California Landmark Cases on the Community Redevelopment Law

The Community Redevelopment Law (CRL) was intended to help local governments revitalize blighted communities. (Health & Saf. Code, 33000 et seq.; Lancaster Redevelopment Agency v. Dibley (1993) 20 Cal.App.4th 1656, 1658.) Local redevelopment agencies have no power to tax, and instead are funded by "tax increment revenue." (Craig v. City of Poway (1994) 28 Cal.App.4th 319, 325.) Tax revenues available for local agencies from land within a redevelopment area are frozen as of the date a redevelopment plan is adopted, and any tax revenues generated by an increase in property values after adoption of the plan--the tax increment--are paid to the local redevelopment agency for use in financing the redevelopment project. ( 33670; Lancaster, at p. 1658, fn. 2.) One of the goals of the CRL is to increase the supply of low- and moderate-income housing. (Lancaster, supra, 20 Cal.App.4th at p. 1658.) However, local redevelopment agencies have had broad discretion to spend redevelopment funds in a manner best suited to the community, and "have historically devoted their resources to the commercial sector, rather than low-income housing development." (Craig, supra, 28 Cal.App.4th at p. 330.) Consequently, the CRL was amended in 1976 and now requires that at least 20 percent of the tax increment revenue be used by the agency "for the purposes of increasing, improving, and preserving the community's supply of low- and moderate-income housing available at affordable housing cost ... ." ( 33334.2, subd. (a); see Craig, supra, 28 Cal.App.4th at p. 334.) This 20 percent of the tax increment revenue is required to be set aside in a low- and moderate-income (LMI) housing fund (LMI Housing Fund). ( 33334.3.) Since enactment of the 20 percent set-aside for LMI housing, "the Legislature has repeatedly enacted amendments narrowing the agencies' discretion to ensure that the agencies place sufficient funds in their LMI Housing Fund and spend that money in an appropriate manner." (Craig, supra, 28 Cal.App.4th at p. 330.) Craig observed that the statutory provision at issue there--section 33334.2, subdivision (e)(2), governing onsite or offsite improvements--had been twice amended since 1979 to reflect "the Legislature's continuing concern that redevelopment agencies were misusing the provision on offsite improvements as a broad loophole to fund community-wide infrastructure and commercial development without any connection to affordable housing." (Craig, supra, 28 Cal.App.4th at pp. 335-336.) In Evans v. City of San Jose (2005) 128 Cal.App.4th 1123, the Court stated: "The California Redevelopment Act was enacted in 1945 to address problems of urban blight. It provides that cities and counties can establish redevelopment agencies with the authority to acquire and sell real property, to impose land use and development controls, and to finance their operations by borrowing from federal or state governments. ... The provisions of the California Redevelopment Act are contained in Health and Safety Code, section 33000 et seq., known as the California Community Redevelopment Law (CRL)." (Id. at p. 1131.) Redevelopment agency is unique among public entities in that it works in conjunction with the private sector--private lenders, developers, owners and tenants--in order to achieve the goal of eliminating blight." (Evans, supra, 128 Cal.App.4th at p. 1131.) Section 33031 of the Health and Safety Code defines the physical and economic conditions that constitute blight. It states: "(a) This subdivision describes physical conditions that cause blight: (1) Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions may be caused by serious building code violations, serious dilapidation and deterioration caused by long-term neglect, construction that is vulnerable to serious damage from seismic or geologic hazards, and faulty or inadequate water or sewer utilities. (2) Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots. These conditions may be caused by buildings of substandard, defective, or obsolete design or construction given the present general plan, zoning, or other development standards. (3) Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area. (4) The existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions. (b) This subdivision describes economic conditions that cause blight: (1) Depreciated or stagnant property values. (2) Impaired property values, due in significant part, to hazardous wastes on property where the agency may be eligible to use its authority as specified in Article 12.5 (commencing with Section 33459). (3) Abnormally high business vacancies, abnormally low lease rates, or an abnormally high number of abandoned buildings. (4) A serious lack of necessary commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions. (5) Serious residential overcrowding that has resulted in significant public health or safety problems. As used in this paragraph, 'overcrowding' means exceeding the standard referenced in Article 5 (commencing with Section 32) of Chapter 1 of Title 25 of the California Code of Regulations. (6) An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems. (7) A high crime rate that constitutes a serious threat to the public safety and welfare." Health and Safety Code section 33030 provides in part: "(b) A blighted area is one that contains both of the following: (1) An area that is predominantly urbanized, as that term is defined in Section 33320.1, and is an area in which the combination of conditions set forth in Section 33031 is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the community that cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment. (2) An area that is characterized by one or more conditions set forth in any paragraph of subdivision (a) of Section 33031 and one or more conditions set forth in any paragraph of subdivision (b) of Section 33031. (c) A blighted area that contains the conditions described in subdivision (b) may also be characterized by the existence of inadequate public improvements or inadequate water or sewer utilities." When a redevelopment agency adopts and implements a redevelopment plan under the CRL, it is carrying out state, not local, policy. "The principle is well established that the local governing body is carrying out state policy when it acts in proceedings under the Community Redevelopment Law. As the court explained in Gibbs v. City of Napa (1976) 59 Cal.App.3d 148, 153: 'The policy question, whether a city's redevelopment agency shall function, is of a legislative nature. But when the need for the agency to function is determined, "all considerations of wisdom, policy and desirability connected with the functioning of a redevelopment plan become settled ... ." The agency's acts thereafter fall "within the executive or administrative functions." And case authority makes it "clear that once the legislative policy is established ... the administrative acts following therefrom are not subject to referendum." (Andrews v. City of San Bernardino (1959) 175 Cal.App.2d 459, 462-463 346 P.2d 457 ... .)' " (Redevelopment Agency v. City of Berkeley (1978) 80 Cal.App.3d 158, 168 143 Cal. Rptr. 633 (City of Berkeley).)