BILL NUMBER: AB 294 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 8, 2013
INTRODUCED BY Assembly Member Holden
FEBRUARY 11, 2013
An act to amend Sections 53395.1, 53395.3, 53395.10,
53395.14, and 53397.6 of, and to add Section 53397.12 to, the
add and repeal Article 5.5 (commencing with Section
63047.55) of Chapter 2 of Division 1 of Title 6.7 of the
Government Code, relating to local government.
LEGISLATIVE COUNSEL'S DIGEST
AB 294, as amended, Holden. Infrastructure financing
districts: use of incremental property tax revenue.
Local-State Joint Investment Partnership Pilot Program.
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.
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.
(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.
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.
(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.
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.
(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.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. 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.
SEC. 2. Article 5.5 (commencing with Section
63047.55) is added to Chapter 2 of Division 1 of Title 6.7 of the
Government Code , to read:
Article 5.5. Local-State Joint Investment Partnership Pilot
Program
63047.55. There is in state government the Local-State Joint
Investment Partnership Pilot Program.
63047.60. 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.
63047.65. 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.
63047.70. (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.
63047.75. (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.
63047.80. (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.
63047.85. (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.
63047.90. 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.
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.