BILL ANALYSIS Ó
SB 628
Page 1
SENATE THIRD READING
SB 628 (Beall and Wolk)
As Amended August 26, 2014
Majority vote
SENATE VOTE :Vote not relevant
LOCAL GOVERNMENT 5-2
-----------------------------------------------------------------
|Ayes:|Levine, Alejo, Bradford, | | |
| |Mullin, Rendon | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Melendez, Waldron | | |
| | | | |
-----------------------------------------------------------------
SUMMARY : Allows local agencies to create enhanced
infrastructure financing districts (EIFDs) to finance specified
infrastructure projects and facilities. Specifically, this
bill :
1)Finds and declares that with the dissolution of redevelopment
agencies (RDAs), public benefits will accrue if local
agencies, excluding schools, are provided a means to finance
the reuse and revitalization of former military bases, fund
the creation of transit priority projects and the
implementation of sustainable communities plans, construct and
rehabilitate affordable housing units, and construct
facilities to house providers of consumer goods and services
in the communities served by these efforts.
2)Requires the public financing authority (sitting as the
governing board of the EIFD) to have a membership consisting
of one of the following, as appropriate:
a) If an EIFD has only one participating affected taxing
entity, the public financing authority's membership shall
consist of three members of the legislative body of the
participating entity, and two members of the public chosen
by the legislative body. The appointment of public members
shall be subject to the provisions of existing law related
to posting requirements for a local agency for an
SB 628
Page 2
unscheduled vacancy; or,
b) If an EIFD has two or more participating affected taxing
entities, the public financing authority's membership shall
consist of a majority of members from the legislative
bodies of the participating entities, and a minimum of two
members of the public chosen by the legislative bodies of
the participating entities. The appointment of public
members shall be subject to the provisions of existing law
related to posting requirements for a local agency for an
unscheduled vacancy.
3)Requires the legislative body to ensure that the public
financing authority is established prior to adopting a
resolution pursuant to this bill's provisions to adopt an
infrastructure financing plan and to form an EIFD. Specifies
that members of the public financing authority shall not
receive compensation but may receive reimbursement for actual
and necessary expenses incurred in the performance of official
duties, as specified. Requires members of the public
financing authority to be subject to provisions of law
requiring ethics training. States that a public financing
authority created pursuant to the bill's provisions shall be a
local public agency subject to the Ralph M. Brown Act, the
California Public Records Act, and the Political Reform Act of
1974. States that an EIFD is a district within the meaning of
California Constitution Article XIII A, Section 1.
4)Allows an EIFD to finance any of the following:
a) The purchase, construction, expansion, improvement,
seismic retrofit, or rehabilitation
of any real or other tangible property with an estimated
useful life of 15 years or longer that satisfied the
requirements of 7) below;
b) The planning and design work that is directly related to
the purchase, construction, expansion, or rehabilitation of
property;
c) The costs described in two sections of the bill related
to replacement of dwelling units and litigation costs.
5)Specifies that for 4) above, that the facilities need not be
SB 628
Page 3
physically located within the boundaries of the EIFD; however,
any facilities financed outside of an EIFD must have a
tangible connection to the work of the EIFD, as detailed in
the infrastructure financing plan adopted pursuant to the
bill's provisions.
6)Prohibits an EIFD from financing routine maintenance, repair
work, or the costs of an ongoing operation of providing
services of any kind.
7)Allows an EIFD to finance only public capital facilities or
other specified projects of communitywide significance that
provide significant benefits to the EIFD or the surrounding
community, including, but not limited to, all of the
following:
a) Highways, interchanges, ramps and bridges, arterial
streets, parking facilities, and transit facilities;
b) Sewage treatment and water reclamation plants and
interceptor pipes;
c) Facilities for the collection and treatment of water for
urban uses;
d) Flood control levees and dams, retention basins, and
drainage channels;
e) Child care facilities;
f) Libraries;
g) Parks, recreation facilities, and open space;
h) Facilities for the transfer and disposal of solid waste,
including transfer stations and vehicles;
i) Brownfield restoration and other environmental
mitigation;
j) The development of projects on a former military base,
provided that the projects are consistent with the military
base authority reuse plan and are approved by the military
base reuse authority, if applicable;
SB 628
Page 4
aa) The repayment of the transfer of funds to a military
base reuse authority pursuant to existing law that occurred
on or after the creation of the EIFD;
bb) The acquisition, construction, or repair of industrial
structures for private use;
cc) Transit priority projects, as defined in existing law,
that are located with a transit priority project area. For
purposes of this bill, a transit priority project area may
include a military base reuse plan that meets the
definition of transit priority project area and it may
include a contaminated site within a transit priority
project area; and,
dd) Projects that implement a sustainable communities
strategy, when the State Air Resources Board has accepted a
metropolitan planning organization's determination that the
sustainable communities strategy or the alternative
planning strategy would, if implemented, achieve the
greenhouse gas emission reduction targets.
8)Provides that the EIFD shall require, by recorded covenants or
restrictions, that housing units built pursuant to the bill's
provisions shall remain available at affordable housing costs
to, and occupied by, persons and families of low- or
moderate-income households for the longest feasible time, but
not for less than 55 years for rental units and 45 years for
owner-occupied units.
9)Allows the EIFD to finance mixed-income housing development,
but may finance only those units in such a development that
are restricted to occupancy by persons of low or moderate
incomes, as specified, and those on-site facilities for child
care, after-school care, and social services that are
integrally linked to the tenants of the restricted units.
10)Allows an EIFD to utilize any powers under the Polanco
Redevelopment Act, and finance an action necessary to
implement that act.
11)Allows an EIFD to reimburse a developer of a project that is
located entirely within the boundaries of that EIFD for any
SB 628
Page 5
permit expenses incurred and to offset additional expenses
incurred by the developer on constructing affordable housing
units pursuant to the Transit Priority Project Program, as
specified.
12)Prohibits a city or county that created an RDA from
initiating the creation of an EIFD or participating in the
governance or financing of an EIFD, until each of the
following has occurred:
a) The successor agency for the former RDA created by the
city or county has received a finding of completion;
b) The city or county certifies to the Department of
Finance (DOF) and to the public financing authority that no
former RDA assets that are the subject of litigation
involving the state, where the city or county, the
successor agency, or the designated local authority are a
named plaintiff, have been or will be used to benefit any
efforts of an EIFD formed pursuant to this bill's
provisions, unless the litigation and all possible appeals
have been resolved in a court of law. The city or county
shall provide this certification to DOF within 10 days of
its legislative body's action to participate in an EIFD, as
specified, or
of its legislative body's action to form an EIFD, as
specified;
c) The office of the State Controller (Controller) has
completed its review of RDA asset transfers pursuant to
existing law; and,
d) The successor agency and the entity that created the
former RDA have complied with all of the office of the
Controller's findings and orders stemming from the reviews
specified in c) above.
13)Allows an EIFD to include any portion of a former RDA project
area, provided that the city or county that created the former
RDA has met the requirements of 12) above.
14)Allows a district to finance only the facilities authorized
in this bill's provisions to the extent that the facilities
are in addition to those provided in the territory of the EIFD
SB 628
Page 6
before the EIFD was created. The additional facilities may
not supplant facilities already available within that
territory when the EIFD was created but may supplement,
rehabilitate, upgrade, or make more sustainable those
facilities.
15)Allows an EIFD to include areas which are not contiguous.
16)States the intent of the Legislature that the creation of
EIFDs should not ordinarily lead to the removal of existing
dwelling units. Provides, if, however, 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 EIFD, the adopted infrastructure financing plan shall
contain provision to do all of the following:
a) Within two years of the removal or destruction, cause or
require the construction or rehabilitation, for rent or
sale to persons or families of low or moderate income, of
an equal number of replacement dwelling units at affordable
housing costs, as defined, within the territory of the EIFD
if the dwelling units removed were inhabited by persons or
families of lower or moderate income, as defined;
b) Within two years of the removal or destruction, cause or
require the construction or rehabilitation, for rent or
sale to persons of low or moderate income, a number of
dwelling units that is at least one unit but not less than
25% of the total dwelling units removed at affordable
housing cost, as defined, within the territory of the EIFD
if the dwelling units removed or destroyed were not
inhabited by persons of low or moderate income, as defined;
c) Provide relocation assistance and make all the payments
to persons displaced by any public or private development
occurring within the territory of the EIFD. This
displacement shall be deemed to be the result of public
action;
d) Ensure that removal or destruction of any dwelling units
occupied by persons or families of low or moderate income
not take place unless and until there are suitable housing
units, at comparable cost to the units from which the
persons or families were displaced, available and ready for
SB 628
Page 7
occupancy by the residents of the units at the time of
their displacement. The housing units shall be suitable to
the needs of these displaced persons or families, and shall
be decent, safe, sanitary, and otherwise standard
dwellings; and,
e) The EIFD shall require, by recorded covenants or
restrictions, that housing units build pursuant to the
bill's provisions shall remain at affordable housing costs
to, and occupied by, persons and families of low- or
moderate-income households for the longest feasible time,
but for not less than 55 years for rental units and 45
years for owner-occupied units. In lieu of a 45-year
covenant or restriction, the EIFD may subject
owner-occupied units to an equity sharing agreement, as
specified.
17)Requires that any action or proceeding to attack, review, set
aside, void, or annul the creation of an EIFD, adoption of an
infrastructure financing plan, including a division of taxes
thereunder, or an election pursuant to this bill's provisions
to be commenced within 30 days after the enactment of the
resolution creating the EIFD. Consistent with the time
limitations, such an action or proceeding with respect to a
division of taxes may be brought pursuant to Chapter 9 of
Title 10 of Part 2 of the Code of Civil Procedure, except that
Code of Civil Procedure Section 869 shall not apply. Requires
an action to determine the validity of the issuance of bonds
pursuant to the bill's provisions to be brought pursuant to
Chapter 9 of Title 10 of Part 2 of the Code of Civil
Procedure. However, notwithstanding the time limits specified
in Code of Civil Procedure Section 860, the action shall be
commenced within 30 days after adoption of the resolution
pursuant to the bill's provisions providing for issuance of
the bonds if the action is brought by an interested person
pursuant to Code of Civil Procedure Section 863. Any appeal
from a judgment in that action or proceeding shall be
commenced within 30 days after entry of judgment.
18)Allows a legislative body of a city or county to designate
one or more proposed EIFDs. Requires proceedings for the
establishment of an EIFD to be instituted by the adoption of a
resolution of intention to establish the proposed EIFD and to
do all of the following:
SB 628
Page 8
a) State that an EIFD is proposed to be established under
the terms of this bill's provisions and describe the
boundaries of the proposed EIFD, which may be accomplished
by reference to a map on file in the office of the clerk of
the city or in the office of the recorder of the county, as
applicable;
b) State the type of public facilities and development
proposed to be financed or assisted by the EIFD, as
specified;
c) State the need for the EIFD and the goals the EIFD
proposed to achieve;
d) State that incremental property tax revenue from the
city or county and some or all affected taxing entities
within the EIFD, if approved by resolution, may be used to
finance these activities; and,
e) Fix a time and place for a public hearing on the
proposal.
19)Requires the legislative body to direct the city clerk or
county recorder, as applicable, to mail a copy of the
resolution of intention to create the EIFD to each owner of
land within the EIFD. Requires the legislative body to direct
the city clerk or county recorder, as applicable, to mail a
copy of the resolution to each affected taxing entity.
Requires, after adopting the resolution of intention, the
legislative body to designate and direct the city or county
engineer or other appropriate official to prepare an
infrastructure financing plan, as specified. Requires, after
receipt of a copy of the resolution of intention to establish
an EIFD, the official to prepare a proposed infrastructure
financing plan. Requires the plan to be consistent with the
general plan of the city or county within which the EIFD is
located and to include all of the following:
a) A map and legal description of the proposed EIFD, which
may include all or a portion of the EIFD designated by the
legislative body in its resolution of intention;
b) A description of the public facilities and other forms
SB 628
Page 9
of development or financial assistance that is proposed in
the area of the EIFD, including those to be provided by the
private sector, those to be provided by governmental
entities without assistance, as specified, those public
improvements and facilities to be financed with assistance
from the proposed EIFD, and those to be provided jointly.
The description shall include the proposed location,
timing, and costs of the development and financial
assistance;
c) If funding from affected taxing entities is incorporated
in the financing plan, a finding that the development and
financial assistance are of communitywide significance and
provide significant benefits to an area larger than the
area of the EIFD;
d) A financing section, which shall contain all of the
following information:
i) A specification of the maximum portion of the
incremental tax revenue of the city or county and of each
affected taxing entity proposed to be committed to the
EIFD for each year during which the EIFD will receive
incremental tax revenue. The portion need not be the
same for all affected taxing entities. The portion may
change over time;
ii) A projection of the amount of tax revenues expected
to be received by the EIFD in each year during which the
EIFD will receive tax revenues, including an estimate of
the amount of tax revenues attributable to each affected
taxing entity for each year;
iii) A plan for financing the public facilities to be
assisted by the EIFD, including a detailed description of
any intention to incur debt;
iv) A limit on the total number of dollars of taxes that
may be allocated to the EIFD pursuant to the plan;
v) A date on which the EIFD will cease to exist, by
which time all tax allocation to the EIFD will end. The
date shall not be more than 45 years from the date on
which the issuance of bonds is approved, or the issuance
SB 628
Page 10
of a loan is approved by the governing board of a local
agency, as specified;
vi) An analysis of the costs to the city or county of
providing facilities and services to the area of the EIFD
while the area is being developed and after the area is
developed. The plan shall also include an analysis of
the tax, fee, charge, and other revenues expected to be
received by the city or county as a result of expected
development in the area of the EIFD;
vii) An analysis of the projected fiscal impact of the
EIFD and the associated development upon each affected
taxing entity; and,
viii) A plan for financing any potential costs that may
be incurred by reimbursing a developer of a project that
is both located entirely within the boundaries of that
EIFD and qualifies for the Transit Priority Project
Program, including any permit and affordable housing
expenses related to the project.
e) If any dwelling units occupied by persons or families
are proposed to be removed or destroyed in the course of
private development or public works construction within the
area of the EIFD, a plan providing for replacement of those
units and relocation of those persons or families
consistent with this bill's provisions; and,
f) The goals the EIFD proposed to achieve for each project
financed pursuant to this bill's provisions.
20)Requires the infrastructure financing plan to be sent to each
owner of land within the proposed EIFD and to each affected
taxing entity together with any report required by the
California Environmental Quality Act that pertains to the
proposed public facilities or the proposed development project
for which the public facilities are needed, and shall be made
available for public inspection. This report shall also be
sent to the planning commission and the legislative body.
21)Requires the designated official to consult with each
affected taxing entity, and, at the request of any affected
taxing entity, to meet with representatives of an affected
SB 628
Page 11
taxing entity. Allows any affected taxing entity to suggest
revisions to the plan.
22)Requires the legislative body to conduct a public hearing
prior to adopting the proposed infrastructure financing plan.
Requires the public hearing to be called no sooner than 60
days after the plan has been sent to each affected taxing
entity. Requires, in addition to the notice given to
landowners and affected taxing entities pursuant to the bill's
provisions, that notice of the public hearing shall be given
by publication not less than once a week for four successive
weeks in a newspaper of general circulation published in the
city or county in which the proposed EIFD is located.
Requires the notice to state that the EIFD will be used to
finance public facilities or development, briefly describe the
public facilities or development, briefly describe the
proposed financial arrangements, including the proposed
commitment of incremental tax revenue, describe the boundaries
of the EIFD, and state the day, hour, and place when and where
any persons having any objections to the proposed
infrastructure financing plan, or the regularity of any of the
prior proceedings, may appear before the legislative body and
object to the adoption of the proposed plan by the legislative
body.
23)Requires, at the hour set in the required notices, the
legislative body to proceed to hear and pass upon all written
and oral objections, and allows the hearing to be continued
from time to time. Requires the legislative body to consider
the recommendations, if any, of affected taxing entities, and
all evidence and testimony for and against the adoption of the
plan. Allows the legislative body to modify the plan by
eliminating or reducing the size and cost of proposed
facilities or development, by reducing the amount of proposed
debt, or be reducing the portion, amount, or duration of
incremental tax revenues to be committed to the EIFD.
24)Prohibits the legislative body from enacting a resolution
proposing the formation of an EIFD and providing for the
division of taxes of any affected taxing entity unless a
resolution approving the plan has been adopted by the
governing body of each affected taxing entity which is
proposed to be subject to division of taxes, as specified, and
has been filed with the legislative body at or prior to the
SB 628
Page 12
time of the hearing.
25)States that nothing in this bill's provisions shall be
construed to prevent the legislative body from amending its
infrastructure financing plan and adopting a resolution
proposing formation of the EIFD without allocation of the tax
revenues of any affected taxing entity that has not approved
the infrastructure financing plan by resolution of the
governing body of the affected taxing entity.
26)Allows, at the conclusion of the hearing, the legislative
body to adopt a resolution proposing adoption of the
infrastructure financing plan, as modified, and formation of
the EIFD in a manner consistent with the bill's provisions, or
it may abandon the proceedings.
27)Provides that the infrastructure financing plan and the
formation of the EIFD shall take effect upon the legislative
body's adoption of the resolution. Requires the
infrastructure financing plan to specify if the EIFD shall be
funded solely through the EIFD's share of tax increment,
governmental or private loans, grants, bonds, assessments,
fees, or some combination thereof.
28)Provides that the public financing authority may not issue
bonds or levy assessment or fees that may be included in the
plan prior to one or more of the following:
a) An affirmative vote to issue bonds to finance the
infrastructure financing plan [see 42) below];
b) Without compliance with the procedures required in the
bill related to division of taxes [see 37) below], to levy
assessments or fees to finance the infrastructure financing
plan.
29)Allows the EIFD to expend up to 10% of any accrued tax
increment in the first two years of the effective date of the
EIFD on planning and dissemination of information to the
residents with the EIFD's boundaries about the infrastructure
financing plan and planned activities to be funded by the
EIFD.
30)Specifies, except as otherwise provided in this bill, that
SB 628
Page 13
that the provisions of law regulating elections of the local
agency that calls an election pursuant to this bill's
provisions, insofar as they may be applicable, shall govern
all elections conducted pursuant to this bill's provisions.
Requires there to be prepared and included in the ballot
material provided to each voter, an impartial analysis, as
specified. Allows, if the vote is to be by the landowners of
the proposed EIFD, the analysis and arguments to be waived
with the unanimous consent of all the landowners and to be so
stated in the order for the election. Provides, if an
election is to be conducted by mail ballot, that the election
official conducting the election shall provide ballots and
election materials, as specified, together with all supplies
and instructions necessary for the use and return of the
ballot. Requires specified information to be contained on the
identification envelope for return of mail ballots.
31)Allows the public financing authority to submit a proposition
to establish or change the appropriations limit, as specified,
of an EIFD to the qualified electors of a proposed or
established EIFD. Requires the proposition establishing or
changing the appropriations limit to become effective if
approved by the qualified electors voting on the proposition
and to be adjusted for changes in the costs of living and
changes in populations, as defined, except that the change in
population may be estimated by the legislative body in the
absence of an estimate by DOF. Specifies for purposes of
adjusting for changes in population, that the population of an
EIFD shall be deemed to be at least one person during each
calendar year. Specifies that any election heard pursuant to
this section may be combined with any election held pursuant
to the provisions in the bill that require voter approval for
the EIFD to issue bonds, in any convenient manner.
32)Allows any infrastructure financing plan to contain a
provision that taxes, if any, levied upon taxable property in
the area included within the EIFD each year by or for the
benefit of the State of California, or any affected taxing
entity after the effective date of the ordinance adopted
pursuant to this bill's provisions to create the EIFD, shall
be divided as follows:
a) That portion of the taxes that would be produced by the
rate upon which the tax is levied each year by or for each
SB 628
Page 14
of the affected taxing entities upon the total sum of the
assessed value of the taxable property in the EIFD as shown
upon the assessment roll used in connection with the
taxation of the property by the affected taxing entity,
last equalized prior to the effective date of the ordinance
adopted to create the EIFD, to be allocated to, and when
collected shall be paid to, the respective affected taxing
entities as taxes by or for the affected taxing entities on
all other property are paid; and,
b) That portion of the levied taxes each year specified in
the adopted infrastructure financing plan for the city or
county and each affected taxing entity that has agreed to
participate in excess of the amount, as specified, shall be
allocated to, and when collected shall be paid into a
special fund of, the EIFD for all lawful purposes of the
EIFD. Unless and until the total assessed valuation of the
taxable property in an EIFD exceeds the total assessed
value of the taxable property in the EIFD as shown by the
last equalized assessment roll referred to in a) above, all
of the taxes levied and collected upon the taxable property
in the EIFD shall be paid to the respective affected taxing
entities. When the EIFD ceases to exist, all moneys
thereafter received from taxes upon the taxable property in
the EIFD shall be paid to the respective affected taxing
entities as taxes on all other property are paid.
33)Specifies, where any EIFD boundaries overlap with the
boundaries of any former RDA project area, any debt or
obligation of an EIFD shall be subordinate to any and all
enforceable obligations of the former RDA, as approved by the
Oversight Board and DOF, as specified. Specifies that the
division of taxes allocated to the EIFD, as specified, shall
not include any taxes required to be deposited by the county
auditor-controller into the Redevelopment Property Tax Trust
Fund.
34)Allows the legislative body of the city or county forming the
EIFD to choose to dedicate any portion of its net available
revenue to the EIFD through the infrastructure financing plan.
35)Requires, that portion of any ad valorem property tax revenue
annually allocated to a city or county pursuant to existing
law related to the Educational Revenue Augmentation Fund
(ERAF) that is specified in the adopted infrastructure
SB 628
Page 15
financing plan for the city or county that has agreed to
participate in the division of taxes, and that corresponds in
the assessed valuation of taxable property, to be allocated
to, and when collected to be apportioned to a special fund of
the EIFD for all lawful purposes of the EIFD.
36)Provides that when the EIFD ceases to exist pursuant to the
adopted infrastructure financing plan, the revenues described
in the division of taxes section of the bill shall be
allocated to, and when collected, shall be apportioned to the
respective city or county.
37)Provides that the bill's provisions shall not be construed to
prevent an EIFD from utilizing revenues from any of the
following sources to support its activities provided that the
applicable voter approval has been obtained, and the
infrastructure financing plan has been approved: the
Improvement Act of 1911; the Municipal Improvement Act of
1913; the Improvement Bond Act of 1915; the Landscaping and
Lighting Act of 1972; the Vehicle Parking District Law of
1943; the Parking District Law of 1951; the Park and
Playground Act of 1909; the Mello-Roos Community Facilities
Act of 1982; the Benefit Assessment Act of 1982; and, the
so-called facilities benefit assessment levied by the charter
city of San Diego or any substantially similar assessment
levied for the same purpose by any other charter city pursuant
to any ordinance or charter provision.
38)Provides that all costs incurred by a county in connection
with the division of taxes for an EIFD shall be paid by that
EIFD.
39)Allows the public financing authority to, by majority vote,
initiate proceedings to issue bonds by adopting a resolution
stating its intent to issue the bonds, and provides that the
resolution shall contain all of the following information:
a) A description of the facilities or developments to be
financed with the proceeds of the proposed bond issue;
b) The estimated costs of the facilities or developments,
the estimated cost of preparing and issuing the bonds, and
the principal amount of the proposed bond issuance;
SB 628
Page 16
c) The maximum interest rate and discount on the proposed
bond issuance;
d) The date of the election on the proposed bond issuance
and the manner of holding the election;
e) A determination of the amount of tax revenue available
or estimated to be available, for the payment of the
principal of, and interest on, the bonds; and,
f) A finding that the amount necessary to pay the principal
of, and interest on, the proposed bond issuance will be
less than, or equal to, the amount determined pursuant to
e) above.
40)Requires the clerk of the public financing authority to
publish the resolution once a day for at least seven
successive days in a newspaper published in the city or county
at least six days a week, or at least once a week for two
successive weeks in a newspaper published in the city or
county less than six days a week. Requires, if there are no
newspapers meeting these criteria, the resolution to be posted
in three public places within the territory of the EIFD for
two succeeding weeks.
41)Requires the public financing authority to submit the
proposal to issue the bonds to the voters who reside within
the EIFD, as specified, and provides for procedures for the
election.
42)Allows bonds to be issued if 55% of the voters voting on the
proposition vote in favor of issuing the bonds.
43)Requires the public financing authority to proceed with the
issuance of bonds, if the voters approve the issuance of
bonds, by adopting a resolution that provides for all of the
following:
a) The issuance of the bonds in one or more series;
b) The principal amount of the bonds that shall be
consistent with the amount specified in 38) above;
c) The date the bonds will bear;
SB 628
Page 17
d) The date of maturity of the bonds;
e) The denomination of the bonds;
f) The form of the bonds;
g) The manner of execution of the bonds;
h) The medium of payment in which the bonds are payable;
i) The place or manner of payment and any requirements for
registration of the bonds; and,
j) The terms of call or redemption, with or without
premium.
44)Prohibits, if any proposition submitted to the voters to
issue bonds is defeated by the voters, the public financing
authority from submitting, or cause to be submitted, a similar
proposition to the voters for at least one year after the
first election.
45)Allows the public financing authority to, by majority vote,
provide for the refunding of bonds, as specified.
46)Prohibits the public financing authority or any person
executing the bonds from being personally liable on the bonds
by reason of their issuance, and provides that the bonds and
other obligations of an EIFD are not a debt of the city,
county, or state or any of its political subdivisions, other
than the EIFD, and none of those entities, other than the
EIFD, shall be liable on the bonds. Requires the bond
obligations to be payable exclusively from funds or properties
of the EIFD. Requires the bonds to contain a statement to
this effect on their face. States that the bonds do not
constitute an indebtedness within the meaning of any
constitutional or statutory debt limitation.
47)Allows the bonds to be sold at a discount not to exceed 5% of
par at public sale. Requires, at least five days prior to the
sale, notice to be published, as specified, in a newspaper of
general circulation and in a financial newspaper published in
the City and County of San Francisco and in the City of Los
Angeles. Prohibits bonds from being sold at not less than par
SB 628
Page 18
to the federal government at a private sale without any public
advertisement.
48)Provides that if any member of the public financing authority
whose signature appears on bonds ceases to be a member of the
public financing authority before delivery of the bonds, his
or her signature is as effective as if he or she had remained
in office. Provides that bonds issued pursuant to this bill's
provisions are fully negotiable.
49)Allows, upon the approval of its governing board, a city,
county, or special district that contains territory within the
boundaries of an EIFD, to loan moneys to the EIFD to fund
those activities described in the approved and adopted
infrastructure financing plan. Requires moneys loaned to be
repaid at an interest rate that does not exceed the Local
Agency Investment Fund (LAIF) rate that is in effect on the
date that the loan is approved by the governing board.
Declares the intent of the Legislature that any loan issued to
a public financing authority by a governmental entity shall be
repaid fully unless agreed to otherwise between the authority
and the governmental entity.
50)Requires, every two years after the issuance of debt pursuant
to the bill's provisions, that the EIFD contract for an
independent financial and performance audit, and requires the
audit to be conducted according to guidelines established by
the Controller. Requires a copy of the audit to be provided
to the Controller, the DOF, and to the Joint Legislative
Budget Committee.
51)Allows, upon request of the Governor or the Legislature, the
Bureau of State Audits to be authorized to conduct financial
and performance audits of EIFDs, and requires the results of
the audits to be provided to the EIFD, the Controller, the
DOF, and the Joint Legislative Budget Committee.
52)Defines the following terms:
a) "Affected taxing entity" to mean any governmental taxing
agency which levied or had levied on its behalf a property
tax on all or portion of the property located in the
proposed EIFD in the fiscal year prior to the designation
of the EIFD, but not including any county office of
SB 628
Page 19
education, school district, or community college district."
b) "County" to mean a county or a city and county.
c) "Debt" to mean any binding obligation to repay a sum of
money, including obligations in the form of bonds,
certificates of participation, long-term leases, loans from
government agencies, or loans from banks, other financial
institutions, private businesses, or individuals.
d) "Designated official" to mean the city or county
engineer or other appropriate official, as specified.
e) "District" to mean an EIFD.
f) "EIFD" to mean a legally constituted governmental entity
separate and distinct from the city or county that
established it [pursuant to the bill's provisions] for the
sole purpose of financing public facilities or other
projects as authorized. Provides that an EIFD shall be a
local agency for purposes of the Ralph M. Brown Act.
g) "Landowner" or "owner of land" to mean any person shown
as the owner of land on the last equalized assessment roll
or otherwise known to be the owner of the land by the
legislative body. The legislative body has no obligation
to obtain other information as to the ownership of the
land, and its determination of ownership shall be final and
conclusive for the purposes of this bill. A public agency
is not a landowner or owner of land for purposes of this
bill, unless the public agency owns all of the land to be
included within the proposed EIFD.
h) "Legislative body" to mean the city council or board of
supervisors.
i) "Net available revenue" to mean periodic distributions
to the city or county from the Redevelopment Property Tax
Trust Fund, as created pursuant to existing law, that are
available to the city or county after all preexisting legal
commitments and statutory obligations from that revenue are
made, as specified. Provides that "net available revenue"
shall not include any funds deposited by the county
auditor-controller in the Redevelopment Property Tax Trust
Fund or funds remaining in the Fund prior to distribution.
SB 628
Page 20
Provides that net available revenues shall not include any
moneys payable to a school district that maintains
kindergarten and grades 1 to 12, inclusive, community
college districts, county office of education, or to ERAF.
j) "Public financing authority" to mean the governing board
of the EIFD, as established pursuant to the bill's
provisions.
53)Provides that no reimbursement is required by this bill
because the only costs that may be incurred by a local agency
or school district will be incurred because this act creates a
new crime or infraction, eliminates a crime or infraction, or
changes the penalty for a crime or infraction, as specified.
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.
7)Requires majority voter approval for setting the IFD's
appropriations limits.
SB 628
Page 21
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.
FISCAL EFFECT : Unknown
COMMENTS :
1)Background on IFD law. Currently, cities and counties can
create IFDs and issue bonds to pay for community scale public
works, including 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 a period of 30 years. IFDs, however, 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
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. That small project is
the only example of local officials' use of the 1990 IFD law.
Public officials continue to search for ways to raise the
capital they need to invest in public work 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.
SB 628
Page 22
When redevelopment officials used property tax increment
financing to eradicate blight, state law did not require voter
approval. When local officials use IFDs to capture tax
increment revenues, state law requires a two-thirds approval.
2)Purpose of this bill. This bill allows a city or county to
create an EIFD, following the process in the bill's
provisions, in order to finance specified facilities and
infrastructure projects, using tax increment. This bill
expands, as compared to existing IFD law, the public capital
facilities or other projects of communitywide significance
that could be financed by an EIFD, to include brownfield
restoration and other environmental mitigation, the
development of projects on a former military base, transit
priority projects, and projects that implement a sustainable
communities strategy, among other infrastructure projects.
Once formed, the governing board of the EIFD (referred to as
the public financing authority), would be subject to
provisions of the Ralph M. Brown Act, the California Public
Records Act, the Political Reform Act of 1974, and the members
of the public financing authority would be subject to ethics
training.
In order to create the EIFD, the legislative body of the city
or county must adopt a resolution of intention to establish
the proposed district, and mail a copy of that resolution to
each owner of land within the EIFD, and fix a time and a place
for a public hearing on the proposal. After adopting the
resolution of intention to establish the EIFD, the city or
county engineer or other appropriate official must develop an
infrastructure financing plan to describe the public
facilities, funding, an analysis of costs of the facilities,
and the goals the EIFD hopes to achieve, among other
requirements specified in this bill. A designated official is
required to consult with each affected taxing entity, and any
affected taxing entity may suggest revisions to the
infrastructure financing plan.
This bill requires that this infrastructure financing plan be
sent to each owner of land and to each affected taxing entity
in the boundaries of the proposed EIFD. The legislative body
is required to conduct a public hearing prior to adopting the
proposed infrastructure financing plan, after giving notice of
the hearing. This bill prohibits the legislative body from
SB 628
Page 23
enacting a resolution proposing the formation of the EIFD and
providing for the division of taxes of any affected taxing
entity unless a resolution approving the plan has been adopted
by the governing body of each affected taxing entity which is
proposed to be subject to division
of taxes.
The bill allows for the formation of the EIFD upon the
legislative body's adoption of the resolution, at which point
the infrastructure financing plan would take effect. If the
EIFD wishes to incur bonded indebtedness, the bill specifies
that a 55% vote of the voters in the EIFD is necessary, and
prescribes the contents of the resolution that must be adopted
by the public financing authority once voters approve the bond
debt. The bill requires that an EIFD must contract for an
independent financial and performance audit every two years
after the issuance of debt, and must be provided to the
Controller, the DOF, and to the Joint Legislative Budget
Committee. This bill provides that an EIFD will cease to
exist not more than 45 years from the date on which the
issuance of bonds is approved, or the issuance of a loan is
approved by the governing board of a local agency.
This bill prohibits a city or county that created an RDA from
initiating the creation of an EIFD or participating in the
governance or financing of an EIFD, until each of the
following has occurred: 1) The successor agency for the
former RDA created by the city or county has received a
finding of completion; 2) The city or county certifies to DOF
and to the public financing authority that no former RDA
assets that are the subject of litigation involving the state,
where the city or county, the successor agency, or the
designated local authority are a named plaintiff, have been or
will be used to benefit any efforts of an EIFD formed pursuant
to the bill's provisions, unless the litigation and all
possible appeals have been resolved in a court of law. The
city or county shall provide this certification to DOF within
10 days of its legislative body's action to participate in an
EIFD, as specified, or of its legislative body's action to
form an EIFD; 3) The office of the Controller has completed
its review of RDA asset transfers pursuant to existing law;
and, 4) The successor agency and the entity that created the
former RDA have complied with all of the office of the
Controller's findings and orders stemming from the reviews, as
SB 628
Page 24
specified in 3) above.
3)Arguments in support. The California Special Districts
Association (CSDA) and the California State Association of
Counties (CSAC) write that they "support the fundamental
principle of protecting existing infrastructure and core local
services by prohibiting the diversion of property tax
increment away from counties, cities, and special districts
without their consent" and that "today's infrastructure and
economic challenges often do not start and stop at city or
county lines, requiring collaboration with multiple agencies."
CSDA and CSAC note that this bill has the potential to foster
meaningful partnerships at the local level.
4)Arguments in opposition. The Howard Jarvis Taxpayers
Association (HJTA) writes that "there are a number of
provisions in this bill that cause concern." HJTA believes
that any long-term debt should require a two-thirds
supermajority vote threshold from individuals in the project
area in order to be approved, and that the long length of time
to repay the bonds is also problematic. Additionally, "no
findings of blight need to be made in the EIFD process under
SB 628."
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0005524