While a law passed in 1978 allowed tax-increment bond sales from redevelopment agencies in California to flourish compared to the rest of the country, in recent years new issuance has collapsed as property values have switched directions from boom to bust, according to a credit sector report issued by bond insurer National Public Finance Guarantee Corp.

Under Proposition 13, the assessed values of properties that don’t change hands during the course of a year cannot increase more than 2% annually. In addition, the property tax rate was limited to 1% of a property’s assessed value.

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