Amended in Assembly May 2, 2016

Amended in Assembly March 17, 2016

California Legislature—2015–16 Regular Session

Assembly Bill No. 2618

Introduced by Assembly Member Nazarian

February 19, 2016

An act to amend begin delete Sections 53313.5 and end delete begin insert Section end insert 53328.1 of the Government Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 2618, as amended, Nazarian. Community facilities districts: powers.

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(1) The

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begin insert The end insert Mello-Roos Community Facilities Act of 1982 specifies the requirements for the establishment of a community facilities district, including, among other things, a petition, a hearing, the establishment of the boundaries of the community facilities district, and an election on the question. begin delete A end delete begin insert Existing law authorizes a end insert community facilities district formed pursuant begin delete to that law is authorized to, among other things, finance and refinance the acquisition, installation, and improvement of energy efficiency, water conservation, and renewable energy improvements to or on real property and in buildings, as specified. end delete

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This bill would specify that for purposes of financing and refinancing these types of improvements, a community facilities district may utilize purchase power agreements.

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begin delete (2) end delete begin delete   end delete begin delete Existing law additionally authorizes end delete begin insert to end insert an alternative procedure begin delete for establishing a community facilities district end delete under which the district initially consists solely of territory proposed for annexation to the community facilities district in the begin delete future, end delete begin insert future end insert and territory is annexed and subjected to special taxes only upon unanimous approval of the owners, to finance and refinance the acquisition, installation, and improvement of energy efficiency, water conservation, and renewable energy improvements.

This bill would authorize a community facilities district that is formed pursuant to the alternative procedure to additionally finance seismic retrofitting, as specified.

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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SECTION 1.  

Section 53313.5 of the Government Code is
amended to read:

53313.5.  

A community facilities district may also finance the
purchase, construction, expansion, improvement, or rehabilitation
of any real or other tangible property with an estimated useful life
of five years or longer or may finance planning and design work
that is directly related to the purchase, construction, expansion, or
rehabilitation of any real or tangible property. The facilities need
not be physically located within the district. A district may not
lease out facilities that it has financed except pursuant to a lease
agreement or annexation agreement entered into prior to January
1, 1988. A district may only finance the purchase of facilities
whose construction has been completed, as determined by the
legislative body, before the resolution of formation to establish
the district is adopted pursuant to Section 53325.1, except that a
district may finance the purchase of facilities completed after the
adoption of the resolution of formation if the facility was
constructed as if it had been constructed under the direction and
supervision, or under the authority of, the local agency that will
own or operate the facility. For example, a community facilities
district may finance facilities, including, but not limited to, the
following:

(a) Local park, recreation, parkway, and open-space facilities.

(b) Elementary and secondary schoolsites and structures
provided that the facilities meet the building area and cost standards
established by the State Allocation Board.

(c) Libraries.

(d) Child care facilities, including costs of insuring the facilities
against loss, liability insurance in connection with the operation
of the facility, and other insurance costs relating to the operation
of the facilities, but excluding all other operational costs. However,
the proceeds of bonds issued pursuant to this chapter shall not be
used to pay these insurance costs.

(e) The district may also finance the construction or
undergrounding of water transmission and distribution facilities,
natural gas pipeline facilities, telephone lines, facilities for the
transmission or distribution of electrical energy, and cable
television lines to provide access to those services to customers
who do not have access to those services or to mitigate existing
visual blight. The district may enter into an agreement with a public
utility to utilize those facilities to provide a particular service and
for the conveyance of those facilities to the public utility. “Public
utility” shall include all utilities, whether public and regulated by
the Public Utilities Commission, or municipal. If the facilities are
conveyed to the public utility, the agreement shall provide that the
cost or a portion of the cost of the facilities that are the
responsibility of the utility shall be refunded by the public utility
to the district or improvement area thereof, to the extent that
refunds are applicable pursuant to (1) the Public Utilities Code or
rules of the Public Utilities Commission, as to utilities regulated
by the commission, or (2) other laws regulating public utilities.
Any reimbursement made to the district shall be utilized to reduce
or minimize the special tax levied within the district or
improvement area, or to construct or acquire additional facilities
within the district or improvement area, as specified in the
resolution of formation.

(f) The district may also finance the acquisition, improvement,
rehabilitation, or maintenance of any real or other tangible property,
whether privately or publicly owned, for flood and storm protection
services, including, but not limited to, storm drainage and treatment
systems and sandstorm protection systems.

(g) The district may also pay in full all amounts necessary to
eliminate any fixed special assessment liens or to pay, repay, or
defease any obligation to pay or any indebtedness secured by any
tax, fee, charge, or assessment levied within the area of a
community facilities district or may pay debt service on that
indebtedness. When the amount financed by the district is to pay
a tax, fee, charge, or assessment imposed by a public agency other
than the one conducting the proceedings, and if the amount
provided to the other public agency will not be entirely used to
pay off or prepay an assessment lien or special tax obligation
pursuant to the property owner’s legal right to do so, the written
consent of the other public agency is required. In addition, tax
revenues of a district may be used to make lease or debt service
payments on any lease, lease-purchase contract, or certificate of
participation used to finance facilities authorized to be financed
by the district.

(h) Any other governmental facilities that the legislative body
creating the community facilities district is authorized by law to
contribute revenue to, or construct, own, or operate. However, the
district shall not operate or maintain or, except as otherwise
provided in subdivisions (e) and (k), have any ownership interest
in any facilities for the transmission or distribution of natural gas,
telephone service, or electrical energy.

(i) (1) A district may also pay for the following:

(A) Work deemed necessary to bring buildings or real property,
including privately owned buildings or real property, into
compliance with seismic safety standards or regulations. Only
work certified as necessary to comply with seismic safety standards
or regulations by local building officials may be financed. No
project involving the dismantling of an existing building and its
replacement by a new building, nor the construction of a new or
substantially new building may be financed pursuant to this
subparagraph. Work on qualified historical buildings or structures
shall be done in accordance with the State Historical Building
Code (Part 2.7 (commencing with Section 18950) of Division 13
of the Health and Safety Code).

(B) In addition, within any county or area designated by the
President of the United States or by the Governor as a disaster area
or for which the Governor has proclaimed the existence of a state
of emergency because of earthquake damage, a district may also
pay for any work deemed necessary to repair any damage to real
property directly or indirectly caused by the occurrence of an
earthquake cited in the President’s or the Governor’s designation
or proclamation, or by aftershocks associated with that earthquake,
including work to reconstruct, repair, shore up, or replace any
building damaged or destroyed by the earthquake, and specifically
including, but not limited to, work on any building damaged or
destroyed in the Loma Prieta earthquake that occurred on October
17, 1989, or by its aftershocks. Work may be financed pursuant
to this subparagraph only on property or buildings identified in a
resolution of intention to establish a community facilities district
adopted within seven years of the date on which the county or area
is designated as a disaster area by the President or by the Governor
or on which the Governor proclaims for the area the existence of
a state of emergency.

(2) Work on privately owned property, including reconstruction
or replacement of privately owned buildings pursuant to
subparagraph (B) of paragraph (1), may only be financed by a tax
levy if all of the votes cast on the question of levying the tax, vote
in favor of levying the tax, or with the prior written consent to the
tax of the owners of all property that may be subject to the tax, in
that case the prior written consent shall be deemed to constitute a
vote in favor of the tax and any associated bond issue. Any district
created to finance seismic safety work on privately owned
buildings, including repair, reconstruction, or replacement of
privately owned buildings pursuant to this subdivision, shall consist
only of lots or parcels that the legislative body finds have buildings
that were damaged or destroyed by the earthquake cited pursuant
to subparagraph (B) of paragraph (1) or by the aftershocks of that
earthquake.

(j) A district may also pay for the following:

(1) Work deemed necessary to repair and abate damage caused
to privately owned buildings and structures by soil deterioration.
“Soil deterioration” means a chemical reaction by soils that causes
structural damage or defects in construction materials including
concrete, steel, and ductile or cast iron. Only work certified as
necessary by local building officials may be financed. No project
involving the dismantling of an existing building or structure and
its replacement by a new building or structure, nor the construction
of a new or substantially new building or structure may be financed
pursuant to this paragraph.

(2) Work on privately owned buildings and structures pursuant
to this subdivision, including reconstruction, repair, and abatement
of damage caused by soil deterioration, may only be financed by
a tax levy if all of the votes cast on the question of levying the tax
vote in favor of levying the tax. Any district created to finance the
work on privately owned buildings or structures, including
reconstruction, repair, and abatement of damage caused by soil
deterioration, shall consist only of lots or parcels on which the
legislative body finds that the buildings or structures to be worked
on pursuant to this subdivision suffer from soil deterioration.

(k) A district may also finance the acquisition, improvement,
rehabilitation, or maintenance of any real or other tangible property,
whether privately or publicly owned, for the purposes of removal
or remedial action for the cleanup of any hazardous substance
released or threatened to be released into the environment. As used
in this subdivision, “remedial action” and “removal” shall have
the meaning set forth in Sections 25322 and 25323, respectively,
of the Health and Safety Code, and “hazardous substance” shall
have the meaning set forth in Section 25281 of the Health and
Safety Code.

(l) (1) A district may also finance and refinance the acquisition,
installation, and improvement of energy efficiency, water
conservation, and renewable energy improvements that are affixed,
as specified in Section 660 of the Civil Code, to or on real property
and in buildings, whether the real property or buildings are
privately or publicly owned. Energy efficiency, water conservation,
and renewable energy improvements financed by a district may
only be installed on a privately owned building and on privately
owned real property with the prior written consent of the owner
or owners of the building or real property.

(2) This chapter shall not be used to finance installation of
energy efficiency, water conservation, and renewable energy
improvements on a privately owned building or on privately owned
real property in connection with the initial construction of a
residential building unless the initial construction is undertaken
by the intended owner or occupant.

(3) A district may use power purchase agreements for purposes
of financing and refinancing improvements pursuant to this
subdivision.

(m) Any improvement on private property authorized to be
financed by this section shall constitute a “public facility” for
purposes of this chapter and a “public improvement” for purposes
of Part 1 (commencing with Section 3100) and Part 2 (commencing
with Section 3110) of Division 4.5 of the Streets and Highways
Code, whether the improvement is owned by a private entity, if
the legislative body has determined that the improvement provides
a public benefit, or the improvement is owned by a public agency.

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begin delete SEC. 2. end delete

begin insert SECTION 1. end insert   

Section 53328.1 of the Government Code is
amended to read:

53328.1.  

(a) As an alternate and independent procedure for
forming a community facilities district, the legislative body may
form a community facilities district that initially consists solely
of territory proposed for annexation to the community facilities
district in the future, with the condition that a parcel or parcels
within that territory may be annexed to the community facilities
district and subjected to the special tax only with the unanimous
approval of the owner or owners of the parcel or parcels at the
time that the parcel or parcels are annexed. In that case, the
legislative body shall follow the procedures set forth in this article
for the formation of a community facilities district, with the
following exceptions:

(1) The legislative body shall not be obligated to specify the
rate or rates of special tax in the resolution of intention or the
resolution of formation, provided that both of the following are
met:

(A) The resolution of intention and the resolution of formation
include a statement that the rate shall be established in an amount
required to finance or refinance the authorized improvements and
to pay the district’s administrative expenses.

(B) The maximum rate of special tax applicable to a parcel or
parcels shall be specified in the unanimous approval described in
this section relating to the parcel or parcels.

(2) The legislative body shall not be obligated to specify in the
resolution of intention the conditions under which the obligation
to pay the specified special tax may be prepaid and permanently
satisfied. Instead, a prepayment provision may be included in the
unanimous approval of the owner or owners of each parcel or
parcels at the time that the parcel or parcels are annexed to the
community facilities district.

(3) In lieu of approval pursuant to an election held in accordance
with the procedures set forth in Sections 53326, 53327, 53327.5,
and 53328, the appropriations limit for the community facilities
district, the applicable rate of the special tax and the method of
apportionment and manner of collection of that tax, and the
authorization to incur bonded indebtedness for the community
facilities district shall be specified and be approved by the
unanimous approval of the owner or owners of each parcel or
parcels at the time that the parcel or parcels are annexed to the
community facilities district. No additional hearings or procedures
are required, and the unanimous approval shall be deemed to
constitute a unanimous vote in favor of the appropriations limit
for the community facilities district, the authorization to levy the
special tax on the parcel or parcels, and the authorization to incur
bonded indebtedness for the community facilities district.

(4) Notwithstanding Section 53324, this paragraph establishes
the applicable protest provisions in the event a local agency forms
a community facilities district pursuant to the procedures set forth
in this section. If 50 percent or more of the registered voters, or
six registered voters, whichever is more, residing within the
territory proposed to be annexed to the community facilities district
in the future, or if the owners of one-half or more of the area of
land proposed to be annexed in the future and not exempt from
the special tax, file written protests against establishment of the
community facilities district, and protests are not withdrawn so as
to reduce the protests to less than a majority, no further proceedings
to form the community facilities district shall be undertaken for a
period of one year from the date of decision of the legislative body
on the issues discussed at the hearing. If the majority protests of
the registered voters or of the landowners are only against the
furnishing of a specified type or types of facilities or services
within the district, or against levying a specified special tax, those
types of facilities or services or the specified special tax shall be
eliminated from the resolution of formation.

(5) The legislative body shall not record a notice of special tax
lien against any parcel or parcels in the community facilities district
until the owner or owners of the parcel or parcels have given their
unanimous approval of the parcel’s or parcels’ annexation to the
community facilities district, at which time the notice of special
tax lien shall be recorded against the parcel or parcels as set forth
in Section 53328.3.

(b) Notwithstanding the provisions of Section 53340, after
adoption of the resolution of formation for a community facilities
district described in subdivision (a), the legislative body may, by
ordinance, provide for the levy of the special taxes on parcels that
will annex to the community facilities district at the rate or rates
to be approved unanimously by the owner or owners of each parcel
or parcels to be annexed to the community facilities district and
for apportionment and collection of the special taxes in the manner
specified in the resolution of formation. No further ordinance shall
be required even though no parcels may then have annexed to the
community facilities district.

(c) The local agency may bring an action to determine the
validity of any special taxes levied pursuant to this chapter and
authorized pursuant to the procedures set forth in this section
pursuant to Chapter 9 (commencing with Section 860) of Title 10
of Part 2 of the Code of Civil Procedure. Notwithstanding Section
53359, if an action is brought by an interested person pursuant to
Section 863 of the Code of Civil Procedure to determine the
validity of any special taxes levied against a parcel pursuant to
this chapter and authorized pursuant to the procedures set forth in
this section, the action shall be brought pursuant to Chapter 9
(commencing with Section 860) of Title 10 of Part 2 of the Code
of Civil Procedure, but shall, notwithstanding the time limits
specified in Section 860 of the Code of Civil Procedure, be
commenced within 15 days after the date on which the notice of
special tax lien is recorded against the parcel. Any appeal from a
judgment in any action or proceeding described in this subdivision
shall be commenced within 30 days after entry of judgment.

(d) A community facilities district formed pursuant to this
section may only finance facilities pursuant to subdivisions (i) or
(l) of Section 53313.5.

(e) In connection with formation of a community facilities
district and annexation of a parcel or parcels to the community
facilities district pursuant to this section, and the conduct of an
election on the proposition to authorize bonded indebtedness
pursuant to the alternate procedures set forth in Section 53355.5,
the local agency may, without additional hearings or procedures,
designate a parcel or parcels as an improvement area within the
community facilities district. After the designation of a parcel or
parcels as an improvement area, all proceedings for approval of
the appropriations limit, the rate and method of apportionment and
manner of collection of special tax and the authorization to incur
bonded indebtedness for the parcel or parcels shall apply only to
the improvement area.

(f) In connection with a community facilities district formed
under this section, as an alternate and independent procedure for
making the changes described in Section 53330.7, the changes
may be made with the unanimous approval of the owner or owners
of the parcel or parcels that will be affected by the change and
with the written consent of the local agency. No additional hearings
or procedures are required, and the unanimous approval shall be
deemed to constitute a unanimous vote in favor of the proposed
changes. If the proceeds of a special tax are being used to retire
any debt incurred pursuant to this chapter and the unanimous
approval relates to the reduction of the special tax rate, the
unanimous approval shall recite that the reduction or termination
of the special tax will not interfere with the timely retirement of
that debt.