Downtown revitalization and economic recovery financing districts.

Assembly Member Haney's legislation expands California's downtown revitalization financing district program beyond San Francisco, allowing cities and counties statewide to establish special districts that fund commercial-to-residential conversion projects through property tax increment financing.

The bill authorizes local governments to create districts that can direct incremental property tax revenue toward qualifying conversion projects, provided they meet specific location and development criteria. Projects must be situated in areas with commercial office vacancy rates of 20 percent or higher, have at least 75 percent of their perimeter adjacent to urban development, and be located within transit priority areas. Mixed-use developments are permitted but must dedicate at least 60 percent of their space to residential use.

The legislation establishes detailed governance and oversight requirements for these districts. Each district is overseen by a five-member board comprising three local government officials and two public members, subject to open meeting laws and public records requirements. Districts must prepare annual reports documenting project progress, revenue allocation, and compliance with affordability targets. Projects seeking tax increment funding must opt in before receiving their first building permit and no later than December 31, 2032. The districts can operate for up to 45 years after their first revenue distribution.

Projects receiving district funding must meet specified labor and affordability standards. Developments with 50 or more units must pay prevailing wages, while buildings over 85 feet tall face additional labor requirements. The bill mandates that projects either designate 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, unless local inclusionary requirements set higher thresholds.