Downtown revitalization and economic recovery financing districts.

Assembly Member Haney's legislation expands California's downtown revitalization financing district model beyond San Francisco, enabling cities and counties statewide to establish special districts for converting commercial buildings to residential use. The bill authorizes local governments to create financing districts that capture incremental property tax revenue from commercial-to-residential conversion projects within designated downtown areas.

The legislation requires eligible projects to be located in areas with commercial office vacancy rates of 20 percent or higher and within transit priority areas. Projects must either convert existing commercial buildings to housing or replace them with new residential structures. To qualify for tax increment financing, at least 75 percent of the project site must adjoin developed urban parcels. The bill mandates that mixed-use developments dedicate a minimum of 60 percent of square footage to residential use.

Projects opting to receive district funding must meet specific affordability requirements, including setting aside either 5 percent of rental units for very low-income households, 10 percent for lower-income households, or 10 percent of for-sale units for moderate-income households - or match local inclusionary requirements if higher. These affordability restrictions apply after the first 1.5 million square feet of conversion projects in each district. The legislation also establishes labor standards, requiring prevailing wages and compliance with additional requirements based on project size and building height.

Districts must prepare detailed financing plans specifying maximum tax increment amounts, revenue projections, and operational timelines not exceeding 45 years. The plans require approval through three public hearings. Annual reporting to the Legislature and regular public hearings provide oversight of district activities and funded projects. Projects have until December 31, 2032 to opt into receiving tax increment financing under the program.