“JEDI,” The Return of Redevelopment Agencies

“JEDI,” The Return of Redevelopment Agencies
By Russ Watson
January 27, 2014

On December 24, 2013, a proposed voter initiative was filed with the California Attorney General’s office.  The submittal was sent from the law firm of Rutan & Tucker, LLP, Costa Mesa, California requesting that a title and summary of the proposed measure be prepared.  The measure, if approved by voters in November, will essentially reactivate redevelopment agencies in California.  The proposed initiative is titled as the California Jobs and Education Development Initiative (JEDI) Act.  This could be very good news for cities and their citizens who previously used RDA funding from property taxes to stimulate local economic development and to help meet workforce available housing in California.

The initiative, as drafted, adds provisions to, amends and repeals provisions of the Health and Safety Code (HSC) that previously authorized redevelopment agency (RDA) activities, and subsequently terminated redevelopment activities in California.  The Jobs and Education Development Initiative (JEDI) Act will allow cities and counties to again use locally generated property tax revenue to create jobs, buildings affordable housing, rebuild neighborhoods and fund public schools.  In summary the proposed initiative, if enacted, would allow the following:

  • Cities and counties to reactivate previously dissolved redevelopment agencies to be referred to as Job and Education Development Initiatives (JEDI) agencies;
  • Cities and counties to use tax increment funding as a tool for economic development, education funding, and job creation;
  • JEDI agencies will be reactivated with a 40-year extension;
  • JEDI agencies will be allowed to establish new redevelopment project area;
  • JEDI agencies will use existing base year values for existing project areas to calculate tax increments;
  • Cities and counties that had not previously established a RDA may activate their JEDI agency if their legislative body elects, by adoption of an ordinance;
  • Limits on the number of dollars of taxes allocated to a redevelopment agency are eliminated;

The Initiative purpose further states:

  • JEDI agencies will create a locally generated funding source for affordable and workforce housing;
  • JEDI agencies can use economic development to enhance funding for public schools;
  • Definition of blight modified to include high unemployment rates
  • Time frames to establish loans, advances and indebtedness are eliminated;

Some basic HSC differences between JEDI and former RDA provisions include:

  • Low and Moderate Income Housing Fund (LMIHF) obligation are reduced from the previous 20 percent level required LMIHF set-aside by the former RDAs to 10 percent required LMIHF set-aside for JEDI agencies.  (It should be noted that proposed Act continues to “find and declare the provisions of housing is itself a fundamental purpose of the Community Redevelopment Law and that a generally inadequate statewide supply of decent, safe and sanitary housing affordable to persons and families of low or moderated income ….”).
  • Payments will be required to be made to “taxing entities” at similar amounts as specified in the previous RDA Law (i.e. 25 percent calculated after LMIHF allocation) will continue under the JEDI proposal.  The exception to these payments is that the JEDI proposal requires tax payments be made to affected local education agencies in an amount equal to 30 percent of the share of tax increments received by the redevelopment agency calculated from the gross amount, prior to the LMIHF deduction.  Payments made to the taxing entities continue throughout the life of the project-extension term (40 years), but are reduced by specific percentages (consistent with the previous RDA Law).  Payments made to affected local education agencies remain at 30 percent of the share of tax increment revenue throughout the term of the project (40 years).
  • Expanded authority to construct buildings.  HSC previously gave authority to RDA’s to construct buildings, facilities, structures or other improvements that were limited to “publicly owned” improvements.  JEDI proposal removes the reference to “publicly owned”, thus it appears to allow more funding or financing options to the JEDI agency in assisting in a community’s economic development ventures.

The proposed initiative also addresses various legal or procedural matters to effectuate a reactivation of the authorities provided to cities and counties to implement redevelopment activities in California, which was the primary purpose of the former California Redevelopment Law as specified in the Health and Safety Code.  The JEDI Act would modify those sections of the HSC (Part 1.8) previously enacted to terminate redevelopment agencies and modifies the sections that were intended to “unwind, dismantle, and dissolve” all former redevelopment agency activities and assets.  The JEDI Act would repeal the provisions of Chapter 5 of the Statutes of 2011 (First Extraordinary Session) and Chapter 26 of the Statutes of 2012 and the ruling in California Redevelopment Association v. Matosantos (2011) 53 Cal.4th 231 to the extent these are inconsistent with the measure.

If approved by the voters, reactivation of tax increment funding, along with the authority to bring about economic initiatives, will enhance the ability of cities and counties to create jobs, buildings affordable housing, rebuild neighborhoods and fund public schools.

In future blogs Vision Economics will attempt to provide further updates regarding the status of this proposed Initiative.  We at Vision Economics offer this endorsement: May the force be with you, and the voters of California, to support and approve this bold “renewed” economic development initiative!

For additional information, or comments, please contact Vision Economics at 805-987-7322 or Russ Watson directly at 916-217-5997.

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