BILL ANALYSIS Ó
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THIRD READING
Bill No: AB 2259
Author: Ammiano (D)
Amended: 8/21/12 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 8-0, 7/3/12
AYES: Wolk, Dutton, DeSaulnier, Fuller, Hernandez, Kehoe,
La Malfa, Liu
NO VOTE RECORDED: Yee
SENATE APPROPRIATIONS COMMITTEE : 7-0, 8/16/12
AYES: Kehoe, Walters, Alquist, Dutton, Lieu, Price,
Steinberg
ASSEMBLY FLOOR : 78-0, 5/30/12 - See last page for vote
SUBJECT : Infrastructure financing districts: Americas
Cup and
waterfront district venus
SOURCE : Port of San Francisco
DIGEST : This bill makes numerous changes to the special
statutes governing infrastructure financing districts
(IFDs) along the waterfront in San Francisco, including a
provision that allows for an annual three percent increase
in the amount of property tax increment revenues diverted
to the America's Cup IFD from the Educational Revenue
Augmentation Fund (ERAF).
CONTINUED
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ANALYSIS :
Waterfront Infrastructure Financing Districts . Existing
law limits IFDs' bonds to 30 years and waterfront IFDs'
bonds to 45 years, measured from the date on which the IFD
issues the bonds. AB 1199, Ammiano, Chapter 664, Statutes
of 2010 changed the starting date for waterfront IFDs'
bonds to the date on which the waterfront IFD received an
aggregate of $100,000 in property tax increment revenues.
This bill clarifies that the district's term assumes that
the district receives incremental tax revenues for a period
no longer than 45 years after San Francisco projects that
the district will have received one hundred thousand
dollars ($100,000) in increment.
This bill authorizes the legislative body to undertake
proceedings for the district as a whole, or as one or more
project areas. The bill provides that if the legislative
body undertakes bond proceedings for the district, it may,
by resolution, allocate the principal amount of the
authorized bond issuance to one or more project areas
within the district. This bill authorizes the legislative
body to increase the principal amount of bonds that may be
issued for a district or a project area within a district.
This bill contains procedures that allow San Francisco to
buy facilities that a waterfront IFD constructs, either
entirely or in phases, once a facility's purchase value is
more than $1 million.
Existing law allows any public or private owner of land
that is not within an existing district, but has a boundary
line contiguous to a waterfront district's boundary may
petition the Board of Supervisors to be included in the
waterfront district without an election.
This bill provides that the annexation must take effect on
the ordinance's effective date.
Existing law requires that an ordinance to create a
district and adopt or amend an infrastructure plan must
establish the base year for the district.
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This bill requires the base year of land annexed into a
district to be the fiscal year in which the assessed value
of the annexed land was last equalized prior to the
effective date of the annexation, or a subsequent fiscal
year specified in the ordinance of the board approving the
annexation.
Existing law authorizes the San Francisco City and County
Board of Supervisors to amend an infrastructure plan by
ordinance. This bill provides that the Board may amend the
plan by ordinance for any purpose, including but not
limited to dividing an established district into one or
more project areas, reducing the district area, or
expanding a waterfront district to include the petitioning
landowner's land in the district.
Set-aside requirements . Existing law allows waterfront
IFDs to divert property tax increment revenues, but
requires a waterfront IFD to set-aside at least 20% of
those revenues for shoreline restoration, removal of bay
fill, waterfront public access, or environmental
remediation of the San Francisco waterfront. Existing law
acknowledges a new requirement that a special waterfront
IFD must set-aside revenues to finance improvements to
federal- or state-owned waterfront lands used for America's
Cup public spectator viewing sites.
Existing law allows the Pier 70 IFD to divert property tax
increment revenues, including revenues that would have gone
to the ERAF. This bill defines "affected taxing entity"
for the purpose of diverting these property tax increment
revenues.
This bill provides that these allocations apply to revenues
that are available for allocation under the applicable
laws.
Resolution of intention . Existing law requires that when
San Francisco's City and County Board of Supervisors adopts
a resolution of intention to form the district, it must
include information about how incremental property tax
revenue from San Francisco and some or all affected taxing
entities in the district, but none of the local educational
agencies, may be used to finance public facilities. The
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resolution must also include a description of the public
improvements and facilities, which includes information
about the proposed location, timing, and projected costs of
the public improvements and facilities.
This bill clarifies that incremental property tax from
local educational agencies may be used, as provided in the
statute, or as a result of the allocation of the ERAF
share. This bill provides that the public facility
description may consist of a reference to the capital plan
for the territory in the district that is approved by the
board, as amended.
Existing law requires the resolution of intention to
include a financing section that lists:
Projected sources of financing for the public facilities.
This bill provides that the projection may refer to the
capital plan for the territory in the district that is
approved by the board.
A limitation on the number of dollars of levied taxes
that may be divided and allocated to the district. This
bill declares that if San Francisco divides a district
into project areas, the project areas may share the limit
and the limit may be divided among the project areas or a
separate limit may be established for a project area.
Authorized projects . Existing law authorizes a waterfront
district to finance remediation of hazardous materials;
seismic and life-safety improvements; rehabilitation,
restoration, and preservation of Historic Places;
structural repairs and improvements to piers and seawalls;
removal of bay infill; stormwater management facilities;
shoreline restoration; planning and design work related to
the waterfront district; and reimbursement made to
California' Infrastructure and Economic Development Bank
(I-Bank).
This bill eliminates the authorization for I-Bank payments.
This bill adds improvements to protect against sea level
rise to the list of authorized uses.
Pier-70 district . Under existing law, a Pier 70 district
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is subject to specified time limitations. This bill
requires all of the following conditions to be met before a
Pier 70 district may refinance, refund, or restructure
ERAF-secured debt:
The debt repayment is not extended beyond the limit
established in the statute.
In the case of a refinancing or refunding to achieve
savings, the total interest cost to maturity on the new
debt plus the principal amount of the new debt does not
exceed the total interest cost to maturity on the debt to
be refunded plus the principal of the debt to be
refunded.
The principal amount of the new debt does not exceed the
amount required to defease the debt to be refunded,
refinanced, or restructured, to establish customary debt
service reserves and to pay related costs of issuance.
This bill provides that if these conditions are satisfied,
the initial principal amount of the new debt may be greater
than the outstanding principal amount of the debt to be
refunded, refinanced, or restructured.
Definitions . Existing law authorizes a district to be
divided into project areas, each of which may be subject to
time limitations, pursuant to the statute.
This bill eliminates the time limitation and clarifies that
within a district, one or more project areas may be a
special waterfront district, as defined pursuant to state
law.
Existing law defines "public facilities" as facilities and
related services authorized to be financed by an IFD.
This bill authorizes public facilities to be public owned
or privately owned utility infrastructure if they are
available to or serve the general public. The bill adds
that public facilities include any capital facility fees
used to pay for public facilities.
This bill defines "county tax collector" as the
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county-auditor-controller, tax collector, or other officer
responsible for the property tax payment into the funds of
taxing entities.
Existing law defines "base year" as means the fiscal year
during which any infrastructure financing plan adopted
becomes effective.
This bill defines "base year" as the fiscal year in which
the assessed value of taxable property in the district was
last equalized prior to an ordinance adopted to create the
district's effective date, or a subsequent fiscal year
specified in the infrastructure financing plan for the
district.
Special waterfront infrastructure financing districts .
This bill creates procedures and powers for special
waterfront IFDs, specifically for a Port America's Cup
special waterfront IFD.
Port America's Cup . Existing law defines the Port
America's Cup district to include the San Francisco
waterfront that is or may be an America's Cup venue. In a
Port America's Cup district, a Port America's Cup special
waterfront IFD can only finance:
Construction of the Port's maritime facilities at Pier
27.
Planning and design work for the Port's maritime
facilities at Pier 27.
Planning, design, and construction of improvements to
publicly owned waterfront lands used as public spectator
viewing sites for America's Cup events.
Port America's Cup special waterfront IFD to spend the
proceeds of debt secured by ERAF money for the construction
of the Port's Pier 27 maritime facilities, including public
access and open space improvements.
Existing law defines a "Port America's Cup district" as a
special waterfront district in the City and County of San
Francisco designated as America's Cup venues, excluding
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venues within the Rincon Point-South Beach Redevelopment
Project Area.
This bill defines a "Port America's Cup district" as a
special waterfront district that includes one or more of
Seawall Lot 330, Pier 19, Pier 23, and Pier 29.
This bill expands the list of authorized uses to include
the acquisition of improvements at Pier 27. The bill
provides that any improvements authorized under the special
waterfront IFD is not required to be in the district.
This bill declares that all improvements in a Port
America's Cup district must deemed to be public facilities
of communitywide significance, which provide significant
benefits to an area larger than the area of the district.
Set-aside requirements . Existing law requires a Port
America's Cup special waterfront IFD (but not a Treasure
Island special waterfront IFD) to set aside at least 20% of
its share of property tax increment revenues from ERAF to
pay for improvements to federally or state-owned waterfront
lands used a public spectator viewing sites for America's
Cup events.
This bill clarifies that if any portion of the 20-percent
set-aside funds is allocated to a federal or state trustee
agency:
The special waterfront district enhanced financing plan
for the Port America's Cup district must specify the
portion of the 20-percent set-aside funds that is
allocated to any federal or state trustee agency. The
trustee agency's proposed use of set-aside funds does not
need to be described in the special waterfront district
enhanced financing plan.
San Francisco must direct the county tax collector to pay
the 20-percent set-aside funds allocated to the federal
or state trustee agency directly to such trustee agency.
State review and approval . Before authorizing debt by
either an America's Cup special waterfront IFD, San
Francisco officials must submit a fiscal analysis to the
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California Infrastructure and Economic Development Bank
(I-Bank) for review and approval. The I-Bank can ask other
state agencies to comment and offer recommendations. The
I-Bank must act within 30 days to either approve the fiscal
analysis or return it with specific recommendations for
changes.
To approve the fiscal analysis, the I-Bank must find that
there is a reasonable probability that the economic
activity proposed to occur from hosting the America's Cup
property would result in State General Fund revenue with a
net present value greater than the net present value of the
property tax increment revenues diverted from ERAF over the
term of the special waterfront IFD. The I-Bank must
consider only those State General Fund revenues that would
occur as a result of hosting the America's Cup in
California. Existing law prohibits the I-Bank from
considering State General Fund revenues that would have
occurred otherwise. The bank has 90 days upon the receipt
of the fiscal analysis to act. If the I-Bank does not act
within 90 days, the fiscal analysis is approved.
This bill eliminates the I-Bank review and approval, and
the requirement for San Francisco to reimburse the bank for
cost of review and approval of the fiscal analysis.
This bill provides that if any proceeds of the special
waterfront district ERAF-secured debt is allocated to a
federal or state trustee agency, the district must, within
90 days after issuance of the special waterfront district
ERAF-secured debt, report to the California Infrastructure
and Economic Development Bank about the use of the proceeds
of the special waterfront district ERAF-secured debt. The
improvements financed by the state or federal trustee
agency must be described in the special waterfront district
enhanced financing plan. The district and the federal or
state trustee agency must enter into a contract governing
the use of the proceeds of the special waterfront district
ERAF-secured debt, as required by bond counsel.
ERAF limits . Existing law caps the amount of county ERAF
portion of incremental tax revenue committed to a special
waterfront district at $1,000,000.
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This bill modifies the requirements of the Pier 70 enhanced
financing plan with respect to the issuance of ERAF-secured
debt, if specified conditions are met.
Background
San Francisco's Waterfront Development Plans . The 1968
Burton Act resulted in transferring the state tidelands
along San Francisco's waterfront to the City and County of
San Francisco, which assumed $55 million in state debt
obligations. The Port of San Francisco wants to promote
development, but lacks the public capital to attract and
retain private investors. The cost to implement the Port's
ten-year capital plan is $1.9 billion.
In 2008, San Francisco voters approved a charter amendment
to divert most of the Pier 70 area's hotel tax and payroll
tax revenues to fund historic preservation and
infrastructure costs. To generate the rest of the needed
money, Port officials plan to use local general obligation
bonds, revenue bonds, and IFD bonds.
In 2010, the BMW ORACLE Racing Team won the America's Cup
in Valencia, Spain. San Francisco will host the 34th
America's Cup regatta along the waterfront. Last year, The
Port of San Francisco believed that the cost of rebuilding
Piers 30-32, Seawall Lot 330, and Pier 50 will be $625
million. To generate some of the needed money, Port
officials asked the Legislature to use IFD bonds (AB 1199,
Ammiano, Chapter 664, Statutes of 2010).
Since last year, sponsors of the America's Cup race have
scaled back race plans. Port officials want to revise San
Francisco's IFD law related to the America's Cup to reflect
those changes.
San Francisco's Infrastructure Financing Districts . In
2005, legislators passed special provisions that apply just
to IFDs in San Francisco (SB 1085, Migden, Chapter 213,
Statutes of 2005). In 2010, the Legislature repealed those
special provisions and instead enacted a new special
statute governing the formation of IFDs along San
Francisco's waterfront, including special provisions for a
San Francisco waterfront IFD in the Pier 70 area (AB 1199,
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Ammiano, Chapter 664, Statutes of 2010).
In early 2011, San Francisco created Infrastructure
Financing District No. 1 (Rincon Hill), relying on the
standard IFD statutes. The Rincon Hill IFD is the second
IFD in California.
Last year, Legislators passed AB 1199 (Ammiano), Chapter
664, Statutes of 2010, which created a new statute for San
Francisco's special waterfront financing districts.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
Unknown with latest amendments.
SUPPORT : (Verified 8/21/12)
Port of San Francisco (source)
City and County of San Francisco
ARGUMENTS IN SUPPORT : The City and County of San
Francisco state that, "This measure makes several
clarifying and procedural changes to San Francisco's
ability to form an Infrastructure Financing District for
sites designated as America's Cup venues under the
jurisdiction of the Port of San Francisco.
"As enacted last year, SB 664 permits the City to create an
infrastructure financing district at 34th America's Cup
venue sites using up to $1 million per year of the ERAF
share of future property tax growth, and requires San
Francisco to submit a fiscal analysis to the California
Infrastructure and Economic Development Bank for review and
approval. AB 2259 would index the $1 million annual cap at
a 3% inflation rate. The full 45 year diversion of this
revenue would result in a net present value of $16.73
million, but existing law (AB 664) requires the ERAF stream
to return to the state after bonding debt is retired.
Based on a 30 year debt cycle, the value of the ERAF stream
is reduced dramatically to $13.1 million. This amount will
be more than offset by the state tax revenue generated by
hosting the America's Cup, which is estimated to be $48.7
million in additional state revenue."
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ASSEMBLY FLOOR : 78-0, 5/30/12
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fong, Fuentes, Furutani, Beth
Gaines, Galgiani, Garrick, Gatto, Gordon, Gorell, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Wagner, Wieckowski, Williams, Yamada, John A.
Pérez
NO VOTE RECORDED: Fletcher, Valadao
AGB:RJG:n 8/21/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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