BILL ANALYSIS Ó SB 310 Page 1 Date of Hearing: June 29, 2011 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair SB 310 (Hancock) - As Amended: June 20, 2011 SENATE VOTE : 22-17 SUBJECT : Local development. SUMMARY : Allows cities and counties to create incentives for transit priority projects. Specifically, this bill : 1)States that it is the intent of the Legislature to provide a process for cities and counties to create development patterns in the form of transit priority projects that comply with the implementation of a sustainable communities strategy (SCS), create good jobs, reduce vehicle miles traveled, expand the availability of accessible open-space, build the density needed for transit viability, and meet regional housing targets. 2)Establishes the Transit Priority Project Program (TPPP). 3)Authorizes a city or county to participate in the TPPP by adopting an ordinance indicating its intent to participate in the program. 4)Clarifies that a city, county, or private developer may create a transit priority project pursuant to an SCS without participating in the TPPP. 5)Requires a city or county, if it elects to participate in the TPPP, to amend the general plan and community, if necessary, to allow participating developers to build at an increased height of a minimum of three stories. 6)Requires a development project to meet all of the following: a) Is located in a designated transit priority project and within one-half of one mile of a transit station consistent with the implementation of an SCS; b) Is located within a zone in which buildings of three stories or more are authorized; SB 310 Page 2 c) Meets State Air Resources Board land use guidelines with respect to distance from major emitters; d) Provides onsite bicycle parking; e) Provides for car sharing if a car sharing program is available in the city or county; f) Provides unbundled parking; g) Provides to all units transit passes for 10 years as part of the rent or condo fees if transit passes are available from local providers; h) Provides to tenants recycling for bottles, cans, paper, and plastic containers; i) Provides open space onsite, including, but not limited to, accessible roof gardens, or pays a fee into a fund established for local open space; j) Provides 20% affordable units in rental or owner occupied housing for low- or moderate-income persons and families, or pays a fee in an amount equivalent to the cost to provide affordable units elsewhere within the city's or county's jurisdiction, as determined by the city or county. Built units require an affordability covenant of 55 years for rental units and 45 years for owner occupied units. aa) Pays prevailing wages to construction workers for residential projects over 100 units; and, bb) Meets the standards for expedited review under provisions of the Permit Streamlining Act by containing at least 49% affordable units in the development and applying for public financial assistance for the project. 7)Requires the following to be applicable to a development project that is eligible for the streamlined permitting procedures of a TPPP: a) The project complies with any local design guidelines that were adopted prior to the submission of the project SB 310 Page 3 application; and, b) If the project is located entirely within the boundaries of an infrastructure financing district (IFD), the IFD may pay for any planning related fees. 8)Specifies for the car sharing program the car sharing area may be onsite, or the developer may pay a fee to the city or county to cover the cost of providing for car sharing at an offsite location near the project. The developer is required to provide one car share for the first 20 units and one car share for every 50 units thereafter. 9)Defines "unbundled parking" as renting a parking space for the residential units separately from the residential units, or pays a fee to the appropriate local transit management fund to cover one-half of the cost of providing a parking space. 10)Prohibits the fee a developer could pay in lieu of providing space from exceeding 10 cents ($0.10) per square foot. 11)Authorizes an IFD to reimburse a developer of a project that is both located entirely within the boundaries of that IFD and qualifies for the streamlined permit procedures of a TPPP, for any permit expenses incurred pursuant to that TPPP or to offset additional expenses incurred by the developer in constructing affordable housing units. 12)Changes the time period that any action or proceeding to attack, review, set aside, void, or annul the creation of an IFD or the adoption of an infrastructure financing plan from 30 days after the enactment of the ordinance creating the IFD to 30 days after the date the legislative body adopted the resolution adopting the infrastructure financing plan. 13)Changes the time period that any action or proceeding to attack, review, set aside, void, or annul the issuance of bonds by the IFD from 30 days after the resolution that the voters approved the issuance of bonds to 30 days from the date the legislative body adopted the resolution providing for the issuance of bonds. 14)Expands the life of an IFD from 30 to 40 years. SB 310 Page 4 15)Requires the infrastructure financing plan to include a plan for financing any potential costs that may be incurred by reimbursing a developer of a project that is both located entirely within the boundaries of that district and qualifies for the streamlined permit procedures of a TPPP for any permit expenses incurred pursuant to that program. 16)Removes the election requirement to form an IFD, adopt an infrastructure financing plan, or issue bonds. 17)Prohibits a city or county from participating in a TPPP if it: a) Prohibits paying prevailing wages for public works; or, b) Prohibits contractors and others from prehire collective bargaining or similar agreements with labor organizations regarding employment terms and conditions on construction projects. EXISTING LAW : 1)Requires the regional transportation plan for specified regions to include an SCS, as specified, designed to achieve certain goals for the reduction of greenhouse gas (GHG) emissions from automobiles and light trucks in a region. 2)Provides that a SCS must: a) Identify the general location of uses, residential densities, and building intensities within the region; b) Identify areas within the region sufficient to house all the population of the region, including all economic segments of the population, over the course of the planning period of the regional transportation plan; c) Identify areas within the region sufficient to house an eight-year projection of the regional housing need for the region; d) Identify a transportation network to service the transportation needs of the region; e) Gather and consider the best available scientific SB 310 Page 5 information regarding resource areas and farmland in the region; f) Set forth a forecasted development pattern for the region, which, when integrated with the transportation network, and other transportation measures and policies, will reduce GHG emissions from automobiles and light trucks to achieve, if there is a feasible way to do so. g) Quantify the reduction in GHG emissions projected to be achieved by the SCS and, if the SCS does not achieve the targeted reductions in GHG emissions, set forth the difference between the amount that the SCS would reduce GHG emissions and the target for the region. 3)Requires a transit priority project to (a) contain at least 50% residential use, based on total building square footage and, if the project contains between 26% and 50% nonresidential uses, a floor area ratio of not less than 0.75; (b) provide a minimum net density of at least 20 dwelling units per acre; and (c) be within one-half mile of a major transit stop or high-quality transit corridor included in a regional transportation plan. 4)Defines "major transit stop" as a site containing an existing rail transit station, a ferry terminal served by either a bus or rail transit service, or the intersection of two or more major bus routes with a frequency of service interval of 15 minutes or less during the morning and afternoon peak commute periods. 5)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. 6)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. 7)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. SB 310 Page 6 8)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. 9)Requires that every local agency who will contribute its property tax increment revenue to the IFD approve the plan. 10)Requires a two-thirds voter approval of the formation of the IFD and the issuance of bonds. 11)Requires majority voter approval for setting the IFD's appropriations limits. 12)Specifies that public agencies that own land in a proposed IFD may not vote on issues regarding the district. 13)Authorizes IFDs to issue a variety of debt instruments, including bonds, certificates of participation, leases, and loans. 14)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. FISCAL EFFECT : None COMMENTS : 1)SB 375 built on the existing regional transportation planning process to connect the reduction of GHG from cars and light trucks to land use and transportation policy. In 2006, the Legislature passed AB 32, the Global Warming Solutions Act of 2006, which requires the State of California to reduce GhG emissions to 1990 levels no later than the year 2020. SB 375 asserted that "without improved land use and transportation policy, California will not be able to achieve the goals of AB 32." 2)SB 310 seeks to further the objectives of SB 375 by creating a voluntary option for cities and counties to encourage transit-oriented development in IFDs. SB 310 builds on IFD law by allowing IFD funding to help incentivize TPPPs thus SB 310 Page 7 promoting denser residential and mixed use development closer to transit stations. The author "believes that insufficient incentives exist to surmount certain financial and procedural barriers to construct infill and transit- oriented development. Additionally, the author seeks to require developers to reciprocate incentives to construction workers and residents of transit priority projects." 3)Cities and counties can 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 other local governments for 30 years. However, IFDs are prohibited from diverting property tax increment revenues from schools. 4)Public officials continue to search for ways to raise the capital they need to invest in public works projects, like public transit facilities, infill development, or clean water. One concept recognizes that expanded public structures 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. When redevelopment officials use property tax increment financing to eradicate blight, state law does not require voter approval. When local officials use IFDs to capture property tax increment revenues, state law requires a two-thirds approval. 5)Recognizing these barriers, SB 310 removes key impediments to IFDs, such as the voting requirements to form and bond the IFD. In addition, the bill extends the term of the IFD bonds from 30 to 40 years, allowing for a longer debt repayment period lowering monthly payments. 6)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. 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 SB 310 Page 8 builders to use the bill. 7)In SB 310 there are specific requirements that the project meet the standards for expedited review by containing at least 49% affordable units in the development and applying for public financial assistance for the project. However, the bill also requires that the project contain 20% affordable units with affordability covenants of 45-55 years. The Committee may wish the author to clarify if these affordable unit requirements can overlap or will the project be required to have 69% of the units be affordable? The amount of IFD increment eligible to be used to pay for affordable housing is unclear. Is it just to meet the 20% required under one of the provisions of the bill or could the funding also pay for the 49% affordable units that are required for the expedited review? The Committee may wish to ask the author to clarify this point. 8)This measure, AB 485 (Ma), AB 910 (Torres), and SB 214 (Wolk) all contain similar provisions in IFD law and will need to contain double-jointing language in order to not have chaptering out issues if the measures move forward. 9)Support arguments: Supporters argue that SB 310 creates a more flexible development tool to finance needed affordable housing and transit-oriented development projects. Given the "opt-in" nature of IFDs tax increment financing, more local governments will have a voice in if their growth in property tax is allocated, a luxury currently not provided to them under redevelopment law. Opposition arguments: Opposition could say that by removing the voter approval requirements for the creation of an IFD and the issuance of tax allocation bonds will remove any input or direct voter oversight. Moreover, with the removal of the voting requirement the measure is creating more of a redevelopment type agency without the requirement of making a finding of blight. SB 310 Page 9 REGISTERED SUPPORT / OPPOSITION : Support American Federation of State, County and Municipal Employees, AFL-CIO Metropolitan Transportation Commission Natural Resource Defense Council San Francisco Bay Area Rapid Transit District Santa Clara Valley Transportation Authority State Building and Construction Trades Council of California TransForm Opposition California Building Industry Association (unless amended) California Business Properties Association (unless amended) California Taxpayers Association Howard Jarvis Taxpayers Association Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958