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Home My WebLink AboutSS2 - RDA Formation & Authority and Santa Ana Heights Project Funding#s59 - 10-/1 -05- Redevelopment & Santa Ana Heights Newport Beach City Council Tuesday, October 11, 2005 Study Session What We'll Cover Redevelopment 101 • How redevelopment works • Important Terms • Funding • Forming an Agency Adopting the Project Area Limits of a Redevelopment Plan Public Improvements Assistance to Development Projects Affordable Housing The Santa Ana Heights Project Area • Tax Increment Generation in SAH • SAH Projects Pending Issues before City Council How to Find out More Important Terms & Acronyms • RDA = Redevelopment Agency. A public entity (usually a city, but sometimes a county) that administers a redevelopment effort. • Project Area = the geographic area declared blighted and planned for redevelopment. • Redevelopment Plan = A document adopted by the RDA that identifies the improvements to be funded inside a Project Area. • PAC = Project Area Committee or Project Advisory Committee. The group of stakeholders (may include residents and business owners from a Project Area that helps advise the RDA's governing board about the Redevelopment Plan, budget, etc. Tax Increment = The difference between the property taxes generated before redevelopment and the property taxes generated during /after redevelopment. Low- and Moderate - Income Housing Fund = a mandatory fund that receives 20% of the Tax Increment and that must be spent on new or rehabilitated housing for persons of low- and moderate - income. 2 Redevelopment 101 6 Community Redevelopment Law in California is meant to provide resources to eliminate "blight" and to provide for housing for persons of low- or moderate - income. u Blight was loosely defined at one time — then, in the early 1990s, the Legislature (AB 1290, Isenberg) tightened up the definition (among other things). e Redevelopment is controversial because: • It can include eminent domain; • It can involve subsidies to the private sector (big box retail, etc) • It can cause the State to pay a larger share of local schools' costs. • Sometimes agencies are reluctant to spend their RDA's low -and moderate - income housing funds. Important Terms & Acronyms • RDA = Redevelopment Agency. A public entity (usually a city, but sometimes a county) that administers a redevelopment effort. • Project Area = the geographic area declared blighted and planned for redevelopment. • Redevelopment Plan = A document adopted by the RDA that identifies the improvements to be funded inside a Project Area. • PAC = Project Area Committee or Project Advisory Committee. The group of stakeholders (may include residents and business owners from a Project Area that helps advise the RDA's governing board about the Redevelopment Plan, budget, etc. Tax Increment = The difference between the property taxes generated before redevelopment and the property taxes generated during /after redevelopment. Low- and Moderate - Income Housing Fund = a mandatory fund that receives 20% of the Tax Increment and that must be spent on new or rehabilitated housing for persons of low- and moderate - income. 2 Funding for Redevelopment How is Property Tax Increment Revenue generated? ■ Set a "base year" — the fiscal year when an RDA project area is established. • Estimate the amount of property tax that will be generated during and after redevelopment. • Issue bonds based on that anticipated revenue stream. • Construct improvements using bond proceeds. • Repay bonds annually using growth in property taxes. Establishing a Redevelopment Agency City Council adopts ordinance activating the agency Agency governing body can be the City Council or a different board Agency is a separate public agency, not a department of the City K Adopting the Redevelopment Project City Council adopts ordinance adopting the existing redevelopment plan covering annexed territory City and County enter agreement: Allocate tax increment to each in proportion to costs of carrying out the redevelopment project First priority of tax increment is for repayment of existing debt Both the City and the County can carry out the redevelopment plan Project Area Committee: Required for three years after plan adoption; optional afterwards Plan Limits Effectiveness of Plan: 40 years Receipt of Tax Increment: 50 years Eminent Domain: 12 years (renewable) Total Tax Increment Public Improvements Agency may pay for public improvements, including land and construction Public improvements may be inside or outside project areas Must be provided for in redevelopment plan and implementation plan Must be of benefit to the redevelopment project Must be no other reasonable means of financing the improvements Must alleviate blight or provide affordable housing Prohibitions: City halls, paying for normal maintenance and operations Assistance to Development Projects Agency may purchase land — may use eminent domain if plan allows Agency may sell land for development, to developer chosen by agency, at or below fair market value Agency may make commercial rehabilitation loans, provide assistance for industrial or manufacturing uses Restrictions on assistance to "big box" retailers and auto dealers Owners must be given an opportunity to participate in the project 5 Affordable Housing 20% of tax increment must be deposited into Low & Moderate Income Housing Fund Funds can be used for new construction, rehabilitation, mortgage assistance, other programs Funds may be used outside of project area, upon finding of benefit to project Agency must diligently spend funds — Four years accumulation is "excess surplus" Inclusionary Housing: 15% of housing developed in the project area must be affordable Replacement Housing: Agencies must replace low /mod housing destroyed by Agency activities Ss,aoa,wo u,aoo,000 o�o.asme rousma vine • m. m .rn:m Inei of �o »xaoa� • 6vice rear emoun, —. C = sa.0MAD Sz000,000 S1.aao.m .m vwe v..,e v..n e..e ...v osw e.m �FV r..e ss,evv w.ivx scone su.am s +ace+e s�raaz sxz+ax masm l+ea;m. sazeovelwn,mv iz,ay.e+weze,mi •m.�.�e..nnmamw+ae, sw,ova sww tn.ezv txe+.na seea.eee um see nzee.iai L °e.,. v..r!norni tmouao na;aw s+o..aa soe.+x+ sme.m snosoe si qem snlem sm me s+v.ma s+z+,ew Tim In Years M More about the Santa Ana Heights Project Area The SAH Project Area (1,096 acres) is OCDAs most prolific Project Area. It includes: • West Santa Ana Heights -Anniversary Tract & YMCA • All of J W A • Marriott Suites, Bayvtew area • Upper Newport Bay Nature Preserve and Muth Center 6 � p 7 Tax Increment Generation -- SAH •••••••Y WiW -5 Prot•0 Aro •M •Mwp•r19r[I� •JW s9M OU�••nYC.rgl 80220 , , 5120 rA A $ 2 T otal $ 7 SAH Projects Pending SAH RDA Projects and Increment Funds Avallable (July 2005) $ 23,644,264 Increment Added (FY 200606), net of Debf, L -M Housing, County Admin Expense $ 1.752.000 Funds Available (July 2006) $ 25,396,264 SAH PAC's Proposed Projects — Old Kline Drive Improvements $ 600,000 -- Santa Ana /Delhi Channel Horse Arenas $ 250,000 — Water Main, Riverside Drive $ 250,000 -- Orchard Drive Park $ 100,000 — UUD #19 & Mesa Drive Trail $ 7,400,000 —Fire Station (land purchase- $2.5M already paid) $ 1,661,000 —Fire Station (building, landscaping (estimate]) $ 5,50,000 — View Park at Mesa -Birch $ 250,000 -- SAH Community Center ($4M land, $13M building) $ 17,500,000 - -Other Misc Projects $ 136,1100 Subtotal of Proposed Projects $ 33,667,000 Surplus (Deficit) ' ($6,270,738) Increment Added (FY 200 &07 to 2016 -17)" $ 20,622,009 • rcanpm)ac1 axP.aaes occuaedra asae ^assumes rxaYs Mcnn »pryer yew MM 26%pmeM SAH Projects — Arena, View Park 4,10440 fles b ®F Issues for Council Should the City take steps to: • Form our own Agency; then • Transfer the SAH Project Area to the citys agency from OCDA What role should PAC have? . PAC is advisory only today What concerns might Newport Beach residents have about RDAs and the City's formation of an agency? • Should the Council act to limit the use of Community Redevelopment Law in Newport Beach to SAH? • What role should eminent domain have (OCDA determined not to use eminent domain in SAH Project Area) N For More Information Community Redevelopment Law: Health and Safety Code §33000 et seq. Santa Ana Heights Issues Iff City issues or questions a 949 - 644 -3002 . dkiff @city.newport- beach.ca.us N