Downtown revitalization and economic recovery financing districts.

Assembly Member Haney's downtown revitalization measure extends financing district authority to California cities and counties beyond San Francisco, enabling local governments to fund commercial-to-residential conversion projects through incremental property tax revenues. The legislation allows jurisdictions to establish special districts that can direct tax increment financing toward qualifying residential conversion developments within designated downtown areas.

The bill requires conversion projects to meet specific location and development criteria to participate in the financing program. Eligible projects must be situated where at least 75 percent of the site perimeter adjoins developed parcels, located in areas with commercial office vacancy rates exceeding 20 percent, and within designated transit priority zones. Projects must dedicate at least 60 percent of converted space to residential use, with mixed-use developments limited to residential and commercial components.

Local governments establishing these districts must create oversight boards comprising three legislative body members and two public appointees. The boards develop financing plans detailing project requirements, tax revenue allocations, and affordability provisions. Projects receiving tax increment funds must include affordable units - either 5 percent for very low income, 10 percent for lower income rentals, or 10 percent for moderate income ownership units, maintained for 45-55 years. These requirements apply after the first 1.5 million square feet of conversion projects in each district.

The financing mechanism allows districts to direct incremental property tax revenue generated by specific conversion projects back to those same developments for up to 30 years to fund eligible costs. Projects must opt into the program before receiving their first building permit and no later than December 31, 2032. All participating projects must pay prevailing wages and comply with local labor standards to receive funding.