BILL ANALYSIS �
AB 562
Page 1
ASSEMBLY THIRD READING
AB 562 (Williams)
As Introduced February 20, 2013
Majority vote
LOCAL GOVERNMENT 7-1
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|Ayes:|Achadjian, Levine, Alejo, | | |
| |Bradford, Gordon, Mullin, | | |
| |Rendon | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Melendez | | |
| | | | |
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SUMMARY : Requires local agencies, beginning January 1, 2014, to
provide specified information to the public before approving any
economic development subsidy of $100,000 or more. Specifically,
this bill :
1)Requires, beginning January 1, 2014, each local agency, before
approving any economic development subsidy (subsidy) within
its jurisdiction, to provide all of the following information
in written form available to the public, and through its
Internet Web site (website), if applicable, for the entire
term of the subsidy:
a) The name and address of the entity or individual that is
the beneficiary of the subsidy,
if applicable;
b) The start and end dates and the schedule for the
subsidy;
c) A description of the subsidy, including the estimated
total amount of the expenditure
of public funds by, or revenue lost to, the local agency as a
result of the subsidy;
d) A statement of the public purposes for the subsidy;
e) Projected tax revenue to the local agency as a result of
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the subsidy; and,
f) Estimated number of jobs created by the subsidy,
categorized by full-time, part-time, and temporary
positions.
2)Requires each local agency, before granting a subsidy, to
provide public notice and a hearing regarding the subsidy,
unless a hearing and notice is otherwise required by law.
3)Requires, on or before October 1, 2015, and on or before
October 1 in each odd-numbered year thereafter, each local
agency to prepare a report for each subsidy approved after
January 1, 2014, and to make the report available to the
public, and through the agency's website. The report must
include the items listed in 1a) through 1f), above, and the
actual data on those elements as the subsidy is extended. For
any subsidy that will exist for 40 years or more, the report
must be prepared only once every six years after the initial
report.
4)Requires the local agency, on or before November 1, 2015, and
on or before November 1 in each odd-numbered year thereafter,
to hold a public hearing to consider any written or oral
comments on the information contained in the report.
5)Requires the local agency to provide a final report at the
conclusion of each economic development subsidy, as specified.
6)Provides that subsidies with a term of less than two years are
not subject to the ongoing reporting requirements of this
bill, but the local agency must comply with the final report
requirement within two years of the date the subsidy is
granted and must hold a public hearing to consider any written
or oral comments on the final report.
7)Defines an "economic development subsidy" to mean any
expenditure of public funds or loss of revenue to a local
agency in the amount of $100,000 or more, for the purpose of
stimulating economic development within the jurisdiction of a
local agency, including, but not limited to, bonds, grants,
loans, loan guarantees, enterprise zone or empowerment zone
incentives, tax-increment financing, fee waivers, land price
subsidies, matching funds, tax abatements, tax exemptions and
tax credits.
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8)Specifies that an "economic development subsidy" does not
include expenditures of public funds by, or loss of revenue
to, the local agency for the purpose of providing affordable
housing to those of low and moderate income, as defined in
current law.
9)Defines a "local agency" as a city, including a charter city,
county, city and county, and community redevelopment agency.
EXISTING LAW prohibits cities, counties, and redevelopment
agencies from subsidizing the relocation of big box retailers
and auto malls within the same market area, but otherwise
generally allows local governments to make their own decisions
regarding local economic development matters.
FISCAL EFFECT : None
COMMENTS : This bill requires cities and counties to provide
specified information to the public before approving a subsidy
of $100,000 or more. This bill is sponsored by the American
Federation of State, County and Municipal Employees.
According to the author's office, "Local governments engage in a
wide variety of economic development activities to build their
tax bases. In that respect, local officials use their
regulatory powers to direct spending and tax policies which, in
turn, influence where, when and how the private sector invests
capital and improves real property. Each year, local
governments give out billions of dollars in tax incentives to
corporations in hopes of increasing economic growth and drawing
jobs for their residents?State requirements for local budgets,
annual financial reports, and regular audits allow constituents
to review most of the direct fiscal decisions made by local
governments. However, local economic subsidies do not receive
the same public scrutiny as budgets and regulatory decisions.
Additionally, local governments rarely track how many jobs are
created and it's impossible to know whether the jobs would have
been created without the aid. AB 562 seeks to remedy this
shortcoming."
Cities and counties engage in a variety of economic development
activities to build their tax bases. Local officials use
regulatory powers, direct spending, and tax policies to
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influence where, when, and how the private sector invests
capital and improves real property. Local officials sometimes
use economic development powers to induce business to relocate
to their communities. How local officials use their regulatory
powers is relatively transparent because state law requires
public notice, public hearings, and environmental reviews.
State requirements for local budgets, annual financial reports,
and regular audits allow constituents to review most of the
direct fiscal decisions. However, some groups worry that local
economic development subsidies do not receive the same public
scrutiny as budgets and regulatory decisions.
SB 1103 (Cedillo) of 2008, which was similar to this bill,
contained a sunset date and (in an early version) a requirement
that the Legislative Analyst's Office report to the Legislature
on the statewide number of subsidies completed or in progress,
the level of compliance by local agencies, and the actual costs
incurred by local agencies as a result of the bill's
requirements. This bill contains neither a sunset date nor any
reporting requirement. The Legislature may wish to consider
whether this legislation should include a mechanism for state
review and/or oversight of the bill's effectiveness and its
impact on local agencies.
The American Federation of State, County and Municipal
Employees, in support, argues that this bill "is a common-sense
reform of local government economic development subsidies?This
bill will improve public knowledge of tax incentives given to
corporations, since these incentives have an uneven track record
and are often approved without disclosure. Promised job growth
does not always materialize and mandating full disclosure of
subsidies promotes accountability and transparency in
government."
The League of California Cities, in opposition, states, "The
local government decision-making process is already
highly-transparent, with many opportunities for public input.
Local elected officials are very accountable to their
communities for their decisions. This measure would impose many
costly and burdensome mandates on local governments...Since the
loss of redevelopment, and with pending efforts to eliminate or
restrict enterprise zones, cities are on their own when it comes
to efforts to improve their communities. The effect of this
measure would be to bog down any remaining local economic
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development activities in complex data keeping, reports and
hearings (that) would further discourage additional local
economic development efforts."
SB 1103 (Cedillo) of 2008 was approved by the Assembly Local
Government Committee on a 4-2 vote on June 4, 2008. SB 1103 was
subsequently amended to address an unrelated subject.
SB 103 (Cedillo) of 2007 was also nearly identical to this bill.
SB 103 was approved by the Assembly Local Government Committee
on a 5-0 vote on July 3, 2007. SB 103 was vetoed by Governor
Schwarzenegger with the following message:
During my administration, I have been committed to
openness in government operations and the public's
right to know how government spends their money.
However, this bill does not offer any additional
information of significance that is not already
provided to the public by existing law. Local
governments already provide sufficient information
about the amount and timing of payments (or forgone
revenue) at the time the decision is made to grant an
economic development subsidy. Such decisions must be
made in open meetings and all documents are subject to
public review. Existing procedures already ensure
that the public is informed about all decisions made
by their local government representatives.
The multiple reports mandated by this bill add little
value and will create costs to the General Fund in the
millions of dollars. The approval processes
envisioned by this bill will likely result in major
time delays in getting the economic assistance to
deserving communities and citizens.
SB 1268 (Cedillo) of 2006 was another similar bill, which was
never heard by the Assembly Local Government Committee because
it was held in the Senate Appropriations Committee.
Support arguments: Supporters argue that this bill increases
transparency of local government decisions related to economic
development subsidies.
Opposition arguments: Opponents contend that this bill places
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additional and unnecessary burdens on local agencies regarding
decisions that are already open to the public.
Analysis Prepared by : Angela Mapp / L. GOV. / (916) 319-3958
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