e-Bulletin: Legislative Amendments for 2007 to California Community Redevelopment Law

To launch a pdf of the BB&K Memorandum covering the amendments below

CLICK HERE

During 2006, the California State Legislature introduced several bills that impact the area of California Redevelopment Law (Health and Safety Code Section 33000, et seq.)(“CRL”). The Governor signed into law eight (8) of the bills which have been chaptered and will become effective January 1, 2007, unless otherwise noted.

The Assembly Bills (“AB”) and Senate Bills (“SB”) discussed below amend the CRL and other laws related to redevelopment, housing and eminent domain. Following is a summary of the bills as they relate to redevelopment agencies.

1. AB 773: Redevelopment
(AB 773 amends Section 33378 of the Health and Safety Code)

Referendum Petitions - The CRL sets forth certain requirements applicable to referendum petitions circulated in cities or counties with populations greater than 500,000, relating to a redevelopment plan that is subject to a referendum, including that the petition be submitted to the clerk of the legislative body within ninety (90) days of the adoption of the ordinance. The law requires that referendum petitions be filed within thirty (30) days from the date of the adoption of the ordinance in cities and counties of other population sizes. AB 773 amends the CRL such that the 90-day timeframe is applicable to all cities and counties, regardless of population size.

2. AB 782: Redevelopment
(AB 782 amends Sections 33030 and 33320.1 of the Health and Safety Code)

Conditions of Blight - Currently, the CRL specifies the physical and economic conditions that cause blight and defines a project area as a predominantly urbanized area of a community that is a blighted area. AB 782 deletes the following as a criterion of blight:

3. AB 1893: Redevelopment
(AB 1893 amends Section 33445 of the Health and Safety Code)

Tax Increment - Existing law prohibits a redevelopment agency from using tax increment funds for the construction or rehabilitation of a city hall or county administration building. AB 1893 extends the prohibition such that tax increment funds also may not be allocated to land acquisition, related site clearance, or design costs of a city hall or county administration building.

4. SB 53: Redevelopment
(SB 53 amends Sections 33333.2 and 33333.4 of, and adds Sections 33342.5 and 33342.7 to, the Health and Safety Code)

Eminent Domain - Under existing law, the CRL authorizes a redevelopment agency to extend the time limitation for beginning eminent domain proceedings for property within a project area only by amending the redevelopment plan. SB 53 makes the following amendments to this area of the law:

1. A redevelopment plan must contain a description of the program to acquire real property by eminent domain, including prohibitions, if any, on the use of eminent domain.
2. Prior to amending a redevelopment plan to extend the time limit for commencing eminent domain proceedings, a redevelopment agency must find substantial evidence that significant blight remains in the project area and cannot be eliminated without the use of eminent domain.
3. If a legislative body adopted a final redevelopment plan before January 1, 2006, it shall also adopt an ordinance on or before July 1, 2007 that contains a description of its program to acquire property by eminent domain.

5. SB 1206: Redevelopment
(SB 1206 amends Sections 33030, 33031, 33320.1, 33328.7, 33352, 33367, 33378, 33445, 33485, 33486, 33500, and 33501 of, and adds Sections 33328.1, 33360.5, 33451.5, 33501.1, 33501.2, 33501.3, and 33501.7 to, the Health and Safety Code)

SB 1206 amends the CRL as follows:

1. Definition of Blight - According to the CRL, a blighted area has been defined as one that is predominantly urbanized and characterized by specified conditions. SB 1206 revises the definition of predominantly urbanized and the conditions that characterize a blighted area by prohibiting the inclusion of non-blighted parcels in a redevelopment project area for the purpose of obtaining property tax revenue from the area without substantial justification for their inclusion.
2. Reports - At present, the CRL requires county officials to annually allocate taxes levied upon the taxable property in a redevelopment project by or for the benefit of specified state or local taxing agencies. SB 1206 requires these county officials to also prepare and deliver a particular report to the Department of Finance that also contains specified projections of tax revenues. Further, the redevelopment agency must prepare and deliver an additional report to the Department of Finance when the agency transmits the map of the project area in accordance with Section 33327 (after receipt of a preliminary redevelopment plan or amendments thereto). This additional report includes such information as projected tax revenue allocations to the applicable school district, county office of education, and community college district for the duration of the project area; SB 1206 also requires the redevelopment agency to reimburse these entities for preparation of necessary reports.
3. Redevelopment Plan - Existing law requires that every redevelopment plan submitted by a redevelopment agency to the legislative body of the local agency include a report that contains such information as a description of the physical and economic conditions that cause the project area to be blighted. SB 1206 requires that the description also contain certain quantifiable evidence that supports specified physical and economic conditions in the project area.
4. Redevelopment Plan Approval - Community Redevelopment Law requires the legislative body to consider the adoption of a redevelopment plan at a public hearing. SB 1206 requires that no later than forty-five (45) days prior to the public hearing, the redevelopment agency deliver a copy of the preliminary report and notice of the date of hearing to the Department of Finance and the Department of Housing and Community Development for an estimate of the proposed plan’s effect upon the State’s General Fund. If the legislative body receives timely comments from the Department of Housing and Community Development, it shall consider the comments at the public hearing.
5. Contents of Ordinance - Currently, the CRL specifies the contents of an ordinance adopting a redevelopment plan, including the findings and determinations of the legislative body about the blighted area that is to be redeveloped. SB 1206 requires the findings to be based on clearly articulated and documented evidence. In addition, the redevelopment agency is required to include a finding and determination that the implementation of the redevelopment plan will improve the physical and economic conditions of blight in the project area.
6. Adoption of Ordinance - Under existing law, an ordinance that adopts, modifies, or amends a redevelopment plan is subject to referendum and the referendum petitions circulated in cities and counties with populations greater than 500,000 are required to be submitted to the clerk of the legislative body within ninety (90) days of the adoption of the ordinance subject to referendum. SB 1206, as well as AB 773, makes this ninety (90) day requirement applicable to all cities and counties regardless of size.
7. Tax Increment Funds - Existing law prohibits a redevelopment agency from using tax increment funds for the construction or rehabilitation of a city hall or county administration building. SB1206 also prohibits the allocation of tax increment funds to land acquisition, related site clearance, or design costs of a city hall or county administration building, as does AB 1893.
8. Amending the Redevelopment Plan - CRL requires a public hearing on a proposed amendment of the redevelopment plan prior to recommendation by the redevelopment agency to its governing board. SB 1206 requires that no later than forty-five (45) days prior to the public hearing, the redevelopment agency (1) notify the Department of Finance and the Department of Housing and Community Development of the hearing and the proposed amendment, and (2) prepare a report containing specified information about the proposed amendment such as a map of the project area, a description of the remaining blight, a description of the project, the reason for the amendment, etc. SB 1206 also requires the Department of Finance to estimate certain consequences of the proposed amendment to the State’s General Fund. These requirements would apply only if the proposed amendments would make any one of the 6 specified changes to the redevelopment plan listed in Section 33451.5.
9. Merger of Project Areas - Existing law authorizes a redevelopment agency to merge project areas under its jurisdiction without regard to contiguity of the areas. SB 1206 requires that prior to the merger of the project areas, the legislative body of the redevelopment agency find that (a) significant blight remains within one (1) of the project areas, and (b) blight cannot be eliminated without the merger.
10. Civil Actions - The CRL authorizes civil actions to determine the validity of proceedings to establish a redevelopment agency and specified actions taken by a redevelopment agency. SB 1206 amends existing law as follows:
    1. provides that the civil action must be commenced within ninety (90) days from the date of the decision of the legislative body or redevelopment agency;
    2. makes the Attorney General an interested party in a civil action regarding the validity of these matters;
    3. authorizes the Attorney General to intervene as of right in these civil actions;
    4. requires that the complaining party must first present the grounds for noncompliance with the CRL to the redevelopment agency or legislative body orally or in writing before the close of the required public hearing prior to commencing an action;
    5. requires any party filing a pleading or brief in an action challenging the validity of a finding and determination that the project area is blighted to serve a copy of the pleading or brief on the Attorney General; the court may not grant relief to a party that fails to comply with this requirement;
    6. prohibits a redevelopment agency or legislative body from permitting or requiring a property owner or real party in interest to indemnify the agency or legislative body against these civil actions as a condition of adopting or amending a redevelopment plan.

6. SB 1210: Eminent Domain
(SB 1210 amends Sections 1250.410, 1255.040, 1255.410, 1255.450, and 1255.460 of, adds Section 1263.025 to, and repeals Sections 1255.420 and 1255.430 of, the Code of Civil Procedure, adds Section 1091.6 to the Government Code, and amends Sections 33333.2 and 33333.4 of the Health and Safety Code)

SB 1210 amends the Eminent Domain Law as follows:

1. Litigation Expenses - Existing law regarding settlement offers in eminent domain proceedings authorizes the recovery of litigation expenses under certain circumstances. SB 1210 defines litigation expenses to include the party’s reasonable attorney’s fees and costs, including reasonable expert witness and appraiser fees.
2. Possession Prior to Judgment - Existing law authorizes the redevelopment agency to make an ex parte application to the court to take possession of property prior to entry of judgment. Existing law authorizes any defendant or occupant of the property to move for relief from an order allowing pre-judgment possession in the case of a substantial hardship. SB 1210 revises the Eminent Domain Law as follows:
   1. a redevelopment agency may ask the court for possession and a noticed hearing on a motion, the contents of which, and the procedure, are described in the statute;
   2. a redevelopment agency is required to serve a copy of the motion on the record owner and on the occupants of the property within specified time periods;
   3. a defendant or occupant of the property may oppose the motion and seek a hearing on the motion because of hardship, whether or not the hardship is severe;
   4. the written opposition must be signed under penalty of perjury;
   5. the court is required to make an order for possession if the motion is not opposed and the court makes specified findings;
   6. the court may issue an order of possession upon an ex parte application by a utility if an emergency exists.
3. Appraisal - Existing Eminent Domain Law requires a condemnor to have the property appraised by an expert prior to depositing with the State Treasury the probable amount of compensation that would be determined at a condemnation proceeding. SB 1210 requires the public entity to offer to pay the reasonable costs of an independent appraisal requested by the owner, not to exceed $5,000, when the public entity offers to purchase the property under threat of condemnation.
4. Conflict of Interest - Existing law prohibits public officers and employees from being financially interested in any contract. SB 1210 further provides:

   An officer who is also a member of the governing body of an organization that has an interest in, or to which the public agency may transfer an interest in, property that the public agency may acquire by eminent domain from voting on any matter affecting that organization.

5. Time Limits - Existing law requires that a redevelopment plan contain time limits of no more than twelve (12) years for the commencement of eminent domain proceedings. SB 1210, as well as SB 53, provides that the time limitation may only be extended by amendment of the redevelopment plan after the redevelopment agency finds substantial evidence that significant blight remains within the project area and that the blight cannot be eliminated without the use of eminent domain.

7. SB 1650: Eminent Domain
(SB 1650 amends Section 1263.510 of, and adds Sections 1245.245 and 1263.615 to, the Code of Civil Procedure)

SB 1650 amends the Eminent Domain Law as follows:

1. Currently, Eminent Domain law requires the governing body of a public agency to adopt a resolution of necessity and send related notices to persons owning targeted property before an eminent domain proceeding may commence. Existing law provides that an owner of property taken by eminent domain is entitled to compensation, including compensation for goodwill. SB 1650 amends existing law as follows:
   1. before the property acquired by eminent domain may be used for any public purpose other than the purpose stated in the resolution, the governing body must adopt a subsequent resolution authorizing a different use of the property by a vote of at least 2/3 of all members of the governing body or a greater vote as required by statute, charter, or ordinance;
   2. if condemned property is not used for the purpose stated in the resolution within ten (10) years of its adoption, the public entity must sell the property unless the governing body adopts a subsequent resolution authorizing a different use of the property or reauthorizing the existing stated public use by a vote of at least 2/3 of all members of the governing body or a greater vote as required by statute, charter, or ordinance;
   3. if property acquired by eminent domain (a) is not used for the stated purpose within ten (10) years, and (b) the public entity fails to adopt a new resolution changing its purpose or extending the existing resolution, the redevelopment agency shall offer the original owner a right of first refusal. If the property to be sold was a single family residence at the time of acquisition, it may be sold to the former owners of low or moderate income at less than fair market value under certain conditions. In these instances, the Department of Housing and Community Development shall provide the redevelopment agency with recommendations regarding the standards and criteria for price, terms, conditions and restrictions for the sale;
   4. unless a redevelopment agency states in writing that the use of property acquired by condemnation is scheduled to begin within two (2) years of its acquisition, the agency shall offer the owner of the property a one (1) year leaseback agreement subject to fair market rents and compliance with other specified conditions. Additional goodwill value may not accrue during the leaseback period.

8. SB 1809: Eminent Domain
(SB 1809 amends Section 33373 of, and repeals and adds Section 33456 of, the Health and Safety Code)

With respect to eminent domain proceedings initiated by redevelopment agencies, the CRL requires a description of the land within a redevelopment project area and a statement, recorded with the County, indicating that proceedings for the redevelopment of the project area have been instituted following adoption of a redevelopment plan. Existing law authorizes amendments to a redevelopment plan to be recorded as promptly as practicable following their adoption.

1. SB 1809 amends the CRL as follows:
   1. the statement referred to above regarding the redevelopment of the project area shall be recorded in the public record no later than sixty (60) days following adoption of a redevelopment plan or amendment(s) thereto;
   2. the statement shall include:
      1. a prominent heading, in boldface type, noting that the property that is the subject of the statement is located within a redevelopment project,
      2. a description of the provisions of the redevelopment plan that authorize the agency to use of the power of eminent domain, and
      3. a general description of any limitations on the use of the power of eminent domain contained in the redevelopment plan.
2. For a redevelopment plan that authorizes the acquisition of property by eminent domain that was adopted on or before December 31, 2006, SB 1809 requires the agency to record a revised statement containing all the above information with the county recorder on or before December 31, 2007.
3. SB 1809 prohibits a redevelopment agency from commencing an action in eminent domain until this statement is recorded with the county recorder.

CLICK HERE: For information on BB&K's California Community Redevelopment Law Reference Handbook & CD