BILL ANALYSIS                                                                                                                                                                                                    

                                                                  AB 987
                                                                  Page  1

          AB 987 (Ma)
          As Amended  January 4, 2010
          Majority vote 

           LOCAL GOVERNMENT    4-1                                         
          |Ayes:|Caballero, Arambula,      |     |                          |
          |     |Davis, Skinner            |     |                          |
          |     |                          |     |                          |
          |Nays:|Knight                    |     |                          |
          |     |                          |     |                          |

           SUMMARY  :  Allows local officials to divert property tax  
          increment revenues to pay for public facilities and amenities  
          within transit village development districts (TVDDs).   
           this bill  :  

          1)Expands the parcels that shall be included in a TVDD to all  
            parcels located within one-half mile of the main entrance of  
            the transit station.

          2)Specifies that an election is not required to form an  
            infrastructure financing district (IFD), adopt an  
            infrastructure financing plan, or issue bonds.

          3)Requires, if a city, county, or city and county finances a  
            transit district using tax increment financing (TIF) collected  
            through an IFD, then the city, county, or city and county  
            shall do all of the following:

             a)   Use at least 20% of all revenues derived from the TIF to  
               increase, improve, and preserve the supply of lower- and  
               moderate-income housing available in the district at  
               affordable housing costs, and occupied by persons and  
               families of low- or moderate-income, lower- income  
               households, very low-income households, and extremely  
               low-income households;

             b)   Require that the housing units listed above remain  


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               available at affordable housing cost to, and occupied by,  
               persons and families of low- or moderate-income and  
               very-low income and extremely-low income households for the  
               longest feasible time, but not for less than 55 years for  
               rental units and 45 years for owner-occupied units;

             c)   Rehabilitate, develop, or construct, or cause to be  
               rehabilitated, developed, or constructed, for rental or  
               sale to persons and families of low- or moderate-income, an  
               equal number of replacement dwelling units that have an  
               equal or greater number of bedrooms as the destroyed or  
               removed units, at affordable housing costs within the  
               district, and within four years after the destruction or  
               removal, whenever dwelling units housing persons and  
               families of low- or moderate-income are destroyed or  
               removed from the low- and moderate-income housing market as  
               part of the development of a transit district that is  
               subject to a written agreement with the city, county, or  
               city and county, or when financial assistance has been  
               provided by the city, county, or city and county;

             d)   Require that the replacement dwelling units be available  
               at affordable housing cost to and occupied by, persons and  
               families in the same or a lower-income category as the  
               persons and families displaced from those destroyed or  
               removed units;
             e)   Include in the transit village plan (TVP), as one of the  
               five demonstrable public benefits, either an increased  
               stock of affordable housing or live-travel options for  
               transit-needy groups; and,

             f)   Include in the TVP provisions on how to implement the  
               affordable housing requirements added by this measure.

          4)Defines "county" to include city and county.

          5)Finds and declares that TVDDs should be environmentally  
            conscious and sustainable, and related construction should  
            meet or exceed the requirements of the California Green  
            Building Standards Code.  

           EXISTING LAW :

          1)Authorizes, under the Transit Village Development Planning Act  


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            of 1994 (Act), a city or county to prepare a TVP for a TVDD  
            that addresses the following characteristics:

             a)   A neighborhood centered around a transit station that is  
               planned and designed so that residents, workers, shoppers,  
               and others find it convenient and attractive to patronize  

             b)   Mix of housing types, including apartments, within not  
               more than a quarter mile of the exterior boundary of the  
               parcel on which the transit station is located;

             c)   Other land uses, including a retail district oriented to  
               the transit station and civic uses, including day care  
               centers and libraries;

             d)   Pedestrian and bicycle access to the transit station,  
               with attractively designed and landscaped pathways;

             e)   A transit system that should encourage and facilitate  
               intermodal service, and access by modes other than single  
               occupant vehicles;

             f)   Demonstrable public benefits beyond the increase in  
               transit usage; and,

             g)   Sites where a density bonus of at least 25% may be  
               granted pursuant to specified performance standards.

          2)Requires a TVP to include any five public benefits from a list  
            of 13 specified public benefits.

          3)Authorizes cities and counties to create IFDs and issue bonds  
            to pay for community scale public works:  highways, transit,  
            water systems, sewer projects, flood control, child care  
            facilities, libraries, parks, and solid waste facilities.

          4)Allows an IFD to divert property tax increment revenues from  
            other local governments, excluding school districts, for up to  
            30 years, in order to pay back bonds issued by the IFD.

          5)Requires that in order to form an IFD a city or county must  
            develop an infrastructure plan, send copies to every  
            landowner, consult with other local governments, and hold a  


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            public hearing.

          6)Requires that when forming an IFD, local officials must find  
            that its public facilities are of communitywide significance  
            and provide significant benefits to an area larger than the  

          7)Requires that every local agency who will contribute its  
            property tax increment revenue to the IFD approve the plan.

          8)Requires a two-thirds voter approval of the formation of the  
            IFD and the issuance of bonds.

          9)Requires majority voter approval for setting the IFD's  
            appropriations limits.

          10)Specifies that public agencies that own land in a proposed  
            IFD may not vote on issues regarding the district.

          11)Authorizes IFDs to issue a variety of debt instruments,  
            including bonds, certificates of participation, leases, and  

           FISCAL EFFECT  :  Unknown

           COMMENTS  :  Many local governments and transit agencies  
          understand the benefits of using transit-oriented development  
          (TOD) as an urban planning tool to help communities deal with  
          the possible negative impact of unrestricted growth and sprawl.   
          Some of these impacts include growing traffic gridlock and  
          commuting times, the loss of open space, and increased air and  
          water pollution.  Working with local transit agencies, local  
          communities are creating strong centralized mixed-use  
          communities by developing TOD projects that are clustered around  
          train stations and bus centers.  The environment and local  
          economies are enhanced by TOD, and the publicly supported  
          transit systems benefit from nearby residents and businesses.

          However, there are roadblocks to TOD development in the state,  
          including the long planning process and spiraling construction  
          costs.  The Act provides no funding mechanism to help deliver  
          the improvements outlined in the legislation.  The reality is  
          that TOD projects must compete with other local priorities and a  
          scarcity of transportation funding.


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          According to the author, this bill helps resolve this dilemma of  
          transit village funding scarcity by making available a new  
          funding tool to communities and transit districts that choose to  
          pursue TOD.  This bill allows local communities to use TIF so  
          they can finance current improvements that will create future  
          gains in property tax revenues.  The author points out that when  
          a TOD project is completed there is an increase in the value of  
          the surrounding areas that often spurs new investment.  This  
          increased site value and investment creates additional taxable  
          property that can increase incoming tax revenues to local  
          communities.  The increase in TIF would be used to finance the  
          debt issued to pay for the project.  This bill also requires  
          that 20% of the collected TIF go towards funding affordable  
          housing in the transit district.  

          The Legislature has previously passed two measures that were  
          identical to this one, AB 338 (Ma, 2009) and AB 1221 (Ma, 2008).  
          However, Governor Schwarzenegger vetoed both of these measures.   
          He vetoed AB 1221 using the blanket veto message regarding the  
          delayed Budget and he stated in his veto of AB 338 that he  
          believed that voters should have the right to vote on the  
          creation of an IFD.  

          Analysis Prepared by  :    Katie Kolitsos / L. GOV. / (916)  

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