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 ----------------------------------------------------------------- |Author: |Atkins | |----------+------------------------------------------------------| |Version: |6/30/2015 | ----------------------------------------------------------------- ----------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ----------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Alison Dinmore | |: | | ----------------------------------------------------------------- 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 --