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Frequently Asked Questions About Redevelopment

Pursuant to AB1x26, which the California legislature enacted and the Governor signed, Redevelopment Agencies were dissolved as of February 1, 2012.

Q.

What is Redevelopment?

Redevelopment is a process created by state law to assist city and county government in eliminating blight from a designated area, and to achieve desired development, reconstruction and rehabilitation including but not limited to: residential, commercial, industrial, and retail.
   
Q.

What is a Redevelopment Agency?

The city council members are generally 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.

   
Q.

What is a Redevelopment Plan?

A redevelopment plan represents a process and a basic framework within which specific projects will be undertaken. 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.

   
Q.

What is a 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.

   
Q.

What does Redevelopment do for the community?

Redevelopment helps communities revitalize downtowns, neighborhoods, or industrial areas in the following ways:

  • Attracting new jobs and businesses;
  • Creating affordable housing;
  • Stimulating private investment;
  • Reducing crime;
  • Building and improving roads, utilities, and other public facilities; and
  • Preserving historic buildings.
   
Q.

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 the 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.

   
Q.

Will property taxes be raised?

It is important to note that higher taxes from the sale, development or rehabilitation of property reflects a rise in property value and not an increase in tax rate. Until a property is improved or sold, assessed values and tax rates in redevelopment areas are restricted by Proposition 13 limitations.

   
Q.

How will this affect the city/county and other taxing agencies in regard to tax revenue loss?

Other taxing agencies will lose part of the new property taxes generated by redevelopment, but will continue receiving the base revenues. In most blighted areas, property values would not increase without redevelopment activities. Other taxing agencies will receive non-property tax revenues generated outside the project area as a direct result of redevelopment activities, i.e; sales taxes, hotel room taxes, and property taxes.

   
Q.

Why does the Agency have the power of eminent domain (condemnation of property)?

Private developers seldom can assemble many separate parcels of land into a site large enough for their needs. One small “hold out” can refuse to sell at any price and block the entire development. The agency can, if necessary, use its power of eminent domain to acquire the hold-out parcel at fair market value and permit the development to proceed in order to reduce or eliminate a blighting condition.

   
Q.

What are the City's Guiding Principles for Property Acquisition?

These guidelines are designed to create a fair and equitable balance between three key priority interests which simultaneously face the City:

  1. The broader community’s need and desire for a vibrant and viable City economy and healthy quality of life;
  2. The City’s legal and financial obligations, needs, and requirements as it carries out its development programs - in other words, the City's obligation to to be prudent and wise in its use of public funds; and
  3. Property owners’ personal values, the unique characteristics of each property, and the treasured historical links that these properties represent.

Click here to go to Redwood City ’s Guiding Principles for Property Acquisition.

   
Q.

What is relocation?

Relocation is the displacement of a business or family for the purpose of clearing land and preparing it for its designated use. When a person or business meets the legal qualifications, the redevelopment agency pays for assistance in finding a new location, payments to help cover moving costs, and payments for certain other costs as provided by law.

   
Q.

If a citizen should decide to sell property to the Agency, who determines the selling price?

The agency would hire an independent appraiser to establish the fair market value of the property, he may hire his own appraiser to re-evaluate the property after which both appraisals will be compared and a selling price negotiated. Fair market value is value that the property would have if it were placed in today’s market place and sold.

   
Q.

If my community adopts a redevelopment program that includes my home or business, does that mean my home or business is blighted?

No. Blight is a legal term used solely for the purposes of determining whether your community can qualify for redevelopment. The Redevelopment Agency must make a finding that the area suffers from adverse economic and physical conditions, defined in the law as blight. Some areas that qualify for redevelopment often have well-maintained homes or businesses interspersed among deteriorating structures.

   
Q.

If I live in a redevelopment project area, does that mean I will lose my home and have to leave?

No. Simply living in a redevelopment project area does not mean that you will be forced to move. Typically, redevelopment improves an area so that you and your neighbors can enjoy your neighborhood more. The Redevelopment Agency rarely acquires homes through eminent domain. However, if eminent domain is necessary, the property is always paid for at a fair price, which is typically the current appraised value. Rest assured that if your home was to be redeveloped, the RDA has to go through a rigorous set of procedures to protect your interests. You would also likely be eligible for relocation assistance.

   
Q.

My neighborhood is not in decline, so how does Redevelopment affect me?

The California Redevelopment Law was passed in recognition of the fact that blight tends to be contagious. Even if your neighborhood is prosperous, deteriorated areas in the community can still physically and economically impact it. Below is a list of negative impacts that blighted neighborhoods have on healthy neighborhoods:

  • Deteriorating areas cannot pay their way. People living in deteriorated and overcrowded conditions are often the victims of unsafe living conditions and require more public services than the taxes generated in the area can fund. When that happens, funding is diverted from other public services. In this way, blighted areas can be a drain on the whole community.
  • There are no natural barriers to deterioration. If it isn’t controlled, it tends to expand.
  • Deterioration results in an economic drain on the community. As offices, industries, and shops leave, tax revenues are lost. The relocation of one business outside of the city can have a ripple effect, and other may soon follow.
  • A deteriorating area results in a negative image that affects development elsewhere in the community.

   
Q.

Is Redevelopment common?

Redevelopment is a process specifically authorized by state law to assist local governments in revitalizing their communities. Over 400 California cities and counties have adopted local redevelopment plans.

   

 

 

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