BILL ANALYSIS Ó
SB 33
Page 1
SENATE THIRD READING
SB 33 (Wolk)
As Amended March 6, 2013
Majority vote
SENATE VOTE :24-13
LOCAL GOVERNMENT 5-2 APPROPRIATIONS 11-5
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|Ayes:|Levine, Alejo, Gordon, |Ayes:|Gatto, Bocanegra, Ian |
| |Mullin, Rendon | |Calderon, Campos, Eggman, |
| | | |Gomez, Hall, Holden, Pan, |
| | | |Quirk, Weber |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Melendez, Waldron |Nays:|Harkey, Bigelow, |
| | | |Donnelly, Linder, Wagner |
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SUMMARY : Eliminates the voter approval requirement for a city
or county to create an infrastructure financing district (IFD)
and expands the types of projects that may be financed by a
district. Specifically, this bill :
1)Repeals the voter approval requirements to form an IFD issue
bonds, and set the appropriations limit.
2)Allows an IFD to contribute to the cost of maintaining
facilities, as specified, and adds the following to the types
of facilities an IFD can finance:
a) Watershed lands used for the collection and treatment of
water for urban uses;
b) Flood management, including levees, bypasses; and,
c) Habitat restoration.
3)Authorizes an IFD to finance the cleanup and development of
brownfield properties contaminated by hazardous waste under
the provisions of the Polanco Redevelopment Act.
4)Allows an IFD to finance any project that implements a transit
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priority project, regional transportation plan, or other
projects that are consistent with the general use designation,
density, building intensity, and applicable policies specified
for the project area in either a sustainable communicates
strategy (SCS) or an alternative planning strategy (APS) for
which the Air Resources Board has accepted the metropolitan
planning organization's determination that the SCS or the APS,
would, if implemented, achieve the greenhouse gas emission
reduction targets.
5)Expands the life of an IFD from 30 to 40 years.
6)Removes the prohibition against an IFD including any portion
of a redevelopment project area.
7)Prohibits an IFD from providing any form of financial
assistance to a vehicle dealer or a big box retailer, or a
business entity that sells or leases land to a vehicle dealer
or big box retailer that is relocating from the territorial
jurisdiction of one local agency to the territorial
jurisdiction of another local agency, as specified.
8)Specifies that an IFD is a local agency for purposes of the
Ralph M. Brown Act.
9)Requires the resolution of intention for the establishment of
an IFD to state the need for the IFD and the goals the IFD
proposes to achieve by financing public facilities.
10)Requires the legislative body to direct the clerk to mail a
copy of the resolution of intention to create the IFD to each
owner of land within the IFD and to each affected taxing
entity and to direct the clerk to post a copy of the
resolution of intention to create an IFD in an easily
identifiable and accessible location on the legislative body's
Internet Web site.
11)Allows the legislative body to adopt a resolution
establishing the IFD, at the conclusion of the required public
hearing, based upon a finding that a) the goals of the IFD are
consistent with the general plan; and, b) the financing
programs undertaken by the IFD are an efficient means of
implementing the goals of the IFD.
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12)Requires the legislative body to send a copy of the
resolution to the public financing authority, after adoption
of the resolution as specified in 11) above.
13)Specifies that projects financed by an IFD that involve
construction, alteration, demolition, installation or repair
work and dwelling units constructed by an IFD shall be subject
to provisions in the Labor Code related to public works,
thereby subjecting these types of projects to prevailing wage
provisions.
14)Provides that in the case of an affected taxing entity that
is a special district that provides fire protection service
and where the county board of supervisors is the governing
authority or has appointed itself as the governing board of
the district, the plan shall be adopted by a separate
resolution approved by the district's governing authority or
governing board.
15)Requires, if an infrastructure financing plan contains a
provision that provides for the division of taxes of any
affected taxing entity, the creation of a public
accountability committee, and provides for the membership and
responsibilities of that public accountability committee, as
follows:
a) Requires the public accountability committee to be
comprised of a representative of each affected taxing
entity that has agreed to the division of its taxes, a
representative of the public financing authority, and one
or more public members;
b) Requires the legislative body of each affected taxing
entity and the legislative body of the public financing
authority to appoint one of its members, or their designee,
to the public accountability committee; and,
c) Provides that the purpose of the public accountability
committee shall be to conduct or have conducted an annual
performance review and an annual independent financial
review of the public financing authority, and specifies
that the costs of the audits shall be paid from the
revenues of the public financing authority.
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16)Requires, in the financing section of the infrastructure
financing plan, the inclusion of the following:
a) The goals the IFD proposes to achieve by financing
public facilities;
b) The goals the IFD proposes to achieve by assisting with
specified development related to transit priority projects;
and,
c) The creation of a public accountability committee, if
funding from affected taxing entities is included in the
plan.
17)Creates and defines, for purposes of IFD law, the term
"public financing authority" to mean the legislative body of
the IFD established pursuant to the bill's provisions.
18)Requires the public financing authority to be comprised of
five people, three of whom shall be members of the city
council or board of supervisors that established the IFD, and
two of whom shall be public members.
19)Allows a public financing authority to enter into a joint
powers agreement with an affected taxing entity to carry out
the purposes of the bill's provisions with regard to nontaxing
authority or powers only.
20)Requires an annual report to be sent to each land owner and
affected taxing entity in the IFD, and posted in an easily
identifiable and accessible location on the legislative body's
Internet Web site, that contains all of the following:
a) A summary of the IFD's expenditures;
b) A description of the progress made towards the IFD's
adopted goals; and,
c) An assessment of the status regarding completion of the
IFD's public works projects.
21)Prohibits the IFD, if it fails to provide the annual report,
from spending any funds to construct public works projects
until the annual report is submitted.
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22)States that if the IFD fails to produce evidence of progress
made towards achieving its adopted goals for five consecutive
years, the IFD shall not spend any funds to construct any new
public works projects, except to complete any public works
projects that it had started.
23)Requires, if the IFD fails, that any excess property tax
increment revenues that had been allocated for new public
works projects be reallocated to the affected taxing entities.
24)Allows the public financing authority to authorize the
issuance of bonds by adoption of a resolution, and expands the
requirements of the resolution to additionally include the
following information:
a) The issuance of the bonds in one or more series;
b) The date the bonds will bear;
c) The denomination of the bonds;
d) The form of the bonds;
e) The manner and execution of the bonds;
f) The medium of payment in which the bonds are payable;
g) The place or manner of payment and any requirements for
registration of the bonds; and,
h) The terms of call of redemption, with or without
premium.
25)Changes the time period that any action or proceeding to
attack, review, set aside, void, or annul the creation of an
IFD or the adoption of an infrastructure financing plan from
30 days after the enactment of the ordinance creating the IFD
to 30 days after the date the legislative body adopted the
resolution adopting the infrastructure financing plan.
26)Changes the time period that any action or proceeding to
attack, review, set aside, void, or annul the issuance of
bonds by the IFD from 30 days after the resolution that the
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voters approved the issuance of bonds to 30 days from the date
the legislative body adopted the resolution providing for the
issuance of bonds.
27)Makes specified findings and declarations, including the
following:
a) It is in the public interest to develop a mechanism that
allows public agencies to jointly dedicate their revenues
to projects that support sustainable communities;
b) Disadvantaged communities, as defined, may not be
beneficiaries of quality public works, and therefore these
communities are neglected, isolated from, and deprived of
the basic facilities needed for public health and safety;
and,
c) IFDs are consistent with the conclusion of California
courts that tax increment revenues are not "proceeds of
taxes," as specified.
28)Revises the definition of an IFD to mean "a legally
constituted public and corporate governmental entity separate
and distinct from the city that established it."
29)Defines "public facilities of communitywide significance" to
mean "facilities that benefit all areas within the IFD or
serve or are made available to those areas."
30)Prohibits an IFD from compensating the members of the
legislative body of the city or the IFD for any activities
undertaken pursuant to the bill's provisions
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
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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.
9)Authorizes IFDs to issue a variety of debt instruments,
including bonds, certificates of participation, leases, and
loans.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, there is negligible fiscal impact.
COMMENTS : According to the author "SB 33 makes it easier for
local agencies to use IFDs to pay for public projects, without
impacting school district's share of property tax or the state's
general fund. In a fiscally distressed economic climate, local
officials need a flexible financing tool that is rigorous and
responsible.
"Forming an IFD is cumbersome: IFDs require three different
vote thresholds. To form an IFD, the city or county must
develop an infrastructure plan, send copies to every landowner,
consult with other local governments, and hold a public hearing.
Every local agency that will contribute its property tax
increment to the IFD must approve the plan. Because an IFD is
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legally separate from the city or county and IFDs do not raise
taxes, the current 2/3 voter approval requirement is not a
Constitutional requirement." This bill is author-sponsored.
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.
This bill removes key impediments to create IFDs, such as the
voting requirements to form and bond the IFD. In addition, the
bill extends the term of the IFD bonds from 30 to 40 years,
allowing for a longer debt repayment period thus lowering
monthly payments. Also, to increase transparency, this bill
includes measures of programmatic and fiscal accountability,
requiring IFDs to annually report its progress and expenditures
to its affected taxing entities and landowners.
This bill allows the creation of an IFD to fund public works
projects in disadvantaged communities and communities seeking to
implement sustainable communities strategies, like transit
priority projects. The bill also allows non-traditional flood
and watershed management projects - using nature to conserve and
restore at-risk watershed lands - to be available for IFD
financing. Additionally, the bill authorizes tax increment
financing for the rehabilitation of upgrades to existing
facilities, which the author notes will "further local
flexibility and opportunity."
This bill is substantially similar to SB 214 (Wolk) of 2012,
which was vetoed by Governor Brown, with the following veto
message:
Expanding the scope of infrastructure financing
districts is premature. This measure would likely
cause cities to focus their efforts on using the new
tools provided by the measure instead of winding down
redevelopment. This would prevent the state from
achieving the General Fund savings assumed in this
year's budget.
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Support arguments: Supporters argue that this bill gives local
officials a rigorous, flexible financing tool that does not
impact K-14 education or the state's General Fund, and local
officials need, and should be given, the flexibility to do their
job: to determine local priorities and the most appropriate
local financing mechanism to achieve those priorities.
Opposition arguments: CalTax argues that eliminating voter
approval for infrastructure financing removes the people from
the decisions process of what their communities will look like,
how bonds are issued, and how property tax revenues are spent.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0001432