California first authorized cities and counties to create redevelopment agencies in 1945 as a vehicle for addressing blight and economic distress.

One of the main tools of redevelopment is tax increment financing.

Under tax increment financing, the property taxes that existing taxing authorities –cities, counties, schools and special districts – receive from within redevelopment project areas are capped and most of the future tax increases – the tax increment – go to the redevelopment agency.

The tax increments are used by the redevelopment agency to finance infrastructure improvements, site acquisition, real estate development and rehabilitation projects and other activities that support the revitalization of the redevelopment project area.

Since 1979, redevelopment agencies have been required to set aside at least 20 percent of their tax increment funds for low and moderate income housing.  The use of redevelopment agency housing funds has become increasingly restricted and targeted over the years. In addition, agencies that extend projects beyond their original life are now required to place 30 percent of their tax increment in their housing set-aside fund.

Redevelopment funds can generally only be used within redevelopment project areas in the city or unincorporated county in which they are generated. Housing set-aside funds, however, may be used anywhere within the city or unincorporated county in which the redevelopment agency is located.

The redevelopment agency simply needs to make a finding that providing affordable housing outside of the project area supports the project area. This should be a relatively easy finding for all redevelopment agencies to make.

State law places numerous housing requirements on redevelopment agencies. In addition to requiring that funds be set-aside for housing, redevelopment agencies must adopt a housing implementation plan and are required to meet certain housing production goals.

All housing assisted with redevelopment housing set-aside funds or counted towards an agency’s housing production goals must have long-term affordability restrictions. Rental housing must be affordable to, and occupied by, the target income group (very low, low or moderate income) for a period of at least 55 years. Ownership housing must be restricted for at least 45 years.

Bob Gorson is the City Manager of Taft.