BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                            



           ----------------------------------------------------------------- 
          |SENATE RULES COMMITTEE            |                        SB 628|
          |Office of Senate Floor Analyses   |                              |
          |1020 N Street, Suite 524          |                              |
          |(916) 651-1520         Fax: (916) |                              |
          |327-4478                          |                              |
           ----------------------------------------------------------------- 
           
                                           
                                    THIRD READING


          Bill No:  SB 628
          Author:   Beall (D)
          Amended:  5/14/13
          Vote:     21

           
           SENATE GOVERNANCE & FINANCE COMMITTEE  :  5-2, 4/17/13
          AYES:  Wolk, Beall, DeSaulnier, Hernandez, Liu
          NOES:  Knight, Emmerson

           SENATE TRANSPORTATION & HOUSING COMMITTEE  :  7-3, 5/7/13
          AYES:  DeSaulnier, Beall, Galgiani, Hueso, Lara, Pavley, Roth
          NOES:  Gaines, Cannella, Wyland
          NO VOTE RECORDED:  Liu


           SUBJECT  :    Infrastructure financing:  transit priority projects

           SOURCE  :     San Francisco Bay Area Rapid Transit District


           DIGEST  :    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 25% 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  
                                                                CONTINUED





                                                                     SB 628
                                                                     Page  
          2

          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:

          1. 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 number of replacement units in the district's  
             territory for persons of low- or moderate-income.  

          2. 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% 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.

                                                                CONTINUED





                                                                     SB 628
                                                                     Page  
          3


          SB 375 also created and defines a "transit priority project" as  
          one that:

          1. Is located within one-half mile of an existing or planned  
             major transit stop or high-quality transit corridor included  
             in the RTP.

          2. 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.

          3. 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.

          4. Provides a minimum net density of at least 20 dwelling units  
             per acre.

          This bill:

          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 25% 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.

          3. Provides that a local government with land use authority that  
             participates in or approves an authority must enact an  
             ordinance that: 

             A.    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  

                                                                CONTINUED





                                                                     SB 628
                                                                     Page  
          4

                period of the plan.

             B.    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.

          4. Requires that the MPO certify that the project the IFD will  
             implement is consistent with that region's SCS.

           

          FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No   Local:  
           No

           SUPPORT  :   (Verified  5/14/13)

          San Francisco Bay Area Rapid Transit District (source)
          California Transit Association
          Valley Transportation Authority
          Western Center on Law and Poverty

           OPPOSITION  :    (Verified  5/14/13)

          California Taxpayers Association
          Howard Jarvis Taxpayers Association

           ARGUMENTS IN SUPPORT  :    According to the author's office,  
          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's office 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  

                                                                CONTINUED





                                                                     SB 628
                                                                     Page  
          5

          local jurisdictions as they develop sustainable 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.

           ARGUMENTS IN OPPOSITION  :    The California Taxpayers Association  
          opposes this bill because it repeals 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.  
           

          AB:d  5/14/13   Senate Floor Analyses 

                           SUPPORT/OPPOSITION:  SEE ABOVE

                                   ****  END  ****
          

















                                                                CONTINUED