BILL ANALYSIS Ó AB 243 Page 1 Date of Hearing: May 1, 2013 ASSEMBLY COMMITTEE ON APPROPRIATIONS Mike Gatto, Chair AB 243 (Dickinson) - As Introduced: February 6, 2013 Policy Committee: Local GovernmentVote:6-3 Urgency: No State Mandated Local Program: No Reimbursable: SUMMARY This bill authorizes creation of infrastructure and refinancing districts (IFRD). Specifically, this bill: 1)Specifies the types of public capital facilities or projects of communitywide significance an IRFD can finance. 2)Authorizes an IRFD to utilize the powers under the Polanco Redevelopment Act in order to finance environmental remediation and brownfield restoration. 3)Specifies that a local government may form an IRFD to finance a project or projects on a former military base as long as the project is consistent with the authority reuse plan and is approved by the military base reuse authority. 4)Removes the voter threshold for the issuance of debt by an IRFD if the project to be financed is on land of a former military base that is publicly owned. 5)Reduces the vote threshold for creating an IRFD and issuing bonds from two-thirds voter approval to 55% voter approval. FISCAL EFFECT Negligible state fiscal impact as IRFDs will only divert property tax increment revenues from other local governments, excluding school districts. COMMENTS AB 243 Page 2 1)Purpose. According to the author, the elimination of redevelopment agencies has removed a major tool used by local governments to remedy blight, provide affordable housing and spur local economic development. The author notes this elimination has increased the efforts of local officials to search for alternative ways to raise the capital they need to invest in public works. The author argues IFDs are one way to do this, but current law governing IFDs makes their formation difficult, particularly because a two-thirds vote of local voters is necessary to form the district. 2)Support . Supporters, including the City of Oakland and the City of West Sacramento, argue this bill will create positive impacts for local jurisdictions and the state by authorizing a financing mechanism to help spur investments and fund critically needed infrastructure and public works projects. 3)Opposition. The Howard Jarvis Taxpayers Association argues any long term financial obligation, including bond debt, that will be passed on to other generations over 30 years should be subject to a two-thirds vote of local residents. 4)Background . IFRDs are modeled after the existing infrastructure financing districts (IFDs). Cities and counties can create IFDs and issue bonds to pay for community scale public works, including 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 a period of 30 years. IFDs, however, are prohibited from diverting property tax increment revenues from schools. For several years, local officials were reluctant to form IFDs because they worried about the constitutionality of using tax increment revenue from property that was not within the redevelopment project area. When a 1998 Attorney General opinion allayed those concerns, the City of Carlsbad formed an IFD in 1999 to fund the public works for a new hotel located adjacent to the Legoland theme park. That small project is the only example of local officials' use of the existing IFD law. IFDs have been tailored to meet specific local circumstances. SB 1085 (Migden), Chapter 213, Statutes of 2005, amended IFD AB 243 Page 3 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 and AB 644 (Ammiano), Chapter 314, Statutes of 2011. 5)Relevant legislation . AB 229 (John A. Pérez) creates infrastructure and revitalization financing districts (IRFD) that can be created by local governments to finance projects and facilities to clean-up and develop former military bases. AB 229 is pending in this committee. 6)Previous legislation . AB 2144 (J. Pérez) of 2012, was similar to AB 243. This bill was vetoed by Governor Brown, who said it was premature and would hinder the winding down of redevelopment agencies. Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081