BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



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                                    THIRD READING


          Bill No:  AB 243
          Author:   Dickinson (D), et al.
          Amended:  8/19/13 in Senate
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  4-2, 6/12/13
          AYES:  Wolk, Beall, DeSaulnier, Liu
          NOES:  Knight, Emmerson
          NO VOTE RECORDED:  Hernandez
           
          SENATE APPROPRIATIONS COMMITTEE  :  Senate Rule 28.8
           
          ASSEMBLY FLOOR  :  44-29, 5/9/13 - See last page for vote


           SUBJECT  :    Local government:  infrastructure and revitalization  


           SOURCE  :     Author


           DIGEST :    This bill creates infrastructure and revitalization  
          financing districts, (IRFDs) (modeled after infrastructure  
          financing districts (IFDs) in existing law), broadens the range  
          of projects and facilities they can finance, lowers the voter  
          approval threshold necessary to form an IRFD and issue bonds to  
          55%, and extends the life of districts to 40 years.  

           Senate Floor Amendments  of 8/19/13 prohibit an IRFD from  
          financing any portion of a project in an area that overlaps with  
          a former redevelopment project area, until the successor agency  
          of the former redevelopment agency receives a finding of  
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          completion, and add double-jointing language with SB 470  
          (Wright).

           ANALYSIS  :    Existing law allows 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.  To repay the bonds, IFDs divert property tax  
          increment revenues from other local governments for 30 years.   
          However, IFDs cannot divert property tax increment revenues from  
          schools.

          To form an IFD, the city or county must develop an  
          infrastructure plan, send copies to every landowner, consult  
          with other local governments, and hold a public hearing.  Every  
          local agency that will contribute its property tax increment  
          revenue to the IFD must approve the plan.  Once the other local  
          officials approve, the city or county must still get the  
          approval of voters in the proposed district, specifically:  
          2/3-vote to create the district, 2/3-vote to issue bonds, and a  
          majority-vote to set the district's appropriations limit.  The  
          deadline for filing lawsuits to challenge an IFD's creation,  
          financing plan, allocation of property tax increment revenues,  
          and tax allocation bonds is 30 days after local officials obtain  
          voter approval.

          Until 2011, the Community Redevelopment Law allowed local  
          officials to set up redevelopment agencies (RDAs), prepare and  
          adopt redevelopment plans, and finance redevelopment activities.  
           Citing a significant 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) dissolved all  
          RDAs.  

          This bill renames IFDs as "Infrastructure and Revitalization  
          Financing Districts."  This bill makes the following changes to  
          the statutes governing the districts:

          1.   Voter approval  .  Existing law requires local officials to  
             prepare an infrastructure financing plan and get voter  
             approval to:

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                   Form the IFD, which requires 2/3-voter approval.
                   Issue bonds, which requires 2/3-voter approval.
                   Set the appropriations limit, which requires  
                majority-voter approval.

             This bill authorizes local officials to create an IRFD and  
             issue debt with 55% voter approval.

             For an IRFD created to finance a project on a former military  
             base, this bill eliminates the vote-requirements to:

                   Form the IRFD, provided that, at the time of the  
                approval of the IRFD's formation, all of the land in the  
                proposed IRFD is owned by one or more public entities,  
                military base reuse authorities, or entities controlled by  
                governmental agencies. 

                   Issue debt to finance facilities described in the  
                infrastructure financing plan, provided that, at the time  
                of the approval of the IRFD's formation, all of the land  
                within the proposed district, or designated project area  
                within the district on which the facilities are to be  
                financed, is owned by one or more public entities,  
                military base reuse authorities, or entities controlled by  
                governmental agencies.  

             This bill provides that bonds, which are authorized for an  
             IRFD to finance a project on a former military base, may be  
             issued in one or more series, upon an IRFD's adoption of a  
             resolution that contains specified information. 

          2.  Types of projects  .  Existing law allows IFDs to finance:

                   The purchase, construction, expansion, improvement,  
                seismic retrofit rehabilitation of any real property, 

                   The planning and design work directly related to the  
                purchase, construction, expansion, or rehabilitation, and

                   Other authorized costs pertaining to replacement  
                dwelling units or action seeking to void the creation of a  
                district. 


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             An IFD must finance only public capital facilities of  
             communitywide significance, like highways, transit, water  
             systems, sewer projects, flood control, child care  
             facilities, libraries, parks, and solid waste facilities.  An  
             IFD is prohibited from financing routine maintenance, repair  
             work, or the costs of ongoing operations or providing  
             services.

             This bill adds to the list of authorized improvements that an  
             IRFD may finance to include:

                   Watershed lands used for the collection and treatment  
                of water for urban uses.

                   Brownfields restoration and other environmental  
                mitigation.

                   Purchase of land and property for development purposes  
                and related site improvements.

                   Acquisition, construction, or repair of housing for  
                rental or purchase, including multipurpose facilities.

                   Acquisition, construction, or repair of commercial or  
                industrial structures for private use.

                   The repayment of the transfer of funds to a military  
                base reuse authority pursuant to state law.

             Existing law requires that any IFD that constructs dwelling  
             units must set aside at least 20% of those units to increase  
             and improve the community's supply of low- and  
             moderate-income housing at an affordable housing cost.  This  
             bill requires that any IRFD that constructs dwelling units  
             must set aside at least 20% of those units to increase and  
             improve the community's supply of low- and moderate-income  
             housing at an affordable housing cost, as defined in state  
             law, or at an affordable rent, as defined in state law. 

             This bill provides that an IRFD may only finance facilities  
             or services authorized in this bill.  The additional  
             facilities or services may not supplant existing facilities  
             or services in the territory when the district was created,  
             except if those facilities or services are nonfunctional,  

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             obsolete, hazardous, or in need of upgrading or  
             rehabilitation.  This bill authorizes the additional  
             facilities or services to supplement those facilities and  
             services as needed to serve new developments. 

             Existing law allows an IFD to include areas that are not  
             contiguous.  This bill authorizes an IRFD to be divided into  
             project areas, each of which may be subject to distinct  
             limitations established under IRFD law.  The city council or  
             board of supervisors may, at any time, add territory to a  
             district or amend the infrastructure financing plan for the  
             district by conducting the same procedures for a district's  
             formation or bond approval.  

          3.  Polanco Act  .  The Polanco Redevelopment Act encourages  
             cleanup and development of brownfields - properties  
             contaminated by hazardous waste.  The Act authorized former  
             RDAs to conduct a cleanup and to recover the costs of that  
             cleanup from responsible parties.  

          This bill authorizes an IRFD to utilize any powers under the Act  
             and finance any action necessary to implement the Act, and  
             authorizes an IRFD to remedy or remove hazardous substances  
             under the Polanco Act.  This bill adds "infrastructure and  
             revitalization financing district" into the Act definition of  
             a local agency. 

          4.   Sustainable Communities Strategy (SCS)  .  The Sustainable  
             Communities and Climate Protect Act requires the Air  
             Resources Board to set regional targets for automobiles' and  
             light trucks' greenhouse gas emission reduction, requires a  
             regional transportation plan to include a SCS to meet targets  
             for greenhouse gas emission reduction, requires the  
             California Transportation Commission to maintain guidelines  
             for travel demand models, requires cities and counties to  
             revise their housing elements every eight years in  
             conjunction with the regional transportation plan, and  
             relaxes California Environmental Quality Act requirements for  
             housing developments that are consistent with a SCS (SB 375  
             (Steinberg), Chapter 728, Statutes of 2008).  

          This bill allows IRFDs to finance any project that implements a  
             SCS prepared pursuant to state law. 


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          5.   Military bases  .  This bill authorizes cities and counties to  
             finance a project on a former military base, only if the  
             project is consistent with the authority reuse plan and is  
             approved by the military base reuse authority, if applicable.

          6.   Redevelopment  .  Existing law prohibits an IFD from including  
             any portion of a redevelopment project area.  

          This bill prohibits an IRFD from financing any portion of a  
             project in an area that overlaps with a former redevelopment  
             project area, until the successor agency of the former RDA  
             receives a finding of completion.  This bill requires that  
             any debt or obligation of an IRFD be subordinate to an  
             enforceable obligation of a former RDA, pursuant to state  
             law. 

          7.   Housing  .  Current IFD law provides that if any dwelling  
             units are proposed to be removed or destroyed, the  
             legislative body must: 

                   Within four years of the removal or destruction,  
                require the construction or rehabilitation, for rental or  
                sale to persons or families of low or moderate income, of  
                an equal number of replacement dwelling units at  
                affordable housing cost.

                   Within four years of the removal or destruction,  
                require the construction or rehabilitation, for rental or  
                sale to persons of low or moderate income, a number of  
                dwelling units which is at least one unit but not less  
                than 20% of the total dwelling units removed at affordable  
                housing cost.

                   Provide relocation assistance and make all the  
                payments required to displaced persons. 

                   Ensure that removal or destruction of any dwelling  
                units occupied by persons or families of low or moderate  
                income not take place unless and until there are suitable  
                housing units, at comparable cost to the units.

             This bill adds that an equal number of replacement dwelling  
             units may also be rented at affordable rent, as defined in  
             state law. 

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             Existing law states the Legislature's intent that an IFD's  
             territory should be substantially undeveloped.  

             This bill is silent on this intent and adds that an IRFD's  
             establishment should not ordinarily lead to the removal of  
             existing functional, habitable, and safe dwelling units.

             This bill requires that if dwelling units located on a former  
             military base are destroyed or removed in connection with a  
             base reuse plan, replacement dwelling units, as required in  
             existing law, may be located anywhere within the territory of  
             the former military base consistent with the base reuse plan,  
             local general plan, and infrastructure financing plan, as  
             applicable. 

          8.   Net available revenue  .  Existing law creates the  
             Redevelopment Property Tax Trust Fund (Trust Fund), which  
             receives property taxes that formerly would have been  
             allocated to a RDA.  Money deposited in the Trust Fund is  
             used to help a successor agency wind down its affairs.  Any  
             excess funds are allocated to local governments as property  
             taxes.

             This bill defines "net available revenue" (NAR) as periodic  
             distributions to the city from the Trust Fund, pursuant to  
             state law, available to the city after all preexisting legal  
             commitments and obligations from that revenue are made,  
             pursuant to state law.  NAR shall not include any funds  
             deposited by the county auditor-controller into the Trust  
             Fund or funds remaining in the Trust Fund, prior to  
             distribution.  NAR shall not include any moneys payable to a  
             school district that maintains kindergarten and grades 1 to  
             12, inclusive, or to the Education Revenue Augmentation Fund,  
             as specified. 

             This bill authorizes the city's legislative body to dedicate  
             any NAR through the financing plan.  This bill also requires  
             the plan to include a specification of the maximum portion of  
             the NAR proposed to be committed to the district for each  
             year the district will receive revenues, if applicable.  The  
             NAR portion may vary over time. 

          9.   Resolution of intention  .  To begin the process  for  

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             establishing an IFD, existing law requires the legislative  
             body of a city to adopt a resolution of intention, which must  
             include:  (a) a statement that the IFD is proposed to be  
             established, with a description of the boundaries; (b) a  
             statement of the type of public facilities proposed to be  
             financed; (c) a statement that the tax increment revenue from  
             affected taxing entities may be used; and (d) a time and  
             place for a public hearing on the proposal.  

             This bill adds, to the resolution of intention, a required  
             statement that the city's NAR may be used to finance  
             facilities and the maximum portion of NAR to be committed to  
             the district each year during which the district will receive  
             revenues. 

          10.  Term life  .  Existing law limits the terms of IFDs' bonds to  
             no more than 30 years.  

          This bill sets the maximum term of an IRFD's bond to 40 years  
             from the date on which the ordinance forming the district is  
             adopted, or a later date, if specified by the ordinance, on  
             which the allocation of tax increment will begin.  This bill  
             provides that the IRFD may issue debt with a final maturity  
             date of up to 30 years from the date of issuance of each debt  
             issue, subject to the time limit on tax allocation to the  
             district. 

          11.  Fire district approval  .  Before an IFD can divert property  
             tax increment from another taxing entity, existing law  
             requires every local agency that will contribute its property  
             tax increment revenue to the IFD to approve the  
             infrastructure financing plan.  Some special districts are  
             governed ex officio by county boards of supervisors or city  
             councils.  

          In the case of a special district that provides fire protection  
             services and where the county board of supervisors is the  
             governing authority, this bill requires the special district  
             to act on an IRFD's plan by adopting a separate resolution.

          12.  Reporting  .  Current IFD law is silent on reporting measures.   
             This bill requires that no later than June 30 each year after  
             the adoption of an IRFD's financing plan, the legislative  
             body must post on its Web site an annual report, which must  

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             contain all of the following:

                   A summary of the district's expenditures.
                   A description of the progress made toward the  
                district's adopted goals.
                   A status assessment regarding the completion of the  
                IRFD's projects. 

          13.  Bond sale  .  Existing law allows IFD bonds to be sold at  
             discount not to exceed 5% of par at public sale.  Bonds may  
             be sold at no less than par to the federal government at  
             private sale without any public advertisement.  At least five  
             days prior to the sale, a notice must be published in a  
             general circulation newspaper and financial newspaper  
             published in the Cities of San Francisco and Los Angeles. 

             This bill authorizes bonds to be sold at discount not to  
             exceed 5% of par at negotiated sale.  This bill limits any  
             negotiated bond sale for an IRFD's bond issuances from  
             exceeding $5 million. 

          14.  Definitions  .  This bill defines the following terms: 

                   "City" means a city, county, city and county, or joint  
                powers authority, where that entity acts as the military  
                base reuse authority established pursuant to state law.

                   "District" means an IRFD.  This bill provides than an  
                IRFD is a "district" within the meaning of the California  
                Constitution Article XIIA, Section 1.

                   "Infrastructure and revitalization financing district"  
                means a legally constituted governmental entity  
                established for the sole purpose of financing facilities  
                authorized by this bill. 

                   "Project area" means a defined area in a district in  
                which the district's activities share a common purpose or  
                goal and an overall financing plan.

                   "Public works" means public facilities or facilities  
                authorized to be financed by an IRFD that are to be  
                financed in whole or in part by the district.
           

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          15.  Findings and declarations  .  This bill makes finding to  
             support this bill's purpose.

          16.Adds double-jointing language with SB 470 (Wright).

           Related Legislation
           
          SB 33 (Wolk) waives the voter-approval requirements to create an  
          IFD, extends an IFD's life term, requires annual, independent  
          audits, and authorizes an IFD's use for projects in  
          disadvantaged communities, hazardous cleanup, environmental  
          mitigation, and flood protection.  

          SB 339 (Cannella) authorizes a county, by a 4/5-vote of the  
          board of supervisors, to sell, or enter into a lease,  
          concession, or managerial contract involving county property  
          acquired from the closure of a military base.  

          SB 628 (Beall) removes the 2/3-vote requirement to form an IFD,  
          the 2/3-vote requirement to issue bonds, and the majority vote  
          to set the appropriations limit, if an IFD proposes to implement  
          a transit priority project, regional transportation plan, or any  
          other project consistent with a SCS or alternative planning  
          strategy.  

          AB 121 (Dickinson) authorizes Sacramento County Board of  
          Supervisors, by 4/5-vote of the Board, to sell, or to enter into  
          a lease, concession, or managerial contract for property from  
          the closure of Mather and McClellan Air Force Bases.  

          AB 229 (J. Pérez) authorizes a military base reuse authority to  
          use IRFDs for specified projects.  

          AB 662 (Atkins) allows IFDs to include portions of former  
          redevelopment project areas and modifies the statutes governing  
          RDAs' dissolution.  

          AB 690 (Campos) establishes a Jobs and Infrastructure Financing  
          Districts in every city and authorizes the issuance of revenue  
          bonds to finance specified projects.  The bill eliminates  
          existing IFD law's replacement housing provisions.  It also  
          requires a job creation plan that ensures that for every $1  
          million invested, 10 prevailing wage jobs are created.  


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           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  Yes    
          Local:  No

           SUPPORT  :   (Verified  8/20/13)

          American Society of Civil Engineers
          Cities of Oakland, Pasadena, Sacramento, and West Sacramento
          Sacramento Area Council of Governments
          Western Center on Law and Poverty

           OPPOSITION  :    (Verified  8/20/13)
          
          Board of Equalization Member, George Runner
          California Association of Realtors
          California Taxpayers Association
          Department of Finance
          Howard Jarvis Taxpayers Association

           ARGUMENTS IN SUPPORT  :    Supporters argue that this bill will  
          create positive impacts for local jurisdictions and the state by  
          allowing for a usable financing mechanism to help spur  
          investments and fund critically needed infrastructure and public  
          works projects.

          ARGUMENTS IN OPPOSITION  :    The California Taxpayers Association  
          states, "The two-thirds vote requirement is intended to make  
          policymakers and the qualified electorate carefully prioritize  
          how revenue will and will not be spent.  Lack of a supermajority  
          vote prevents such a careful deliberation from taking place, and  
          also fails to protect the rights of the minority."  
           
           ASSEMBLY FLOOR  :  44-29, 5/9/13
          AYES:  Alejo, Ammiano, Atkins, Bloom, Blumenfield, Bocanegra,  
            Bonilla, Bonta, Bradford, Brown, Ian Calderon, Campos, Chau,  
            Chesbro, Dickinson, Eggman, Fong, Frazier, Gatto, Gomez,  
            Gordon, Hall, Roger Hernández, Jones-Sawyer, Levine,  
            Lowenthal, Medina, Mitchell, Mullin, Nazarian, Pan, Perea, V.  
            Manuel Pérez, Quirk, Rendon, Skinner, Stone, Ting, Torres,  
            Weber, Wieckowski, Williams, Yamada, John A. Pérez
          NOES:  Achadjian, Allen, Bigelow, Chávez, Conway, Cooley, Dahle,  
            Daly, Donnelly, Fox, Beth Gaines, Gorell, Gray, Grove, Hagman,  
            Harkey, Jones, Linder, Maienschein, Mansoor, Melendez,  
            Morrell, Nestande, Olsen, Patterson, Quirk-Silva, Salas,  
            Wagner, Wilk

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          NO VOTE RECORDED:  Buchanan, Garcia, Holden, Logue, Muratsuchi,  
            Waldron, Vacancy


          AB:k  8/20/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

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