BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 2551|
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THIRD READING
Bill No: AB 2551
Author: Hueso (D), et al.
Amended: 8/14/12 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-3, 7/3/12
AYES: Wolk, DeSaulnier, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
NO VOTE RECORDED: Yee
SENATE APPROPRIATIONS COMMITTEE : 5-2, 8/6/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
ASSEMBLY FLOOR : 46-26, 5/31/12 - See last page for vote
SUBJECT : Infrastructure financing districts: renewable
energy zones
SOURCE : East County Renewables Coalition
DIGEST : This bill authorizes cities and counties to
establish infrastructure financing districts (IFDs) and use
tax increment revenues derived from project areas to
finance renewable energy infrastructure or renewable energy
upgrades. An IFD formed for this purpose would be exempt
from voter approval requirements for formation of the
district, adoption of an infrastructure financing plan, and
issuance of bonds.
CONTINUED
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ANALYSIS : Existing law 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. To repay the bonds,
IFDs divert property tax increment revenues from local
governments that consent to forgo those revenues for up to
30 years. IFDs cannot divert property tax increment
revenues from schools (SB 308 (Seymour), Chapter 1575,
Statutes of 1990).
This bill authorizes a city or county to create an
infrastructure financing district in a renewable energy
infrastructure area without voter approval. This statute
applies only to a city or county that created and approved
a renewable energy infrastructure area in its jurisdiction.
This bill defines "renewable energy infrastructure area" as
an area that contains a proposed development project or
projects that would generate in total more than 50
megawatts of electricity using an eligible renewable energy
resource, as defined in state law, that is intended to be
used for commercial renewable energy production. Renewable
energy infrastructure areas may not include property
proposed to include rooftop solar energy systems unless the
property owner provides written consent to be contained in
the renewable energy infrastructure area.
This bill defines "commercial renewable energy production"
as a project that has an executed power purchase agreement
for the sale of the electricity from an eligible renewable
energy resource to a California retail seller, as defined
in state law, or a local publicly owned electric utility.
This bill requires that any tax increment generated within
the IFD may only be used within the district's boundaries
on renewable energy infrastructure or renewable energy
upgrades, and may not be used to offset any mitigation
responsibilities imposed on the development project.
This bill authorizes the city's legislative body to
aggregate the total megawatts of several areas that are not
contiguous in determining whether an area is a renewable
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energy zone.
This bill authorizes a city's legislative body to use this
statute to form an IFD in renewable energy infrastructure
area to promote renewable energy projects.
This bill exempts a city's legislative body from the
voter-approval requirements for the formation of an IFD,
adoption of a financial plan, and issuance of bonds, for
IFDs established in a renewable energy infrastructure area.
This bill declares that this statute is not intended to
interfere with, or prevent the exercise of, an agency or
department's existing authority to carry out its program,
projects, or responsibilities to identify, review, approve,
deny, or implement any mitigation requirements. This bill
further provides that this statute must not be construed as
a limitation on mitigation requirements for the project, or
a limitation on compliance with California Environmental
Quality Act requirements.
Comments
To form an IFD, 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. Once the other local officials approve, the city or
county must still get voter approval to:
Form the IFD, which requires 2/3-voter approval.
Issue bonds, which requires 2/3-voter approval.
Set the appropriations limit, which requires
majority-voter approval.
The deadline for filing lawsuits to challenge an IFD's
creation, financing plan, allocation of property tax
increment revenues, and tax allocation bonds is 30 days
after the local officials get voter approval.
Unlike former redevelopment projects, the property in an
IFD does not have to be blighted, but an IFD cannot overlap
a former redevelopment project area. The Legislature has
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declared, but not required, that IFDs should include
substantially undeveloped areas.
Public officials continue to search for ways to raise the
capital they need to invest in public works projects.
Expanded public infrastructure can boost the value of
nearby property. Higher property values produce higher
property tax revenues. Property tax increment financing
captures those property tax increment revenues.
Proposition 13 (1978) capped ad valorem taxes on real
property at one percent. Assessors reappraise property
whenever it is purchased, newly constructed, or when
ownership changes. Since 1980, assessors do not include
the value of a solar energy system in a property
assessment; a solar energy system installation also does
not trigger a reassessment. AB 1451 (Leno), Chapter 538,
Statutes of 2008, extended the date on which the property
tax exclusion for active solar energy systems will expire
in 2016.
Last year, the Legislature approved SB 1X2 (Simitian),
Chapter 1, Statutes of 2011, which requires that at least
33% of retail energy sales by investor owned utilities,
local publicly owned utilities, and energy service
providers must come from renewable energy resources by
December 31, 2020. Renewable energy sources include solar,
geothermal, biomass, hydroelectric, and wind.
Most of California's renewable energy potential rests in
the East Bay, southeastern counties, rural areas, and
tribal lands. The author would like to encourage local
governments to overcome local resistance and approve
renewable energy projects.
Related Legislation
AB 485 (Ma, 2011) removes the vote requirement to issue
bonds, form an IFD, and to set the appropriations limit, if
an infrastructure financing district implements a transit
village plans. The bill also requires the transit village
plan to set-aside 20% of the IFD's property tax increment
for affordable housing.
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AB 910 (Torres, 2011) adds affordable housing, economic
development, and transit villages to the list of authorized
IFD projects.
AB 1827 (Bonilla, 2012) authorizes military base reuse
authority to form IFDs. The bill authorizes IFDs to
finance homeless accommodations.
AB 2114 (Pérez, 2012) renames IFD law to the Infrastructure
and Revitalization Financing District. It removes the vote
requirement to issue bonds, form an IFD, and to set the
appropriation limit. The bill requires annual construction
progress reports, prohibits big-box subsidies, and
authorizes IFD use for military bases, sustainable
community strategies, and powers under the Polanco Act.
AB 2259 (Ammiano, 2012) amends provisions pertaining to San
Francisco's use of IFD revenues to support America's Cup.
SB 214 (Wolk, 2011) removes the vote requirement to issue
bonds, form an IFD, and set the appropriation limit. The
bill requires annual construction progress reports,
prohibits big-box subsidies, and promotes the use of IFDs
for Polanco Act clean-up, transit priority projects, and
disadvantaged communities.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee, unknown
diversion of local agency property tax revenues for IFD
purposes, subject to approval by each affected local taxing
agency. IFD law prohibits the diversion of schools' share
of the property tax, so the bill would have no state fiscal
impact related to backfilling diversions of school revenues
to meet the minimum funding guarantees of Proposition 98.
SUPPORT : (Verified 8/15/12)
East County Renewables Coalition (source)
Gildred Solar
Hamann Companies
RBF Consulting
TSAC Engineering
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Wally's World
OPPOSITION : (Verified 8/15/12)
California Association of Realtors
California Taxpayers Association
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : According to the author:
Renewable energy projects are the present and the future
in California. An IFD provides another tool for local
jurisdictions seeking to fund community-benefitting
projects in renewable energy areas.
Many communities across the state lack basic
infrastructure and the ability to adequately finance
improvements. Allowing a jurisdiction to be more nimble
in the creation of IFDs in Renewable Energy Areas will
assist those jurisdictions in bringing benefits to the
local communities impacted by the developments.
AB 2551 recognizes the need for renewable energy
development projects and the impacts they and other
projects have on local communities.
ARGUMENTS IN OPPOSITION : The California Association of
Realtors writes, "Generally, two-thirds of the voters must
favor creation of an infrastructure financing district
before a legislative body can create the district.
However, AB 2551 specifically provides that 'an election
shall not be required to form an infrastructure financing
district, adopt an infrastructure financing plan, or issue
bonds pursuant to this chapter.' We strongly believe the
individuals who are going to pay the taxes to finance the
district should approve creation of the district."
ASSEMBLY FLOOR : 46-26, 5/31/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Butler, Campos,
Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer,
Fuentes, Furutani, Gatto, Gordon, Hall, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Lara, Bonnie
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Lowenthal, Ma, Mitchell, Monning, Pan, Perea, V. Manuel
Pérez, Skinner, Solorio, Swanson, Torres, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Achadjian, Bill Berryhill, Buchanan, Conway, Cook,
Donnelly, Beth Gaines, Galgiani, Garrick, Gorell, Grove,
Hagman, Halderman, Harkey, Jeffries, Jones, Knight,
Logue, Miller, Morrell, Nestande, Nielsen, Olsen, Silva,
Smyth, Wagner
NO VOTE RECORDED: Charles Calderon, Fletcher, Fong,
Mansoor, Mendoza, Norby, Portantino, Valadao
AGB:m 8/15/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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