BILL ANALYSIS Ó
-----------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 562|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
-----------------------------------------------------------------
THIRD READING
Bill No: AB 562
Author: Williams (D)
Amended: 8/15/13 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-2, 6/26/13
AYES: Wolk, Beall, DeSaulnier, Hernandez, Liu
NOES: Knight, Emmerson
ASSEMBLY FLOOR : 49-19, 5/23/13 - See last page for vote
SUBJECT : Economic development subsidies: review by local
agencies
SOURCE : American Federation of State, County, and Municipal
Employees,
AFL-CIO
DIGEST : This bill 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.
Senate Floor Amendments of 8/15/13 requires a local agency to
provide specified information about an economic development
subsidy.
ANALYSIS : 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
CONTINUED
AB 562
Page
2
decisions regarding local economic development matters.
This bill:
1.Requires a city, charter city, county, or city and county,
before approving any economic development subsidy, to provide:
A. The name and address of all corporations or any other
business entities, except for sole proprietorships, that
are the beneficiary of the economic development subsidy, if
applicable.
B. The start and end dates and schedule.
C. A description of the subsidy, including an estimate of
the total expenditure of public funds or revenue lost to
the local agency.
D. A statement of the public purposes for the subsidy.
E. Projected tax revenue to the local agency as a result of
the subsidy.
F. Estimated number of jobs created by the subsidy, broken
down by full-time, part-time, and temporary positions.
1.Requires a local agency to issue a report for each economic
subsidy, either within the term of the economic development
subsidy but no later than five years after the action granting
an economic development subsidy.
2.Requires a local agency, within the term of the economic
development subsidy but no later than five years after the
action granting an economic development subsidy, to hold a
public hearing to consider any written or oral comments on the
information contained in the report.
3.Requires a local agency, for subsidies with a term of ten
years or more, to hold a public hearing at the conclusion of
the subsidy that shall contain specified information in
written form available to the public and through its Internet
Web site, if applicable. Requires any public hearing required
by this bill to be consolidated with a local agency's
regularly scheduled hearing.
CONTINUED
AB 562
Page
3
4.Defines "economic development subsidy" as any expenditure of
public funds or loss of revenue to a local agency of $100,000
or more, for the purpose of stimulating local economic
development, including bonds, grants, loans, loan guarantees,
enterprise zone or empowerment zone incentives, fee waivers,
land price subsidies, matching funds, tax abatement, tax
exemptions, and tax credits.
5.Exempts from the definition of "economic development subsidy"
any public funds or loss of revenue to the local agency for
providing affordable housing to persons and families of low-
or moderate-income, as defined in state law.
Comments
Existing law does not require local agencies to provide detailed
information about tax expenditures. This bill is intended to
provide some transparency to taxpayers concerning the use of
public funds for economic development activities. Knowing more
about local subsidies helps communities get ready for important
discussions about goals and results.
Related Legislation
SB 1103 (Cedillo, 2008) contained nearly identical provisions
and passed the Assembly Local Government Committee on a 3-2
vote. The bill was later amended to another subject.
SB 103 (Cedillo, 2007) contained nearly identical provisions but
was vetoed by Governor Schwarzenegger, citing concerns that the
bill did not offer additional information that wasn't already
provided to the public. He stated, "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, 2006) passed the former Senate Local
Government Committee on a 3-2 vote, but died in the Senate
Appropriations Committee.
AB 1139 (Dymally, 2005) would have required the State Department
of Finance to produce an annual "unified economic development
budget" that included economic development spending. County
CONTINUED
AB 562
Page
4
officials would have been responsible for reporting property tax
reductions and abatements to the state. AB 1139 failed in the
Assembly Committee on Jobs, Economic Development, and the
Economy.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 8/20/13)
American Federation of State, County, and Municipal Employees,
AFL-CIO
(source)
California Labor Federation
Howard Jarvis Taxpayers
Service Employees International Union
Teamsters
United Food and Commercial Workers Western States Council
OPPOSITION : (Verified 8/20/13)
California Asian Pacific Chamber of Commerce
California Building Industry Association
California Chamber of Commerce
California Business Properties Association
California Grocers Association
California Manufacturers and Technology Association
California Taxpayers Association
Cities of Cypress, Chula Vista, Culver City, El Centro,
Fairfield, Goleta, Moorpark, Ontario, Pismo Beach, Rancho
Cordova, Riverside, Rosemead, Sacramento, San Luis Obispo, Santa
Rosa, South San Francisco; Sunnyvale, Tulare, and Ventura
League of California Cities
National Federation of Independent Business
TechAmerica
ARGUMENTS IN SUPPORT : According to the author, "The first
step towards accountability is to require full disclosure of
subsidies that are being granted. It is impossible to determine
if these incentives work without adequate information on
specific subsidy deals. Taxpayers deserve to know the benefit
to them of awarding economic development incentives to
businesses, or if their tax dollars are better used elsewhere."
CONTINUED
AB 562
Page
5
ARGUMENTS IN OPPOSITION : 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."
ASSEMBLY FLOOR : 49-19, 5/23/13
AYES: Ammiano, Atkins, Bloom, Blumenfield, Bocanegra, Bonilla,
Bonta, Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
Chesbro, Cooley, Dickinson, Eggman, Fong, Fox, Frazier, Gatto,
Gomez, Gordon, Gray, Hall, Roger Hernández, Jones-Sawyer,
Levine, Lowenthal, Medina, Mitchell, Mullin, Muratsuchi,
Nazarian, Pan, Perea, V. Manuel Pérez, Quirk, Quirk-Silva,
Rendon, Salas, Skinner, Stone, Ting, Weber, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Allen, Bigelow, Chávez, Conway, Dahle, Donnelly, Beth
Gaines, Gorell, Hagman, Harkey, Linder, Logue, Maienschein,
Melendez, Morrell, Nestande, Patterson, Wagner, Wilk
NO VOTE RECORDED: Achadjian, Alejo, Daly, Garcia, Grove,
Holden, Jones, Mansoor, Olsen, Waldron, Vacancy, Vacancy
AB:nl 8/20/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
CONTINUED