Late Tuesday June 17, legislation by Assemblymember Richard Bloom (D-Santa Monica) that could free up nearly $750 million in redevelopment agency proceeds for numerous cities around the state passed the Senate Transportation and Housing Committee. The bill, AB 2493, which would release funds that have been held hostage by the state since redevelopment agencies were dissolved in 2011.
“When the Legislature and Governor stripped redevelopment agencies away from cities in 2011, we lost a major tool in fighting blight and reinvigorating our local economies,” said Bloom. “Moreover, many cities were in the middle of moving major projects forward when the state withheld their funds. This bill will allow us to get back on track with important economic development projects overwhelmingly supported by the local electorate.”
In 2011, facing a severe budget shortfall, the Governor and Legislature dissolved redevelopment agencies and redirected $1.7 billion away from various community development and affordable housing projects. Unfortunately, many local redevelopment agencies had already legally issued bonds for local projects and must now make debt payments even though they cannot reap the economic benefits of the now stalled project.
Statewide, approximately $750 million in 2011 redevelopment bond proceeds are sitting idle and cannot be used. If current law prevails, cities will make debt payments for a decade, costing them nearly $1 billion while not completing a single redevelopment project. These non-productive debt payments will further depress local economic activity throughout the state.
According to SmartCitiesPrevail, a nonprofit that provides research to cities, releasing the bond proceeds for the intended projects would generate approximately 19,000 high wage construction and related jobs. Funding the redevelopment projects would also create over $2.8 billion in statewide economic activity and provide $130 million in new state and local tax revenues.
“This bill offers a common sense solution that will foster job creation, economic development, affordable housing construction, and the completion of needed infrastructure projects. The bonds are there waiting. We just need to allow local governments to use them,” added Bloom.
The current version of the bill reflects a years’ worth of conversations with the Governor’s office, the Department of Finance and construction trade groups. Changes over the last year include requiring projects to comply with the local sustainable community strategy, contain two or more significant planning actions that occurred on or before December 31, 2010, demonstrating that the projects were actively pursued by the local agency prior to the Governor’s redevelopment dissolution announcement and that prevailing wages are paid for all projects.
“Utilization of the 2011 bond proceeds would facilitate the completion of hundreds of projects, including infrastructure and public facilities, as well as thousands of affordable housing units,” stated West Hollywood Senior Financial Management Analyst, John Leonard.
AB 2493 passed the Senate Housing and Transportation Committee on a 9-1 vote. Having already moved through the Assembly, the bill next heads to the Senate Committee on Governance and Finance Committee.