BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: SB 310 HEARING: 4/27/11
AUTHOR: Hancock FISCAL: Yes
VERSION: 4/25/11 TAX LEVY: No
CONSULTANT: Detwiler
TRANSIT PRIORITY PROJECTS
Allows cities and counties to create incentives for transit
priority projects.
Background and Existing Law
California has a goal of reducing greenhouse gas emissions
(AB 32, Nu�ez & Pavley, 2006). Reducing vehicle emissions
involves multiple strategies, including clean technology as
well as reducing the amount of vehicle miles traveled.
Among the ways to reduce vehicle miles is better
coordination of transportation and land use plans and
increasing the density in existing areas and new
development projects. To those ends, the Legislature
linked transportation planning and land use planning by
state, regional, and local agencies. Metropolitan planning
organizations and their constituent counties and cities are
preparing sustainable communities strategies. Among the
incentives to implement those policies is the opportunity
for developers to gain accelerated approval for projects
that promote those goals (SB 375, Steinberg, 2008).
Proposed Law
I. Transit priority projects . A "transit priority
project" must contain at least 50% residential use, have a
residential density of at least 20 dwelling units an acre,
and be within a half-mile of a major transit stop. If the
transit priority project meets additional environmental
criteria, it qualifies as a "sustainable communities
project," and is statutorily exempt from the California
Environmental Quality Act (CEQA) (SB 375, Steinberg, 2008).
Some builders, community leaders, and legislators want to
create additional incentives to develop projects that help
to reduce greenhouse gas emissions, reduce vehicle travel,
SB 310 -- 4/25/11 -- Page 2
promote transit, and result in more balanced development.
Senate Bill 310 creates the Transit Priority Project
Program and allows a city or county to participate by
adopting an ordinance. A city or county cannot participate
if it:
Prohibits paying prevailing wages for public works.
Prohibits contractors and others from prehire,
collective bargaining, or similar agreements with
labor organizations regarding employment terms and
conditions on construction projects.
A participating city or county must amend its general plan
and community plan to allow participating developers to
build a minimum of three stories.
A development project must:
Be in a designated transit priority project and
within a half-mile of a transit station.
Be within a zone that allows three-story buildings.
Meet State Air Resources Board land use guidelines
regarding distance from major emitters.
Comply with the Gold standard of the United State
Green Building Council Leadership in Energy and
Environmental Design or Standard 189.1 of the American
Society of Heating, Refrigerating and Air Conditioning
Engineers.
Provide onsite bicycle parking.
Provide car sharing, if available. The developer
must either provide car sharing onsite or pay a fee to
provide the car sharing offsite. The developer must
provide one car share for the first 20 units and one
car share for every subsequent 50 units.
Provide "unbundled parking," that is, renting
parking spaces separately from residential rents.
Alternatively, the developer can pay a fee to cover
half the cost of a parking space.
Provide transit passes for 10 years as part of the
rent or condo fees.
Provide recycling for bottles, cans, papers, and
plastic container.
Provide onsite open space, including roof gardens.
Alternatively, the developer can pay a maximum fee of
10� per square foot.
Provide 20% affordable units for low- or
moderate-income persons and families. Alternatively,
SB 310 -- 4/25/11 -- Page 3
the developer can pay an equivalent amount as a fee to
provide the affordable units somewhere else within the
city or county. Rental housing units must remain
affordable for at least 55 years and owner-occupied
units for 45 years, guaranteed by the developer's
covenants or restrictions.
Pay prevailing wages to construction workers in
residential projects with more than 100 units.
Meet the affordable housing standards set by an
existing law that requires public officials to act
more quickly on applications for qualifying projects.
The project must also comply with any local design
guidelines adopted before the submission of the project
application.
If the project is within an Infrastructure Finance District
(IFD), the IFD may pay for the developer's:
Permit processing fees.
Costs of constructing affordable housing units.
II. Infrastructure Financing Districts . Cities and
counties can create Infrastructure Financing Districts
(IFDs) and issue bonds to pay for community scale public
works. To repay the bonds, IFDs divert property tax
increment revenues from other local governments. However,
IFDs can't divert property tax increment revenues from
schools (SB 308, Seymour, 1990).
Voter approval . 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. Once the other local officials
approve, the city or county must still get the voters'
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.
Senate Bill 310 repeals the voter approval requirements to
form an IFD, issue IFD bonds, and set the IFD's
appropriations limit. �See �2 to �18 of the bill.]
SB 310 -- 4/25/11 -- Page 4
IFD spending . An IFD can fund public capital facilities of
community-wide significance which benefit an area that's
larger than the district, including highways, transit,
sewer projects, water systems, flood control, child care
facilities, libraries, parks, and solid waste facilities.
Senate Bill 310 allows an IFD to reimburse the permit
expenses and affordable housing costs of a developer of a
project located within the IFD and qualifies for
streamlined permit procedures under an existing statute.
ݧ1]
IFD plan . When local officials want to establish an IFD,
they must propose an infrastructure financing plan,
including a detailed financing section. If local officials
want to reimburse the permit expenses and affordable
housing costs of a qualified developer, Senate Bill 310
requires the proposed infrastructure financing plan's
financing section to include that information. ݧ4]
Bond terms . The term of IFDs' bonds can't be more than 30
years. Senate Bill 310 extends the maximum term of IFDs'
bonds from 30 years to 40 years. ݧ4]
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Building better communities in
the new century requires intense collaboration among
willing developers, local leaders, and supportive
neighbors. The statewide goals launched by AB 32 (Nu�ez &
Pavley, 2006) need to be translated into well-designed and
economically feasible development projects in downtowns,
older suburbs, and new development. SB 375 (Steinberg,
2008) pointed the way to this future by linking
transportation and land use planning programs. SB 375
contained incentives for developers who want to build
projects that fit state, regional, and local growth
policies. As communities explore other opportunities to
promote better development decisions, legislators can help
by pointing the way. SB 310 encourages builders with
SB 310 -- 4/25/11 -- Page 5
projects that meet these goals by allowing local officials
to use funds from infrastructure financing districts to pay
for the developer's processing fees and the costs of
affordable housing. These economic incentives show that
communities are willing to support developers who want to
build smart.
2. Sometimes a great notion . To qualify for the economic
subsidies offered by SB 310, a builder must propose a
project that meets more than a dozen conditions, from car
sharing to prevailing wages. Some of these requirements
may be difficult for builders and local officials to adapt
to specific projects. Some of the bill's detailed language
looks more like a deal sheet than a statewide policy
program. Local officials already bargain with developers.
Cities regularly ask builders for concessions in return
for lowering fees or expediting decisions. The Committee
may wish to consider whether the incentives in SB 310 are
enough to convince builders to use the bill.
3. Voter review . The California Constitution requires
2/3-voter approval before cities or counties can issue
long-term debt backed by local general purpose revenues;
school districts need 55%-voter approval. That's why local
general obligation bonds need 2/3-voter approval. The
courts have explained that cities need 2/3-voter approval
before they dedicate portions of their general funds to pay
for bonds. That's why local limited obligation bonds need
2/3-voter approval. However, because that constitutional
limit doesn't mention redevelopment agencies, local
officials don't need voter approval before they issue tax
allocation bonds. Redevelopment agencies are not diverting
local general funds, they pay for their bonds with property
tax increment revenues. When Governor Deukmejian signed
the 1990 Seymour bill that created IFDs, there was a
political agreement that local officials should get
2/3-voter approval before they could issue IFD bonds. That
requirement is statutory and not based on a constitutional
limitation. There is no constitutional requirement for
IFDs to seek 2/3-voter approval (or any voter-approval)
before they issue bonds backed by property tax increment
revenues. SB 310 repeals the statutory requirement for
2/3-voter approval of IFDs' bonds. The Committee may wish
to consider what voter approval (if any) local officials
should seek before issuing IFD bonds.
SB 310 -- 4/25/11 -- Page 6
4. Back to Rules . Other Senate policy committees may want
to review SB 310. If the Senate Governance & Finance
Committee approves the bill on April 27, the Senate Rules
Committee has directed this Committee to send the bill back
to Rules for further review and possible re-referral.
Support and Opposition (4/21/11)
Support : American Federation of State, County and
Municipal Employees; State Building and Construction Trades
Council of California.
Opposition : American Forest & Paper Association; American
Wood Council; California Forestry Association; California
Taxpayers Association.