BILL ANALYSIS Ó
AB 2551
Page 1
Date of Hearing: April 18, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2551 (Hueso) - As Amended: March 29, 2012
SUBJECT : Infrastructure financing districts: renewable energy
zones.
SUMMARY : Authorizes a legislative body of a city or county to
establish an infrastructure financing district (IFD) in a
renewable energy zone area, as defined, and exempts the creation
of the IFD from voter-approval requirements. Specifically, this
bill :
1)Authorizes a legislative body of a city or county to form an
IFD in renewable energy zone areas for the purpose of
promoting renewable energy projects.
2)Exempts the creation of an IFD in renewable energy zone areas
from specified voter approval requirements.
3)Requires the legislative body of the city or county to comply
with all other applicable requirements contained in IFD law
relating to the financing of the IFD.
4)Defines "renewable energy zone" to mean an area that is
characterized by the proposed development of more than 10
megawatts of renewable energy projects, including, but not
limited to, solar, wind, and geothermal projects, as
determined by the legislative body.
5)Requires, in determining whether an area constitutes a
renewable energy zone, the legislative body to consider zones
that are not contiguous and may aggregate the total megawatts
of several areas.
6)Requires the provisions of the bill to apply only to a city
and county that contains within its jurisdiction a renewable
energy zone.
7)States that the provisions of the bill shall prevail over any
other provision of law, to the extent that there is a
conflict.
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EXISTING LAW :
1)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.
2)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.
3)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
public hearing.
4)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
IFD.
5)Requires that every local agency who will contribute its
property tax increment revenue to the IFD approve the plan.
6)Requires a two-thirds voter approval of the formation of the
IFD and the issuance of bonds.
7)Requires majority voter approval for setting the IFD's
appropriations limits.
8)Specifies that public agencies that own land in a proposed IFD
may not vote on issues regarding the district.
9)Authorizes IFDs to issue a variety of debt instruments,
including bonds, certificates of participation, leases, and
loans.
10)Requires any IFD that constructs dwelling units to set aside
not less than 20% of those units to increase and improve the
community's supply of low- and moderate-income housing
available at an affordable housing cost to persons and
families of low- and moderate-income.
FISCAL EFFECT : Unknown. This bill is keyed fiscal.
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COMMENTS :
1)According to the sponsor, the East County Renewables
Coalition, this bill creates a financing mechanism for cities
who want to create infrastructure projects for the community
while promoting the development of renewable energy. To do
this, the bill removes the voter-approval requirement to form
an IFD in a renewable energy zone, as identified by the
legislative body of a city. A renewable energy zone is
defined in the bill as an area proposed for the development of
more than 10 megawatts of renewable energy products.
The sponsor notes that in order to be developed, renewable
energy projects need a renewable energy source and the
infrastructure to move that energy, which can create a
concentration of projects near urban communities. The sponsor
believes that this designation is not a land use planning
tool, but instead a recognition of the implications of many
projects concentrated in one area.
Once created, these IFDs can take property tax increment
dollars and use them locally for infrastructure and community
benefit needs.
2)Since the creation of IFD law there have been multiple bills
that have tailored IFD law to specific local circumstances.
In 1999 the Legislature created a parallel law for IFDs to
stimulate development and international trade in the "border
development zone," about 400 square miles next to the Mexico
border ÝSB 207 (Peace), Chapter 773, Statutes of 1999].
However, San Diego officials have yet to use this authority.
In 2005, the Legislature passed SB 1085 (Migden), Chapter 213,
Statutes of 2005, which provided for changes and additions to
the IFD law to enable the City and County of San Francisco to
finance needed public infrastructure improvements to specified
waterfront properties. This authority was expanded even
further for San Francisco in AB 1199 (Ammiano), Chapter 664,
Statutes of 2010.
3)Cities and counties can create IFDs to pay for regional scale
public works (SB 308, Seymour, 1990). IFDs can divert the
non-school shares of property tax increment revenues to
finance highways, transit, water systems, sewer projects,
flood control, child care facilities, libraries, parks, and
solid waste facilities. IFDs can't pay for maintenance,
AB 2551
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repairs, operating costs, and services. Unlike redevelopment
project areas, the property in an IFD doesn't have to be
blighted. IFDs and redevelopment agencies' project areas
can't overlap.
Forming an IFD is cumbersome. The city or county must develop
an infrastructure plan, send copies to every landowner,
consult with other local governments, and hold a public
hearing. Every local agency that will contribute its property
tax increment revenue to the IFD must approve the plan.
Schools cannot shift their property tax increment revenues to
the IFD. Once the other local agencies approve, the city or
county must still get the voters' approval to form the IFD
(two-thirds voter approval), issue bonds (two-thirds voter
approval), and vet the IFD's appropriations limit
(majority-voter approval).
Until the Attorney General's 1998 opinion, local officials
were reluctant to form IFDs because they worried about the
constitutionality of using tax increment revenue from property
that was not within a redevelopment project area.
Because an IFD is legally separate from the city or county,
it's similar to a community redevelopment agency. Like a
redevelopment agency, there is no constitutional requirement
for two-thirds voter approval to form an IFD or to issue
bonds. The requirement for two-thirds voter approval is not
based on any constitutional requirement, but instead,
represents the political comprise that legislators struck in
1990.
4)This bill allows the tax increment brought in by the IFD to be
used in a broad manner. The Committee may wish to consider
whether there should be restrictions on what the increment can
be used for, especially given that this bill allows for an IFD
to be created without a public vote, and given that increment
can be used outside of the boundaries of an IFD.
The Committee may wish to consider whether the bill should be
narrowed to make it explicit that the tax increment from the
IFD must be used to help pay for the infrastructure directly
supporting the renewable energy projects, rather than
community-wide benefits like child care facilities, libraries,
and parks.
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5)Support arguments : Supporters argue that this bill will
assist local governments and provide avenues to help the state
reach its goal of 33% renewable energy by 2020.
Opposition arguments : The California Association of Realtors
believes that individuals who are going to pay the taxes to
finance the Ýinfrastructure financing] district should approve
the creation of the district.
REGISTERED SUPPORT / OPPOSITION :
Support
East County Renewables Coalition ÝSPONSOR]
Hamann Companies
Nakao International C & E
RBF Consulting
Wally's World
TSAC Engineering
Opposition
California Association of Realtors
Southern California Edison
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958