BILL ANALYSIS Ó
SENATE COMMITTEE ON GOVERNANCE AND FINANCE
Senator Robert M.Hertzberg, Chair
2015 - 2016 Regular
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|Bill No: |AB 313 |Hearing |7/8/15 |
| | |Date: | |
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|Author: |Atkins |Tax Levy: |No |
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|Version: |6/30/15 |Fiscal: |No |
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|Consultant|Weinberger |
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ENHANCED INFRASTRUCTURE FINANCING DISTRICTS
Makes several changes to the statutes governing enhanced
infrastructure financing districts.
Background
Cities and counties can create infrastructure financing
districts (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 can divert
property tax increment revenues, which are revenues generated
from increases in property values within the IFD above property
values in the base-year when the IFD was formed. However, IFDs
can't divert property tax increment revenues from schools (SB
308, Seymour, 1990).
Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare and
adopt redevelopment plans, and use property tax increment
revenues to finance redevelopment activities. After state law
dissolved RDAs in 2011, local officials sought other ways to use
tax increment financing to raise the capital they need to invest
in public works projects. Last year, the Legislature enacted SB
628 (Beall, 2014) to allow local officials to create Enhanced
Infrastructure Financing Districts (EIFDs), which augment the
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tax increment financing powers available to local government
under the IFD statutes. City or county officials can create an
EIFD, which is governed by a public finance authority, to
finance public capital facilities or other specified projects of
communitywide significance that provide significant benefits to
the district or the surrounding community.
Local officials and other stakeholders have identified changes
and clarifications to the statutes enacted by SB 628 that will
help local governments implement the EIFD law's provisions.
Proposed Law
Assembly Bill 313 makes numerous changes to EIFD laws relating
to replacement housing requirements, public financing
authorities, very low income housing, hazardous substance
release cleanup, appropriations limits, and validation
proceedings.
Replacement housing . Assembly Bill 313 modifies several
provisions of existing EIFD law that require an infrastructure
financing plans to address specified policies relating to
affordable housing:
Existing EIFD law requires that if dwelling units are to
be destroyed by private development or public works
construction within an EIFD, the district's adopted
infrastructure financing plan must contain specified
requirements for the replacement of the dwelling units.
Assembly Bill 313 requires the plan to contain specified
requirements for the replacement of all dwelling units to
be removed or destroyed that 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. The bill also imposes
requirements for the replacement of at least 25% of
dwelling units to be removed or destroyed that were not
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.
Existing EIFD law requires that a plan must provide for
relocation assistance, and specified payments required by
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state law, to persons displaced by public or private
development within the EIFD. Assembly Bill 313 requires
that a plan must fully comply with all requirements of
specified statutes relating to relocation assistance for
persons displaced from dwelling units by any public or
private action occurring as the result of the plan.
Existing EIFD law requires that replacement affordable
housing units must remain available as affordable units for
specified minimum time periods. Assembly Bill 313 requires
that a plan must both:
o Contain provisions relating to the manner in
which an EIFD must require that all dwelling units
constructed or rehabilitated must remain available at
affordable rent or housing cost to, and occupied by,
households in specified income categories for the
longest feasible time, but for not less than 55 years
for rental units and 45 years for owner-occupied
units.
o Allow an EIFD to 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 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.
Public financing authority's role in EIFD formation . Current
law requires a city or county to begin the process of forming an
EIFD by adopting a resolution of intention to establish an EIFD.
The resolution must state a time and place for a hearing on the
proposal, the proposed district's boundaries, the types of
facilities and development to be financed, the need for the
district, the goals the district proposes to achieve, and that
incremental property tax revenues may be used to finance the
EIFD's activities. After adopting the resolution of intention,
the city or county must provide public notice, as specified, and
direct an official to prepare an infrastructure financing plan.
Before adopting an infrastructure financing plan and forming an
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EIFD, a city council or board of supervisors must establish a
public financing authority with a specified membership
comprising both public members and members from the legislative
body of a participating taxing entity or entities.
Assembly Bill 313 requires that a city or county must establish
a public financing authority at the same time that it adopts a
resolution of intention to form an EIFD. Assembly Bill 313
amends state law to clarify that the public financing authority,
and not the city council or board of supervisors that created
it, is responsible for performing specified actions as part of
the EIFD formation process, including:
Designating and directing an official to prepare an
infrastructure financing plan.
Conducting a publicly-noticed hearing on a proposed
infrastructure financing plan.
Adopting an infrastructure financing plan and forming an
EIFD.
Assembly Bill 313 specifies the manner in which a public
financing authority may abandon EIFD formation proceedings and
requires, if the proceedings are abandoned, that:
The public financing authority must cease to exist with
no further action required of the legislative body.
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.
Public financing authority membership . Current law requires
that a public financing authority's membership must be comprised
of a specified combination of public members and members from
the legislative body of a participating affected taxing entity
or entities. Assembly Bill 313 clarifies that a special
district can be considered an affected taxing entity if it is
providing any portion of the funding included in an EIFD's
adopted infrastructure financing plan. Assembly Bill 313
defines "special district" as an agency of the state formed for
the performance of governmental and proprietary functions within
limited geographic boundaries, excluding a school district or
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community college district.
Very low income housing . Assembly Bill 313 clarifies, in
several sections of EIFD law, that statutory provisions relating
to housing for low- or moderate-income households also apply to
very-low income households, as defined.
Hazardous substance release cleanup . As part of the Community
Redevelopment Law, the Polanco Redevelopment Act allowed
redevelopment officials and property owners to clean up
contaminated properties - sometimes called "brownfields" -
within redevelopment project areas and to receive limited
immunity from future liability (AB 3193, Polanco, 1990).
Because redevelopment agencies' dissolution in 2011 deprived
local government officials of the Polanco Act's powers to abate
toxic hazards and obtain immunity from liability, the
Legislature enacted a separate statute to allow local
governments to remedy or remove releases of hazardous substances
using tools that are substantially the same as those available
under the Polanco Act (AB 440, Gatto, 2013). Existing EIFD law
allows an EIFD to use the Polanco Act's powers. Assembly Bill
313 clarifies that an EIFD may use either the powers specified
in the Polanco Act or the powers enacted by the 2013 Gatto bill.
Appropriations limit . Article XIIIB of the California
Constitution establishes and defines annual appropriation limits
on each local government based on an annual appropriation for
the prior fiscal year and requires adjustments for changes in
the cost of living, changes in population, and other specified
factors. Current EIFD law specifies how a public financing
authority can submit to voters a proposition to establish or
change an EIFD's appropriations limit. Assembly Bill 313
repeals this statute and replaces it with language declaring
that specified property tax increment revenues allocated to an
EIFD must not be deemed "proceeds of taxes" and are not subject
to the appropriations limits in Article XIII B of the California
Constitution.
Validation proceedings . Current law specifies the manner in
which a party may bring an action to determine the validity of
the division of taxes under the EIFD statutes. Assembly Bill
313 repeals language that exempted such an action from being
subject to a specified statute in the Code of Civil Procedure.
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Assembly Bill 313 makes additional clarifying and conforming
changes to the statutes governing EIFDs.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . As local officials begin to implement
last year's EIFD law, they are seeking some clarification of
provisions related to replacement housing, the public financing
authority's separate legal standing, and a few other related
issues. The changes that AB 313 makes to the state laws
governing EIFDs 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 units and available to residents of the same income
levels as before. AB 313 also clarifies the process for forming
an EIFD through an independent financing authority that is
legally separate from the city or county. Overall, the bill's
provisions will help to facilitate the use of EIFD financing in
communities throughout California.
2. Double-referred . The Senate Rules Committee has ordered a
double-referral of AB 313 -- first to the Senate Governance &
Finance Committee, which has jurisdiction over bills relating to
local governments' tax increment financing powers, and then to
the Senate Transportation & Housing Committee, which has
jurisdiction over bills relating to housing policy.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 78-0
Support and
Opposition (7/2/15)
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Support : California Association for Local Economic Development;
California Economic Summit; California Equity Leaders Network;
California Forward Action Fund; California Rural Legal
Assistance Foundation; Housing California; League of California
Cities; San Diego Housing Federation; Western Center on Law and
Poverty.
Opposition : Unknown.
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