BILL ANALYSIS Ó
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: sb 628
SENATOR MARK DESAULNIER, CHAIRMAN AUTHOR: beall
VERSION: 4/10/13
Analysis by: Carrie Cornwell FISCAL: no
Hearing date: May 7, 2013
SUBJECT:
Infrastructure financing districts: transit priority projects
DESCRIPTION:
This bill allows a city or county to create an infrastructure
financing district to implement a transit priority project
without having to hold an election and requires the local entity
to use 20 percent of the resulting revenues for affordable
housing.
ANALYSIS:
Existing law authorizes a city or county to create an
Infrastructure Financing District (IFD) and through the IFD
issue bonds to pay for community-scale public works, including
transit facilities, highways, water systems, sewer projects,
flood control, child care facilities, libraries, parks, and
solid waste facilities. The city or county repays the bonds by
capturing a portion of the increase in property taxes that is
generated within the IFD. This is referred to as the "tax
increment" revenue.
Under an IFD, tax increment is diverted for 30 years from the
host city or county and other local governments, excluding
schools, but only if the other local governments agree to the
diversion. Each IFD must have a detailed infrastructure
financing plan, and the voters of the jurisdiction must approve
with a two-thirds vote the formation of the district and the
issuance of bonds and with a majority vote set a limit as to the
funds it will appropriate.
Existing law requires that:
If the IFD removes or destroys any housing units occupied by
low- or moderate-income persons, then the IFD must within four
years ensure the construction or rehabilitation of an equal
SB 628 (BEALL) Page 2
number of replacement units in the district's territory for
persons of low- or moderate-income.
If an IFD removes or destroys any affordable housing units
that are not occupied by persons of low or moderate incomes,
then the IFD must within four years ensure the construction or
rehabilitation of replacement units equal to 20 percent of the
number it destroyed.
The IFD must also provide relocation assistance and ensure that
there are suitable housing units at comparable costs for persons
or families of low or moderate income before removing or
destroying those units.
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, must include within its
regional transportation plan 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:
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 land 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 percent residential use, based on total
building square footage and, if the project contains between
26 percent and 50 percent nonresidential uses, a floor area
ratio of not less than 0.75; and
Provides a minimum net density of at least 20 dwelling units
per acre.
This bill :
SB 628 (BEALL) Page 3
1.Allows an IFD formed to finance any project that implements a
transit priority project, a regional transportation plan, or
any other project consistent with an ARB-approved SCS to form,
issue bonds, and set an appropriation limit without holding
any public votes.
2.Requires that any IFD formed pursuant to the bill use 20
percent of its tax increment revenues to increase, improve,
and preserve the supply of low- and moderate-income housing
available in the district and occupied by income qualified
persons.
COMMENTS:
1.Purpose . The author introduced this bill at the request of
the Bay Area Rapid Transit District to eliminate the
requirements for voter approval for the creation of an
infrastructure financing district, the issuance of bonds, and
the approval of an appropriations limit for transit priority
projects. Transit priority projects are generally mixed-use
projects that include multifamily residential, retail, and
service facilities located around transit centers in order to
make it easier for local residents to live near and use mass
transit. Many of these developments also include public and
green spaces, cultural centers, and entertainment venues, all
of which work to enhance the livability of local communities
and improve local economies.
According to the author, increasingly transit-oriented
projects are helping communities deal with the negative
impacts of growth and sprawl, such as growing traffic
gridlock, increased commute times and pollution. These
projects have been shown to be one of the most cost-effective
ways to reduce the emission of greenhouse gases. The author
notes that in essentially every transit-oriented project there
are critical components that have very little or no source of
funds, such as place making features (pedestrian plazas,
pocket parks, community facilities, etc.), access improvements
(additional bus access services, bicycle facilities, parking,
etc.) and affordable housing. The sponsor, BART, has
completed a number of transit-oriented projects around its
stations in the San Francisco Bay Area.
Proponents assert that this bill could be an important tool
for local jurisdictions as they develop sustainable
SB 628 (BEALL) Page 4
communities strategies pursuant to SB 375, and related transit
priority projects. The bill will assist in critical
place-making development around fixed rail stations, bus
centers, and high-speed rail stations, improving the
livability of local communities.
2.Affordable housing set aside . The bill adds to the affordable
housing provisions of existing IFD law by requiring that an
IFD formed under its provisions use 20 percent of the
district's tax increment revenue for housing affordable to
low- and moderate-income persons. The bill makes no further
requirements on these funds, which conceivably could be set
aside and never used or set aside and spent solely on
moderate-income housing with none provided to lower-income
individuals and families. Over many years, the housing
provisions of the Community Redevelopment Law evolved to
address the timely and appropriate expenditure of
redevelopment tax-increment housing funds. The committee may
wish to consider amendments to subject the 20 percent set
aside for affordable housing in this bill to the existing
requirement on housing funds in the Community Redevelopment
Law.
3.Additional housing provisions . The committee recently heard
and passed a similar bill, SB 1 (Steinberg), which also sets
up a new system of tax increment financing that excludes the
school share of property taxes and relies on consensus among
the local agencies. SB 1 adds to the affordable housing
provisions of existing Community Redevelopment Law in three
ways. First, it increases from 20 to 25 percent the amount of
tax increment revenue that an authority must set aside for
low- and moderate-income housing. Because tax increment
accruing to an authority under either SB 1 or to an IFD under
this bill would be less (e.g., it would not include the
schools' share), this would be 25 percent of a smaller number.
Second, SB 1 requires that a host city or county pass an
ordinance ensuring that housing affordable to and occupied by
extremely low-, very low-, and low-income households within an
area does not decrease during the life of the plan. Third, SB
1 requires that ordinance to ensure an authority provide
replacement housing in two rather than four years. The
committee may wish to consider amendments to mirror these
three housing provisions of SB 1, so that this bill includes a
25 percent set aside for affordable housing, a no-net loss of
affordable housing provision, and a two-year period to provide
replacement housing.
SB 628 (BEALL) Page 5
4.Consistency with SB 375 . Under this bill, a local government
can create an IFD, issue bonds, and set a spending limit
without a vote of the people, but only to finance a project
that is consistent with that region's sustainable communities
strategy adopted pursuant to SB 375. The bill does not,
however, require anyone to certify that the project is
consistent with the SCS. The committee may wish to amend the
bill to require that the MPO certify that the project the IFD
will implement is consistent with that region's SCS.
5.Opposition . The California Taxpayers Association opposes this
bill because it would repeal the vote of the people to
establish an IFD and for that IFD to issue bonds. CalTax
points out that the California Constitution requires
two-thirds voter approval before a city or county can issue
long-term debt backed by general purpose revenues.
Proposition 13 added this requirement to the constitution to
protect property owners and to ensure that local spending is
carefully prioritized. CalTax further asserts that this bill
creates a funding gap for critical government services and
drives the demand for increasing local taxes. Rather than
utilizing tax increment financing, local government should use
existing tools to provide economic development in our
communities.
6.Committee of second referral . The Rules Committee referred
this bill to the Governance and Finance Committee and to the
Transportation and Housing Committee. This bill passed that
committee on April 17 by a 5 to 2 vote. The Governance and
Finance Committee's analysis and hearing of the bill dealt
primarily with the provisions of the bill related to the local
government finance provisions, leaving the housing provisions
for review in this committee.
RELATED LEGISLATION:
SB 1 (Steinberg) Provides for the creation of new Sustainable
Communities Investment Authorities to set up a new system of tax
increment financing that excludes the school share of property
taxes and relies on consensus among the local agencies, to
confer new revenue authority, and to retain all the other powers
that redevelopment agencies possessed under state law, except it
limits the areas that would qualify as project areas. Pending
in the Senate Appropriations Committee.
SB 628 (BEALL) Page 6
POSITIONS: (Communicated to the committee before noon on
Wednesday, May 1,
2013.)
SUPPORT: Bay Area Rapid Transit District (sponsor)
California Transit Association
OPPOSED: California Taxpayers Association