While some California cities and counties continue to mourn the demise of redevelopment agencies, others are looking to the future and aggressively implementing new tools to incentivize economic development. Communities that establish and promote these new incentives are gaining a competitive advantage in attracting private capital to their doorstep.

When the California Supreme Court upheld Assembly Bill 26 and established a deadline for all California's redevelopment agencies to be dissolved by February 1, 2012, many developers, affordable housing advocates, property owners and public agencies were left wondering if economic development incentives had forever vanished in the State of California.

Cities and counties are now forced to evaluate other innovative tools - beyond redevelopment and the use of tax increment financing - in order to incentivize economic development. A variety of public-private partnerships and other economic arrangements with private sector developers and employers are beginning to be utilized.

There is renewed focus and interest among California cities and counties in establishing Community Taxing Districts whereby a charter city, for example, can pledge a portion of taxes collected for particular land uses (e.g., hotel transient occupancy tax) to a developer for new ground-up construction within the taxing district.

The use of an Infrastructure Financing District (IFD) is another economic development tool which allows cities and counties to issue bonds to pay for certain public works, including roads, parking facilities, highways, or public parks. Importantly IFDs do not require a finding of blight.

Perhaps among the most promising substitutes for redevelopment, currently in use, is the state's Enterprise Zone Program, which provides economic incentives to businesses in the form of state tax credits based on job creation. The Anaheim Enterprise Zone received its final designation status from the State of California on February 1, 2012 and its current benefits are in effect until 2027. The region encompasses almost all of the commercial and industrial areas of the City of Anaheim.

The Anaheim Enterprise Zone will encourage employers to hire local residents, many of whom will qualify for a hiring incentive state tax credit of up to nearly $40,000 per employee. The city hopes to use this program to add 26,000 jobs to the community in the next five years. Businesses will also be able to earn sales tax credits on purchases of $20 million per year of certain types of equipment. Other benefits include credits for depreciable property, preference points on state contracts and the ability to stretch tax credits across multiple years.

Providing incentives like these will help cities and counties attract investment capital and position their communities for economic growth.