BILL ANALYSIS Ó
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THIRD READING
Bill No: SB 1
Author: Steinberg (D), et al.
Amended: 5/2/13
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 4-2, 3/13/13
AYES: Wolk, Beall, DeSaulnier, Liu
NOES: Knight, Emmerson
NO VOTE RECORDED: Hernandez
SENATE TRANSPORTATION & HOUSING COMMITTEE : 8-3, 4/23/13
AYES: DeSaulnier, Beall, Galgiani, Hueso, Lara, Liu, Pavley,
Roth
NOES: Gaines, Cannella, Wyland
SENATE APPROPRIATIONS COMMITTEE : 5-2, 5/23/13
AYES: De León, Hill, Lara, Padilla, Steinberg
NOES: Walters, Gaines
SUBJECT : Sustainable Communities Investment Authority
SOURCE : Author
DIGEST : This bill allows a local government to establish a
Sustainable Communities Investment Authority (Authority) and
direct tax increment revenues to that Authority in order to
address blight by supporting development in transit priority
project areas, small walkable communities, and clean energy
manufacturing sites.
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ANALYSIS : The Community Redevelopment Law allowed a local
government to establish a redevelopment area and capture all of
the increase in property taxes generated within the area
(referred to as "tax increment") over a period of decades.
In 2011, the Legislature enacted AB 26X1 (Blumenfield, Chapter
5) which eliminated redevelopment agencies and established
procedures for winding down the agencies, paying off enforceable
obligations, and disposing of agency assets. AB 26X1
established successor agencies, typically the city that
established the agency, to take control of all redevelopment
agency assets, properties, and other items of value. Successor
agencies are to dispose of an agency's assets as directed by an
oversight board, made up of representatives of local taxing
entities, with the proceeds transferred to the county
auditor-controller for distribution to taxing agencies within
each county.
AB 26X1 also included provisions allowing the host city or
county of a dissolving redevelopment agency to retain the
housing assets and functions previously performed by the agency,
except for funds on deposit in the agency's Low and Moderate
Income Housing Fund (L&M fund), and thus become a successor
housing agency. If the host city or county chooses not to
become the housing successor agency, a local housing authority
or the Department of Housing and Community Development (HCD)
takes on that responsibility.
SB 375 (Steinberg, Chapter 728, Statutes of 2008) required the
Air Resources Board (ARB), by September 30, 2010, to provide
each region that has a metropolitan planning organization (MPO)
with a greenhouse gas emission reduction target for the
automobile and light truck sector for 2020 and 2035,
respectively. Each MPO, in turn, is required to include within
its regional transportation plan (RTP) a sustainable communities
strategy (SCS) designed to achieve the ARB targets for
greenhouse gas emission reduction. Each MPO must submit its SCS
to ARB for review. ARB must accept or reject the MPO's
determination that the SCS submitted would, if implemented,
achieve the greenhouse gas emission reduction targets.
SB 375 also created and defines a "transit priority project" as
one that:
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Is located within one-half mile of an existing or planned
major transit stop or high-quality transit corridor included
in the RTP.
Is consistent with the general plan use designation,
density, building intensity, and applicable policies
specified for the project area in its SCS, for which ARB has
accepted an MPO's determination that the SCS would, if
implemented, achieve the greenhouse gas emission reduction
targets;
Contains at least 50% residential use, based on total
building square footage and, if the project contains between
26% and 50% nonresidential uses, a floor area ratio of not
less than 0.75;
Provides a minimum net density of at least 20 dwelling units
per acre; and
Existing law also defines a "small walkable community
project" as a project in an incorporated city, which is not
within the boundary of an MPO, and that:
Is approximately one-quarter mile diameter of contiguous
land completely within the existing incorporated boundaries
of the city;
Is a project area that includes a residential area adjacent
to a retail downtown area; and
Has a density of at least eight dwelling units per acre or a
floor area ratio for retail or commercial use of not less
than 0.50.
This bill authorizes local governments to create Authorities to
function in a manner similar to former redevelopment agencies
and under the Community Redevelopment Law with certain
modifications. Specifically, this bill:
1. Permits any combination of a city, county, city and county,
or special district, but not a school district, to create a
Authority in one of several ways as follows:
A city, county, or special district may create an
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Authority through a joint powers agreement that
establishes a governing board and designates a Sustainable
Communities Investment Area (Area).
A city alone may create an Authority, appoint the
Authority's governing board, designate an Area within the
city, and establish the parameters of the proposed
economic development within a proposed area with county
approval of the economic development parameters and the
Sustainable Communities Investment Plan (Plan).
Alternatively, a city alone may create an Authority,
which constitutes a legally distinct entity from that
city, and appoint the Authority's governing board, which
may designate an Area only within the incorporated limits
of that city.
A city and a county together may create an Authority
and appoint the governing board with the city council
appointing two members and the county appointing two
members, and those four members appointing the fifth. The
governing board then designates the Area in an
incorporated area or in both an incorporated area and an
unincorporated area. The city and county must both
approve the Plan.
A county board of supervisors alone can create an
Authority for an area within an unincorporated area.
2. Prescribes that an Authority shall have five members of
four-year terms and shall be subject to the Brown Act for
open meetings, the Public Records Act, the
Meyers-Milias-Brown Act governing employer-employee
relations, and the Political Reform Act.
3. Prohibits a city or county that created a redevelopment
agency dissolved pursuant to AB 26X1 of 2011 from forming an
Authority unless Department of Finance (DOF) has issued its
successor agency a finding of completion indicating that the
local government has complied with AB 26X1's requirements to
distribute the former agency's assets to the taxing entities.
4. Deems an Authority to be an "agency," as defined in the
Community Redevelopment Law; assigns an Authority all of the
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rights, responsibilities, and obligations of a redevelopment
agency; and requires an Authority to comply with most
provisions of the Community Redevelopment Law, excluding
specified statutes that suspend redevelopment agencies'
activities, prohibit redevelopment agencies' issuance of
debt, and govern redevelopment agencies' dissolution.
5. Limits the areas that local governments can include in a plan
area to:
Transit priority project areas, including high-speed
rail stations. The transit stop or corridor must be
scheduled to be completed within the planning horizon
established by specified federal regulations governing the
metropolitan transportation planning process. This bill
specifies that if the transit priority project area
includes a high-speed rail station, then the radius of the
area may be up to one mile from the station. If such a
project area consists of a radius greater than half a
mile, then at least 50% of the tax increment revenue from
that area shall be used to support construction of the
high-speed rail station and related infrastructure.
Small walkable communities, as defined, which the bill
also permits to be in a city that is within the
jurisdiction of an MPO. An Authority may designate only
one small walkable community area per city.
Clean energy manufacturing sites. This bill defines
clean energy manufacturing sites to be those that have
land use approvals or other effective controls restricting
the sites to clean energy manufacturing and that are
consistent with the SCS, if within the jurisdiction of an
MPO. This bill defines clean energy manufacturing as:
o Components, parts, or materials for the
generation of renewable energy;
o Equipment designed to make buildings more energy
efficient;
o Public transit vehicles or their components; or
o Alternative fuel vehicles or their component
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parts.
6. Authorizes only local agencies participating in, approving
the formation of, or appointing board members to an Authority
to allocate all or part of their tax increment revenues, plus
specified additional revenues, to the Authority. Before any
assignment of tax increment revenues, the local government
with land use jurisdiction over the area must have adopted a
sustainable parking standards ordinance to encourage transit
use to the greatest extent feasible and a jobs plan ordinance
to ensure projects further construction careers that pay
prevailing wage.
7. Adds to the numerous elements that must be included in a
redevelopment plan for a project area so that a Plan will
also include:
A fiscal analysis of projected tax increment revenue
and other revenue and projected expenses over five-year
planning horizons for the life of the Authority.
A statement of the principal goals and objectives of
the plan together with findings of the public purposes and
uses that it will achieve.
A statement of how the Plan will relieve blight,
including how it will implement the goals of the SCS,
reduce energy consumption, ensure compliance with this
bill's affordable housing provisions, and contribute to
more efficient transportation infrastructure, to reducing
the combined costs of housing and transportation for
residents, to improving public heath, to promoting
efficient water consumption, to preserving prime farm
land, and to reducing vehicle miles traveled.
Statements of how the Plan will implement the local
government's sustainable parking standards and its jobs
plan.
8. Permits a Plan additionally to include:
Farmworker housing.
Transitional and supportive housing, including former
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foster youth, persons with mental health treatment needs,
persons with substance use disorder treatment needs, and
various offender populations.
Health and safety related infrastructure investments
for disadvantaged and rural communities.
Infrastructure investments to support countywide
services, including health clinics, hospitals, medical
provider offices, child care facilities, day reporting
centers, and grocery stores in food desert areas.
9. Increases from 20% to 25% the amount of money an Authority
must dedicate from tax increment revenues it receives to the
provision of low- and moderate-income housing (i.e., the
Authority's L&M fund).
10.Provides that a local government with land use authority that
participates in or approves an Authority must enact an
ordinance that:
Prohibits the number of housing units occupied by
extremely low-, very low-, and low-income households,
including the number of bedrooms in those units, from
being reduced within the area during the effective period
of the Plan; and
Requires the replacement of dwelling units that house
extremely low-, very low-, or low-income households when
removed from an area within two years, rather than the
four years under existing provisions of the Community
Redevelopment Law.
11.Requires an Authority to contract every five years for an
independent financial and performance audit pursuant to
guidelines that the State Controller shall establish. These
must include guidelines for ensuring that an Authority is
meeting the housing requirements of this bill (#10
immediately above). If an Authority is failing to comply
with these housing requirements, then it shall submit to the
Controller with its audit, a plan to achieve compliance in
not less than two years. The plan must include one of the
following means of achieving compliance:
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Expenditure of an additional 10% of the Authority's
tax increment revenues on providing low-income housing;
A 10% increase in the production of housing for very
low-income households, as required under the Community
Redevelopment Law's housing production requirements; or
The targeting of expenditures from its L&M fund
exclusively to rental housing affordable to, and occupied
by, persons of very low and extremely low income.
12.Permits a state or local public pension fund to invest in
public infrastructure projects and private commercial and
residential development that an Authority undertakes.
13.Authorizes an Authority to implement a local transactions and
use tax, above the state's base 7.25% sales and use tax, and
the resolution authorizing the tax may designate the use of
the proceeds of the tax.
14.Authorizes an Authority to issue bonds paid for with
Authority proceeds in order to carry out the provisions of
this bill.
15.Authorizes an Authority to exercise the powers of an
infrastructure financing district to divert property tax
increment revenues and issue bonds to pay for public works.
16.Allows an Authority to finance infrastructure by issuing
bonds and lending the proceeds for public works, working
capital, and insurance programs as provided in the Marks-Roos
Local Bond Pooling Act.
17.Requires that all entities that will receive more than
$1,000,000 from an Authority, including private developers,
must comply with specified prequalification requirements for
all construction contracts or subcontracts and allows an
Authority to establish additional prequalification
requirements.
Prior legislation . This bill is very similar to the final
version of last year's SB 1156 (Steinberg, 2012), which Governor
Brown vetoed. The Governor's veto message read in part, "I
prefer to take a constructive look at implementing this type of
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program once the winding down of redevelopment is complete and
General Fund (GF) savings are achieved. At that time, we will
be in a much better position to consider new investment
authority. I am committed to working with the Legislature and
interested parties on the important task of revitalizing our
communities."
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
According to the Senate Appropriations Committee:
Potentially major redirection of local property tax revenues
from participating local agencies, excluding schools, to an
Authority over a period of decades. Since this bill
prohibits schools from participating, there is no state
fiscal impact related to the redirection of local property
tax revenues.
Estimated one-time costs to the Controller's Office in the
range of $100,000 to $200,000 (GF) to establish guidelines
for periodic financial and performance audits that include
provisions for determining compliance with affordable housing
requirements as well as secondary review and compliance
measures for failure to achieve initial compliance on the
regular audit schedule. (Staff assumes 1.5 to 2 personnel
year (PY) of regulatory staff to establish guidelines)
Estimated ongoing Controller's Office costs in the range of
$150,000 (GF) on a periodic basis for accepting audits and
reviewing and approving secondary compliance plans submitted
by Authorities who fail to comply with initial audit
requirements. (Staff assumes approximately one PY of audit
work on a periodic basis)
Estimated ongoing costs in the range of $150,000 to $200,000
(GF) to the DOF to review and approve completed audits on a
periodic basis. This bill requires audits to be submitted to
the Controller's Office, DOF, and Joint Legislative Budget
Committee, and specifies that the Controller's Office is not
required to review and approve completed audits. (Staff
assumes 1.5 to 2 PY of DOF staff would be required to handle
this workload to determine compliance with guidelines)
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Unknown costs to the Department of Industrial Relations
(State Public Works Enforcement Fund) to monitor and enforce
prevailing wage requirements for Authority projects. These
costs would be reimbursed in arrears by charges on an
awarding body or developer for each project.
SUPPORT : (Verified 5/23/13)
Alameda-Contra Costa Transit District
American Lung Association in California
Bridge Housing
California Association of Realtors
California Building and Construction Trades, AFL-CIO
California Coastal Protection Network
California Federation of Labor, AFL-CIO
California League of Conservation Voters
California Special Districts Association
California State Association of Counties
California Transit Association
Cities of West Sacramento and Emeryville
County of Lassen
DMB Pacific Ventures
Emeryville Chamber of Commerce
Environment California
Housing California
Los Angeles Alliance for a New Economy
Los Angeles County Federation of Labor, AFL-CIO
Los Angeles/Orange Counties Building and Construction Trades
Council
Metropolitan Transportation Commission
Natural Resources Defense Council
Sacramento Area Council of Governments
United Food and Commercial Workers, Local 770
UNITE-HERE, Local 11
Western Center on Law and Poverty
OPPOSITION : (Verified 5/23/13)
Air Conditioning Trade Association
California Federation of Republican Women
California Taxpayers Association
Howard Jarvis Taxpayers Association
Plumbing-Heating-Cooling Contractors Association of California
Western Electrical Contractors Association
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ARGUMENTS IN SUPPORT : Eliminating redevelopment agencies did
not eliminate the need for California communities to build more
affordable housing, eliminate blight, foster business activity,
clean up contaminated brownfields, and create jobs. This bill
establishes a new approach to local economic development and
housing policy that is focused on building sustainable
communities and creating high skill, high wage jobs. This bill
fosters collaboration between cities and counties on local
economic development efforts and mitigates the zero-sum
competition for scarce property tax revenues among cities,
counties, and school districts. This bill offers local
governments flexibility by allowing an authority to use a
variety of tools, including tax increment financing, Community
Redevelopment Law powers, local sales taxes, infrastructure
financing districts, and the ability to leverage public pension
fund investments.
ARGUMENTS IN OPPOSITION : Opponents object to the taxation,
bonding, and eminent domain powers that this bill confers to the
Authorities. They are concerned about how high sales tax rates
could go up in the project areas and about how Authorities would
structure the public votes for such sales tax increases as well
as for bonds. The opponents are also concerned that the
imposition of sales taxes of varying levels in many small areas
throughout the state could result in significant administrative
challenges and compliance problems for small businesses.
Finally, they are opposed to assigning eminent domain power to
the Authorities.
AB:k 5/23/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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