This Week:  Local State Reps Respond to Changing Land Use Environment; Oakland Skyline Growing

Assemblywoman Ma, Senator Hancock, Introduce Bills to Make Establishing Infrastructure Financing Districts Easier

Back in April, we wrote about the potential use of Infrastructure Financing Districts in the city should Redevelopment be eliminated, as proposed by the Governor.  These IFDs provide a similar mechanism to capture and redirect increased tax revenue back to the district and to issue bonds backed by the captured tax revenue.  To see our previous update on IFDs, click here:

As a creature of state law, any tweaks to the IFD law must go through Sacramento.  And, possibly also foreseeing a greater reliance on IFDs in the near future, a couple of our local representatives have introduced bills that would make it easier to establish the districts.

Assemblywoman Fiona Ma, from San Francisco, has introduced AB 485, which would eliminate the requirement that a vote be held by district property owners or residents to establish an IFD or issue bonds when the IFD implements a “transit village plan.”  Transit village plans can be established by cities and counties in order to encourage high density neighborhoods anchored around a rail or light-rail station, a ferry terminal or a bus hub or transfer station.  Ma’s legislation would also require that at least 20% of tax increment in these IFDs be used to fund affordable housing.  AB 485 was approved by the full Assembly two weeks ago.

State Senator Loni Hancock, from Berkeley, has introduced a bill that goes even further.  SB 310 would eliminate the requirement that a vote be held by district property owners or residents to establish an IFD or issue bonds in all situations.  If enacted, IFDs could be created, and bonds could be issued, merely by a majority vote of a County Board of Supervisors or City Council after a public hearing.  SB 310 was approved by the full Senate the same week as AB 485.

Removing the requirement of a local vote to establish an IFD makes a lot of sense, considering the fact that IFDs redirect new tax revenue back within the district, as opposed to going to a city or county’s general fund.  It’s difficult to imagine a situation where owners or residents within a district would not want tax revenue redirected back to their local neighborhood.  As for the issuance of bonds, the argument in favor of a district vote is stronger, considering the fact that the district alone is liable on the bonds.  At the very least, eliminating the district vote requirement would take an unnecessary and time-consuming step out of the process to create an IFD.


Senator Leno Attempts to Counter Anti-Inclusionary Housing Palmer Decision

Many will remember the momentous Palmer decision of 2009, where the California Court of Appeal struck down the application of a local inclusionary housing law to a rental housing project in Los Angeles.  The Court determined that the local law, which required new housing projects to construct a certain amount of below-market rate housing units, conflicted with the state Costa Hawkins Rental Housing Act, which gives rental property owners the right to set rental rates for vacant units.  The decision was seen as a blow to inclusionary housing laws throughout the state, and many expected the state legislature to move in to pave a legal path for these laws.

San Francisco’s own Senator Mark Leno has made such a move this legislative session, by introducing a bill that would expressly supersede the Palmer decision and give cities and counties the right to establish inclusionary housing laws.  SB 184 cleared a Senate committee in early May.

While Leno’s bill may provide relief to cities and counties throughout the state by reaffirming their inclusionary housing laws, San Francisco has already taken steps to comply with the Palmer decision.  Last year, the city adopted amendments to its inclusionary ordinance, allowing most projects to comply by paying an in-lieu fee or providing below market rate ownership units, but significantly limiting the option of providing below market rate rental units.  Expect to see local legislation freeing up the below market rate rental unit option if Leno’s bill passes.

Oakland Skyline Set to Grow

The growth on the ground in Uptown Oakland may soon be matched by growth in the sky.  Early in May, the Oakland Planning Commission gave the thumbs up to redevelopment of the Kaiser Center – located on Harrison Street between 20th and 21st Streets.  The project would add 1.4 million square feet of mostly office development to the site, by demolishing existing street level mall buildings along 20th Street and Webster Street, and constructing a pair of towers – at heights of 573 feet and 469 feet.  For those keeping track, these would immediately become the tallest and second-tallest buildings in Oakland.  The Ordway Building, just across 21st Street from the Kaiser Center, is currently the tallest building in the city at 404 feet, with the Kaiser Center the second tallest at 390 feet.

The project is proposed to be constructed in two phases and will take approximately 8 years to complete.  Future approvals are still necessary for the project to proceed.

The Kaiser Center redevelopment would continue to cement the renaissance of Uptown Oakland, which has been substantially driven by the Fox Theater redevelopment, the construction of numerous residential projects as part of Jerry Brown’s 10K plan, and the explosion of hip, new restaurants formally only found in San Francisco and Berkeley.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben & Junius, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

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