Amended in Assembly May 6, 2013

Amended in Assembly April 23, 2013

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 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. 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, 2020, establish a pilot program whereby certain local government entities, upon the approval and oversight of the bank, are authorized to reallocate their annual payments of property tax revenue 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 government entity operating a project under the pilot program and the bank to submit annual reports, as specified, on the results of the pilot program.

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 government entities, upon the approval and oversight of the
Infrastructure and Economic Development Bank, are authorized
to reallocate their payments of property tax revenue 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 government 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 or any special district, 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.

(l) “Economic development facilities” as that term is used in
subdivision (g) of Section 63010.

(m) Development of affordable housing.

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 that includes a
determination 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 the Educational
begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert Fund over a
35-year period, taking into consideration all pertinent data.

(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) A statement of the availability of matching funds from the
applicant local government entity. The application shall not request
funding greater than required to complete the project.

(5) The annual amount of property taxes otherwise allocated to
the Educational begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert
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.

(6) 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 15 applications for financing pursuant
to the program or a total of fifty million dollars ($50,000,000) in
allocations for all approved projects, whichever comes first.

(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. The bank shall not approve an application unless
the bank determines 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
the Educational begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert
Fund over a 35-year period, taking into consideration all pertinent
data.

(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 a level of financing that
reallocates tax revenue that would otherwise be allocated to the
Educational Revenue Augmentation Fund from the tax rate areas
within the territorial jurisdiction of the applicant, for which the
bank has received verification from the county auditor that the
level of financing approved by the bank would not prevent the
county auditor from making all distributions to cities, counties,
and special districts from the Educational Revenue Augmentation
Fund as required by law. The local government agency shall only
receive its share of the Educational begin delete Augmentation Revenue end delete
begin insert Revenue Augmentation end insert Fund funds for projects approved pursuant
to the program.

(f) The bank may approve an amount less than the amount
requested by the applicant. The bank shall not approve an
application unless it finds that the local government will be able
to provide matching funds in an amount equal to the approved
funding.

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 begin delete agency’s end delete begin insert entity’s end insert payment to the Educational
Revenue Augmentation Fund that is being reallocated, and the
duration of those reallocations. The written statement shall include
a statement that the maximum amount that may be diverted from
the Educational begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert
Fund shall not exceed the total amount of the Educational
begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert Fund contributions
by each local agency participating in an infrastructure financing
district, or in the case of a special district, that special district’s
begin delete the end delete Educational begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert
Fund share. The statement shall additionally specify that the
Educational begin delete Augmentation Revenue end delete begin insert Revenue Augmentation end insert Fund
reallocations pursuant to the program shall only be used for projects
of the applicant that are approved projects pursuant to this program.
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.

63047.83.  

Upon approval by the bank, the local government
entity may issue bonds, including, but not limited to, general
obligation bonds, against the Educational begin delete Augmentation Revenue end delete
begin insert Revenue Augmentation end insert Fund funds, the proceeds of which shall
only be used for a project approved pursuant to this program.

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, 2020, and as of that date is repealed, unless a later enacted
statute, that is enacted before January 1, 2020, 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.