California Eminent Domain Report

In late September, Governor Brown signed into law AB 229 and SB 628, which are intended to finance public capital facilities or other specified projects of communitywide significance previously financed by redevelopment agencies.

AB 229 and SB 628 both seek to expand existing but underutilized Infrastructure Financing Districts (Financing Districts).

AB 229 authorizes the creation of Infrastructure and Revitalization Financing Districts (Revitalization Districts) by the legislative body of a city or county[1] to finance projects of communitywide significance pursuant to an infrastructure financing plan adopted by the district.  A Revitalization District may be formed for up to 40 years by passage of a resolution of intent.  The resolution of intent must specify the boundaries of the Revitalization District, the types of projects the Revitalization District will finance, and state that incremental property tax revenues may be used to finance the Revitalization District’s projects, provided that use of incremental tax revenues allocated to any other taxing agency must be approved by said agency.

The issuance of bonds by a Revitalization District requires 2/3 voter approval.  The legislative body of a city or county may also dedicate a portion of its funds from the Redevelopment Property Tax Trust Fund to the Revitalization District.

SB 628 authorizes the legislative body of a city or county to form an Enhanced Infrastructure Financing District (Enhanced Infrastructure Districts) to finance various infrastructure projects pursuant to an infrastructure financing plan.  First the legislative body must establish a public financing authority, consisting of members from the city, county and the general public.  The public financing authority acts as the governing body of the Enhanced Infrastructure District.  By passage of a resolution of intent, an Enhanced Infrastructure District may be formed for up to 45 years.  The resolution must state the boundaries of the Enhanced Infrastructure District, the types of public facilities the Enhanced Infrastructure District will finance, the need for and goals of the Enhanced Infrastructure District, and state that incremental property tax revenues may be used to finance these projects, provided that use of incremental tax revenues allocated to any other taxing agency are approved by said agency.

With 55% voter approval, an Enhanced Infrastructure District may issue bonds to finance infrastructure projects such as highways, interchanges, transit facilities, sewage treatment and water reclamation plants, brownfield restoration and other environmental mitigation, low and moderate income housing, and transit priority projects

Before the passage of AB 229 and SB 628, a Financing District was prohibited from including any portion of a redevelopment project area.  Now districts formed under AB 229 and SB 628 may be located in, or overlap with, any redevelopment project area, former redevelopment project area or former military base.  Cities or counties that created a redevelopment agency are prohibited from creating a Revitalization District or an Enhanced Infrastructure District until the successor agency receives a finding of completion pursuant to Section 34179.7 of the Health and Safety Code.  These bills also authorize a Revitalization District or an Enhanced Infrastructure District to implement hazardous cleanup pursuant to the Polanco Redevelopment Act.

Statements that AB 229 and SB 628 will bring back redevelopment law are misleading.  These bills do not provide the same development mechanisms that were utilized by former redevelopment agencies, such as the use of development agreements and using another agency’s funds without its approval.  Rather, these bills are a financing mechanism, subject to approval by any agency whose funds are sought by a Revitalization District or an Enhanced Infrastructure District, with high voting requirements.  One can imagine the types of projects another agency will approve for usage of its funds – those that strictly benefit a wider region or those that will enhance property values.