BILL ANALYSIS �
SB 628
Page 1
Date of Hearing: July 3, 2013
ASSEMBLY COMMITTEE ON HOUSING AND COMMUNITY DEVELOPMENT
Ed Chau, Chair
SB 628 (Beall) - As Amended: June 17, 2013
SENATE VOTE : 24-11
SUBJECT : Infrastructure financing: transit priority projects.
SUMMARY : Authorizes a city or a county to create an
infrastructure financing district (IFD) to implement a transit
priority project without having to hold an election and requires
the city or county to use 25% of the resulting revenues for
affordable housing. Specifically, this bill :
1)Allows an IFD to finance any project that implements a transit
priority project.
2)Provides that for an IFD proposed to implement a transit
priority project, an election is not required to form the IFD,
issue bonds, or establish or change the appropriations limit
pursuant to existing IFD law.
3)Requires that at least 25% of all revenues derived from the
property tax increment of the IFD be used for the purpose 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 be implemented in
accordance with the section of Community Redevelopment Law
(CRL) 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 CRL, 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
jurisdiction has adopted an ordinance that requires the
SB 628
Page 2
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, including highways,
transit facilities, water systems, sewer projects, flood
control, child care facilities, libraries, parks, and solid
waste facilities (Government Code Section 53395, et seq.).
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
(Government Code Section 53395.14).
3)Requires a city or county to develop an infrastructure plan,
send copies to every landowner, consult with other local
governments, and hold a public hearing in order to form an IFD
(Government Code Section 53395.10, et seq).
4)Requires local officials, when forming an IFD, to find that
its public facilities are of communitywide significance and
provide significant benefits to an area larger than the IFD
(Government Code Section 53395.3).
5)Requires every local agency that will contribute its property
tax increment revenue to the IFD to approve the plan
(Government Code Section 53395.19).
SB 628
Page 3
6)Requires two-thirds voter approval for the formation of an IFD
and for the issuance of bonds (Government Code Sections
53395.24 and 53397.6).
7)Requires majority voter approval for setting an IFD's
appropriations limits.
8)Specifies that public agencies that own land within a proposed
IFD may not vote on issues regarding the district (Government
Code Section 53395.1).
9)Authorizes IFDs to issue a variety of debt instruments,
including bonds, certificates of participation, leases, and
loans (Government Code Section 53395.1).
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 (Government Code Section
53395.3).
11)Requires the city or county to do all of the following if any
dwelling units are proposed to be removed or destroyed in the
course of private development or public works construction
within the area of the IFD:
a) Within four years of removal, cause or require the
construction or rehabilitation, for rental or sale to
persons or families of low or moderate income, of an equal
number of replacement dwelling units at affordable housing
cost within the IFD if the dwelling units removed were
inhabited by persons or families of low or moderate income.
b) Within four years of removal, cause or require the
construction or rehabilitation, for rental or sale to
persons of low or moderate income, of at least 20% of the
total dwelling units removed at affordable housing cost
within the IFD if the dwelling units removed or destroyed
were not inhabited by persons of low or moderate income.
c) Provide relocation assistance to persons displaced by
any public or private development occurring within the IFD.
SB 628
Page 4
d) Ensure that removal of any dwelling units occupied by
persons or families of low or moderate income not take
place until there are suitable housing units, at comparable
cost to the units from which the persons or families were
displaced, available and ready for occupancy by the
residents of the units at the time of their displacement.
(Government Code Section 53395.5)
12)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 (Public Resources Code 21155).
13)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
of Housing and Community Development (HCD) 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
(Health and Safety Code Section 50093).
14)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 HCD in the
California Code of Regulations as soon as possible after
adoption by the Secretary of Housing and Urban Development
(Health and Safety Code Section 50079.5).
15)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
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 (Health and Safety Code Section 50106).
FISCAL EFFECT : None
SB 628
Page 5
COMMENTS :
Background: 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, generally referred to as the tax
increment.
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.
With respect to housing, existing IFD 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
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% of the number
it destroyed.
The IFD must also provide relocation assistance and ensure that
there are suitable replacement 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,
SB 628
Page 6
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 regional transportation plans;
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% 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; and
Provides a minimum net density of at least 20 dwelling units
per acre.
Purpose of the bill: SB 628 allows a city or county to form an
IFD to implement a transit priority project without an election.
The bill also requires that 25% of revenues from such IFDs be
used to increase, improve, and preserve the supply of affordable
housing within the territory of the IFD. Finally, the bill
requires IFDs formed to implement transit priority projects to
provide any required replacement housing within two years,
rather than the four years that is required under current IFD
law.
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
SB 628
Page 7
(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 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
(CalTax) 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.
Proposed amendments:
1. On page 4, starting on line 22, make the following change to
improve clarity:
(c) (1) At least 25 percent of all revenues derived from
the property tax increment under this section shall 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, as defined
in Section 50052.5 of the Health and Safety Code , and
occupied Units funded pursuant to this subsection shall be
restricted to occupancy by persons and families of low or
moderate income, as defined in Section 50093 of the Health
and Safety Code, lower income households, as defined in
Section 50079.5 of the Health and Safety Code, very low
income households, as defined in Section 50105 of the
SB 628
Page 8
Health and Safety Code, and extremely low income
households, as defined in Section 50106 of the Health and
Safety Code.
2. On page 5, starting on line 1, make the following change to
ensure that there is no net loss of affordable housing units
within the IFD. This language is similar to language that
appears in SB 1 (Steinberg):
(d) The district may provide for the receipt of tax
increment funds pursuant to this chapter for, purposes of a
project subject to this section, provided that the local
government with land use jurisdiction has adopted an
ordinance that does both of the following:
(1) Prohibits the number of housing units occupied by
extremely low, very low, and low-income households,
including the number of bedrooms in those units, in the
district at the time the district is established from being
reduced during the effective period of the infrastructure
plan.
(2) an ordinance that requires Requires the replacement of
dwelling units that house extremely low, very low, or
low-income households, upon their removal from the
district, pursuant to subdivision (a) of Section 33413,
within two years of their displacement.
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.
Double referral : This bill was also referred to the Local
Government Committee, where it passed on June 26 by a vote of 6
to 3.
REGISTERED SUPPORT / OPPOSITION :
Support
San Francisco Bay Area Rapid Transit District (BART) (sponsor)
California Rural Legal Assistance Foundation
SB 628
Page 9
California Transit Association
City of Burbank
San Francisco Bay Area Rapid Transit District
Santa Clara Valley Transportation Authority
Western Center on Law and Poverty
Opposition
CalTax
Howard Jarvis Taxpayers Association
Analysis Prepared by : Anya Lawler / H. & C.D. / (916)
319-2085