Amended in Assembly April 8, 2013

California Legislature—2013–14 Regular Session

Assembly Bill No. 294

Introduced by Assembly Member Holden

February 11, 2013

An act to begin delete amend Sections 53395.1, 53395.3, 53395.10, 53395.14, and 53397.6 of, and to add Section 53397.12 to, the end delete begin insert add and repeal Article 5.5 (commencing with Section 63047.55) of Chapter 2 of Division 1 of Title 6.7 of the end insert Government Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 294, as amended, Holden. begin delete Infrastructure financing districts: use of incremental property tax revenue. end delete begin insert Local-State Joint Investment Partnership Pilot Program. end insert

begin insert

The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the Infrastructure and Economic Development Bank within the Governor’s Office of Business and Economic Development. The bank is authorized to, among other things, issue bonds, approve the issuance of certain bonds, invest moneys, and make loans, as specified.

end insert begin insert

This bill would, until January 1, 2025, establish a pilot program whereby certain local governmental entities, upon the approval and oversight of the bank, are authorized to reallocate their payments directed to the Educational Revenue Augmentation Fund to instead finance certain kinds of public works that further state policy, as specified. This bill would require each local governmental entity operating a project under the pilot program and the bank to submit annual reports, as specified, on the results of the pilot program.

end insert begin delete

(1) Existing law authorizes a legislative body, as defined, to create an infrastructure financing district, adopt an infrastructure financing plan, and issue bonds, to finance specified public facilities, upon voter approval. Existing law authorizes an infrastructure financing district to fund infrastructure projects through tax increment financing, pursuant to the infrastructure financing plan and agreement of affected taxing entities, as defined.

end delete begin delete

This bill would authorize an infrastructure financing district to utilize the Educational Revenue Augmentation Fund (ERAF) portion of incremental tax revenue. The bill would require an infrastructure financing district that proposes to utilize the ERAF portion of incremental tax revenue to include that intention in the financing plan, and prior to adopting a resolution authorizing the first debt issuance utilizing the ERAF share, obtain and submit an economic analysis to the California Infrastructure and Economic Development Bank for review and approval, as specified.

end delete begin delete

(2) Existing law authorizes the legislative body of an infrastructure financing district to issue bonds upon the approval, by a 2⁄3 vote, of the voters voting on the proposition and requires the issuance of the bonds to include, among other things, the date on which the bonds will mature.

end delete begin delete

This bill would require the issuance to specify that the date on which the bonds will mature may not occur prior to the receipt of at least the aggregate of $100,000 in incremental property tax revenues by the district.

end delete begin delete

(3) Existing law authorizes an infrastructure financing district to finance only public capital facilities of communitywide significance, which provide significant benefits to an area larger than the area of the district, including, among others, highways, interchanges, ramps and bridges, arterial streets, parking facilities, transit facilities, facilities for the collection and treatment of water for urban uses, child care facilities, libraries, and facilities for the transfer and disposal of solid waste.

end delete begin delete

This bill would additionally authorize an infrastructure financing district to finance brownfield cleanup that promotes infill housing development and other related infill development consistent with regional and local plans.

end delete

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

begin insert

begin insert SECTION 1. end insert   

end insert begin insert

The Legislature finds and declares that the
purpose of this act is to create a pilot program whereby certain
local governmental entities, upon the approval and oversight of
the Infrastructure and Economic Development Bank, are authorized
to reallocate their payments directed to the Educational Revenue
Augmentation Fund to instead finance certain kinds of public
works.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Article 5.5 (commencing with Section 63047.55) is
added to Chapter 2 of Division 1 of Title 6.7 of the end insert begin insert Government
Code end insert begin insert , to read: end insert

begin insert

 

Article begin insert 5.5. end insert   Local-State Joint Investment Partnership Pilot
Program

 

begin insert 63047.55. end insert   

There is in state government the Local-State Joint
Investment Partnership Pilot Program.

begin insert 63047.60. end insert   

Only a local governmental entity, including, but not
limited to, an infrastructure financing district established pursuant
to Chapter 2.8 (commencing with Section 53395) of Part 1 of
Division 2 of Title 5, but excluding a city, county, or city and
county, may file an application for financing a public works project
with, and for approval by, the bank pursuant to the program.

begin insert 63047.65. end insert   

Only the following public works that further state
policy objectives shall be financed under the program:

(a) “City streets,” “county highways,” and “state highways,”
as those terms are used in paragraphs (1), (2), and (15),
respectively, of subdivision (q) of Section 63010.

(b) “Sewage collection and treatment,” as that term is used in
paragraph (10) of subdivision (q) of Section 63010.

(c) “Water treatment and distribution,” as that term is used in
paragraph (12) of subdivision (q) of Section 63010.

(d) Facilities for the collection and treatment of water for urban
uses.

(e) “Drainage, water supply, and flood control,” as that term
is used in paragraph (3) of subdivision (q) of Section 63010.

(f) “Educational facilities,” as that term is used in paragraph
(4) of subdivision (q) of Section 63010.

(g) “Parks and recreational facilities,” as that term is used in
paragraph (6) of subdivision (q) of Section 63010.

(h) “Solid waste collection and disposal,” as that term is used
in paragraph (11) of subdivision (q) of Section 63010.

(i) “Public transit,” as that term is used in paragraph (9) of
subdivision (q) of Section 63010.

(j) “Power and communications,” as that term is used in
paragraph (8) of subdivision (q) of Section 63010.

(k) (1) Brownfield cleanup that promotes infill housing
development and other related infill development consistent with
regional and local plans.

(2) For purposes of this subdivision, “brownfield” has the same
meaning as in paragraph (2) of subdivision (a) of Section 25395.20
of the Health and Safety Code.

begin insert 63047.70. end insert   

(a) An application for financing approval filed with
the bank pursuant to the program shall include all of the following
information in a manner prescribed by the bank:

(1) An economic analysis of the project.

(2) A description of how the project will further local and
statewide policy objectives.

(3) A description of all local resources available to invest in
the project and an analysis of the reduced scope or feasibility of
the project based on the investment of only those local resources.

(4) The annual amount of property taxes otherwise allocated
to the Educational Augmentation Revenue Fund, from the tax rate
areas within the territorial jurisdiction of the applicant, that the
applicant proposes to reallocate to finance the project, and whether
the applicant proposes to issue debt to fund the project.

(5) A demonstration, to a reasonable probability, that the project
would result in an amount of tax revenue to the state General Fund
with a net present value that is greater than the net present value
of the amount of property tax increment revenues that would be
reallocated from the Educational Revenue Augmentation Fund
over the term of the project, taking into consideration all pertinent
data.

(b) The bank may circulate an application for financing to other
state agencies, including, but not limited to, the Department of
Finance, the Department of Housing and Community Development,
and the Office of Planning and Research.

(c) The bank may establish a process for the public to comment
on an application for financing.

(d) The legislative body of the applicant shall reimburse the
bank for the reasonable cost of the bank’s review of its application
for financing.

(e) For purposes of this article, “public works project” means
the entire plan for developing the public works specified in Section
63047.65, within a specified geographical area, as set forth by the
applicant.

begin insert 63047.75. end insert   

(a) On and after January 1, 2015, the bank may
approve up to a maximum of 25 applications for financing pursuant
to the program.

(b) The bank shall not approve an application for financing
unless it determines that approving a public works project
proposed in an application is necessary either to make the project
financially feasible or to significantly enhance the scope and
potential benefits of the project.

(c) In reviewing the economic analysis in an application for
financing, the bank shall consider the increase in state General
Fund tax revenues that would occur because of the proposed
economic activity.

(d) In making its decision to approve an application for
financing, the bank may give weight to any established state policy
objective or benefit identified by a state agency reviewing the
application.

(e) The bank shall only approve financing that reallocates tax
revenue that would otherwise be allocated to the Educational
Revenue Augmentation Fund from each affected taxing entity
making the application, and the reallocation shall be made in
proportion to the percentage share of property taxes that each
affected taxing entity would otherwise contribute to the Educational
Revenue Augmentation Fund.

begin insert 63047.80. end insert   

(a) To approve an application for financing under
the program, the bank shall issue a written statement that
establishes, but is not limited to, the total amount of tax revenue
that would have been directed to the Educational Revenue
Augmentation Fund that is reallocated to finance specific public
works projects proposed in the application, the amount of each
affected taxing agency’s payment to the Educational Revenue
Augmentation Fund that is being reallocated, and the duration of
those reallocations. The bank shall transmit the statement to the
county tax collector or the official responsible for the allocation
of property tax revenues within the county.

(b) Upon receiving the bank’s written statement described in
subdivision (a), the county tax collector or the official responsible
for the allocation of tax revenues within the county shall direct
the tax revenues as prescribed in the bank’s statement.

begin insert 63047.85. end insert   

(a) On or before December 31, 2016, and annually
thereafter, each applicant that has received financing pursuant to
the program for any fiscal year shall provide a report to the bank
that includes all of the following information for that fiscal year:

(1) The amount of money that the county auditor reallocated
from the Educational Revenue Augmentation Fund for financing
under the program.

(2) The purposes for which that allocated money was used.

(3) The actions taken during the fiscal year to implement the
applicant’s project.

(b) On or before March 1, 2017, and annually thereafter, the
bank shall provide a report to the Joint Legislative Budget
Committee that includes all of the following information for the
preceding fiscal year:

(1) The name, location, and general description of each
application for financing approved under the program.

(2) The total amount of money that county auditors reallocated
from the Educational Revenue Augmentation Fund under the
program.

(3) An evaluation of the extent to which the implementation of
the approved financing has achieved the purposes and intent of
the program. In preparing this evaluation, the bank may solicit
advice and assistance from other state entities, including, but not
limited to, the departments within the Transportation Agency, the
Business, Consumer Services, and Housing Agency, and the
Natural Resources Agency, the Department of Finance, and the
Office of Planning and Research.

begin insert 63047.90. end insert   

This article shall remain in effect only until January
1, 2025, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2025, deletes or extends
that date. However, the repeal of this article shall not affect the
continuing annual reallocation of property taxes for financing
approved by the bank prior to the repeal of this article.

end insert

begin delete

SECTION 1.  

Section 53395.1 of the Government Code is
amended to read:

53395.1.  

Unless the context otherwise requires, the definitions
contained in this article shall govern the construction of this
chapter.

(a) “Affected taxing entity” means any governmental taxing
agency which levied or had levied on its behalf a property tax on
all or a portion of the property located in the proposed district in
the fiscal year prior to the designation of the district, but not
including any county office of education, school district, or
community college district.

(b) “City” means a city, a county, or a city and county.

(c) “Debt” means any binding obligation to repay a sum of
money, including obligations in the form of bonds, certificates of
participation, long-term leases, loans from government agencies,
or loans from banks, other financial institutions, private businesses,
or individuals.

(d) “Designated official” means the city engineer or other
appropriate official designated pursuant to Section 53395.13.

(e) (1) “District” means an infrastructure financing district.

(2) An infrastructure financing district is a “district” within the
meaning of Section 1 of Article XIII A of the California
Constitution.

(f) “ERAF” means the Educational Revenue Augmentation
Fund.

(g) “ERAF share” means the county ERAF portion of
incremental tax revenue.

(h) “Infrastructure financing district” means a legally constituted
governmental entity established pursuant to this chapter for the
sole purpose of financing public facilities.

(i) “Landowner” or “owner of land” means any person shown
as the owner of land on the last equalized assessment roll or
otherwise known to be the owner of the land by the legislative
body. The legislative body has no obligation to obtain other
information as to the ownership of land, and its determination of
ownership shall be final and conclusive for the purposes of this
chapter. A public agency is not a landowner or owner of land for
purposes of this chapter, unless the public agency owns all of the
land to be included within the proposed district.

(j) “Legislative body” means the city council or board of
supervisors.

SEC. 2.  

Section 53395.3 of the Government Code is amended
to read:

53395.3.  

(a) A district may finance (1) the purchase,
construction, expansion, improvement, seismic retrofit, or
rehabilitation of any real or other tangible property with an
estimated useful life of 15 years or longer which satisfies the
requirements of subdivision (b), (2) may finance planning and
design work which is directly related to the purchase, construction,
expansion, or rehabilitation of that property and (3) the costs
described in Sections 53395.5, and 53396.5. A district may only
finance the purchase of facilities for which construction has been
completed, as determined by the legislative body. The facilities
need not be physically located within the boundaries of the district.
A district may not finance routine maintenance, repair work, or
the costs of ongoing operation or providing services of any kind.

(b) The district shall finance only public capital facilities of
communitywide significance, which provide significant benefits
to an area larger than the area of the district, including, but not
limited to, all of the following:

(1) Highways, interchanges, ramps and bridges, arterial streets,
parking facilities, and transit facilities.

(2) Sewage treatment and water reclamation plants and
interceptor pipes.

(3) Facilities for the collection and treatment of water for urban
uses.

(4) Flood control levees and dams, retention basins, and drainage
channels.

(5) Child care facilities.

(6) Libraries.

(7) Parks, recreational facilities, and open space.

(8) Facilities for the transfer and disposal of solid waste,
including transfer stations and vehicles.

(c) Notwithstanding subdivisions (a) and (b), a district may
finance brownfield cleanup that promotes infill housing
development and other related infill development consistent with
regional and local plans.

(d) Any district which constructs dwelling units shall set aside
not less than 20 percent of those units to increase and improve the
community’s supply of low- and moderate-income housing
available at an affordable housing cost, as defined by Section
50052.5 of the Health and Safety Code, to persons and families of
low- and moderate-income, as defined in Section 50093 of the
Health and Safety Code.

SEC. 3.  

Section 53395.10 of the Government Code is amended
to read:

53395.10.  

A legislative body of a city may designate one or
more proposed infrastructure financing districts pursuant to this
chapter. Proceedings for the establishment of a district shall be
instituted by the adoption of a resolution of intention to establish
the proposed district and shall do all of the following:

(a) State that an infrastructure financing district is proposed to
be established under the terms of this chapter and describe the
boundaries of the proposed district, which may be accomplished
by reference to a map on file in the office of the clerk of the city.

(b) State the type of public facilities proposed to be financed
by the district. The district may only finance public facilities
authorized by Section 53395.3.

(c) (1) State that incremental property tax revenue from the
city and some or all affected taxing entities within the district may
be used to finance these public facilities.

(2) In the case of a district that proposes to utilize the ERAF
share, state that incremental property tax revenues from the county
ERAF within the district may be used to finance these public
facilities.

(d) Fix a time and place for a public hearing on the proposal.

SEC. 4.  

Section 53395.14 of the Government Code is amended
to read:

53395.14.  

After receipt of a copy of the resolution of intention
to establish a district, the official designated pursuant to Section
53395.13 shall prepare a proposed infrastructure financing plan.
The infrastructure financing plan shall be consistent with the
general plan of the city within which the district is located and
shall include all of the following:

(a) A map and legal description of the proposed district, which
may include all or a portion of the district designated by the
legislative body in its resolution of intention.

(b) A description of the public facilities required to serve the
development proposed in the area of the district including those
to be provided by the private sector, those to be provided by
governmental entities without assistance under this chapter, those
public improvements and facilities to be financed with assistance
from the proposed district, and those to be provided jointly. The
description shall include the proposed location, timing, and costs
of the public improvements and facilities.

(c) A finding that the public facilities are of communitywide
significance and provide significant benefits to an area larger than
the area of the district.

(d) A financing section, which shall contain all of the following
information:

(1) (A) A specification of the maximum portion of the
incremental tax revenue of the city and of each affected taxing
entity proposed to be committed to the district for each year during
which the district will receive incremental tax revenue. The portion
need not be the same for all affected taxing entities. The portion
may change over time.

(B) If the district proposes to utilize the ERAF share, a statement
of the maximum amount of tax increment from the ERAF share
that the district will receive during the period of the district.

(2) A projection of the amount of tax revenues expected to be
received by the district in each year during which the district will
receive tax revenues, including an estimate of the amount of tax
revenues attributable to each affected taxing entity for each year.

(3) A plan for financing the public facilities to be assisted by
the district, including a detailed description of any intention to
incur debt.

(4) A limit on the total number of dollars of taxes which may
be allocated to the district pursuant to the plan.

(5) A date on which the district will cease to exist, by which
time all tax allocation to the district will end. The date shall not
be more than 30 years from the date on which the ordinance
forming the district is adopted pursuant to Section 53395.23.

(6) An analysis of the costs to the city of providing facilities
and services to the area of the district while the area is being
developed and after the area is developed. The plan shall also
include an analysis of the tax, fee, charge, and other revenues
expected to be received by the city as a result of expected
development in the area of the district.

(7) An analysis of the projected fiscal impact of the district and
the associated development upon each affected taxing entity.

(8) A plan for financing any potential costs that may be incurred
by reimbursing a developer of a project that is both located entirely
within the boundaries of that district and qualifies for the Transit
Priority Project Program, pursuant to Section 65470, including
any permit and affordable housing expenses related to the project.

(e) If any dwelling units occupied by persons or families of low
or moderate income are proposed to be removed or destroyed in
the course of private development or public works construction
within the area of the district, a plan providing for replacement of
those units and relocation of those persons or families consistent
with the requirements of Section 53395.5.

SEC. 5.  

Section 53397.6 of the Government Code is amended
to read:

53397.6.  

(a) The bonds may be issued if two-thirds of the
voters voting on the proposition vote in favor of issuing the bonds.

(b) If the voters approve the issuance of the bonds as provided
by subdivision (a), the legislative body shall proceed with the
issuance of the bonds by adopting a resolution which shall provide
for all of the following:

(1) The issuance of the bonds in one or more series.

(2) The principal amount of the bonds, which shall be consistent
with the amount specified in subdivision (b) of Section 53397.2.

(3) The date the bonds will bear.

(4) The date of maturity of the bonds, which shall not occur
prior to the receipt of at least the aggregate of one hundred
thousand dollars ($100,000) in incremental property tax revenues
by the district.

(5) The denomination of the bonds.

(6) The form of the bonds.

(7) The manner of execution of the bonds.

(8) The medium of payment in which the bonds are payable.

(9) The place or manner of payment and any requirements for
registration of the bonds.

(10) The terms of call or redemption, with or without premium.

SEC. 6.  

Section 53397.12 is added to the Government Code,
to read:

53397.12.  

(a) (1) Before adopting the resolution required by
subdivision (b) of Section 53397.6 authorizing the issuance of
bonds utilizing the ERAF share, the legislative body shall obtain
and submit an economic analysis to the California Infrastructure
and Economic Development Bank for review and approval. The
Legislative body shall include the adopted infrastructure financing
plan with the economic analysis.

(2) The legislative body shall obtain the economic analysis from
one of the following entities:

(A) The University of California.

(B) The California State University.

(C) A group of economists of comparable stature and
qualifications to those from the University of California or the
California State University.

(b) The bank may circulate the economic analysis to other state
agencies, including, but not limited to, the Department of Finance,
the Department of Housing and Community Development, and
the Office of Planning and Research, and solicit their comments
and recommendations. After considering the comments and
recommendations of other state agencies, if any, the bank shall
take one of the following actions:

(1) Approve the economic analysis and infrastructure financing
plan if the bank makes the finding required pursuant to subdivision
(d).

(2) Return the economic analysis and infrastructure financing
plan to the legislative body with specific recommendations for
changes that would allow the bank to approve the fiscal analysis.

(3) Require an additional economic analysis to affirm the
determinations made by the first economic analysis.

(c) The bank shall have 100 days from the receipt of the
economic analysis to act pursuant to this subdivision. If the bank
does not act within 100 days, the fiscal analysis shall be deemed
approved.

(d) For bank approval, the economic analysis shall demonstrate
to the bank’s reasonable satisfaction a reasonable probability that
the development to be financed would result in an amount of
revenue to the General Fund with a net present value that is greater
than the net present value of the amount of property tax increment
revenues that would be diverted from ERAF over the term of the
district, taking into consideration all pertinent data. In reviewing
the economic analysis, the bank shall consider only those General
Fund revenues that would occur because of economic activity
proposed to occur as a result of implementation of the infrastructure
financing plan.

(e) The legislative body shall reimburse the bank for the
reasonable cost of the review and approval of the fiscal analysis.

end delete