BILL ANALYSIS                                                                                                                                                                                                    Ó

                                                                  AB 243
                                                                  Page  1

          Date of Hearing:   May 1, 2013

                                  Mike Gatto, Chair

                AB 243 (Dickinson) - As Introduced:  February 6, 2013 

          Policy Committee:                              Local  

          Urgency:     No                   State Mandated Local Program:  
          No     Reimbursable:              


          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.



                                                                  AB 243
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           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  

            IFDs have been tailored to meet specific local circumstances.   
            SB 1085 (Migden), Chapter 213, Statutes of 2005, amended IFD  


                                                                  AB 243
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            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