Redevelopment in the City of Santa Clarita
LEGISLATIVE WISH LIST
1. Bond Proceeds – Ability to maintain and spend bond proceeds on hand for the purposes in which they were issued.
2. City/Agency Loans – Allow loans between the City and Agency for legitimate redevelopment purposes to be considered an “enforceable obligation.”
3. New Economic Development Program – Provide a new tool to continue the public/private development opportunities, including affordable housing and high impact commercial development.
4. Financing – The creation of a new, dependable, and ongoing source of funding to finance public improvements and further public/private partnership opportunities.
5. Implementation – Maintain the best aspects of California Redevelopment Law to further implementation of economic development goals and creation of affordable housing.
The Redevelopment Agency of the City of Santa Clarita was created in 1989, with the Newhall Project Area adopted in 1997. On average, the Agency received $4 million in tax increment annually to further the goals of the Redevelopment Plan. Since the inception of the Project Area, $48 million has been invested in new projects and over 300 jobs have been created. Crime in the Project Area has decreased by 11% and sales tax generation has increased by 60%.
How Did We Get Here?
On June 29, 2011, as part of adopting the State of California Fiscal Year 2011-12 budget, the Governor signed two trailer bills, ABX1 26 (Dissolution Act) and ABX1 27 (Voluntary Alternative Redevelop-ment Program), into law. The Dissolution Act eliminated Redevelopment Agencies and ordered Successor Agencies to wind down the activities of Redevelopment Agencies. The Voluntary Alternative Redevelopment Program provided a process for Redevelopment Agencies to provide payment to the State on an annual basis in order to continue to operate.
In July 2011, California Redevelopment Agency v. Matosantos was filed in the California Supreme Court by the California Redevelopment Association (CRA), the League of California Cities (League), and the cities of San Jose and Union City, challenging the constitutionality of ABX1 26 and ABX1 27.
In December 2011, the Supreme Court rendered a decision that was the worst case scenario for local governments throughout the state: The court upheld ABX1 26, but struck down ABX1 27.
While the Legislature has indicated that their intent was not to end Redevelopment, the Supreme Court’s decision means that the Redevelopment Agency of the City of Santa Clarita, along with every Redevelopment Agency in the state of California, now has to endure a lengthy and complicated wind down process which includes paying down outstanding debt, disposing of assets and properties of the former Redevelopment Agency, overseeing the completion of existing projects, and completely putting the brakes on current and ongoing revitalization efforts.
Impact of State Legislation Currently Being Considered on the City of Santa Clarita
In an attempt to fix some of the disparities in ABX1 26, the Legislature has introduced a number of bills that will significantly impact how the dissolution of Redevelopment will unfold.
SB 654 – This bill allows the balance of the former Redevelopment Agencies low/mod housing trust funds to be retained by the housing successor to use for affordable housing-related activities per California Redevelopment Law. The City Council of the City of Santa Clarita has adopted a support position for this bill and encourages the Legislature to move forward with the adoption of this bill. At the time ABX1 26 was adopted, the Agency was about to enter into a Disposition and Development Agreement for the construction of a 30-unit, 100% affordable rental housing development called the “Newhall Avenue Development.” The Agency had approximately $8.9 million set aside for future affordable housing, of which a contribution of $6.3 million was expected for this project. The timely passage of this bill will ensure that this valuable project can move forward to provide suitable housing for all our community members.
AB 1585 – This bill, among other technical fixes to ABX1 26, expands the definition of “enforceable obligation” to include any loans specific to the project area between the City and the Agency prior to December 31, 2010. This bill would also allow cities to retain responsibility for housing functions, including the current low and moderate income housing funds, previously performed by the Redevelopment Agency. The City Council of the City of Santa Clarita has adopted a support position for this bill and encourages the Legislature to move forward with the adoption of this bill. This bill is important to the City of Santa Clarita to provide the power and funds to move forward with the Newhall Avenue Development. Additionally, the expansion of the definition of enforceable obligation as currently proposed is a step in the right direction to ensure that the City’s General Fund is paid back for the funds loaned to the Agency.
SB 986 – This bill, similar to SB 654, would allow the Successor Agency to expend bond proceeds in the manner outlined at the time the bonds were issued. This is the only bill currently proposed that includes bond proceeds for both housing and non-housing bonds. The City Council of the City of Santa Clarita has adopted a support position for this bill and encourages the Legislature to move forward with the adoption of this bill. This bill will allow the City to move forward with the proposed affordable housing project, the Newhall Avenue Development. The Agency’s non-housing bond proceeds have been fully expended/allocated to projects.