In 2015, as part of “Redevelopment 2.0.” the State Legislature adopted Assembly Bill 2 authorizing the formation of Community Revitalization and Investment Authorities (CRIAs). CRIAs use tax increment funds to finance projects within a designated Revitalization Area. CRIAs are intended to provide a source of tax-increment funding for infrastructure and housing in disadvantaged communities and, therefore, may only be formed in geographic areas that meet specific criteria. The designated geographic area is referred to as the Revitalization Area. The primary requirement is that at least 80 percent of properties located in the Revitalization Area must have a median annual household income of 80 percent of the statewide, countywide, or citywide annual median income (the CRIA may choose the metric used). Additionally, three out of four of the following conditions must exist:
- Unemployment rate 3 percent higher than the statewide average
- Crime rates 5 percent higher than the statewide average for violent or property crime offenses
- Deteriorated or inadequate infrastructure, including streets, sidewalks, water supply, sewer treatment and processing, and parks
- Deteriorated commercial or residential structures.
However, in addition to the criteria listed above, all areas designated as SB 535 Disadvantaged Communities are eligible Revitalization Areas for a CRIA. Since a sizable portion of the San Joaquin Valley has the SB 535 Disadvantaged Community designation, this may be the most straightforward way for many Valley jurisdictions to show eligibility (see link in the Available Resources section for a map showing Disadvantaged Communities).
CRIA formation is achieved by adoption of a resolution by the sponsoring jurisdiction’s city council or board of supervisors, appointment of a governing body, and adoption of a Revitalization Plan. Once the CRIA board adopts the Revitalization Plan, CRIAs are authorized to use revenues to conduct a variety of activities, based on what was described in the Plan. Eligible activities include, but are not limited to, funding infrastructure improvements, affordable housing projects, seismic retrofits, property acquisition, tenant improvements, and undertaking brownfield cleanup. CRIAs may also borrow and accept funding from other sources, including other government agencies and private entities. Accountability measures required for CRIAs include completion of an annual report and a protest hearing every ten years to determine if the Revitalization Plan should continue.
A key requirement that differentiates CRIAs from other tax increment tools is that at least 25 percent of the tax increment allocated to the CRIA must be set aside for affordable housing. State law contains detailed requirements for the use of affordable housing funds like previous Community Redevelopment Law. In terms of housing production, prior to expiration of the Revitalization Plan, 30 percent of the housing units constructed or rehabilitated by the CRIA must be made available to lower- and moderate-income households and 15 percent of housing units constructed or rehabilitated by any other entity must be made available to lower- and moderate-income households.
New and untested. Because CRIAs are a relatively new tool, examples of their effectiveness are not available. Without proven success stories, it may be difficult to garner the political and community support needed for CRIA formation. The City of Victorville approved formation of a CRIA in August 2021 and is currently in the process of appointing board members. The City of Riverside has conducted a feasibility analysis and held public informational meetings but has yet to form a CRIA.
Bonds and loans. CRIAs are also authorized to issue bonds without voter approval. Therefore, once the CRIA’s tax base has increased enough to support financing, this is an available option. Alternatively, the CRIA’s sponsoring jurisdiction can provide a loan to the CRIA in the interim period while the CRIA’s revenue base is growing.
Timing and revenue generation. As with all tax increment funding mechanisms, the contingency of funding on the amount and pace of development can pose a significant challenge. Unlike former Community Redevelopment Law, the tax increment diverted to the CRIA is only from the sponsoring jurisdiction’s share rather than from all taxing entities. Therefore, it can be challenging to generate enough initial revenue over the base tax year to begin plan implementation. Furthermore, plan implementation, such as infrastructure improvements, may be needed to spur other development within the Revitalization Area, which in turn increases tax increment revenues.
One potential remedy is for a city to partner with other local taxing entities. Other local agencies (excluding school districts) may opt to contribute all or just a portion of their tax increment to the CRIA. Other agencies may see participation in the CRIA as a worthwhile investment if the planned infrastructure improvements and other programs contribute to an increase in the long-term property tax base.
Relevant State Law
Assembly Bill No. 2492 (AB 2492) (2016), Assembly Bill No. 2 (AB 2) (2015), as amended by AB 2492 (a clean-up bill passed in 2016), authorized the formation of CRIAs.
Government Code Sections 62000-62208., Community Revitalization and Investment Authorities.
California Association for Local Economic Development (CALED). Primer on California’s New Tax Increment Financing Tools, includes a clear explanation and examples of how tax increment funds are generated and built over time.
California Office of Environmental Health Hazard Assessment (OEHHA). SB 535 Disadvantaged Communities Map.
City of Victorville. CRIA formation documents (August 17, 2021, City Council Meeting):
City of Riverside. Community Revitalization and Investment Authorities (CRIA). Although Riverside has yet to form a CRIA, they have developed a helpful public information page explaining the benefits of CRIAs and how they provide designated funding without increasing taxes.