The State enacted a bill sponsored by the City of Long Beach that gives some power back to local governments on how former redevelopment properties can be sold.
On Oct. 8, Gov. Jerry Brown signed SB 470, authored by Sen. Roderick Wright (D-Inglewood) and Assemblymember Bonnie Lowenthal (D-Long Beach), that grants cities and counties the authority to place certain conditions on former redevelopment parcels and establish what’s called “fair-reuse” value.
This essentially allows local governments to sell the properties at a price that is less than fair-market value in order for cities and counties to require conditions set forth by former redevelopment agencies (RDAs) while allowing buyers to reap the same returns on investments if properties were sold at “best and highest use,” said Mike Conway, Long Beach’s business and property development director, in a phone interview.
Redevelopment once used property-tax increment money mainly to fix up blighted areas and spur economic development. But a decision by the State Legislature in 2011 to abolish redevelopment to fill a budget gap ordered RDAs to wind down operations, stripping local governments of powers that redevelopment once provided.
Long Beach Deputy City Manager Tom Modica said current state law makes the redevelopment property dissolution process “cumbersome” and the new bill gives cities more “flexibility” to place conditions on the properties at the benefit of the community.
“For example, you can say we want to sell this property for retail use, but we don’t want to sell it for a liquor store,” he said. “The proposals that come in can only [fit] the conditions that you have placed on the property.”
An analysis of the bill by Sen. Wright’s office, states that giving cities and counties the power to sell land based at fair-reuse value enables local governments to “negotiate for the use that best fits the community,” unlike fair-market value, which bases property value on market conditions without any pressures put on a developer or the seller.
The analysis adds that reinstating this power to local governments would have “no fiscal impact on the State, school district or other taxing entities,” since it would only be used for land owned by cities or counties without using any property-tax increment.
Conway said SB 470 is intended to be an “economic-development tool” that will help cities after the loss of redevelopment by providing a mechanism to “underwrite development and increase jobs.” He said the bill allows the City, acting as the Successor Agency to the Long Beach RDA, to negotiate deals with developers for property uses that were agreed upon by the community through former project-area committees (PACs).
“Fair-reuse value is where we would go out and solicit a particular use of a property, and that use would then drive the market value of the land,” Conway said. “What we intend to do is pursue the goals and objectives of each project area as to the types of use the community has supported for those properties.”
Conway said the bill only applies to 161 of the 259 properties formerly owned by Long Beach RDA, outlined in the City’s long-range property-management plan that awaits State approval after the Oversight Board of the Successor Agency signed off on it Oct. 7. This plan provides a framework for how the former RDA properties will be disposed or utilized for future governmental use, development, sale or the fulfillment of an enforceable obligation.
Upon the bill’s passage, the City of Long Beach issued a press release in which Long Beach Mayor Bob Foster called the measure “a huge win for the City of Long Beach and the State of California.”
Earlier versions of the measure planned to restore the Polanco Redevelopment Act for local government brownfield remediation, but the City opted to drop this provision, as the issue was addressed in AB 440, which Gov. Brown also approved, according to the press release.
SB 470 was also supported by several cities in addition to the Gateway Council of Governments, the League of California Cities, the County of Los Angeles, the California Contract Cities, the Port of Long Beach and the Western Center on Law and Poverty.
Though Signal Hill is in a unique situation in that most of its former redevelopment properties (totaling 24 acres) are environmentally distressed because of oil wells causing many of the properties to be valued at historically low prices or even negative value, Signal Hill City Manager Ken Farfsing said any effort to reinstate powers to local governments in the redevelopment dissolution process is positive.
“I think the bill is very reasonable,” he said. “It will restore some of the tools we had to do economic development. I think that’s good to help cities and put them all on the same level. Any step to repair the damage of the dissolution of redevelopment can really help the cities.”
Some critics of the bill, however, say the measure doesn’t provide enough oversight to ensure the public is involved in the redevelopment-dissolution process.
Dan Pressburg, a longtime north Long Beach community activist, expressed concerns about the bill in an opinion piece published on LBReport.com, stating that SB 470 “fails to provide the public with serious checks and balances over how City Hall will spend public money from selling to developers– at below-market prices– properties acquired with public funds that were supposed to eliminate blight in our neighborhoods.”
He added, “Instead of returning to the areas the funds were supposed to help, the money can be spent virtually anywhere in Long Beach for virtually anything that a Council majority accepts.”
Conway, however, said he disagrees with this assertion. “I don’t think the bill talks at all about proceeds,” he said. “I don’t see how someone can read the bill and interpret that as it somehow moves money from one project to another.”
Conway added that each property acquisition requires a public hearing at City Hall with two-weeks notice in a local periodical, adding that the process will be “extremely transparent and open.”