BILL ANALYSIS Ó
AB 2841
Page 1
Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2841
(Travis Allen) - As Amended April 6, 2016
SUBJECT: State infrastructure financing for seaports.
SUMMARY: Creates a process for a harbor agency to apply for
funding to the Infrastructure and Economic Development Bank
(I-Bank). Specifically, this bill:
1)Requires, after consulting with the appropriate state and
local agencies, the I-Bank to establish, for state
infrastructure financing for seaports, criteria, priorities,
and guidelines for the selection of projects to receive
assistance from the I-Bank, and requires projects to comply
with those criteria, priorities, and adopted guidelines of the
I-Bank.
2)Requires, when the I-Bank establishes or makes changes to the
criteria, priorities, and guidelines, the I-Bank to notify the
Governor, the appropriate fiscal and policy committees
of the Legislature that exercise oversight of the I-Bank, and
the appropriate state and local agencies.
3)Allows I-Bank to accept applications for a proposed project
valuation consistent with the criteria, priorities, and
AB 2841
Page 2
guidelines adopted by the Board of the harbor agency, and
specifies the contents of the application.
4)Requires a harbor agency to adopt a resolution setting forth
estimates of the state fiscal and economic impacts that will
result from the proposed project, as specified.
5)Requires the I-Bank, upon receipt of the proposed project
valuation, to approve, require a modification of, or deny the
proposed project valuation, as specified.
6)Prohibits the I-Bank from approving a proposed project
valuation, if the State Lands Commission objects to a finding
made by a harbor agency that the project to be financed is
consistent with state tidelands trust and the terms and
conditions of any grant of trust lands to the harbor agency.
7)Requires the I-Bank to provide notice to the Department of
Finance (DOF) within 30 days
of approving a proposed project valuation, and requires that
notice include, at a minimum, the dollar amount of the
valuation and any other information requested by DOF.
Requires DOF to include an amount equal to the approved
project valuation in the appropriation for the I-Bank Fund, as
specified, in the Governor's proposed annual budget.
8)Requires the I-Bank to remit funding to the harbor agency only
upon an appropriation by the Legislature of moneys for that
purpose.
9)Allows the I-Bank to require the harbor agency to demonstrate
it has sufficient resources to complete the infrastructure
development project or install the equipment purchase.
AB 2841
Page 3
10)Requires the I-Bank to prepare a report on its activities and
post that report in its Internet Web site.
11)Requires the harbor agency to reimburse the administrative
expenses incurred by the I-Bank for the processing of the
proposed financing of a project.
12)Requires all permanent fixtures and capital improvements to
the real property of a harbor agency that administers public
trust tidelands financed pursuant to the bill's provisions to
be a trust asset of the state once completed. Specifies that
this does not apply to fixtures and improvements otherwise
agreed as nonpermanent in a lease between the harbor agency
and a private tenant.
13)Defines applicable terms.
14)Makes a number of findings and declarations regarding the
infrastructure needs of seaport infrastructure financing
districts and harbor agencies.
EXISTING LAW:
1)Authorizes cities and counties to 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
AB 2841
Page 4
IFD was formed. However, IFDs can't divert property tax
increment revenues from schools.
2)Authorizes cities and counties to create Enhanced
Infrastructure Financing Districts (EIFDs), which augment the
tax increment financing powers that are available to local
governments 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.
3)Authorizes cities and counties to establish Seaport
Infrastructure Financing Districts, which are similar to an
EIFD, for the purpose of financing port or harbor
infrastructure, including any capital improvement that
improves environmental quality, if the improvement's primary
or predominant use directly benefits a port or harbor.
4)Establishes the I-Bank within the Governor's Office of
Business and Economic Development (GO-Biz) and authorizes it
to undertake a variety of infrastructure related financial
activities, including, but not limited to, the administration
of a revolving loan fund, oversight of the Small Business
Finance Center, and the issuance of tax-exempt and taxable
revenue bonds.
5)Requires, prior to the submittal of a project to the I-Bank
for consideration, the legislative body of the project sponsor
to make specified findings, by resolution, on each of the
following:
a) The project is consistent with the general plan of both
the city and county, or city and county in the case of San
Francisco, or only the county for projects in
AB 2841
Page 5
unincorporated areas in which the project is located.
b) The proposed financing is appropriate for the specific
project.
c) The project facilitates effective and efficient use of
existing and future public resources so as to promote both
economic development and conservation of natural resources.
The project develops and enhances public infrastructure in
a manner that will attract, create, and sustain long-term
employment opportunities.
d) The project is consistent with the criteria, priorities,
and guidelines for the selection of projects adopted of the
I-Bank.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)Bill Summary. This bill creates a process for a harbor agency
to apply for funding through the I-Bank, and gives the I-Bank
the authority to establish criteria, priorities, and
guidelines for the selection of projects to receive assistance
from the I-Bank.
This bill is sponsored by the Pacific Merchant Shippers
Association.
AB 2841
Page 6
2)Author's Statement. According to the author, "AB 2841 creates
a new public financing program to encourage future investments
in infrastructure at California's public seaports to be
administered by the state Infrastructure Bank. Incentivizing
these infrastructure improvements will lower operating
expenses, which in turn will help to preserve our ports'
economic competitive position or usher in the use of clean
technologies sooner than otherwise feasible."
"California's major commercial seaports in Long Beach, Los
Angeles, Oakland, Port Hueneme, Richmond, and San Diego are
either 'trust grant' ports, meaning that they are operating on
state-owned property, which has been granted to a local
governmental entity who must manage the property as a trustee
for the benefit of the state, or they are special districts
set up under the state Harbors & Navigation Code to achieve
state purposes. The real property at these ports are publicly
owned assets, but are not supported with state or local tax
revenues, rather they are operated as enterprises with private
revenue streams and their primary form of infrastructure
development funding is in the form of revenue bonds backed
against future operations or lease revenues.
"In the wake of the elimination of redevelopment and other
economic development tools which were not universally believed
to be effective, the State revamped its public financing tools
to provide for Enhanced Infrastructure Financing Districts
(EIFDs). SB 63 (Hall) added seaports to the EIFD statute, and
allowed for access to new seaport infrastructure and
environmental improvement financing."
3)Prior Legislation.
a) SB 63 (Hall), Chapter 793, Statutes of 2015. This bill
authorized cities and counties to establish Seaport
AB 2841
Page 7
Infrastructure Financing Districts and allowed these
districts, to finance certain port or harbor facilities, as
specified.
b) SB 628 (Beall), Chapter 785, Statutes of 2014. This
bill authorized local officials to create EIFDs, which
augment the tax increment financing powers that are
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.
4)Arguments in Support. Supporters argue that this bill will
create a win-win investment in California's seaports, create
cost savings, improve competitiveness, help grow cargo and
jobs, while also investing in the environment.
5)Arguments in Opposition. None on file.
6)Double-Referral. This bill was heard by the Jobs, Economic
Development and the Economy Committee on April 5, 2016, where
it passed with a 9-0 vote.
REGISTERED SUPPORT / OPPOSITION:
Support
Pacific Merchant Shipping Association [SPONSOR]
AB 2841
Page 8
Opposition
None on file
Analysis Prepared by:Debbie Michel