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