AB1445 - Downtown revitalization and economic recovery financing districts.

Assembly Bill No. 1445 CHAPTER 642 An act to amend Sections 62450, 62451, 62452, 62453, 62455, 62456, 62457, 62458, 62459, 62460, 62461, and 62462 of, and to add Section 62451.5 to, the Government Code, relating to local government. [ Approved by Governor October 11, 2025. Filed with Secretary of State October 11, 2025. ] LEGISLATIVE COUNSEL'S DIGEST AB 1445, Haney. Downtown revitalization and economic recovery financing districts. Existing law authorizes the legislative body of a city or a county to establish an enhanced infrastructure financing district to finance public capital facilities or other specified projects of communitywide significance, including the acquisition, construction, or rehabilitation of housing for persons of very low, low, and moderate income. Existing law authorizes the City and County of San Francisco to establish a downtown revitalization and economic recovery financing district for the purpose of financing commercial-to-residential conversion projects with incremental tax revenues generated by commercial-to-residential conversion projects within the district. Existing law requires the City and County of San Francisco to establish a board for the district at the same time that it adopts the resolution of intention to form the district, and requires the district to prepare a downtown revitalization financing plan (financing plan) that includes specified information and requirements, including that the first distribution of incremental tax revenues distributed back to a commercial-to-residential conversion project commence with the fiscal year that begins after the project is issued a certificate of occupancy. Existing law, among other things, requires a district to establish a process for eligible commercial-to-residential conversion projects identified in the financing plan to opt into receiving incremental tax revenue generated by the respective project. Existing law specifies that the commercial-to-residential conversion projects that opt in to receive incremental tax revenue are public works for which prevailing wages are required to be paid, as specified, and requires the commercial-to-residential conversion projects that opt in to receiving incremental tax revenue to comply with labor standards adopted by the Board of Supervisors of the City and County of San Francisco, as provided. This bill would additionally authorize any city, county, or city and county, except the City and County of San Francisco, to establish a downtown revitalization and economic recovery financing district for the purpose of financing specified commercial-to-residential conversion projects with incremental tax revenues generated by commercial-to-residential conversion projects within the district. The bill would require the district to meet the requirements imposed on the City and County of San Francisco when establishing a downtown revitalization and economic recovery financing district described above and would modify the required components of the district’s proposed financing plan, as provided. The bill would make various conforming changes to the above-described provisions in this regard and would also make technical changes. This bill would further specify that, for purposes of the preparation of a financing plan, if the city, county, or city and county does not issue certificates of occupancy, the first distribution of incremental tax revenue to a commercial-to-residential conversion project shall be made with the fiscal year that begins after the project completes a final inspection. The bill would remove the requirement that commercial-to-residential conversion projects that opt in to receive incremental tax revenue comply with labor standards adopted by the Board of Supervisors of the City and County of San Francisco and would instead subject such projects to specified labor standards. Existing law requires a certain portion of any ad valorem property tax revenue annually allocated to the local government that is specified in the adopted financing plan, as described, to be allocated to and, when collected, apportioned to a special fund of the district for all lawful purposes of the district. Existing law also requires those revenues to be allocated and apportioned to the local government when the district ceases to exist pursuant to the financing plan. This bill would remove those provisions. Digest Key Vote: MAJORITY Appropriation: NO Fiscal Committee: YES Local Program: NO Bill Text The people of the State of California do enact as follows: SECTION 1. Section 62450 of the Government Code is amended to read: 62450. For purposes of this part: (a) “Commercial-to-residential conversion project” means a housing development project that converts an existing qualifying commercial building to market rate or affordable housing by either reuse of the existing commercial building or by replacing the commercial building with a new residential building. (b) “Communitywide significance” means benefits associated with the commercial-to-residential conversion project beyond the conversion of commercial space to residential dwelling units. (c) “Designated official” means the appropriate official designated pursuant to Section 62455. (d) “District board” means the governing board of the downtown revitalization and economic recovery financing district. (e) (1) “Downtown revitalization and economic recovery financing district” or “district” means a legally constituted governmental entity separate and distinct from the local government that established it pursuant to this division for the sole purpose of financing commercial-to-residential conversion projects or other projects of communitywide significance that support downtown revitalization and economic recovery as authorized by this division. A downtown revitalization and economic recovery financing district is a local agency for purposes of Chapter 9 (commencing with Section 54950) of Part 1 of Division 2 of Title 5. (2) A downtown revitalization and economic recovery financing district shall be deemed a district within the meaning of Section 1 of Article XIII A of the California Constitution. (f) “Downtown revitalization financing plan” means an adopted financing plan prepared pursuant to Section 62456. (g) “Downtown San Francisco” means an area in the City and County of San Francisco bounded beginning at the intersection of Washington Street and The Embarcadero, running southerly along The Embarcadero and then King Street to 3rd Street, running northwesterly on 3rd Street to Townsend Street, running southwesterly along Townsend Street to 6th Street, running northwesterly along 6th Street to Mission Street, running southwesterly along Mission Street to 10th Street, running southeasterly along 10th Street to Minna Street, running southwesterly along Minna Street to Lafayette Street, running southeasterly along Lafayette Street to Howard Street, running southerly along Howard Street to the junction with the Central Freeway, running westerly along the Central Freeway to Market Street, running northeasterly along Market Street to Franklin Street, running northerly along Franklin Street to Golden Gate Avenue, running easterly along Golden Gate Avenue to Taylor Street, running northerly along Taylor Street to Turk Street, running easterly along Turk Street to Mason Street, running northerly along Mason Street to Ellis Street, running westerly along Ellis Street to Taylor Street, running northerly along Taylor Street to O’Farrell Street, running westerly along O’Farrell Street to Shannon Street, running northerly along Shannon Street to Geary Street, running easterly along Geary Street to Taylor Street, running northerly along Taylor Street to Bush Street, running easterly along Bush Street to Kearny Street, running northerly along Kearny Street to Sacramento Street, running easterly along Sacramento Street to Montgomery Street, running northerly along Montgomery Street to Washington Street, and running easterly along Washington Street to The Embarcadero. (h) “Governing body” means the city council or board of supervisors of a local government. (i) “Local government” means a city, county, or city and county, whether general law or chartered. (j) “Lower income households” has the same meaning as defined in Section 50079.5 of the Health and Safety Code. (k) “Moderate-income households” means households of persons and families of moderate income, as defined in Section 50093 of the Health and Safety Code. (l) “Net available revenue” means periodic distributions to a local government from the Redevelopment Property Tax Trust Fund, created pursuant to Section 34170.5 of the Health and Safety Code, that are available to the local government after all preexisting legal commitments and statutory obligations funded from that revenue are made pursuant to Part 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code. “Net available revenue” shall not include any funds deposited by the county auditor-controller into the Redevelopment Property Tax Trust Fund or funds remaining in the Redevelopment Property Tax Trust Fund prior to distribution. “Net available revenue” shall not include any moneys payable to a school district that maintains kindergarten and grades 1 to 12, inclusive, community college districts, county office of education, or to the Educational Revenue Augmentation Fund, pursuant to paragraph (4) of subdivision (a) of Section 34183 of the Health and Safety Code. (m) “Opted-in taxable property” means the property of a commercial-to-residential conversion project that has opted in to receive incremental tax revenue pursuant to Section 62459. (n) “Qualifying commercial building” means a commercial building identified in the downtown revitalization financing plan pursuant to subdivision (d) of Section 62456. (o) “San Francisco” means the City and County of San Francisco. (p) “Transit priority area” has the same meaning as defined in subdivision (a) of Section 21099 of the Public Resources Code. (q) “Very low income households” has the same meaning as defined in Section 50105 of the Health and Safety Code. SEC. 2. Section 62451 of the Government Code is amended to read: 62451. The Board of Supervisors of the City and County of San Francisco may establish one downtown revitalization and economic recovery financing district pursuant to this division. Proceedings for the establishment of a district shall be instituted by the adoption of a resolution of intention to establish the proposed district and shall do all of the following: (a) (1) State that a district is proposed to be established under the terms of this division and describe the boundaries of the proposed district, which may be accomplished by reference to a map on file in the office of the recorder of the county. (2) The boundaries of the district shall be limited to downtown San Francisco. (b) State the need for the district and the goals the district proposes to achieve. (c) State that incremental property tax revenue generated by investment in the commercial-to-residential conversion project from San Francisco will be used to finance these activities. (d) Fix a time and place for a public hearing by the Board of Supervisors of the City and County of San Francisco on the proposed downtown revitalization financing plan. The Board of Supervisors of the City and County of San Francisco shall hold the public hearing before the district board’s third public hearing, described in subdivision (d) of Section 62458. After the Board of Supervisors of the City and County of San Francisco public hearing, the Board of Supervisors of the City and County of San Francisco may approve or reject the proposed downtown revitalization financing plan. SEC. 3. Section 62451.5 is added to the Government Code, to read: 62451.5. The governing body of a local government, except the City and County of San Francisco, may establish one downtown revitalization and economic recovery financing district pursuant to this division. Proceedings for the establishment of a district shall be instituted by the adoption of a resolution of intention to establish the proposed district and shall do all of the following: (a) State that a district is proposed to be established under the terms of this division and describe the boundaries of the proposed district, which may be accomplished by reference to a map on file in the office of the recorder of the county. (b) State that the district will only finance commercial-to-residential conversion projects that meet all of the following requirements: (1) At least 75 percent of the perimeter of the site of the development adjoins parcels that are developed with urban uses. For the purposes of this section, parcels that are only separated by a street or highway shall be considered to be adjoined. (2) Is located within a part of the city or county where the commercial office building vacancy rate is 20 percent or greater. (3) Is located within a transit priority area. (c) State the need for the district and the goals the district proposes to achieve. (d) State that incremental property tax revenue generated by investment in the commercial-to-residential conversion project from the local government will be used to finance these activities. (e) Fix a time and place for a public hearing by the governing body on the proposed downtown revitalization financing plan. The governing body shall hold the public hearing before the district board’s third public hearing, described in subdivision (d) of Section 62458. After the governing body’s public hearing, the governing body may approve or reject the proposed downtown revitalization financing plan. SEC. 4. Section 62452 of the Government Code is amended to read: 62452. (a) (1) The district board’s membership shall consist of three members of the governing body and two members of the public chosen by the governing body. The governing body may appoint one of its members to be an alternate member of the district board who may serve and vote in place of a member who is absent or disqualifies themselves from participating in a meeting of the district. The appointment of the public members shall be subject to the provisions of Sections 54970 and 54972. (2) For purposes of this subdivision, the district board may include a directly elected mayor. (b) The governing body shall ensure the district board is established at the same time that it adopts a resolution of intention pursuant to Section 62451 or 62451.5, as applicable. (c) Members of the district board shall not receive compensation but may receive reimbursement for actual and necessary expenses incurred in the performance of official duties pursuant to Article 2.3 (commencing with Section 53232) of Chapter 2 of Part 1 of Division 2 of Title 5. (d) Members of the district board are subject to Article 2.4 (commencing with Section 53234) of Chapter 2 of Part 1 of Division 2 of Title 5. (e) The district [Text truncated for display. Full text available on Congress.gov.]