BILL ANALYSIS                                                                                                                                                                                                    Ó



          SENATE COMMITTEE ON TRANSPORTATION AND HOUSING
                              Senator Jim Beall, Chair
                                2015 - 2016  Regular 

          Bill No:          AB 313            Hearing Date:    7/14/2015 
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          |Author:   |Atkins                                                |
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          |Version:  |6/30/2015                                             |
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          |Urgency:  |No                     |Fiscal:      |No              |
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          |Consultant|Alison Dinmore                                        |
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          SUBJECT:  Enhanced infrastructure financing districts

            
          DIGEST:  This bill 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.

          ANALYSIS:
          
          Existing law:
          
          1)Allows cities or county officials to create EIFDs, which are  
            governed by a public finance authority, to finance public  
            capital facilities or other specified projects of  
            community-wide significance that provide significant benefits  
            to the district or the surrounding community.  

          2)Specifies the requirements of the EIFD authority membership  
            and requires an EIFD authority to be formed prior to adopting  
            a infrastructure financing plan.

          3)Specifies the components of an infrastructure financing plan  
            and the public hearing process for adopting the plan.   
            Existing law also permits an infrastructure financing plan to  
            contain a provision requiring that property tax increment  
            revenues from specified taxes levied by the city or county  
            that formed the EIFD, and any other affected taxing entity  
            that has agreed to participate, must be divided in a specified  
            manner and allocated to an EIFD. 







          AB 313 (Atkins)                                    Page 2 of ?
          
          

          4)Permits the EIFD authority to initiate proceedings to issue  
            bonds by adopting a resolution stating its intent to issue the  
            bonds.  Bonds may be issued only if 55% of the voters who  
            reside within the district vote in favor of issuing the bonds.  
             

          5)Specifies that an EIFD may finance: the purchase,  
            construction, expansion, improvement, seismic retrofit, or  
            rehabilitation of any real or tangible property with an  
            estimated useful life of 15 years or longer; planning and  
            design work; and the costs associated with the replacement of  
            existing dwelling units for persons of low- and  
            moderate-income, as well as relocation assistance for persons  
            displaced by development of dwelling units in the district. 

          6)Specifies that the EIFD shall finance only public capital  
            facilities or other specified projects of community-wide  
            significance that provide significant benefits to the district  
            or the surrounding community, including but not limited to:  
            highways, interchanges, ramps and bridges, and transit  
            facilities; sewage treatment and water reclamation plans;  
            flood control levees and dams; child-care facilities;  
            libraries; parks; brownfield restoration and other  
            environmental mitigation; and projects that implement a  
            sustainable communities strategy.

          7)Authorizes the EIFD to finance mixed-income housing  
            developments, but may finance only those units that are  
            restricted to occupancy by persons of low or moderate incomes  
            and those onsite facilities for child care, after-school care,  
            and social services that are integrally linked to the tenants  
            of the restricted units. 

          8)States the intent of the legislature to be that the creation  
            of EIFDs should not lead to the removal of existing units, but  
            that if units are proposed to be removed or destroyed in the  
            course of development or public works construction in the  
            EIFD, the infrastructure financing plan shall contain the  
            following provisions:

             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  








          AB 313 (Atkins)                                    Page 3 of ?
          
          
               affordable-housing costs within the territory of the EIFD  
               if the dwelling units removed were inhabited by persons of  
               low or moderate income. 

             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 costs within the EIFD, if the dwelling  
               units removed or destroyed were not inhabited by persons of  
               low or moderate income. 

             c)   Provide relocation assistance and make 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 unit  
               occupied by persons or families of low or moderate income  
               not take place unless and until there are suitable housing  
               units at comparable costs 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.  

             e)   Requires the EIFD, by recorded covenants or  
               restrictions, to require housing units built pursuant to  
               this section to remain at affordable-housing costs to, and  
               occupied by, persons and families of low- or  
               moderate-income households for the longest feasible time,  
               but not less than 55 years for rental units and 45 for  
               owner-occupied units.

          This bill:

          1)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 dwelling units to be removed or destroyed are or were  
               inhabited by persons of very low, low, or moderate income  
               at any time within five years prior to the establishment of  
               the EIFD, the infrastructure financing plan shall require  








          AB 313 (Atkins)                                    Page 4 of ?
          
          
               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  
               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.  The replacement units  
               shall be available for rent or sale to persons or families  
               of very low, low, or moderate income at affordable rent, or  
               at affordable-housing costs to persons in the same or a  
               lower income category 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 at any  
               time within five years prior to the establishment of the  
               EIFD, the infrastructure financing plan shall 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.  The units  
               constructed or rehabilitated shall be of equivalent 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 to extremely low- and very low-income  
               persons or families. 
             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.  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  
               not take place unless and until there has been full  
               compliance with the relocation assistance requirements. 

             e)   The EIFD shall require, by recorded covenants or  
               restrictions, all dwelling units constructed or  
               rehabilitated to remain available at affordable rent or  
               housing costs to, and occupied by, persons and families of  
               applicable income categories, for the longest feasible  
               time, but not less than 55 years for rental units, and 45  








          AB 313 (Atkins)                                    Page 5 of ?
          
          
               years for owner-occupied units. 

             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 EIFDs investment of money in  
               the unit or units, including, but not limited to, an  
               equity-sharing program, not in conflict with another public  
               financing 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.  

          1)Specifies that after adopting a resolution establishing an  
            EIFD, the legislative body shall send a copy of the resolution  
            to the public financing authority.  The public financing  
            authority shall designate and direct the city or county  
            engineer or other appropriate official to prepare an  
            infrastructure plan. 

          2)Specifies that at the end of a public hearing reviewing the  
            infrastructure plan, the public authority may adopt a  
            resolution proposing adoption of the infrastructure financing  
            plan, as modified, and the formation of the EIFD, or it may  
            adopt a resolution abandoning the proceedings.  If the  
            proceedings are abandoned, the public financing authority  
            shall cease to exist operation, with no further action  
            required of the legislative body.  The legislative body may  
            not enact a resolution of intention to establish a district  
            that includes the same geographic area within one year of the  
            date of the resolution abandoning the proceedings. 

          3)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  








          AB 313 (Atkins)                                    Page 6 of ?
          
          
            the California Constitution or any statutory provision enacted  
            in implementation of Article XIII B of the California  
            Constitution. 

          4)Clarifies that "affected taxing entity" may include a special  
            district if the special district is providing any portion of  
            the funding included in the infrastructure financing plan.   
            "Special district" means an agency of the state formed for the  
            performance of governmental or proprietary functions within  
            limited geographic boundaries, and shall not include a school  
            district or community college district. 

          5)Clarifies, in several sections of EIFD law, that provisions  
            relating to persons of low- or moderate-income households also  
            apply to very-low-income households. 

          6)Clarifies in several sections of EIFD law that it is the  
            public financing authority, instead of the legislative body,  
            that must take specified actions to ensure that a public  
            financing authority is separate and apart from the legislative  
            body that created the EIFD.

          7)Makes other technical and conforming changes. 

          COMMENTS:

          1)Purpose of the bill.  According to the author, SB 628 (Beall,  
            Chapter 785, Statutes of 2014) required some clarification to  
            the provisions related to housing and a few other related  
            issues.  This bill provides the clarity needed relating to  
            replacement housing, provides that the EIFD is a separate  
            legal structure, and ensures that when local governments  
            utilize EIFDs, the administrative and implementation  
            requirements are clear.  Moreover, this bill 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 a similar type of unit and available to residents  
            of the same income levels.  This bill will also allow special  
            districts to be considered affected taxing entities and  
            participate in the EIFD process if they contribute other  
            financial resources towards a project, if they do not have the  
            ability to contribute property. 

          2)Background on EIFDs.  SB 628 allowed a city or county to  
            create an EIFD to finance specified facilities and  








          AB 313 (Atkins)                                    Page 7 of ?
          
          
            infrastructure projects using tax increment.  SB 628 expanded  
            upon existing infrastructure financing district (IFD) law and  
            the types of public capital facilities or other projects of  
            communitywide significance that could be financed by an EIFD.   
            This expansion includes: 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.

            SB 628 sets forth the procedures for the creation of an EIFD  
            through a city or county resolution and procedures and process  
            for public participation in the creation of the infrastructure  
            financing plan.  If the EIFD seeks to incur bond indebtedness,  
            SB 628 specifies that 55% approval of the voters in the EIFD  
            is required and sets forth the procedures for conducting the  
            election.  

          3)Housing Provisions.  SB 628 allows EIFDs to finance housing  
            for low- and moderate-income households and requires EIFDs to  
            replace low- and moderate-income housing that is removed or  
            destroyed.  This bill clarifies that if any units proposed to  
            be removed or destroyed in the course of development in the  
            EIFD, the infrastructure financing plan must contain  
            provisions to assist low-income families to relocate and  
            ensure that no destruction or removal shall occur until there  
            is a plan in place to provide replacement housing and  
            relocation of displaced families.

            More specifically, if the removed units are inhabited by very  
            low-, low-, or moderate-income persons, an equal number of  
            replacement units and equal number of bedrooms must be  
            constructed or rehabilitated within one-half mile of the units  
            that were destroyed or removed, and must occur within two  
            years.  If the units were not inhabited by low- or  
            moderate-income persons, at least one unit but not less than  
            25% of the total units removed must be constructed or  
            rehabilitated within one-half mile of the location of the  
            units that were destroyed or removed and must occur within two  
            years.  The units constructed must be of an equivalent size  
            and type as those destroyed and an equal percentage of  
            replacement units must be available for rent or sale at  
            affordable rent to extremely low- and very low-income persons.  
            Additionally, all units constructed or rehabilitated must  
            remain affordable for the longest time feasible, but not less  








          AB 313 (Atkins)                                    Page 8 of ?
          
          
            than 55 years for rental units and 45 years for owner-occupied  
            units.  This bill further clarifies that these provisions  
            apply to very low-, low-, and moderate-income families.  These  
            clarifications ensure that no persons or families are  
            displaced or unable to find housing as a result of the  
            destruction or removal of a dwelling unit in an EIFD.  Those  
            that lose their housing will be assured replacement housing  
            for up to two years and will receive support in the moving  
            process. 

          4)Double-referred.  This bill was heard by the Governance and  
            Finance Committee on July 8, 2015 and approved 7-0. 

          Assembly Votes:
           
            Floor:    78-0
            LGov:       9-0
          
          Related Legislation:
          
          AB 2 (Alejo, 2015) - allows local governments to form Community  
          Revitalization and Investment Authorities to administer economic  
          development and affordable housing programs.  This bill is also  
          being heard today by this committee. 

          SB 628 (Beall, Chapter 785, Statutes of 2014) - allows local  
          agencies to create EIFDs to fund specified infrastructure  
          projects and facilities. 

          FISCAL EFFECT:  Appropriation:  No    Fiscal Com.:  No    Local:  
           No
            
          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,
                          July 8, 2015.)
          
            SUPPORT:  

          California Association for Local Economic Development
          California Equity Leaders Network
          California Forward Action Fund
          California Rural Legal Assistance Foundation
          Housing California
          League of California Cities
          Western Center on Law and Poverty








          AB 313 (Atkins)                                    Page 9 of ?
          
          

          OPPOSITION:

          None received                                      -- END --