BILL ANALYSIS Ó
AB 2551
Page 1
ASSEMBLY THIRD READING
AB 2551 (Hueso)
As Amended March 29, 2012
Majority vote
LOCAL GOVERNMENT 6-3 APPROPRIATIONS 12-5
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|Ayes:|Alejo, Bradford, Campos, |Ayes:|Fuentes, Blumenfield, |
| |Davis, Gordon, Hueso | |Bradford, Charles |
| | | |Calderon, Campos, Davis, |
| | | |Gatto, Ammiano, Hill, |
| | | |Lara, Mitchell, Solorio |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Smyth, Knight, Norby |Nays:|Harkey, Donnelly, |
| | | |Nielsen, Norby, Wagner |
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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
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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.
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
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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 : According to the Assembly Appropriations Committee,
there are negligible fiscal impacts to the state.
COMMENTS : 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.
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.
Cities and counties can create IFDs to pay for regional scale public
works (SB 308 (Seymour), Chapter 1575, Statutes of 1990). IFDs can
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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 cannot pay for maintenance, 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.
This bill allows the tax increment brought in by the IFD to be used
in a broad manner. The Legislature 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 Legislature 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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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.
Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958
FN: 0003813