BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 2292
                                                                  Page  1

          Date of Hearing:  August 13, 2014

                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
                           K.H. "Katcho" Achadjian, Chair
                     AB 2292 (Bonta) - As Amended:  June 11, 2014
           
          SUBJECT  :  Infrastructure financing districts: broadband.

           SUMMARY  :  Allows an infrastructure financing district (IFD) to  
          finance public capital facilities or projects that include  
          broadband.

           The Senate amendments  :  

          1)Delete the provisions that would have authorized an IFD within  
            the Oakland Army Base, the Howard Terminal, or the Coliseum  
            City in the City of Oakland to finance public capital  
            facilities or projects that include freight rail, and the  
            provisions that would have required the governing board of the  
            City of Oakland to establish a commission, as specified, to  
            advise the city on the safety concerns regarding development  
            on the Howard Terminal.

          2)Add new provisions to IFD law to allow any IFD to finance  
            public capital facilities or projects that include broadband.

          3)Define, for purposes of the bill, the term "broadband" means  
            "communications network facilities that enable high-speed  
            internet access."

           EXISTING LAW  :

          1)Authorizes cities and counties to 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.

          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.








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          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 to 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.

          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.

           AS PASSED BY THE ASSEMBLY  , this bill:  

          1)Allowed any IFD within the Oakland Army Base, the Howard  
            Terminal, or the Coliseum City in the City of Oakland to  
            finance public capital facilities or projects that include  
            freight rail, in addition to the projects authorized in  
            existing IFD law.

          2)Required the governing board of the City of Oakland to  
            establish a commission to advise the city on the safety  
            concerns regarding any development authorized by 1) above, on  
            the Howard Terminal, and requires the commission to consist of  
            one member from each of the stakeholders involved in the  
            development of the Howard Terminal, including, but not limited  
            to, all of the following:

             a)   A representative for the City of Oakland appointed by  








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               the governing board of the City 
             of Oakland;

             b)   A representative for the Port of Oakland appointed by  
               the Board of Port Commissioners; and,

             c)   Every owner or lessor of property located within the  
               Howard Terminal or a representative appointed by the owner  
               or lessor.

          3)Found and declared that a special law is necessary and that a  
            general law cannot be made applicable because of the unique  
            circumstances applicable to the City of Oakland and the need  
            for revitalization on the Oakland Army Base, the Howard  
            Terminal, and in the Coliseum City.

          4)Provided that no reimbursement is required because the only  
            costs that may be incurred by a local agency or school  
            district are the result of a program for which legislative  
            authority was requested by that local agency or school  
            district, as specified.
           
          COMMENTS  :   

          1)Purpose of this bill.  This bill allows any IFD to finance  
            public capital facilities or projects that include broadband,  
            and defines "broadband" as communications network facilities  
            that enable high-speed Internet access.  
             
            This bill is sponsored by the City of San Leandro.

          2)Author's statement.  According to the author, "AB 2292  
            provides cities and counties with a tool to expand broadband  
            projects that would bring high-speed communications, jobs, and  
            new businesses to local communities.  Access to high-speed  
            fiber optic networks, like the one in San Leandro, provides  
            businesses with a significant competitive advantage, helping  
            them to grow and become industry leaders.  Businesses  
            connecting to San Leandro's high-speed fiber loop enjoy  
            Internet speeds of up to 10 gigabytes per second, which is  
            roughly 2,000 times the average speed of an Internet  
            connection in the U.S.  By adding broadband-related projects  
            to the list of facilities an IFD can finance, AB 2292 will  
            allow San Leandro and other local governments to create and  
            expand broadband networks that will help keep California at  








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            the forefront of the innovation economy."

          3)IFDs.  Cities and counties can create IFDs and issue bonds to  
            pay for community scale public works, including 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 a period of 30  
            years.  IFDs, however, are prohibited from diverting property  
            tax increment revenues from schools.

          4)Public facilities of communitywide significance.  State law  
            says that the types of public facilities of communitywide  
            significance that an IFD may finance are not limited to the  
            types of projects that are listed in statute.  As a result, a  
            city-wide fiber optic network may already qualify for IFD  
            financing, despite not being specifically mentioned in the  
            state laws governing IFDs.  This bill may only clarify what is  
            already allowable under current law.

          5)Arguments in support.  Supporters argue that changing state  
            law to add broadband-related projects to the list of approved  
            IFD uses will allow local governments throughout the state to  
            be able to create and expand broadband networks enabling  
            California to remain at the forefront of today's innovation  
            economy.

          6)Arguments in opposition.  According to the California  
            Taxpayers Association, "this bill creates a funding gap for  
            critical government services and drives the demand for higher  
            local taxes.  Before moving forward with AB 2292's approach,  
            the Legislature should continue winding down redevelopment  
            agencies.  Once this is done, a more thoughtful approach  
            should be considered that maintains budget savings associated  
            with the elimination of these agencies.  Rather than utilizing  
            tax-increment financing, local governments should utilize  
            existing tools such as voter-approved bond financing to invest  
            in infrastructure and economic development."

          7)Gut and amend.  This bill was substantially amended in the  
            Senate and therefore no Assembly policy committee has heard  
            the subject matter of this bill during this legislative  
            session.










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           REGISTERED SUPPORT / OPPOSITION  :   

           Support 
           
          City of San Leandro [SPONSOR]
          California Library Association
          California State Association Counties
          Central Coast Broadband Consortium
          Cities of Brisbane, Dublin, Millbrae, Oakland, and Sacramento
          San Leandro Chamber of Commerce

           Opposition 
           
          California Taxpayers Association
           
          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916)  
          319-3958