California lawmakers have approved a bill that would further restrict the funding of public facilities outside a redevelopment project area.

If signed by the governor, Senate Bill 93 (“SB 93”) would amend some sections of the Community Redevelopment Law (Health and Safety Code § 33000 et seq.) (“CRL”) and go into effect on January 1, 2010.

Prior to SB 93, CRL Section 33445 provided that a redevelopment agency was authorized to pay for all or part of the value of land for and the cost of installation and construction of any publicly owned building or other improvement within or without the project area, if certain findings were made by the legislative body. SB 93 amends that section to provide that an agency may fund land acquisition or public improvements that are within or contiguous to the project area, if the legislative body finds that:

• The acquisition or construction of the public improvements are of benefit to the project area by helping to eliminate blight or provide housing to low- and moderate-income persons.
• No other reasonable means of financing is available to the community.
• The acquisition or improvement is consistent with the implementation plan.

Redevelopment agencies are still prohibited from paying for normal maintenance or operations of facilities that are publicly owned.

SB 93 will also add Section 33445.1 regarding agency funding of public improvements outside of the project area (non-contiguous areas). For those types of acquisitions or improvements, the agency may fund the activity if the legislative body finds, based upon substantial evidence, that:

• The acquisition or construction of the public improvements are of primary benefit to the project area.
• The acquisition or construction of the public improvements benefit the project by eliminating blight within the project area, or will directly assist in the provision of housing for low- or moderate-income persons.
• No other reasonable means of financing the acquisition or construction is available to the community.
• The payment of funds for acquisition or the cost of the improvements is consistent with the implementation plan.
• The acquisition of land and installation of each improvement is provided for in the redevelopment plan.

These additional findings required by 33445.1 do not apply to land acquisitions or construction projects that are a contractual obligation of the agency as of Dec. 31, 2009, specifically described in the implementation plan as of July 1, 2009 or specifically provided for in the redevelopment plan as of Dec. 31, 2009.

The bill also prohibits redevelopment agencies from authorizing the settlement of specified judicial actions that contest the validity of the adoption or amendment of a redevelopment plan, if the settlement requires the expenditure of funds outside the project area, unless the agency first holds a duly noticed public hearing on the proposed settlement.

For more details on SB 93, or questions regarding this and other redevelopment issues, please contact Elizabeth Hull or Delmar Williams, members of the Redevelopment Practice Group, or your BB&K attorney.