AB 1543 (Bloom), a measure that would have diverted property tax increment away from special districts, cities, counties, and schools, has failed to advance. This “two-year bill”, introduced in 2021, needed to clear two legislative policy hearings this week to stay ahead of legislative deadlines. Following opposition from CSDA and coalition partners, AB 1543 author Assemblymember Richard Bloom withdrew his legislation from consideration. CSDA thanks the Assemblymember for this action.
AB 1543 contemplated taking a percentage of future property tax increment from redevelopment successor agencies and diverting it to housing successor agencies instead of returning it to local taxing entities or paying down the enforceable obligations of former redevelopment agencies (RDAs). This would have impeded the progress made to date in the full dissolution of RDAs, which continue to divert hundreds of millions of dollars to pay down past debts that would otherwise go to local agencies, including special districts, to provide needed infrastructure and services to their constituents. While amendments were discussed to limit this statewide measure to one local successor agency, this type of legislation is precedential and could encourage further encroachment on sorely needed property tax revenues for local agencies.
First established in 1945, RDAs were dissolved in 2011 after their share of the statewide property tax had grown from two percent in 1977 to 12 percent—more than the amount received by all special districts. Once established, RDAs would unilaterally freeze the property tax receipts of other local governments and schools in their jurisdiction and divert the property tax growth, or “increment”, for the next 45 years. RDAs would borrow against this future growth to pay for redevelopment projects.
Since the dissolution of RDAs, CSDA has worked in partnership with other local agencies and stakeholders to provide local governments with new economic development tools that do not divert revenue from other local service providers without their consent. Examples of these tools include enhanced infrastructure finance districts (EIFDs) and community revitalization and investment authorities (CRIAs). However, these newer tools do not provide access to the school share of the local property tax, which makes up approximately half of local property taxes. This has motivated some policymakers to revisit old tools like RDA in search of renewed funding streams.
CSDA will continue to work proactively and in good faith with the State Legislature and stakeholders to develop and implement policies that meet the challenges facing our State and local communities without requiring the diversion of local revenue needed to fund essential services and infrastructure for those same communities.
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