BILL ANALYSIS
AB 1199
Page 1
ASSEMBLY THIRD READING
AB 1199 (Ammiano)
As Amended January 4, 2010
Majority vote
LOCAL GOVERNMENT 5-0 APPROPRIATIONS 12-5
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|Ayes:|Caballero, Knight, |Ayes:|De Leon, Ammiano, |
| |Arambula, Davis, Skinner | |Bradford, Charles |
| | | |Calderon, Coto, Davis, |
| | | |Fuentes, Hall, John A. |
| | | |Perez, Skinner, Solorio, |
| | | |Torlakson |
| | | | |
|-----+--------------------------+-----+--------------------------|
| | |Nays:|Conway, Harkey, Miller, |
| | | |Nielsen, Audra Strickland |
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SUMMARY : Revises the special statute that controls how local
officials can form, finance, and operate an infrastructure
financing district (IFD) along the San Francisco waterfront, at
Pier 70, on land that is under the jurisdiction of the Port of
San Francisco. Specifically, this bill :
1)Defines various terms for the purposes of an IFD created in
the waterfront area of San Francisco, including the following:
a) "Base year" means the fiscal year during which any
infrastructure plan adopted under this chapter becomes
effective;
b) "Board" means the Board of Supervisors of the City and
County of San Francisco, which is the legislative body for
any district formed in San Francisco;
c) "District" means any district created under this
chapter, including any project area within a district;
d) "Port" means the Port of San Francisco;
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e) "San Francisco" means the City and County of San
Francisco;
f) "ERAF" as the Educational Revenue Augmentation Fund;
g) "ERAF-secured debt" means the debt incurred to finance a
Pier 70 IFD subject to a
Pier 70 enhanced financing plan that is secured by and will
be repaid from the ERAF share; and,
h) "ERAF share" as the county ERAF portion of incremental
tax revenue committed to a Pier 70 IFD under a Pier 70
enhanced financing plan.
2)Adds, for the purposes of San Francisco, shoreline restoration
and other repairs and improvements to maritime facilities to
the statutory list of activities whose costs are eligible to
be covered by an IFD.
3)Clarifies that facilities on land, located in a previously
formed district that the Port subsequently leases, sells, or
otherwise transfers to any person, are free of the public
trust, the Burton Act, and any additional restrictions on use
or alienability created by the Burton Act transfer agreement,
provided that the State Lands Commission has concurred in the
lifting of trust restrictions on the transferred property,
will remain in and subject to the district.
4)States that for a district created along the San Francisco
Waterfront the plan provisions established for other IFDs do
not apply.
5)States that the Board will initiate proceedings for the
establishment of a district by adopting a resolution of
intention to establish the proposed district that does all of
the following:
a) States an infrastructure financing district is proposed
to be established and describes the boundaries of the
proposed district;
b) States the type of public facilities proposed to be
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financed by the district;
c) States that incremental property tax revenue from San
Francisco, and some or all affected taxing entities within
the district may be used to finance these public
facilities, or, alternatively, that incremental property
tax revenue from San Francisco, and no other taxing entity
within the district, may be used to finance these public
facilities; and,
d) Directs the Executive Director of the Port, or an
appropriate official designated by the Executive Director,
to prepare a proposed infrastructure financing plan.
6)Requires that the proposed infrastructure financing plan be
consistent with the general plan of San Francisco.
7)Requires that the proposed infrastructure financing plan to
include all of the following:
a) A map and legal description of the proposed district
that may include all or a portion of the district
designated by the Board in its resolution of intention;
b) A description of the public facilities required to serve
the development proposed in the district, including those
to be provided by the private sector, those to be provided
by governmental entities without assistance under this
chapter, those public improvements and facilities to be
financed with assistance from the proposed district, and
those to be provided jointly; and,
c) A financing section that shall contain all of the
following:
i) A statement that specifies the maximum portion of
the incremental tax revenue of
San Francisco and of any affected taxing entity proposed to
be committed to the district;
ii) A limitation on the use of levied taxes allocated to
and collected by the district providing that no less than
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20% of that amount must be expended on shoreline
restoration, removal of bay fill, or waterfront public
access to, or environmental remediation of, the San
Francisco waterfront;
iii) A projection of the amount of incremental tax
revenues expected to be received by the district,
assuming a period of 45 years from the base year of the
infrastructure financing plan;
iv) Projected sources of financing public facilities to
be assisted by the district, including debt to be repaid
with incremental tax revenues;
v) A limitation on the number of dollars of taxes that
may be divided and allocated to the district. Taxes shall
not be divided or be allocated to the district beyond
this limitation, except by amendment of the
infrastructure financing plan pursuant to the procedures
in this subdivision;
vi) A date on which the effectiveness of the
infrastructure financing plan and all tax allocation to
the district will end and a time limit on the district's
authority to repay indebtedness with incremental tax
revenues received under this chapter, not to exceed 45
years from the date of the Board's resolution of intent
to issue bonds to be repaid with incremental tax revenues
under this chapter;
vii) An analysis of the costs to San Francisco of
providing facilities and services to the district while
the area is being developed and after the area is
developed and of the tax, fee, charge, and other revenues
expected to be received by San Francisco as a result of
expected development in the district;
viii) An analysis of the projected fiscal impact of the
district and the associated development upon any
affected taxing entity; and,
ix) A statement that the district will maintain
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accounting procedures in accordance with procedures
established for local governments overseeing trusting
lands.
8)States that for Pier 70 IFD, the financing plan may contain a
provision that allocates a portion of the incremental tax
revenues of San Francisco and of other designated affected
taxing entities to the Pier 70 IFD.
9)Prohibits a Pier 70 IFD plan from being formed for at least
three full fiscal years after the effective date of this bill.
10)Prohibits any new debt secured by the ERAF share to be issued
after the 20th year in which the IFD first incurs debt.
11)States that beginning in the 21st year after the IFD first
incurs debt, it may collect only the amount of ERAF share
necessary to meet ERAF-secured debt (payment and coverage)
requirements.
12)Requires the dollar amount for the ERAF-secured debt to be
specified in a schedule stating the amount of ERAF share
required annually to meet the debt requirements until all
ERAF-secured debt is paid in full.
13)Requires that all ERAF share above the annual debt
requirements be paid into the state ERAF beginning in the 21st
year after the district first incurs debt.
14)Provides that the portion of incremental tax revenue of San
Francisco to be allocated to the Pier 70 IFD must be equal to
the portion of the incremental tax revenue of the county ERAF
proposed to be committed to the Pier 70 IFD.
15)States that the Board shall not enact a resolution forming
the Pier 70 IFD and providing for the division of taxes of any
affected taxing to the IFD unless the affected taxing entities
approve such a division of taxes.
16)States that if an affected taxing entity has not approved the
infrastructure financing plan prior to the Board's approval,
the Board may amend the infrastructure financing plan to
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remove the allocation of tax revenues of the non-consenting
affected taxing entity.
17)States that if the infrastructure financing plan is amended
as stated above, San Francisco will be required to match the
lost revenue dollar for dollar.
18)Requires that the Board hold a public hearing regarding the
infrastructure financing plan no earlier than 60 days after
the plan has been sent to each affected taxing entity, or in
the absence of any affected taxing entities, no earlier than
30 days after the plan has been lodged with the clerk of the
Board.
19)Provides that no election is necessary for the formation of
the Pier 70 IFD.
20)Specifies that if the approved plan allocates to the Pier 70
IFD 100% of the incremental tax revenue of San Francisco, then
the IFD shall not make a payment to ERAF, but if the plan
allocated less than 100% of the incremental tax revenue of San
Francisco to the IFD then the IFD shall pay a proportionate
share of the incremental tax revenue into ERAF.
21)Allows owners of land that's contiguous to the Port's
waterfront jurisdiction to request their addition of that land
to the IFD, provided that the landowners agree to conditions
regarding public access to the waterfront, based on standards
set by the San Francisco Bay Conservation and Development
Commission.
22)Allows, with an affected taxing entity's permission, the Pier
70 IFD to subordinate payments to the affected taxing entity
to the IFD's loans, bonds, or other debts.
23)Requires San Francisco's waterfront IFD to annually file with
the county auditor a detailed statement of indebtedness and a
detailed reconciliation statement.
24)Declares that it implements the IFD statutes and
constitutional provisions.
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25)Declares that the property tax increment revenues received
under provisions of this measure are not "proceeds of taxes."
EXISTING LAW :
1)Clarifies that an IFD can be formed on urban waterfront
property.
2)Clarifies that IFDs can be used to finance public
infrastructure projects on public trust lands.
3)Specifies that if all of the land within a proposed IFD
belongs to a public agency, that agency is a landowner and
will be allowed to vote on issues relating to the district.
4)Waives the requirement for an election to form the IFD if all
of the land within the proposed IFD is publicly owned.
5)Authorizes environmental remediation work as a type of project
that is eligible for IFD spending in San Francisco.
6)Adds, for the purposes of San Francisco, four more examples to
the statutory list of activities whose costs are eligible to
be covered by an IFD: a) seismic and life-safety
improvements; b) landmark rehabilitation; c) structural work
on piers; seawalls, and wharves; d) hazardous material
remediation; and, e) storm water management facilities, other
utility infrastructure, or public access improvements.
7)Clarifies that if an IFD includes tideland and submerged
lands, whether filled or unfilled, and finances facilities
located on these lands, these facilities must serve and
promote uses and purposes consistent with the public trust.
8)Specifies that facilities built by an IFD on tideland or
submerged lands are public trust assets subject to the
administration and control of the trust grantee of the public
lands on which they are constructed.
9)Clarifies that if the facilities built on the trust lands are
capitol facilities and are not owned
by the public agency administering the public trust land, but
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are owned and operated by another entity that has a license
from or an agreement with the public entity, then those
facilities would not become public trust assets.
10)Expands the definition of "debt," as it applies to San
Francisco, to include commercial paper and variable rate
demand loans.
11)Allows an IFD in San Francisco to extend the diversion of
property tax increment revenues for up to 10 additional years
if local officials amend the IFD plan, analyze its fiscal
impacts on other local governments, hold a public hearing, and
obtain the consent of all of the other local governments.
12)Declares, as it applies to San Francisco, that infrastructure
improvements that increase public access to public trust lands
satisfy the requirement that the public facilities are of
communitywide significance and provide significant benefits to
an area larger than the IFD.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill would result in a General Fund cost to
backfill any property tax increment shifted from ERAF to the
proposed San Francisco waterfront IFD. Appropriations staff
notes that: a) any shifts of tax increment will be minimal for
several years because of the time it will take for the IFD to be
formed and new development to start generating property tax
growth; and, b) the magnitude of actual General Fund costs in
the future is unknown because it is unclear how much economic
activity (and hence property tax growth) would occur in the
absence of the bill.
COMMENTS : Under the Burton Act (Chapter 1333, Statutes of
1968), the state conveyed certain state tidelands along the San
Francisco waterfront, generally extending from Fisherman's Wharf
to Candlestick Point, to the City and County of San Francisco,
through its Port, in 1969 in trust for public trust and Burton
Act trust purposes, subject to the obligation on the part of the
City and County San Francisco to assume $55 million in state
debt obligations then existing relating to the waterfront
properties.
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The San Francisco waterfront is a valuable public trust asset of
the state and provides special maritime, navigational,
recreational, cultural, and historical benefits to the people of
the region and the state. The Port of San Francisco has
estimated 10-year capital plan liabilities of $1.9 billion to
bring its existing facilities, including facilities listed or
eligible for listing on the National Register of Historic
Places, to a level of compliance with current codes. Realizing
the goals of the Port's waterfront land use plan, the Bay
Conservation and Development Commission special area plan and
the Port's capital plan and removal of the deteriorating
conditions along the San Francisco waterfront are matters of
statewide significance.
For several years, local officials were reluctant to form IFDs
because they worried about
the constitutionality of using tax increment revenue from
property that was not within the redevelopment project area.
When a 1998 Attorney General's opinion allayed those concerns,
the City of Carlsbad formed an IFD in 1999 to fund the public
works for a new hotel located adjacent to the Legoland theme
park. That small project is the only example of local
officials' use of the 1990 IFD law. San Francisco's proposal to
set up large IFDs may attract more attention and the appellate
courts may be asked to determine whether it is constitutional to
divert property tax increment to IFDs.
In 2005, the Legislature adopted SB 1085 (Migden), Chapter 213,
Statutes of 2005, authorizing the Port of San Francisco to enact
infrastructure financing districts to finance specified
waterfront improvements. Due to the extraordinary unfunded
capital plan liabilities on the Port's property, the City and
County of San Francisco is seeking to make various changes to
San Francisco's IFD law to authorize the use of IFD moneys on a
more diverse group of projects.
Pier 70 is a 65-acre brownfields site on San Francisco's Central
Waterfront and encompasses the oldest continuously operating
shipyard on the West Coast. For over 150 years, some portion of
this site was used for ship building and repair. The federal
government controlled portions of the site until 1967. Since
the state's transfer of the property to the City of San
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Francisco in 1969, Pier 70 has remained fallow, failing to
attract private investment. The blighted nature of this land,
need for seismic retrofitting of historic buildings and
environmental clean-up has prevented private investment.
According to the author, this bill will provide the public
investment needed to attract private investment and development.
This bill expands the Port's infrastructure financing powers,
by directing capture of 90% of growth in property taxes from
Port revitalization efforts of the Pier 70 area, provided that
the Port expends at least 20% of these revenues on waterfront
parks, environmental remediation, and removal of contaminated
bay fill.
This measure is identical to AB 1176 (Ammiano, 2009) that was
vetoed by Governor Schwarzenegger. In his veto message the
Governor called out the need for reforms in other major policy
areas, however, there was no specific comment on what changes
should be made to AB 1176.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958
FN: 0003599