BILL ANALYSIS Ó
AB 313
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Date of Hearing: May 6, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 313
(Atkins) - As Introduced February 12, 2015
SUBJECT: Enhanced infrastructure financing districts.
SUMMARY: Clarifies procedures for replacing dwelling units that
are removed or destroyed within an Enhanced Infrastructure
Financing District (EIFD) and makes other technical changes to
EIFD law. Specifically, this bill:
1)Clarifies, in several sections of EIFD law, that provisions
relating to persons of low- or moderate-income households also
apply to very-low income, as defined.
2)Makes changes to EIFD law relating to the removal of existing
dwelling units, and requires the infrastructure financing
plan to contain provisions to do all of the following:
a) If the dwelling units to be removed or destroyed are or
were inhabited by persons or families of very low-, low-,
or moderate-income, as defined, at any time within five
years prior to establishment of the EIFD, cause or require
the construction or rehabilitation of an equal number of
replacement dwelling units, within one-half mile of the
location of the units to be removed or destroyed, that have
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an equal or greater number of bedrooms as those removed or
destroyed units, within two years of the removal or
destruction of the dwelling units. Requires the
replacement dwelling units to be available for rent or sale
to persons or families of very low-, low-, or
moderate-income at affordable rent, as defined, or at
affordable housing cost, as defined, to persons in the same
or a lower-income category (extremely low-, very low-, low
or moderate) as the persons displaced from, or who last
occupied, the removed or destroyed dwelling units;
b) If the dwelling units to be removed or destroyed were
not inhabited by persons of low- or moderate-income within
the period of time specified in a), above, cause or require
the construction or rehabilitation within one-half mile of
the location of the units to be removed or destroyed of at
least one unit but not less than 25% of the total dwelling
units removed or destroyed, within two years of the removal
or destruction of the dwelling units. Requires the units
constructed or rehabilitated to be equivalent in size and
type to the units to be removed or destroyed. An equal
percentage of the replacement dwelling units constructed or
rehabilitated shall be available for rent or sale at
affordable rent, as defined, or affordable housing cost, as
defined, to extremely low- and very low-income persons or
families, as defined;
c) Comply with all relocation assistance requirements, for
persons displaced from dwelling units by any public or
private action occurring as a result of the infrastructure
financing plan, and specifies that the displacement of any
persons from a dwelling unit as a result of the plan 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
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not take place unless and until there has been full
compliance with the relocation assistance requirements, as
specified;
e) The EIFD shall require, by recorded covenants or
restrictions, that all dwelling units constructed or
rehabilitated shall remain available at affordable rent or
housing cost to, and occupied by, persons and families of
the same income categories as required by a) and b), above,
as applicable, for the longest feasible time, but for not
less than 55 years for rental units and 45 years for
owner-occupied units; and,
f) The EIFD may permit sales of owner-occupied units prior
to the expiration of the 45-year period for a price in
excess of that otherwise permitted pursuant to an adopted
program which protects the EIFD's investment of moneys in
the unit or units, including, but not limited to, an equity
sharing program, not in conflict with another public
funding source or law, which establishes a schedule of
equity sharing that permits retention by the seller of a
portion of those excess proceeds based on the length of
occupancy. Specifies the terms of the equity sharing
program, as specified.
3)Clarifies, in several sections of EIFD law, that it is the
public financing authority, instead of the legislative body,
that must take specified actions, in order to ensure that a
public financing authority is separate and apart from the
legislative body that created the EIFD.
4)Specifies that the public financing authority may adopt a
resolution abandoning the proceedings relating to the adoption
of the infrastructure financing plan, and if the proceedings
are abandoned, then the public financing authority shall cease
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to exist with no further action required of the legislative
body. States that the legislative body may not enact a
resolution of intention to establish an EIFD that includes the
same geographic area within one year of the date of the
resolution abandoning the proceedings.
5)Repeals a section in EIFD law that allows the public financing
authority to submit a proposition to establish or change the
appropriations limit of an EIFD, and adds a new section that
specifies that the allocation and payment to an EIFD of the
portion of taxes, as specified, for the purpose of paying
principal of, or interest on, loans, advances, or indebtedness
incurred by the EIFD pursuant to EIFD law, shall not be deemed
the receipt by an EIFD of proceeds of taxes levied by or on
behalf of the EIFD within the meaning of the purposes of
Article XIII B of the California Constitution, nor shall that
portion of taxes be deemed receipts of proceeds of taxes by,
or an appropriation subject to limitation of, any other public
body within the meaning or for purposes of Article XIII B of
the California Constitution or any statutory provision enacted
in implementation of Article XIII B of the California
Constitution.
6) Makes other technical and conforming changes.
EXISTING LAW:
1)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;
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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;
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) The acquisition, construction, or rehabilitation of
housing for persons of low- and moderate-income, as
defined, for rent or purchase;
dd) Transit priority projects, as defined in existing law,
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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,
ee) 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.
2)Specifies the requirements of the public financing authority
membership.
3)Provides that the EIFD shall require, by recorded covenants or
restrictions, that housing units built 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.
4)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.
5)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:
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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
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 built, pursuant to the
bill's provisions, shall remain at affordable housing costs
to, and occupied by, persons and families of low- or
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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.
6)Requires the legislative body to conduct a public hearing
prior to adopting the proposed infrastructure financing plan,
as specified.
7)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.
Allows bonds to be issued if 55% of the voters voting on the
proposition vote in favor of issuing the bonds.
8)Requires the public financing authority to proceed with the
issuance of bonds, if the voters approve the issuance of
bonds, as specified.
FISCAL EFFECT: None
COMMENTS:
1)Bill Summary. This bill adds provisions to EIFD law to
clarify the procedures for replacing dwelling units that are
removed or destroyed within an EIFD, and makes a number of
other technical and clarifying changes to update EIFD law.
This bill is author-sponsored.
2)Background on EIFDs. SB 628 (Beall), Chapter, 785, Statutes
of 2014, allowed a city or county to create an EIFD, in order
to finance specified facilities and infrastructure projects,
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using tax increment. SB 628 expanded, 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, pursuant to SB 628, 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. 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.
SB 628 required 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. SB 628 prohibited the legislative body from
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
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by the governing body of each affected taxing entity which is
proposed to be subject to division
of taxes.
SB 628 allowed 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. 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 Department of
Finance (DOF), and to the Joint Legislative Budget Committee.
SB 628 provided 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.
The provisions of SB 628 prohibited 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
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, 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;
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c) The office of the 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, as specified in
3) above.
3)Author's Statement. According to the author, "Existing law,
created by SB 628 (Beall), Chapter 785, Statutes of 2014,
allows local agencies to create enhanced infrastructure
financing districts (EIFDs) to fund specified infrastructure
projects and facilities. SB 628, among other things: (1)
Created a "public financing authority" to govern the EIFD; (2)
Specified that housing paid for by the EIFD must be for low
and moderate income housing; and, (3) Required that housing
that is replacing units torn down during the course of work
done by an EIFD must be done within two years after demolition
and if none of the units removed were for affordable housing
then replacement work must increase the number of replacement
units with at least 25% affordable.
"However, after further review of the language, it was found
that some clarification of the provisions related to
replacement housing and a few other related issues were
necessary. Also, ensuring that the EIFD public financing
authority has its own separate legal standing and spending
capacity requires more clarity as well.
"AB 313 provides the clarity needed in both of these issue
areas and ensures that when this tool is used by local
governments, the implementation requirements are clear.
Moreover,
AB 313 will ensure that any residents that are displaced by
work done in an EIFD will receive adequate support and that
any units lost will be replaced by those of a similar type of
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units and available to residents of the same income levels as
before."
4)Prior Legislation. There have been numerous measures in the
past few years to remove barriers and expand infrastructure
financing district law, including the following bills:
SB 33 (Wolk, 2013) would have expanded local officials'
authority to create IFDs. The bill was amended into a
different unrelated subject matter.
AB 229 (J. Pérez), Chapter 774, Statutes of 2014,
created infrastructure and revitalization financing
districts (IRFDs) modeled after infrastructure financing
districts in existing law, authorized a military base reuse
authority to form a district, and allowed these districts
to finance a broader range of projects and facilities to
clean-up and develop former military bases.
AB 243 (Dickinson, 2013) would have created
infrastructure and revitalization financing districts,
(IRFDs) (modeled after infrastructure financing districts
in existing law), broadened the range of projects and
facilities they can finance, lowered the voter approval
threshold necessary to form an IRFD and issue bonds to 55%,
and extended the life of districts to 40 years. The bill
was held at the Senate Desk.
AB 471 (Atkins), Chapter 1, Statutes of 2014, repealed
the prohibition against forming an IFD within a former
redevelopment area.
SB 628 (Beall), Chapter 785, Statutes of 2014, allowed
local agencies to create enhanced infrastructure financing
districts (EIFDs) to fund specified infrastructure projects
and facilities.
1)Arguments in Support. Supporters argue that this bill will
ensure that, should any housing be affected by the activities
of an EIFD, relocation and replacement housing obligations
would apply to protect lower-income households from
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displacement.
2)Arguments in Opposition. None on file.
REGISTERED SUPPORT / OPPOSITION:
Support
California Rural Legal Assistance Foundation
League of California Cities
Western Center on Law and Poverty
Opposition
None on file
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958
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