FREQUENTLY ASKED QUESTIONS ABOUT REDEVELOPMENT

 ·               What is redevelopment?

 Redevelopment is a process authorized under California law that enables local government entities to identify deteriorated and blighted areas in their jurisdictions in need of revitalization. Redevelopment encourages new development, creates jobs, provides housing, improves infrastructure, helps reduce crime, and generates tax revenues in declining urbanized areas by developing partnerships between local governments and private entities. Over 400 California cities and counties have adopted local redevelopment plans.  

 ·                     Why is redevelopment needed?

There are hundreds of communities throughout California with neighborhoods and business districts that are struggling economically and socially. The abandoned gas station, dilapidated housing project, or a vacant strip mall that is continually vandalized are all examples of deteriorated and blighted areas. Revitalization of these areas does not just happen on its own. Often, the private sector is reluctant to invest in them because the risks and costs associated with doing so outweigh the benefits. Redevelopment serves as a catalyst for private investment by providing the initial plan and seed money that ultimately breathes new life into areas in need of economic development and new opportunity.

 ·                     How does redevelopment benefit communities?

The benefits of redevelopment are abundant.  Success stories range from physical transformations of dilapidated buildings to the attitudes of the newly empowered people that reside in a redeveloped community.  And the positive effects of community pride are often contagious!

Redevelopment is a powerful tool that empowers communities through:

  • Creation of new job and housing opportunities;
  • Economic development and crime reduction;
  • Development or improvement of public facilities like libraries, theaters, parks, youth centers, bike paths, and greenbelts;
  • Landscaping or neighborhood streets with trees or shrubs;
  • Improved street lights, storm drains and water systems;
  • Reduced through traffic on residential streets;
  • New cultural, shopping, and recreational opportunities;
  • Restoration of community pride; and
  • Ultimately increasing overall city revenues to provide greater public safety and services.

The first way redevelopment agencies help communities is to listen to local citizens when they ask for help.  To facilitate community involvement, many agencies distribute newsletters, provide public forums and form redevelopment advisory committees on which community members can serve to provide community direction on redevelopment projects.

 ·                     What is a Redevelopment Agency?

 In most cities, the city council members are also the governing board for the redevelopment agency, however, the council and the agency are two separate, distinct legal entities.  The agency members hire staff to carry out the day-to-day operations and its redevelopment plans.  In most counties, the board of supervisors is the governing board.

 ·                     What can a Redevelopment Agency do?

A redevelopment agency has unique powers.  There are eight main tools that an agency can use to implement a redevelopment program:

  • Receive and spend tax increment revenue;
  • Help improve public infrastructure and facilities;
  • Prepare sites for development;
  • Assemble property. Resell property it has assembled, and/or participate in the redevelopment of a property;
  • Encourage private development;
  • Regulate land use; and
  • Preserve, rehabilitate and produce affordable housing for low- and moderate-income families.

 ·                     What is a Redevelopment Project Area?

 A project area is the area within which actual redevelopment will take place.  The project area must first go to public hearing (giving citizens who will be included in the project area a chance to express their views) after which the redevelopment agency acts on the adoption of the project area and becomes primarily responsible for future projects.

 ·                     Why do we have Redevelopment Projects?

The basic reason for establishing redevelopment projects is to eliminate blight and improve an area by attracting investment for new open space, commercial, industrial, and residential uses.  Blighting conditions tend to cost local government tax revenues.  As a consequence, Redevelopment Law contains a mechanism for receiving a greater percentage of property taxes collected within a specific area to compensate for historical shortfalls.  Redevelopment is a way of keeping taxes assessed in Inglewood spent in Inglewood.  The Agency receives a percentage of the increase in property tax revenue generated by increased property values within the area. These revenues fund activities in the redevelopment area.

 ·                     What is Blight?

Blight is deterioration of an area caused by physical, economic and social forces.

·                     What is California Redevelopment Law?

What is the California Community Redevelopment Law? Redevelopment law of the State contained in California Health and Safety Code, Division 24, Part 1 (Section 33000 et seq.), which defines blight and sets forth the procedures for developing and implementing the redevelopment process.

 ·                     Does Redevelopment really eliminate “blight”?

Numerous examples can be offered to demonstrate that a redevelopment area DOES eliminate blight.  Locally, the Osage Senior Villas, the Village at Century, and the Marvin Engineering Facility (including the Inglewood Civic Center) have all benefited from being within a redevelopment area. 

  ·                     What is a Redevelopment Plan?

A redevelopment plan represents a process and a basic framework within which specific projects will be undertaken, but does not approve any specific projects.  The plan provides the Agency with powers to take certain actions such as to buy and sell land within the area covered by the plan (project area), improving dilapidated facilities, and to use tax increment financing to achieve the goals of the redevelopment plan.

 ·                     Does a Redevelopment Plan impose land use elements?

No, because any and all development within the Redevelopment Project Area must, at all time conform to the City’s General Plan. State law requires the Redevelopment Plan to conform to the City’s General Plan at the time of adoption of the Redevelopment Plan and from time to time thereafter. That is, at any particular time, the land uses allowed by the Redevelopment Plan will be the same land uses that are allowed by the City’s General Plan that is in effect at that time.

 ·                     How do Redevelopment Agencies secure funds?

 The state law makes available to redevelopment agencies a method of obtaining funds called “tax increment financing.”  On the date the city council approves a redevelopment plan, the property within boundaries of the plan has a certain total property tax value.  If this total assessed valuation increases, most of the taxes that are derived from the increase go to the redevelopment agency.  These funds are called “tax increments.”  Usually, the flow of tax increment revenues to the agency will not be sufficient in itself to finance the full scope of redevelopment activities and development projects.  Therefore, agencies issue bonds.  These bonds are not a debt of the city or county and are repaid solely from tax increment revenue.  Tax increments can be used only in the same project which generates them, except for residential projects which benefit low-and moderate-income households or if the redevelopment areas are merged for financing purposes. 

 ·                     Can redevelopment revenues be used outside of a Redevelopment area?

Yes, but the use is limited to affordable housing and publicly owned improvements and must demonstrate a benefit to the redevelopment area.  Streets, sewers and storm drains are examples of possible redevelopment expenditures outside of a redevelopment area.

 ·                     Will property taxes be raised?

No, because a Redevelopment Agency DOES NOT have the authority to levy or increase property taxes.  It is important to note that the increased tax revenue from the sale, development, or rehabilitation of property reflects a rise in property value and not an increase in tax rate.  Assessed values and tax rates in redevelopment areas continue to be restricted by Proposition 13 limitations. 

 ·                     What is a redevelopment's role in providing affordable housing?

Redevelopment plays a critical role in providing housing affordable for working families, low income seniors, and disabled individuals. Redevelopment agencies are the leading funder of affordable housing in California. Agencies are required to deposit 20 percent of the property tax revenues generated from their activities into a special fund called a “Low- and Moderate-Income Housing Fund.” These funds can only be used for the purpose of increasing, improving, and preserving the community’s supply of affordable housing for very low-, low-moderate-income households.  

 ·                     What are Low and Moderate Incomes?

Income levels of household to which some federal and state programs, particularly housing, are directed. Very low-income units are reserved for households with incomes of no more than 50 percent of the Los Angeles area median income; for low-income units, the ceiling is 80 percent of that median; and for moderate-income units the ceiling is 120 percent of the median. For 2008, the median income ranges from $41,900 for a single member household to $78,900 for a family of eight.

·                     What is an Environmental Impact Report (EIR)?

It’s a study and report prepared in compliance with the California Environmental Quality Act. The EIR evaluates the effects of a proposed project on its surroundings, i.e. noise, traffic, sewage, and air quality, and identifies measures to mitigate theses impacts.

·                     What is Assessed Value?

The amount used by the County Tax Assessor to value real property for tax purposes. Assessed value is generally the market value of property established at the time the property is sold. Proposition 13 limits annual increases in this value to a maximum of 2 percent. Assessed value multiplied by the tax rate determines property tax.

·                     What is Fair Re-Use Value?

The value of a piece of property being sold by a redevelopment agency, reflecting additional conditions and limitations beyond those permitted by land use and zoning codes. These conditions result in a lower value because the “highest and best use” cannot be achieved under the limitations imposed.

·                     What is Land Write-Down?

A method of encouraging specifically defined and controlled new development in a redevelopment area by offering land at lower than “market value.” The lowering of land prices by a redevelopment agency occurs when the agency assumes part of the acquisition, demolition, and improvement costs because it imposes more stringent development requirements on the land. The difference between the market value and the fair re-use value for the uses and restrictions proposed by the redevelopment agency is commonly known as land write-down.

·                     What is a Disposition and Development Agreement (DDA)?

Disposition and Development Agreement (DDA) is a contract between a developer and the redevelopment agency that involves the sale of agency-owned land. Example: DDA with the Haagen Company to construct The Village at Century Shopping Center on Century Boulevard.

·                     What is an Owner Participation Agreement (OPA)?

A contract between a property owner/developer and the redevelopment agency to allow for development of property owned in whole or in part by an entity other than the agency, generally the owner/developer.

·                     What is Replacement Housing?

Housing constructed or rehabilitated by the agency to replace housing (on a unit-by-unit basis) that is demolished as a result of redevelopment activities.

·                     How does redevelopment encourage private sector investment?

Restoring blighted areas is often economically infeasible for the private sector to initiate on its own. The initial community improvements made by redevelopment agencies, coupled with their commitment of funds and low-cost financing, reduce the cost and risk factors associated with these projects. In essence, redevelopment agencies make these projects more attractive and economically feasible for the private sector to undertake.

Specifically, redevelopment agencies encourage private investment by: 

  • Assembly/acquisition of project sites and making those sites ready for private development;
  • Building or rehabilitating area infrastructure such as streets, sewers and water lines in order to make revitalization projects attractive and feasible;
  • Clearing an area of existing blight or environmental hazards that make projects too costly or unattractive to the private sector;
  • Making quality of life improvements by building libraries, parks and community centers; and/or
  • Improving public safety and reducing crime by building police and fire stations; and.
  • Building affordable housing, helping low- and moderate-income individuals become new homeowners, or funding rehabilitation of existing housing for working families

 ·                     What is a Request for Proposal (RFP)?

 A public solicitation to developers and /or property owners to redevelop a parcel or group of parcels in accordance with specific guidelines set forth by CRA. The guidelines may include use, or mix of uses, density, building height and setback requirements, parking and open space standards, or other conditions. These standards are often set forth in a design for development. RFP's are most often used to attract proposals for agency-owned parcels.