BILL ANALYSIS �
AB 662
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Date of Hearing: April 17, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 662 (Atkins) - As Introduced: February 21, 2013
SUBJECT : Local government: infrastructure financing districts.
SUMMARY : Deletes the prohibition on infrastructure financing
districts including any portion of a redevelopment project area.
EXISTING LAW :
1)Authorizes cities and counties to create infrastructure
financing districts (IFDs) and issue bonds to pay for
community scale public works: highways, transit, water
systems, sewer projects, flood control, child care facilities,
libraries, parks, and solid waste facilities.
2)Allows an IFD to divert property tax increment revenues from
other local governments, excluding school districts, for up to
30 years, in order to pay back bonds issued by the IFD.
3)Requires that in order to form an IFD a city or county must
develop an infrastructure plan, send copies to every
landowner, consult with other local governments, and hold a
public hearing.
4)Requires that when forming an IFD, local officials must find
that its public facilities are of communitywide significance
and provide significant benefits to an area larger than the
IFD.
5)Requires that every local agency who will contribute its
property tax increment revenue to the IFD approve the plan.
6)Requires a two-thirds voter approval of the formation of the
IFD and the issuance of bonds.
7)Requires majority voter approval for setting the IFD's
appropriations limits.
8)Specifies that public agencies that own land in a proposed IFD
may not vote on issues regarding the district.
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9)Authorizes IFDs to issue a variety of debt instruments,
including bonds, certificates of participation, leases, and
loans.
10)Requires any IFD that constructs dwelling units to set aside
not less than 20% of those units to increase and improve the
community's supply of low- and moderate-income housing
available at an affordable housing cost to persons and
families of low- and moderate-income.
FISCAL EFFECT : None
COMMENTS :
1)This bill deletes the prohibition on an infrastructure
financing district from including any portion of a
redevelopment project area. This bill is an author-sponsored
measure.
2)Cities and counties can create IFDs and issue bonds to pay for
community scale public works: highways, transit, water
systems, sewer projects, flood control, child care facilities,
libraries, parks, and solid waste facilities. To repay the
bonds, IFDs divert property tax increment revenues from other
local governments for 30 years. However, IFDs are prohibited
from diverting property tax increment revenues from schools.
For several years, local officials were reluctant to form IFDs
because they worried about the constitutionality of using tax
increment revenue from property that was not within the
redevelopment project area. When a 1998 Attorney General's
opinion allayed those concerns, the City of Carlsbad formed an
IFD in 1999 to fund the public works for a new hotel located
adjacent to the Legoland theme park.
Since the creation of IFD law there have been multiple bills
that have tailored IFD law to specific local circumstances.
In 1999 the Legislature created a parallel law for IFDs to
stimulate development and international trade in the "border
development zone," about 400 square miles next to the Mexico
border [SB 207 (Peace), Chapter 773, Statutes of 1999].
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However, San Diego officials have yet to use this authority.
In 2005, the Legislature passed SB 1085 (Migden), Chapter 213,
Statutes of 2005, which provided for changes and additions to
the IFD law to enable the City and County of San Francisco to
finance needed public infrastructure improvements to specified
waterfront properties. This authority was expanded even
further for San Francisco in AB 1199 (Ammiano), Chapter 664,
Statutes of 2010.
3)According to the author, "Public officials continue to search
for ways to raise the capital they need to invest in public
work projects, like public transit facilities, infill
development, or clean water. One concept recognizes that
expanded public structures can boost the value of nearby
property. Higher property values produce higher property tax
revenues. Property tax increment financing captures those
property tax increment revenues. For decades redevelopment
agencies used this method of financing to eradicate blight.
With the dissolution of redevelopment in February 2012, IFDs
are being looked at by local agencies as the new tool to
create infrastructure and economic development.
"Existing law prohibits an IFD from including any portion of a
redevelopment project area for the purposes of collecting tax
increment. This prohibition was originally created to ensure
that the tax increment base was not "double-dipped" by both
redevelopment agencies and IFDs if they were both formed in
the same geographic area.
"Given that redevelopment agencies were dissolved in 2012 and
are no longer collecting additional tax increment to create
new activities to promote economic development and
infrastructure, the restriction on the overlap with IFDs seems
unnecessary."
4)Last year the Legislature saw several proposals to broaden the
scope and powers of existing IFDs as well as bills to reduce
the voter threshold needed to establish IFDs, in order to
create a more workable tool for local agencies in light of the
dissolution of redevelopment agencies. Most of these measures
were vetoed by the Governor, who noted that "expanding the
scope of IFDs is premature?[and] would likely cause cities to
focus their efforts on using the new tools provided?instead of
winding down redevelopment."
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This legislative session is no different - there are multiple
IFD-related proposals pending in both the Senate and the
Assembly. The Committee may wish to discuss each of these
measures and their individual merits, but also contemplate
whether a more comprehensive approach is necessary. Given the
numerous other IFD bills, the Committee may wish to consider
whether this change can be folded into one of the more
substantive IFD proposals.
5)Support arguments : Supporters argue that this bill will
remove unnecessary barriers to establish infrastructure
financing districts and provide jurisdictions with the local
authority needed to meet the needs of their communities.
Opposition arguments : None on file.
REGISTERED SUPPORT / OPPOSITION :
Support
City of West Sacramento
San Diego Housing Federation
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958