BILL ANALYSIS Ó AB 313 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 313 (Atkins) As Amended August 25, 2015 Majority vote -------------------------------------------------------------------- |ASSEMBLY: |78-0 |(May 14, 2015) |SENATE: |40-0 |(August 31, | | | | | | |2015) | | | | | | | | | | | | | | | -------------------------------------------------------------------- Original Committee Reference: L. GOV. 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. The Senate amendments: 1)Clarify that an "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, and define, for purposes of the bill, the term "special district" to mean 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. AB 313 Page 2 2)Clarify that the legislative body shall ensure that the public financing authority is established at the same time that it adopts a resolution of intention, as specified. 3)Clarify that if dwelling units are proposed to be removed or destroyed in the course of public works construction within the area of the EIFD or private development within the area of the EIFD that is subject to a written agreement with the EIFD or that is financed in whole or in part of the EIFD, then the infrastructure financing plan shall contain specified provisions pursuant to the bill's provisions. 4)Contain chaptering out amendments to resolve conflicts with SB 63 (Hall) of the current legislative session. 5)Make other minor, technical corrections. 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, using tax increment. SB 628 expanded, as compared to existing IFD law, the public capital facilities or other projects of AB 313 Page 3 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 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 AB 313 Page 4 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 a redevelopment agency (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; 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. AB 313 Page 5 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: a) Created a "public financing authority" to govern the EIFD; b) Specified that housing paid for by the EIFD must be for low and moderate income housing; and, c) 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 units and available to residents of the same income levels as before." 4)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 displacement. 5)Arguments in Opposition. None on file. AB 313 Page 6 Analysis Prepared by: Debbie Michel / L. GOV. / (916) 319-3958 FN: 0001585