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. AB 2292 Page 2 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 AB 2292 Page 3 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 AB 2292 Page 4 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. AB 2292 Page 5 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