of bonds serviced by tax revenues. In order to safeguard against the secrecy and dubious spending priorities that led to the demise of the redevelopment agencies, AB2 requires each Authority to set aside 25% of its tax revenue to be deposited in an affordable housing fund, which fund must be used only to create and improve low and moderate-income housing. AB2 also requires the Authorities to be subject to periodic state audits, and prohibits them from taking tax revenues away from school districts without consent.

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