Basics of Redevelopment

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What Does it Mean and How Does it Happen?

Redevelopment is a government-supported process that allows for the revitalization of existing blighted sites. Specifically, this term “redevelopment” refers to the reconstruction of areas that had been previously developed and occupied, but are no longer being used as they are plagued by poor physical and economic conditions.

A Redevelopment Agency is a governing body whose primary goal is to reverse these conditions. The agency is ultimately responsible for the implementation and supervision of the redevelopment program. Redevelopment programs are sanctioned and protected by State law, particularly the California Community Redevelopment Law (CRL), which signifies that any county or city can establish an agency by action of its governing body. Essentially, a Redevelopment Agency operates under a City Council. While they are two separate governing bodies, their principal objective is to improve the quality of life for residents of the community by cleaning up and restoring areas that are deemed by law as “blighted.”

These “blighted” areas are abandoned and vacant lands once occupied by properties that are currently obsolete. Some of these areas may be complicated by hazardous chemicals. The planning, development, and eventual reconstruction of these areas are overseen by the Redevelopment Agency. In essence, redevelopment invests in these areas as a means to draw in businesses that will inevitably bring in sales and utility tax revenue and improve the community as a whole.

Blighted areas are placed under the microscope of the City’s Planning Commission, City Council, and Redevelopment Agency Board. As a first step in determining whether a particular site is a likely candidate for redevelopment, a survey area must be identified and adopted by the local governing body. In identifying the survey area, it must be determined how redevelopment of this area would benefit the community. Once the survey area is identified, feasibility studies are conducted within the area in order to determine if there are any constraints to development and what would be the highest and best use for the site. Once the survey area is proven to be viable, the City Council designates the survey area as the “Project Area.”

The Project Area is where the work will actually take place. Should a designated project area include residential units and citizens who will face displacement, a Project Area Committee (PAC) is created in order to ensure the best possible outcome for individuals that may possibly be displaced. The PAC is composed of project area residents and representatives. They consult with residents, business and property owners, as well as other community organizations, providing the Agency Board with concerns and recommendations before a Redevelopment Plan is actually adopted. A PAC is only required if the site selected for revitalization contains residential units and citizens facing displacement.

In any case, the Planning Commission presents the Redevelopment Agency Board with a preliminary plan, outlining the goals and objectives for the reconstruction of the site, as well as a legal description of the project area. Once the proposal is accepted by the Agency Board and adopted by the local governing body, the process moves forward as further preparation is conducted.

In this stage of the process, the Redevelopment Agency prepares documents required by state law, such as preliminary reports and environmental documentation. These documents must be approved before a Redevelopment Plan can be implemented. Once the Agency Board obtains all necessary legal documentation, they develop the following: a draft Redevelopment Plan and a draft Environmental Impact Report. These drafts outline the purposes, goals and limitations of a potential project. It details the state of the blighted areas, the way these deteriorated areas will be revitalized, and the impact it will have on environmental conditions. Following the circulation of these drafts, the agency consults and obtains input from the taxing agencies and the community.

After the Redevelopment Agency completes these necessary steps and gathers all appropriate reports and documents, a public hearing is held. The proposed Redevelopment Plan is presented to the community, inviting input from citizens. The Redevelopment Plan and five-year implementation plan are adopted within the public hearing, and after all required environmental documents are certified.

Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based upon an allocation of taxes collected within a project area. The taxable valuation of a project area's last equalized tax roll prior to adoption of the Redevelopment Plan, or base roll, is established and, except for any period during which the taxable valuation drops below the base year level, the taxing agencies within the project area thereafter receive the taxes produced by the levy of the current tax rate upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll, the “Tax Increment Revenues,” are allocated to a redevelopment agency and may be pledged by a redevelopment agency to the repayment of any indebtedness incurred in financing or refinancing a redevelopment project. Redevelopment agencies themselves have no authority to levy property taxes and must look specifically to the allocation of taxes produced by the tax increment.

Housing Set-Aside
In accordance with Section 33334.2 of the Redevelopment Law, not less than twenty percent (20%) of all taxes that are allocated to the Agency shall be deposited in a low and moderate income housing fund to be used by the Agency for purposes of improving, increasing, and preserving the City’s supply of housing for persons and families of low or moderate income. See Affordable Housing for more information.