BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 1
Author: Steinberg (D), et al.
Amended: 9/3/13
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
SENATE FLOOR : 27-11, 5/28/13
AYES: Beall, Block, Calderon, Corbett, De León, DeSaulnier,
Evans, Galgiani, Hancock, Hernandez, Hill, Hueso, Jackson,
Lara, Leno, Lieu, Liu, Monning, Padilla, Pavley, Price, Roth,
Steinberg, Torres, Wolk, Wright, Yee
NOES: Anderson, Berryhill, Cannella, Emmerson, Fuller, Gaines,
Huff, Knight, Nielsen, Walters, Wyland
NO VOTE RECORDED: Correa, Vacancy
ASSEMBLY FLOOR : 48-28, 9/9/13 - See last page for vote
SUBJECT : Sustainable Communities Investment Authority
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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.
Assembly Amendments (1) provide that if a city, county, or city
and county that is part of an Authority declares a fiscal
emergency that city, county or city and county must develop a
plan for how the county auditor-controller shall reduce the
amount of the tax increment revenue allocated to the authority
during the period of time of the fiscal emergency; (2) prohibit
an Authority from including land that is subject to a contract
pursuant to the Williamson Act or more than two acres of prime
farmland, farmland of statewide importance, unique farmland, or
farmland of local importance as defined by the United States
Department of Agriculture (USDA) land inventory and monitoring
criteria as modified for California; (3) prohibit an Authority
from being formed, as specified, by a city, county, city and
county, or special district that has declared a fiscal
emergency, unless the city, county, city and county, or special
district subsequently declares that the fiscal emergency has
been resolved; and (4) make other clarifying changes.
ANALYSIS : The Community Redevelopment Law (CRL) 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
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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 (GHG) 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 GHG
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 GHG
emission reduction targets.
SB 375 also created and defines a "transit priority project" as
one that:
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 GHG 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;
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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:
1. Allows an Authority to be formed and specifies that it must
comply with the provisions of the CRL, with certain
exceptions, and this bill's provisions.
2. Requires an Authority to adopt a plan for a sustainable
communities investment area.
3. Requires a sustainable communities investment plan to
terminate on a specified date not to exceed 30 years from the
date of the first issuance of bond indebtedness by the
Authority.
4. Provides that the Authority shall be deemed to be an
"agency" as defined in the CRL and shall have all the rights,
responsibilities, and obligations of an agency.
5. Exempts an Authority from the requirement under the CRL from
reporting on its financial information to the State
Controller.
6. Provides that an Authority is not required to make a finding
of blight or conduct a survey of blight in a project area,
but can rely upon the legislative findings in this bill to
establish blight.
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7. Prohibits a city or county that created a redevelopment
agency from forming an Authority unless the designated local
authority or the successor agency has receive a finding of
completion from Department of Finance (DOF) that it has
complied with the provisions of AB 26X1.
8. Allows an Authority to be formed as follows:
A. A city and county representing the geographic
territory of an sustainable communities investment area
may form an Authority by entering into a joint powers
agreement that establishes the governing board and the
sustainable communities investment area;
B. A city may form the governing board and establish the
parameters of the proposed economic development within the
sustainable communities investment area in an incorporated
area of the city provided the economic development
parameters and the sustainable communities investment plan
are approved by the county;
C. A city and county may appoint a governing board for a
sustainable communities investment area comprised of two
members appointed by the city with geographic jurisdiction
and two appointed by the county with geographic
jurisdiction and a fifth member appointed by those
members. The governing board will designate the
sustainable communities' investment area in an
incorporated area, an unincorporated area or both. The
city and the county must approve the sustainable
communities investment plan and any amendments to it.
D. If the sustainable communities' investment area is
within an unincorporated area, the county may form an
Authority and appoint the governing body.
E. A city may form an Authority and appoint a governing
board that designates the sustainable communities
investment area without county approval if the area is
within the incorporated limits of the city.
9. Provides that the governing board of the Authority shall
consist of five members, and that members shall be appointed
for four-year terms and shall only be removed by the
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appointing authority for cause, and provides that the initial
appointees to the governing board shall serve either two-year
or four-year terms and shall draw their terms by lot.
10.Deems an Authority a public body subject to the Ralph A.
Brown Act, California Public Records Act, Meyers-Milias-Brown
Act, and the Political Reform Act.
11.Requires a city or county approving participation in an
Authority, the governing board, or a sustainable communities
investment area to do so through a resolution.
12.Excludes a school district from participating in an
Authority.
13.States that a sustainable communities investment area shall
include only the following:
A. Transit priority areas that meet the following
parameters:
(1) A transit priority project including a
high-speed rail station. The transit stop or corridor
must be completed within the planning horizon
established by specified federal regulations. The
transit priority area may include a military base reuse
plan that meets the definition of a transit priority
area and it may include a contaminated site within a
transit priority area;
(2) It is within the geographic boundaries of a MPO
with an approved SCS.
A. Areas that are small walkable communities, as defined,
except that small walkable communities may also be
designated in a city that is within the area of an MPO.
Specifies that no more than one small walkable community
project area shall be designated within a city; and
B. Sites that have land use approvals, covenants,
conditions and restrictions, or other effective controls
restricting the sites to clean energy manufacturing, and
that are consistent with the use, designation, density,
building intensity, and applicable policies specified for
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the sustainable communities investment area in the SCS, if
those sites are within the geographic boundaries of an
MPO. Specifies that clean energy manufacturing shall
consist of the manufacturing of any of the following:
(1) Components, parts, or materials for the
generation of renewable energy resources;
(2) Equipment designed to make buildings more energy
efficient or the component parts thereof;
(3) Public transit vehicles or the component parts
thereof; or,
(4) Alternative fuel vehicles or the component parts
thereof.
1. Prohibits an Authority from including land that is subject
to a contract pursuant to the Williamson Act or more than two
acres of prime farmland, farmland of statewide importance,
unique farmland, or farmland of local importance as defined
by the USDA land inventory and monitoring criteria as
modified for California.
2. Allows a sustainable communities investment plan for an
sustainable communities investment area to include a
provision for the receipt of tax increment funds providing
that the local government with land use jurisdiction has
adopted all of the following:
A. A sustainable parking standards ordinance that
restricts parking in transit priority project areas to
encourage transit use to the greatest extent feasible;
B. An ordinance creating a jobs plan. Specifies that all
entities receiving financial support from the Authority
shall, at a minimum, require that any and all agreements
approved by the Authority include a jobs plan, which shall
describe how the project will further create construction
careers that pay prevailing wages, living wage permanent
jobs, and create a program for community outreach, local
hire, and job training. Specifies that the plan shall
also describe the project developer's commitment to offer
jobs to disadvantaged California residents, including
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veterans of the Iraq and Afghanistan wars, people with a
history in the criminal justice system, and single-parent
families;
C. For transit priority areas and small walkable
communities within an MPO, a plan consistent with the use
designation, density, building intensity, and applicable
policies specified for the sustainable communities
investment area density of at least 20 dwelling units per
net acre and for nonresidential uses, provides a minimum
floor area ratio of 0.75;
D. Within small walkable communities outside of an MPO, a
plan for new residential construction that provides a
density of at least 20 dwelling units per net acre and,
for nonresidential uses, provides a minimum floor area
ratio of 0.75; and
E. An ordinance that prohibits the number of housing
units for extremely low-, very low- and low-income
households in the sustainable communities investment area
from being reduced during the effective period of the
sustainable communities investment plan. And requires the
replacement of these housing units within two years of
their displacement.
3. Requires the county auditor controller to allocate to an
Authority the tax increment as specified in a an sustainable
communities investment plan in proportion to the levied taxes
for the city and or county in excess of the amount specified
in Health and Safety Code Section 33670 (a).
4. Provides that the auditor-controller may only allocate tax
increment revenues to an Authority if the taxing agency whose
tax increment would be allocated adopts a resolution
authorizing the allocation.
5. Provides that the adoption of a resolution to allow tax
increment to go to the Authority does not prohibit an
auditor-controller's authority to revoke the allocation if it
conflicts with requirements to pay existing obligations
secured by tax increment revenues.
6. Provides that if a city, county, or city and county that is
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part of an Authority declares a fiscal emergency that city,
county or city and county must develop a plan for how the
county auditor-controller shall reduce the amount of the tax
increment revenue allocated to the authority during the
period of time of the fiscal emergency.
7. Provides that if an sustainable communities investment area
includes in whole or in part a former redevelopment area and
the sustainable communities investment plan includes a
provision for receipt of tax increment revenues then it shall
include a provision that tax increment amounts collected and
received by the Authority are subordinate to existing
enforceable obligations.
8. Defines "net available revenue" as periodic distributions to
the city or county from the Redevelopment Property Tax Trust
Fund once all enforceable obligations are paid.
9. Allows a city or county forming the Authority to dedicate
any portion of its net available revenue to the Authority
through the sustainable communities investment plan which
shall include the date upon which the Authority will cease to
receive the net available revenue.
10.Provides that an Authority that collects tax increment
revenues must dedicate no less than 25% of the allocated tax
increment for affordable housing purposes.
11.Requires a sustainable communities investment plan to
include the following, in addition to what is required for a
redevelopment plan in the CRL:
A. A fiscal analysis of the projected receipt of tax
increment and other revenue and the projected expenses
over five-year planning horizons for the life of the
Authority;
B. A statement of the principal goals and objectives of
the plan with findings of the public purposes and uses
that will be achieved;
C. A statement of how the sustainable communities
investment plan with relieve blight as follows:
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(1) How it will implement the goals of a SCS if the
sustainable communities investment area is within an
MPO;
(2) How it will contribute to a more efficient
transportation;
(3) How it will contribute to and reduce cost for
the combined costs of housing and transportation;
(4) How it will contribute to improved public
health;
(5) How it will promote more efficient water
consumption;
(6) How it will avoid loss of prime farmland; and,
(7) How it will reduce air pollution, energy
consumption and GHG emissions by reducing vehicle miles
traveled;
(8) How it will ensure compliance with the
affordable housing maintenance and preservation
requirements.
A. A statement of how the plan will implement the
sustainable parking standards;
B. A statement of how the plan will implement the jobs
plan;
1. Provides a sustainable communities investment plan, in
addition to meeting the housing provisions of the CRL, may
include, to the extent applicable to the sustainable
communities investment area, the following:
A. Affordable and farmworker housing;
B. Transitional and supportive housing for, including but
not limited to, former foster youth, persons with mental
health treatment needs, persons with substance use
disorder treatment needs, offender populations.
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C. Health and safety related infrastructure investments
in disadvantaged rural communities; and
D. Infrastructure to support country wide services.
2. Requires an Authority to contract for an independent and
financial audit every five years, conducted by guidelines
established by the Controller, and submit it to the
Controller, Director of DOF, and the Joint Legislative Budget
Committee.
3. Requires the audit to determine compliance with the
affordable housing maintenance and replacement requirement
including provisions to ensure that the replacement
requirements are met within the five year period covered by
the audit.
4. Provides that if the Authority fails to meet the maintenance
and replacement requirement for affordable housing it must
adopt and submit to a plan with the audit to show how it will
comply with those provisions within two years.
5. Require the Controller to review and approve an Authority's
plan to meet the replacement housing requirements and ensure
that the plan includes one or more of the following means of
achieving compliance:
A. Expenditure of an additional 10% of gross tax
increment revenue on increasing, preserving, or improving
the supply of low-income housing;
B. An increase in the production by an additional 10% of
housing for very low-income households as required under
the CRL housing production requirements; and/or
C. The targeting of expenditures from the Low- and
Moderate -Income Housing Fund toward rental housing
affordable to and occupied by person of very low and
extremely low income.
6. Requires the Authority to approve any bond financing.
7. Specifies that school district property taxes cannot be
pledged for the repayment of bonds issued by an Authority.
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8. Specifies, in the event a tax increment financing provision
is included as part of an sustainable communities investment
area, and for the purposes of collecting tax increment under
Section 16 of Article XVI of the California Constitution,
that the terms "district" and "affected taxing entity" shall
exclude a school district and special districts.
9. Permits a state or local pension fund system to invest
capital in the public infrastructure projects and private
commercial residential developments undertaken by an
Authority.
10.Allows an Authority to exercise the powers granted under the
Mello-Roos Act.
11.Allows an Authority to implement local transaction and use
tax, except that the resolution authorizing the tax may
designate the use of the tax.
12.Establishes a process to prequalify developers for
construction contracts in excess of $1 million.
13.Requires the Department of Industrial Relations to monitor
and enforce compliance with prevailing wage requirements for
projects that include funds from an Authority and shall
charge each awarding body or developer for the reasonable and
directly related costs of monitoring and enforcing compliance
with the prevailing wage requirements of each project.
14.Defines, for the purpose of exempting small walkable
communities from the California Environmental Quality Act,
the following terms:
A. "Floor area ratio" as the ratio of gross building area
of development, exclusive of structured parking areas,
proposed for the project divided by the total net lot
area;
B. "Gross building area" as the sum of all finished areas
of all floors of a building included within the outside
faces of its exterior walls; and
C. "Net lot area" means the area of a lot excluding
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publicly dedicated land, private streets that meet local
standards, and other public use areas as determined by the
local land use authority.
15.Makes legislative findings and declarations.
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
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)
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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)
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 9/9/13)
Alameda-Contra Costa Transit District
Alliance for Community Transit-Los Angeles
California Association of REALTORS
California Labor Federation
California Special Districts Association
California State Association of Counties
California State Council on Developmental Disabilities
California Transit Association
Capacity Builders, Inc.
City of West Sacramento
Counties of Alameda, Lassen
East Los Angeles Community Corporation
Emeryville Chamber of Commerce
Green Technical Education and Employment
Housing California
Los Angeles County Federation of Labor
Los Angeles/Orange Counties Building and Construction Trades
Council
Metropolitan Transportation Commission
Mission Bay Development Group
Natural Resources Defense Council
Sacramento Area Council of Governments
Sacramento Housing Alliance
Southeast Asian Community Alliance
State Building and Construction Trades Council
Western Center on Law and Poverty
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OPPOSITION : (Verified 9/9/13)
Air Conditioning Trade Association
California Farm Bureau Federation
California Right to Life Committee, Inc.
California Taxpayers Association
Contra Costa Taxpayers Association
Plumbing-Heating-Cooling Contractors Association of California
State Board of Equalization, Third District, Vice-Chair,
Michelle Steel
Western Electrical Contractors Association
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, CRL 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.
ASSEMBLY FLOOR : 48-28, 9/9/13
AYES: Alejo, Ammiano, Atkins, Bloom, Bocanegra, Bonilla, Bonta,
Bradford, Brown, Buchanan, Ian Calderon, Campos, Chau,
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Chesbro, Daly, Dickinson, Eggman, Fong, Frazier, Garcia,
Gatto, Gomez, Gonzalez, Gordon, Gray, Hall, Roger Hernández,
Holden, Jones-Sawyer, Levine, Lowenthal, Mitchell, Mullin,
Muratsuchi, Nazarian, Pan, Perea, V. Manuel Pérez,
Quirk-Silva, Rendon, Skinner, Stone, Ting, Weber, Wieckowski,
Williams, Yamada, John A. Pérez
NOES: Achadjian, Allen, Bigelow, Chávez, Conway, Cooley, Dahle,
Donnelly, Fox, Beth Gaines, Gorell, Grove, Hagman, Harkey,
Jones, Linder, Logue, Maienschein, Mansoor, Melendez, Morrell,
Nestande, Olsen, Patterson, Salas, Wagner, Waldron, Wilk
NO VOTE RECORDED: Medina, Quirk, Vacancy, Vacancy
AB/RM:k 9/9/13 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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