Cities and Counties Must Provide Report Before Approving Economic Development Subsidies to Businesses


New Law Applies to Subsidies of $100,000 or More

Gov. Brown last week signed into law AB 562, legislation that will require all cities and counties to provide a report to the public before approving any economic development subsidy of $100,000 or more that are issued to corporations and other business entities. In addition, each city and county will need to review, hold hearings and report on those subsidies at five-year intervals. These requirements will begin on January 1, 2014.

AB 562, authored by Assemblyman Das Williams, D-Santa Barbara, adds Section 53083 to the Government Code and declared this to be a matter of statewide concern, such that it applies to all cities whether they are general law or charter cities.

Once effective, section 53083 will require that each city and county provide the following information about the economic development subsidy prior to its approval:

  • name and address of any business entity benefiting from the subsidy;
  • the start and end dates for the subsidy;
  • a description of the subsidy and estimated total amount of the expenditure of public funds, or revenue lost, as a result of the subsidy;
  • a statement of the public purpose of the subsidy;
  • projected tax revenue to the city or county as a result of the subsidy; and
  • estimated number of jobs created by the subsidy, broken down by full-time, part-time and temporary positions.

There shall be a notice and hearing before the subsidy is approved and the report must be posted on the city or county website.

During the term of the economic development subsidy but not later than five years after the action granting an economic development subsidy, the city or county shall issue a report for each economic development subsidy and hold a public hearing. The report shall contain the information described above as actual numbers rather than estimates.

"Economic development subsidy" is defined very broadly, but shall not include expenditures of public funds by, or loss of revenue to, the local agency for the purpose of providing housing affordable to persons and families of low or moderate income, as defined in Section 50093 of the Health and Safety Code.

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