BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 243|
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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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