BILL ANALYSIS Ó
AB 2551
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Date of Hearing: May 2, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2551 (Hueso) - As Amended: March 29, 2012
Policy Committee: Local
GovernmentVote:6-3
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
As proposed to be amended, this bill 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)Requires, in determining whether an area constitutes a
renewable energy zone, the legislative body to consider zones
that are not contiguous and aggregate the total megawatts of
several areas.
2)States that the provisions of the bill shall prevail over any
other provision of law, to the extent there is a conflict.
FISCAL EFFECT
Although IFD law is clear that schools cannot participate,
creation of an IFD can have a negative impact on school funding.
IFD law is unclear about property tax revenues from the
Educational Revenue Augmentation Fund (ERAF). Since these funds
originate with a taxing entity other than schools, there is an
argument that the ERAF increment could flow to the IFD. If that
were to happen, there would be a corresponding cost to the
General Fund as the property tax increment would otherwise
offset General Fund obligations to schools, pursuant to the
Proposition 98 minimum funding guarantee. The actual impact to
the General Fund is unknown because it will depend on the number
of basic aid school districts, but it could be hundreds of
thousands of dollars.
AB 2551
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COMMENTS
1)Purpose . 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.
2)Background - IFDs . Existing law authorizes cities and counties
to create Infrastructure Financing Districts (IFDs) and issue
bonds to pay for highways, transit, water systems, sewer
projects, flood control, child care facilities, libraries,
parks and solid waste facilities. To repay the bonds, IFDs
divert property tax increment (that is, the growth in property
tax revenues resulting from the developments) from other local
governments for 30 years. However, IFDs cannot divert
property tax increment revenues from schools (although there
is ambiguity with respect to the ERAF portion of school
property taxes). There are numerous requirements for the
formation and operation of IFDs, including extensive
infrastructure planning and consultation with other local
governments, public hearings and voter approval.
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.
3)Previous legislation . There have been bills that have
tailored IFD law to specific local circumstances.
AB 2551
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a) SB 207 (Peace), Chapter 773, Statutes of 1999 created
IFDs to stimulate development and international trade in
the "border development zone," about 400 square miles
adjacent to the Mexico border.
b) SB 1085 (Migden), Chapter 213, Statutes of 2005 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.
c) AB 1199 (Ammiano), Chapter 664, Statutes of 2010,
further amended IFD law to provide funding for shoreline
improvements within the City and County of San Francisco.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081