BILL ANALYSIS Ó
AB 2551
Page 1
GOVERNOR'S VETO
AB 2551 (Hueso)
As Amended August 14, 2012
2/3 vote
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|ASSEMBLY: |46-26|(May 31, 2012) |SENATE: |21-14|(August 23, |
| | | | | |2012) |
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|ASSEMBLY: |46-27|(August 27, | | | |
| | |2012) | | | |
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Original Committee Reference: L. GOV.
SUMMARY : Authorizes a legislative body of a city or county to
establish an infrastructure financing district (IFD) in a
renewable energy infrastructure area, as defined, and exempts
the creation of the IFD from voter-approval requirements.
The Senate amendments :
1)Limit the use of tax increment for an IFD created pursuant to
the bill's provisions, as follows:
a) Within the boundaries of that district; and,
b) On renewable energy infrastructure or renewable energy
upgrades.
2)Allow a renewable energy infrastructure area to include a
rooftop solar energy system only if the property owner
provides written consent that the property be contained in the
renewable energy infrastructure area.
3)Specify that the bill's provisions are not intended to
interfere with, or prevent the exercise of, the existing
authority of an agency or department to carry out its
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programs, projects, or responsibilities to identify, review,
approve, deny, or implement any mitigation requirements.
4)Specify that the bill's provisions shall not be construed as a
limitation on mitigation requirements for the project, or a
limitation on compliance with requirements under the
California Environmental Quality Act (CEQA) or any other
provisions of law.
5)Prohibit an IFD, created pursuant to the bill's provisions,
from using property tax increment to pay for, in whole or in
part, subsidize, make affordable, conditions of project
approval or mitigation requirements imposed on a private
developer of a renewable energy project.
6)Revise and add several definitions, as follows:
a) Define "renewable energy infrastructure area" to mean 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, that is intended to be used for
commercial renewable energy production.
b) Define "commercial renewable energy production" to mean
that the project 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,
or a local publicly owned utility, as defined.
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.
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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.
AS PASSED BY THE ASSEMBLY , this bill:
1)Authorized 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)Exempted the creation of an IFD in renewable energy zone areas
from specified voter approval requirements.
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3)Required 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)Defined "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)Required, 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)Required the provisions of the bill to apply only to a city
and county that contains within its jurisdiction a renewable
energy zone.
7)Stated that the provisions of the bill shall prevail over any
other provision of law, to the extent that there is a
conflict.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill contains 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.
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 infrastructure area, as identified by
the legislative body of a city. A renewable energy
infrastructure area is defined in the bill as an area that
contains a proposed development project or projects that would
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generate in total more than 50 megawatts of electricity using an
eligible renewable energy resource, as defined, that is intended
to be used for commercial renewable energy projection.
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 ÝSB 308 (Seymour), Chapter 1575, Statutes of 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 cannot pay for
maintenance, repairs, operating costs, and services. Unlike
redevelopment project areas, the property in an IFD does not
have to be blighted. IFDs and redevelopment agencies' project
areas cannot 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).
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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 is 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.
Amendments taken in the Senate limit the use of tax increment to
within the boundaries of that IFD, and specifically for
renewable energy infrastructure or renewable energy upgrades.
Amendments also specify that a renewable energy infrastructure
area may include property that is proposed to include a rooftop
solar energy system, but only if the property owner provides
written consent that the property be contained in the renewable
energy infrastructure area, and prohibit an IFD created pursuant
to the bill's provisions from using tax increment to pay for, in
whole or in part, subsidize, or make affordable, conditions of
project approval or mitigation requirements imposed on a private
developer of a renewable energy development project.
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 IFD should approve the creation of the district.
GOVERNOR'S VETO MESSAGE :
"This bill authorizes a legislative body of a city or county to
form an Infrastructure Financing District in renewable energy
zone areas to issue bonds to pay for renewable energy projects.
"While I am supportive of the author's efforts to promote the
development of renewable energy sources, this bill is premature.
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This measure would likely cause cities to focus their efforts
on using the new tools provided by the measure instead of
winding down redevelopment. This would prevent the state from
achieving the General Fund savings assumed in this year's
budget."
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0005956