Proposed Bill Would Impact Economic Development Efforts within CRAs

The Community Redevelopment Act of 1969 authorizes counties and municipalities to create CRAs as a means for redeveloping slums and blighted areas in the community. Once created, CRAs adopt a Community Redevelopment Plan (Plan) to carry out specific community redevelopment goals, which typically include infrastructure improvements, beautification projects, affordable housing, and public-private partnerships to promote economic development. 

CRAs accomplish these goals through the use of tax increment financing.  As we have explained in prior blog posts, each taxing authority within a CRA must transfer to the CRA a specified percentage of the incremental increase in ad valorem revenues after the CRA was created. CRAs then use this tax increment to issue bonds and fund dedicated improvements in furtherance of the CRA Plan. Over time, these dedicated investments revitalize communities and generate increased property values in the CRA, which in turn leads to additional tax increment funds to complete additional projects or pay off the bonds. 

For CRAs in existence as of October 1, 2019, Florida law currently provides for the dissolution of CRAs at the earlier of September 30, 2039, or the date provided in their respective charters as of October 1, 2019. However, the governing body of the county or municipality that created the CRA may approve its continued existence beyond those dates by a majority vote. In addition, if the CRA has outstanding bonds that will not mature until after the agency’s dissolution date, the CRA remains in existence until the bonds mature.

The Florida Legislature is currently considering a proposed bill (HB 991/SB 1242), which would dramatically limit the impact and operation of CRAs. First, the bill prohibits the creation of new CRAs on or after July 1, 2025. The bill expedites the schedule for dissolution of CRAs, and removes the ability of counties or municipalities to approve a CRA’s continued existence by a majority vote of the governing body. 

Importantly, the bill would also prohibit CRAs from initiating any new projects or issuing any new debt on or after October 1, 2025.  

If passed, the proposed legislation would take effect on July 1, 2025. Local officials and developers with projects in CRAs should monitor the bill closely, as it may require local governments, and the development community, to identify alternative funding mechanisms and options for partnering together to implement future infrastructure improvements, affordable housing projects, and economic development initiatives located within CRAs.