BILL ANALYSIS                                                                                                                                                                                                    Ó



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          SENATE THIRD READING
          SB 310 (Hancock)
          As Amended  June 20, 2011
          Majority vote 

           SENATE VOTE  :22-17  
           
           LOCAL GOVERNMENT    6-3                                         
           
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          |Ayes:|Lara, Bradford, Campos,   |     |                          |
          |     |Williams, Gordon, Hueso   |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Smyth, Knight, Norby      |     |                          |
          |     |                          |     |                          |
           ----------------------------------------------------------------- 

           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 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 TPPP.

          5)Requires a city or county, if it elects to participate in 
            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. 








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          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;

             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 








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               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 
               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 $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 








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            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.

          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 an 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 








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               region; 

             d)   Identify a transportation network to service the 
               transportation needs of the region; 

             e)   Gather and consider the best available scientific 
               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; and, 

             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 








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            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.

          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  :  SB 375 (Steinberg), Chapter 728, Statutes of 2008, 
          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 (Núñez and Pavley), Chapter 488, Statutes of 2006, 
          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. 








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          SB 375 (Steinberg) asserted that "without improved land use and 
          transportation policy, California will not be able to achieve 
          the goals of AB 32."

          This bill seeks to further the objectives of SB 375 (Steinberg) 
          by creating a voluntary option for cities and counties to 
          encourage transit-oriented development in IFDs.  This bill 
          builds on IFD law by allowing IFD funding to help incentivize 
          TPPPs thus 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." 

          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. 

          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.  

          Recognizing these barriers, this bill 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.

          To qualify for the economic subsidies offered by this bill, a 
          builder must propose a project that meets more than a dozen 








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          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 Legislature may wish to consider whether the 
          incentives in this bill are enough to convince builders to use 
          the bill.

          In this bill 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 Legislature 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 Legislature may wish to 
          ask the author to clarify this point. 

          This measure, AB 485 (Ma), AB 910 (Torres), and SB 214 (Wolk) of 
          2011, 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. 

          Support arguments:  Supporters argue that this bill 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.










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           Analysis Prepared by  :    Katie Kolitsos / L. GOV. / (916) 
          319-3958 


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