Putting the Development Back Into Redevelopment

The demise of the “redevelopment agency” in California in 2012 was swift and sudden.  In the midst of a budget crisis, the California legislature dissolved the hundreds of redevelopment agencies across the state, and used their tax proceeds to balance the state budget.  A consequence of this action was the disarming of the Polanco Act, which redevelopment agencies had used to compel responsible parties to clean up environmentally contaminated “brownfields” sites.  The Polanco Act had aided in redevelopment of these sites by granting immunity for hazardous substance releases to redevelopment agencies, redevelopers and lenders once the approved cleanup plan was implemented.  Without the power of the Polanco Act, these entities were hesitant to take on the responsibility of redeeming brownfields sites, leading to their abandonment and resulting in area blight.

 

In order to resurrect the benefits of the Polanco Act, the Legislature recently passed AB 440, the “Gatto Act” (CA Health & Safety Code Section 24503 et seq.) which allows cities, counties and housing authorities to exercise most of the same powers and immunities that were formerly granted by the Polanco Act, along with some new enhancements to the old law.

 

Importantly, the Gatto Act now allows agencies to use their redevelopment powers on blighted areas “anywhere within their jurisdiction” not just within designated redevelopment project areas.  The Gatto Act definition of blighted property is one “with the presence or perceived presence of a release or releases of hazardous material that contributes to the vacancies, abandonment of property, or reduction or lack of property utilization of property”  This definition is in line with the federal EPA definition of “brownfields” as “real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant”.

 

The local agency must submit advanced notice to the Regional Water Quality Control Board (RWQCB) or the Department of Toxic Substances Control (DTSC), prior to taking any action.  As in the Polanco Act, 60 days’ notice is given to the responsible party of the order to prepare a cleanup and investigation plan.  However, the Gatto Act gives the responsible party 30 days within which to appeal the notice with a hearing before the local agency, with said appeal staying the 60 day notice.

 

A further significant obstacle to agency action to cleanup brownfields has been eliminated by the Gatto Act, which now allows agencies to access a property to conduct an initial site assessment and investigation, without having to resort to eminent domain, as was the case under the Polanco Act.

 

If local and state agencies have conflicting interests in overseeing the cleanup, the Gatto Act allows for a dispute resolution. If the agencies cannot agree, it will be submitted to a site designation committee to designate the agency in charge, including representatives from the DTSC and RWQCB (if they are not themselves involved).

 

Enhanced public participation is also mandated by the Gatto Act, as notice of the cleanup plan must be posted at the site and in local papers, public comments can be solicited, and public meetings would be held by request.

 

Although the loss of the redevelopment agency in California was a significant setback in the fight to remediate blight and develop brownfields properties, the Gatto Act has given local agencies the powers and immunities once granted to the redevelopment agencies by the Polanco Act, along with new and improved tools to provide agencies, developers and lenders the security and incentive for productive development of formerly distressed sites.

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