BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 1156|
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UNFINISHED BUSINESS
Bill No: SB 1156
Author: Steinberg (D)
Amended: 8/24/12
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 4/18/12
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Dutton, Fuller, La Malfa
SENATE TRANSPORTATION & HOUSING COMM. : 5-3, 4/24/12
AYES: DeSaulnier, Kehoe, Lowenthal, Pavley, Simitian
NOES: Gaines, Harman, Wyland
NO VOTE RECORDED: Rubio
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/24/12
AYES: Kehoe, Alquist, Lieu, Price, Steinberg
NOES: Walters, Dutton
SENATE FLOOR : 21-15, 5/31/12
AYES: Alquist, Calderon, Corbett, De León, DeSaulnier,
Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu,
Lowenthal, Negrete McLeod, Padilla, Pavley, Price,
Steinberg, Vargas, Wolk, Yee
NOES: Anderson, Berryhill, Blakeslee, Cannella, Correa,
Dutton, Emmerson, Fuller, Gaines, Harman, Huff, La Malfa,
Walters, Wright, Wyland
NO VOTE RECORDED: Rubio, Runner, Simitian, Strickland
ASSEMBLY FLOOR : 51-25, 8/24/12 - See last page for vote
SUBJECT : Sustainable Communities Investment Authority
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SOURCE : Author
DIGEST : This bill allows local governments to establish
a Sustainable Communities Investment Authority (Authority)
to finance specified activities within a sustainable
communities investment area (Area).
Assembly Amendments (1) contain certain public entities of
a Sustainable Communities Investment Area to form a
specified group to carry out the Redevelopment Law, as
specified, and (2) make specified guideline adjustments
that also include clarifying language.
Senate Floor Amendments of 5/29/12 delete the authority for
a city council to form a Sustainable Communities Investment
Authority that receives only the city's share of tax
increment revenue.
ANALYSIS : Until 2011, the Community Redevelopment Law
allowed local officials to set up redevelopment agencies
(RDAs), prepare and adopt redevelopment plans, and finance
redevelopment activities.
A redevelopment agency kept the property tax increment
revenues generated from increases in property values within
a redevelopment project area. As a redevelopment project
area's assessed valuation grew above its base-year value,
the resulting property tax revenues, the property tax
increment, went to the RDA instead of going to the
underlying local governments. When a redevelopment agency
diverted property tax revenues from a school district, the
State General Fund paid the difference.
Citing a significant State General Fund deficit, Governor
Brown's 2011-12 budget proposed eliminating RDAs and
returning billions of dollars of property tax revenues to
schools, cities, and counties to fund core services. Among
the statutory changes that the Legislature adopted to
implement the 2011-12 Budget, AB 26X1 (Blumenfield),
Chapter 5, Statutes of 2011-12 First Extraordinary Session,
dissolved all RDAs.
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This bill:
1. Allows the city council, board of supervisors, or a
special district representing an Area to form a joint
powers authority to establish an Authority governing
board and to designate an Area.
2. Allows a city, with county's approval, to create an
Authority, designate an Area and Authority governing
board, establish the parameters of the proposed
economic development within the Area and amend the Plan
within the city's incorporated area.
3. Allows a city and a county to create an Authority and
to appoint the Authority board, made up of two members
appointed by the city and two by the county, and a
fifth member appointed by the two city and two county
members.
4. Allows a city and county to create an Authority
governing body, to designate an Area to include an
incorporated and unincorporated area and a Plan, and to
amend a plan with the approval of both the city and the
county.
5. Allows a board of supervisors to create an Authority
and appoint the Authority board within an
unincorporated area.
6. Allows a city to create an Authority, appoint a
governing board and designate an Area that includes
only the incorporated area of the city.
7. Provides for an Authority that is created by an
entity that is a city and county the governing board
shall be made up of five members appointed by the mayor
of the city, if that appointment is subject to the
confirmation by the board of supervisors.
8. Requires that approval of the creation of an
Authority, Plan, or amendment to a Plan to be made by a
resolution of the city or county.
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9. Specify that school districts are excluded from
participating in an Authority.
10. Provides that any taxing agency that participates in
or approves the formation of an Authority or appoints a
governing board member of the Authority may authorize
an allocation to the Authority of all or part of the
tax increment revenue that would otherwise be paid to
the taxing agency.
11. Makes and Authority subject to the Brown Act, Public
Records Act, and Political Reform Act.
12. Provides that members of any governing board formed
for an Area serve for four year terms and can only be
removed by the appointing Authority for cause.
13. Requires an Authority to comply with the Community
Redevelopment Law (CRL) as specified except where it is
inconsistent with the provisions of this bill.
14. Specifies that an Authority is exempt from the
following provisions of CRL:
A. Paying special districts and school districts
in lieu taxes;
B. Requirements that apply to the Hamilton Field
Redevelopment Project and Mather Air Force Base
Redevelopment Project Area; and,
C. Provisions that relate to the dissolution of
redevelopment agencies.
1. Defines a redevelopment project area in the CRL as a
Sustainable Communities Investment Area and a
redevelopment plan as a Sustainable Communities
Investment Plan (Plan).
2. Allows an Authority to rely upon the legislative
determination of blight and exempts the Authority from
making a separate finding of blight or conducting a
survey of blight in a project area.
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3. Provides that a plan for an Area will terminate 40
years from the date of the first issuance of bond
indebtedness by the Authority.
4. Provides that an Area shall include the following:
A. A transit priority area, provided the planned
major transit stop or the high-quality transit
corridor will be scheduled to be completed within
the planning horizon established by the Code of
Federal Regulations;
B. A transit priority area may include a military
base reuse plan with a contaminate site;
C. Small walkable communities as defined in
Section 21094.5 of the Public Resources Code, except
that small walkable communities may also be
designated in a city that is within the sustainable
communities investment area of a metropolitan
planning organization (MPO). No more than one small
walkable community project area shall be designated
within a city; and
D. Sites that are restricted to clean energy
manufacturing that are consistent with the
sustainable communities strategy (SCS) if they are
within the geographic boundaries of a MPO.
1. Provides the following apply to transit priority
areas eligible for funding by an Authority:
A. Where an Area includes a high-speed rail
station, the radius of the area may be up to one
mile from a high-speed rail station. And if it is
greater than one-half of one mile, at least 50% of
the tax increment revenue derived from the Area
shall be used to support construction of the
high-speed rail station;
B. An Area may include all or part of a transit
project area and multiple transit project areas;
C. Requires transit priority areas to be within
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the geographic boundaries of an MPO, where a SCS has
been adopted and approved by the state Air Resources
Board.
1. Limits clean energy manufacturing to the following:
A. Manufacture of components, parts, or materials
for the generation of renewable energy resources;
B. Equipment designed to make buildings more
energy-efficient or the component parts;
C. Public transit vehicles or components parts of
public transit vehicles; and
D. Alternative fuel vehicles or component parts of
alternative fuel vehicles.
1. Provides an Authority may receive tax increment
funds, if the local government with land use
jurisdiction has adopted the following:
A. A sustainable parking standards ordinance that
restricts parking in transit priority project areas
to encourage transit use to the greatest extent
feasible;
B. An ordinance creating a jobs plan that
describes how the project will create construction
careers that pay prevailing wages and create living
wage permanent jobs, and that contains a program for
community outreach, local hire, and job training;
C. For transit priority areas and small walkable
communities within an MPO, a plan consistent with
the use designation, density, building intensity,
and applicable policies for the area in the SCS;
D. For small walkable communities outside an MPO,
a plan for new residential construction that
provides a density of at least 20 dwelling units per
net acre and for nonresidential uses provides a
minimum floor area ratio of 0.75.
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1. Requires that for small walkable communities, transit
projects, and clean energy manufacturing sites within
an MPO, an Authority must consult with the MPO to
obtain its opinion about whether or not the plan for
the Area is consistent with the use designation,
density, building intensity, and applicable policies of
the SCS.
2. Requires the county auditor controller to allocate to
an Authority the tax increment as specified in a Plan
in proportion to the levied taxes for the city and or
county in excess of the amount specified in Health and
Safety Code Section 33670 (a).
3. Provides that the auditor-controller may only
allocate tax increment revenues to an Authority if the
taxing agency whose tax increment would be allocated
adopts a resolution authorizing the allocation.
4. Provides that the adoption of a resolution to allow
tax increment to go to the Authority does not prohibit
an auditor-controller's authority to revoke the
allocation if it conflicts with requirements to pay
existing obligations secured by tax increment revenues.
5. Provides that if an Area includes in whole or in part
a former redevelopment area and the Plan includes a
provision for receipt of tax increment revenues then it
shall include a provision that tax increment amounts
collected and received by the Authority are subordinate
to existing enforceable obligations.
6. Defines "net available revenue" as periodic
distributions to the city or county from the
Redevelopment Property Tax Trust Fund once all
enforceable obligations are paid.
7. Allows a city or county forming the Authority to
dedicate any portion of its net available revenue to
the Authority through the Plan which shall include the
date upon which the Authority will cease to receive the
net available revenue.
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8. Provides that an Authority that collects tax
increment revenues must dedicate no less than 20% of
the allocated tax increment for affordable housing
purposes.
9. Requires a Plan to include the following, in addition
to what is required for a redevelopment plan in the
CRL:
A. A fiscal analysis of the projected receipt of
tax increment and other revenue and the projected
expenses over five-year planning horizons for the
life of the authority;
B. A statement of the principal goals and
objectives of the plan with findings of the public
purposes and uses that will be achieved;
C. A statement of how the plan with relieve blight
as follows:
How it will implement the goals of a SCS
if the Area is within an MPO;
How it will contribute to a more
efficient transportation infrastructure;
How it will contribute to and reduce cost
for the combined costs of housing and
transportation;
How it will contribute to improved public
health;
How it will promote more efficient water
consumption;
How it will avoid loss of prime farmland;
and,
How it will reduce air pollution, energy
consumption and greenhouse gas emissions by
reducing vehicle miles traveled;
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A. A statement of how the plan will implement the
sustainable parking standards;
B. A statement of how the plan will implement the
jobs plan;
1. Provides a Plan, in addition to meeting the housing
provisions of the CRL, may include, to the extent
applicable to the Area, the following:
A. Affordable and farmworker housing;
B. Transitional and supportive housing
C. Health and safety related infrastructure
investments in disadvantaged rural communities; and,
D. Infrastructure to support country wide
services.
1. Requires and Authority to contract for an independent
and financial audit every five years conducted by
guidelines established by the Controller and submitted
to the Controller, Direct or Department of Finance and
the Joint Legislative Budget Committee.
2. Specifies that the Controller is not required to
review or approve audits submitted by an Authority.
3. Requires the Authority to approve any bond financing.
4. Specifies that school district property taxes cannot
be pledged for the repayment of bonds issued by
authority.
5. Permits a state or local pension fund system to
invest capital in the public infrastructure projects
and private commercial residential developments
undertaken by an Authority.
6. Grants an Authority the ability to exercise the
powers of the Marks-Roos Local Bond Pooling Act of
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1985.
7. Allows an Authority to implement local transaction
and use tax, except that the resolution authorizing the
tax may designate the use of the tax.
8. Establishes a process to prequalify developers for
construction contracts in excess of $1,000,000.
9. Requires the Department of Industrial Relations to
monitor and enforce compliance with prevailing wage
requirements for projects that include funds from an
Authority and shall charge each awarding body or
developer for the reasonable and directly related costs
of monitoring and enforcing compliance with the
prevailing wage requirements of each project.
10. Defines, for the purpose of exempting small walkable
communities from the California Environmental Quality
Act, the following terms:
A. "Floor area ratio" as the ratio of gross
building area of development, exclusive of
structured parking areas, proposed for the project
divided by the total net lot area;
B. "Gross building area" as the sum of all
finished areas of all floors of a building included
within the outside faces of its exterior walls; and
C. "Net lot area" means the area of a lot
excluding publicly dedicated land, private streets
that meet local standards, and other public use
areas as determined by the local land use authority.
1. Makes legislative findings.
Comments
In 2011, the Legislature approved and the Governor signed
two measures, AB 26 X1 and AB 27 X1 that together dissolved
redevelopment agencies as they existed at the time and
created a voluntary redevelopment program on a smaller
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scale. In response, the California Redevelopment
Association (CRA), League of California Cities, along with
other parties, filed suit challenging the two measures. The
Supreme Court denied the petition for peremptory writ of
mandate with respect to AB 26 X1. However, the Court did
grant CRA's petition with respect to AB 27 X1. As a result,
all redevelopment agencies were required to dissolve as of
February 1, 2012.
Over the last sixty years, redevelopment agencies used tax
increment to finance affordable housing, community
development, and economic development projects. The
dissolution of redevelopment agencies has created a void
and an effort to create new tools that would support
community and economic development activities. This bill
allows cities and counties to establish Sustainable
Communities Investment Authorities (Authorities) to use tax
increment financing, on a limited scale, along with other
financing tools to support the goals SB 375 (Steinberg),
Chapter 728, Statutes of 2008.
SB 375 created a new procedure for land use planning that
would require local governments to plan in a way that would
accomplish the greenhouse gas reduction goals of AB 32:
The California Global Greenhouse Gas Reduction Act of 2006.
SB 375 required MPOs to adopt an SCS in their regional
transportation plans for the purpose of reducing greenhouse
gas emissions, aligning planning for transportation and
housing, and creating specified incentives for the
implementation of those strategies. This bill would
authorize the use of tax increment as well as other funding
sources to finance some of the projects-small walkable
communities, transit priority areas and clean energy
manufacturing that would be part of the SCS.
Related Legislation
SB 986 (Dutton) which allows successor agencies to keep
former RDAs' bond proceeds and enter into new enforceable
obligations funded by bond proceeds.
SB 1056 (Hancock) expands the definition of "enforceable
obligation" to include financial obligations related to a
project funded with both tax increment and federal school
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construction bonds.
SB 1151 (Steinberg) creates an alternative process by which
communities can use their former redevelopment agencies'
assets for economic development and housing purposes.
Other bills that amend the statutes governing the
disposition and use of former RDAs' assets include:
SB 1337 (Pavley) allows a successor agency to retain former
RDA land that is a brownfield site for the purpose of
hazardous substance remediation or removal.
AB 1585 (Perez) makes numerous amendments to the statutes
governing the redevelopment dissolution process.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
According to the Assembly Appropriations Committee:
The Controller will have increased administrative costs
of up to $200,000 annually. The newly formed authorities
must file specified documents with the Controller,
including reports of financial transactions and financial
and performance audits.
If an authority was to adopt a local transactions and use
tax, the Board of Equalization (BOE) would administer the
tax and the costs the BOE incurred would be fully
reimbursed by the authority.
SUPPORT : (Verified 8/28/12)
American Federation of State, County and Municipal
Employees
BRIDGE Housing
California Infill Builders Association
California State Association of Counties
DMB Pacific Ventures
Los Angeles Alliance for a New Economy
Mission Bay Development Group
ARGUMENTS IN SUPPORT : According to the author, "this
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bill sets forth a new vision of local economic development
and housing policy for the 21st century, focused on
building sustainable communities and creating the high
skill, high wage jobs that are the key to our future
prosperity.
"The purpose of bringing together the cities and the
counties as equal partners in an inclusive governance
structure is to correct the old model of redevelopment that
pitted cities against counties and schools for limited tax
revenues. Both cities and counties have land use
authority, and both share responsibility for directing
growth toward infill and transit-oriented development
consistent with SB 375 of 2008. This bill will encourage
cooperation, not competition, between cities and counties
in furtherance of sustainable economic development.
"This bill recognizes that economic development requires
investments both in the physical capital of our
infrastructure and the human capital of our workforce, and
therefore authorizes financial agreements with community
colleges, K-12 school districts, and industry to advance
career education and credentialing programs."
ASSEMBLY FLOOR : 51-25, 08/24/12
AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block,
Blumenfield, Bonilla, Bradford, Brownley, Buchanan,
Butler, Charles Calderon, Campos, Carter, Cedillo,
Chesbro, Davis, Dickinson, Eng, Feuer, Fletcher, Fong,
Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall,
Hayashi, Hill, Huber, Hueso, Huffman, Lara, Bonnie
Lowenthal, Ma, Mendoza, Mitchell, Monning, Pan, Perea, V.
Manuel Pérez, Portantino, Skinner, Solorio, Swanson,
Torres, Wieckowski, Yamada, John A. Pérez
NOES: Achadjian, Bill Berryhill, Conway, Donnelly, Beth
Gaines, Garrick, Gorell, Grove, Hagman, Harkey, Jeffries,
Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande,
Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner
NO VOTE RECORDED: Cook, Halderman, Roger Hernández,
Williams
RJG:n 8/28/12 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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