BILL ANALYSIS �
SB 628
Page 1
Date of Hearing: June 26, 2013
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
SB 628 (Beall) - As Amended: June 17, 2013
SENATE VOTE : 24-11
SUBJECT : Infrastructure financing districts: transit priority
projects.
SUMMARY : 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 tax increment revenues for affordable housing.
Specifically, this bill :
1)Allows an infrastructure financing district (IFD) to finance
any project that implements a transit priority project.
2)Provides, for an IFD proposed to implement a transit priority
project, that an election is not required to form an IFD,
issue bonds, or establish or change the appropriations limit
pursuant to existing IFD law.
3)Requires at least 25% of all revenues derived from the
property tax increment of the IFD to be used for the purposes
of increasing, improving, and preserving the supply of lower-
and moderate-income housing available in the district at an
affordable housing cost, and occupied by persons and families
of low- or moderate-income, lower-income households, very low-
income households, and extremely low-income households.
4)Requires that the provisions of the bill are implemented in
accordance with the section of Community Redevelopment Law
that required a 20% set aside from tax increment proceeds to
increase, improve, and preserve the community's supply of
affordable housing, and all other applicable affordable
housing provisions of the Community Redevelopment Law, to the
extent that those provisions are not inconsistent with the
provisions of this bill.
5)Allows an IFD to provide for the receipt of tax increment
funds for purposes of a project subject to the bill's
provisions, provided that the local government with land use
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jurisdiction has adopted an ordinance that requires the
replacement of dwelling units that house extremely low-, very
low-, or low-income households, upon their removal from the
district, as specified, within two years of their
displacement.
6)Makes findings and declarations related to the need for
California local governments to have a sustainable funding
source to accommodate transportation and land use planning and
to develop projects that are consistent with the state's
climate, air quality, and energy conservation goals, and for
the need to expedite the process for local governments to
create IFDs to implement transit priority projects.
7)Declares the intent of the Legislature that the development of
transit priority projects throughout the state be
environmentally conscious and sustainable, and that related
construction meet or exceed the requirements of the California
Green Building Standards Code.
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
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.
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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.
10)Requires any IFD that constructs dwelling units to set aside
not less than 20% of those units to increase and improve the
community's supply of low- and moderate-income housing
available at an affordable housing cost to persons and
families of low- and moderate-income.
11)Defines a transit priority project to a) contain 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; b) provide a
minimum net density of at least 20 dwelling units per acre;
and, c) be within one-half mile of a major transit stop or
high-quality transit corridor included in a regional
transportation plan.
12)Defines "persons and families of low or moderate income" to
mean persons and families whose income does not exceed 120% of
area median income, adjusted for family size by the department
in accordance with adjustment factors adopted and amended from
time to time by the United States Department of Housing and
Urban Development pursuant to Section 8 of the United States
Housing Act of 1937.
13)Defines "lower income households" to mean persons and
families whose income does not exceed the qualifying limits
for lower-income families as established and amended from time
to time pursuant to Section 8 of the United States Housing Act
of 1937. The limits shall be published by the department in
the California Code of Regulations as soon as possible after
adoption by the Secretary of Housing and Urban Development.
14)Defines "extremely low income households" to mean persons and
families whose incomes do not exceed the qualifying limits for
extremely low-income families as established and amended from
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time to time by the Secretary of Housing and Urban Development
and defined in Section 5.603(b) of Title 24 of the Code of
Federal Regulations.
FISCAL EFFECT : None
COMMENTS :
1)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. This bill is sponsored by Bay Area Rapid Transit
(BART).
According to the author, "SB 628 authorizes local officials to
use an IFD to finance any project that implements a transit
priority project. SB 628 is essentially a tool for local
officials to spur private investors and developers to invest
in transit-oriented development. Legislators and voters who
have elected their local representatives should let local
officials do their job - setting local priorities for spending
local revenues."
2)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.
For several years, local officials were reluctant to form IFDs
because they worried about the constitutionality of using tax
increment revenue from property that was not within the
redevelopment project area. When a 1998 Attorney General's
opinion allayed those concerns, the City of Carlsbad formed an
IFD in 1999 to fund the public works for a new hotel located
adjacent to the Legoland theme park.
Since the creation of IFD law there have been multiple bills
that have tailored IFD law to specific local circumstances.
In 1999 the Legislature created a parallel law for IFDs to
stimulate development and international trade in the "border
development zone," about 400 square miles next to the Mexico
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border [SB 207 (Peace), Chapter 773, Statutes of 1999].
However, San Diego officials have yet to use this authority.
In 2005, the Legislature passed SB 1085 (Migden), Chapter 213,
Statutes of 2005, which provided for changes and additions to
IFD law to enable the City and County of San Francisco to
finance needed public infrastructure improvements to specified
waterfront properties. This authority was expanded even
further for San Francisco last year in AB 1199 (Ammiano),
Chapter 664, Statutes of 2010.
Public officials continue to search for ways to raise the
capital they need to invest in public works projects, like
public transit facilities, infill development, or clean water.
One concept recognizes that expanded public structures can
boost the value of nearby property. Higher property values
produce higher property tax revenues. Property tax increment
financing captures those property tax increment revenues.
When local officials use IFDs to capture property tax
increment revenues, state law requires a two-thirds approval.
3)This Committee has heard several other proposals this session
aimed at establishing a post-redevelopment tool that local
governments can use to fund infrastructure improvements,
including the following bills:
a) AB 229 (Speaker Perez) - Allows military base reuse
authorities to create Infrastructure and Revitalization
Financing Districts to finance environmental mitigation and
hazardous cleanup. This bill maintains the two-thirds vote
to form the District and issue bonds. AB 229
passed the Committee on April 17 on an 8-1 vote;
b) AB 243 (Dickinson) - Creates Infrastructure and
Revitalization Financing Districts and reduces the
two-thirds voter threshold to form a District and issue
bonds to 55%. AB 243 passed the Committee on April 17 on a
6-3 vote;
c) AB 662 (Atkins) - Repeals the prohibition of an IFD on a
former redevelopment area.
AB 662 passed the Committee on April 17 on a 9-0, and was
subsequently amended in the Senate to include several other
provisions that modify the statutes governing the
dissolution of redevelopment agencies; and,
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d) SB 33 (Wolk) - Eliminates the voter approval requirement
for a city or county to create an infrastructure financing
district and expands the types of projects that may be
financed by a district. SB 33 passed the Committee on June
12 on a 5-2 vote.
4)Support arguments : Supporters argue that this bill provides a
new tool for green development to help achieve the sustainable
communities strategy and regional transportation goals of SB
375 and that investment in local transit priority project
development can improve local and regional economies by
providing appropriate commercial and residential development
opportunities.
Opposition arguments : Opponents argue that the two-thirds
voting requirement is intended to ensure that policymakers and
voters carefully prioritize how revenue will and will not be
spent, and that lack of a supermajority vote prevents such a
careful deliberation from taking place.
5)This bill is double-referred to the Assembly Housing and
Community Development Committee.
REGISTERED SUPPORT / OPPOSITION :
Support
San Francisco Bay Area Rapid Transit District [SPONSOR]
California Association of Housing Authorities
California Transit Association
Metropolitan Transportation Commission
Santa Clara Valley Transportation Authority
Western Center on Law & Poverty
Opposition
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California Association of Realtors
CalTax
Howard Jarvis Taxpayers Association
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958