BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 63 (Hall) - Seaport infrastructure financing districts
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|Version: April 7, 2015 |Policy Vote: GOV. & F. 6 - 1 |
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|Urgency: No |Mandate: No |
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|Hearing Date: April 27, 2015 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 63 would authorize cities and counties to establish
seaport infrastructure financing districts (SIFDs) and divert
property tax increment revenues from participating local
agencies to finance port or harbor infrastructure, as specified.
Fiscal
Impact:
Unknown administrative costs to the State Lands Commission
(SLC). Costs for review and approval of SIFD bond issuance
proposals could be absorbable but potentially up to $150,000
(General Fund) in a given year depending on the number and
complexity of the proposals submitted for consideration.
SB 63 (Hall) Page 1 of
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There would be no state costs related to the diversion of
property tax increment for SIFD purposes because the school
share of tax increment cannot be redirected to fund enhanced
infrastructure financing district projects. As such, there
would be no backfill of property tax revenues from the General
Fund.
Background: Historically, the Community Redevelopment Law has allowed a
local government to establish redevelopment agencies (RDAs) and
capture all of the increase in property taxes that is generated
within the project area beyond the base year value (referred to
as "tax increment") over a period of decades. Prior to their
dissolution pursuant to ABx1 26 (Blumenfield) Chap 5/2011, RDAs
used tax increment financing (including the school share),
oftentimes issuing long-term debt in the form of tax allocation
bonds, to address issues of blight, construct affordable
housing, rehabilitate existing buildings, and finance
development and infrastructure projects.
Existing law authorizes cities and counties to form
Infrastructure Financing Districts (IFDs) and divert property
tax increment revenues from participating local agencies to
finance public capital facilities of communitywide significance.
IFDs retain property tax increment revenues from participating
local taxing agencies to directly finance projects or to pay
debt service on bonds issued to finance projects. School
district property tax revenues may not be diverted for IFD
purposes, and each local agency in the IFD must agree to divert
property tax increment to the IFD. Formation of a district and
issuance of IFD bonds required approval by 2/3 of affected
voters in an election.
In the wake of the dissolution of RDAs, SB 628 (Beall), Chap
785/2014, was enacted, allowing local officials to create
Enhanced Infrastructure Financing Districts (EIFDs). SB 628
removed the voter-approval requirement that was required to form
an IFD, authorized an EIFD public finance authority to issue
bonds upon the approval of 55 percent of the voters, and
expanded the types of projects that could be financed. EIFDs
can finance public capital facilities or other specified
projects of communitywide significance that provide significant
benefits to the district or the surrounding community.
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Existing law also authorizes the formation of Port
Infrastructure and Financing Authorities, which allows two or
more local agencies that operate ports or harbors (harbor
agencies) to form a joint powers authority to finance specified
port and harbor infrastructure projects (SB 1988 (Marks), Chap
1235/1992). These authorities are intended to improve access to
ports by allowing for the financing of roads and rail lines,
piers, docks, channel improvements, breakwaters, warehouses and
storage facilities, parks and recreation facilities,
remediation, drainage, wastewater and electric facilities, and
other projects. Port or harbor infrastructure projects may be
privately operated, but all projects must have a primary or
predominant use that is of direct benefit to the port or harbor.
The Public Trust Doctrine is common law doctrine that protects
the public's right to use California's waterways and waterfronts
for commerce, navigation, fishing, boating, natural habitat
protection, and other water-oriented activities. In general,
the public trust doctrine provides that filled and unfilled tide
and submerged lands and the beds of lakes, streams, and other
navigable waterways (i.e. public trust lands) are to be held in
trust by the state for the benefit of the people of California.
The State Lands Commission (SLC) administers public trust lands
not granted to local agencies and oversees the activities of
local grantees, such as harbor agencies.
California has 11 public ports and one private port, and the SLC
administers the activities of seven harbor district grantees.
Port and harbor facilities operate pursuant to long-term leases
on state lands that are exempt from property taxes. Private use
of public property may be taxed if those uses constitute a
possessory interest, so harbor and port tenants pay a possessory
interest tax in lieu of a property tax.
Proposed Law:
SB 63 would authorize cities and counties to form Seaport
Infrastructure Financing Districts (SIFDs), using the structure
of EIFD law to finance port and harbor infrastructure projects.
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Specifically, this bill would:
Define an SIFD as an EIFD that finances port or harbor
infrastructure created in accordance with the EIFD law.
Add port or harbor infrastructure to the list of projects that
may be financed using EIFD law, and expand the definition of
port or harbor infrastructure to include any capital
improvement that improves environmental quality.
Require the city or county that initiates the formation of an
SIFD to designate and direct the harbor agency, rather than
the city engineer, to prepare an infrastructure financing
plan.
Require and SIFD public finance authority to submit any
proposals for issuing bonds for port or harbor infrastructure
to the affected harbor agency and the SLC for review and
approval pursuant to a prescribed process that includes the
following:
o The harbor agency must consider the public finance
authority's bond proposal within 60 days, during which
the agency must act in a public meeting to either vote
for preliminary approval of the proposal or disapprove
the proposal and return it to the public finance
authority.
o The harbor agency may only grant approval only if it
makes four specified affirmative findings, and ensures
that the SIFD will operate independently and that no
transfers of funds or obligations are created between the
harbor agency and the public finance authority or any of
its constituent local agencies.
o If the harbor agency grants preliminary approval,
the proposal must be immediately forwarded to the SLC for
consideration.
o Upon receipt of the harbor agency's preliminary
approval, the SLC must consider the bond issuance
proposal and grant or deny final approval.
o Before granting final approval, the SLC must review
the infrastructure financing plan prepared by the harbor
agency, review the harbor agency's findings made in its
preliminary approval of the bond issuance proposal, and
make seven affirmative findings, as specified.
o If the SLC grants final approval of the bond
issuance proposal, it must immediately forward its
approval to the public finance authority.
Require an SIFD public finance authority, upon receipt of
final approval from the SLC, to submit the proposal for
SB 63 (Hall) Page 4 of
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issuing bonds to the voters. The SIFD bonds may be issued if
two-thirds of the voters approve the proposition.
Specify that an entity paying possessory interest taxes on
state-owned land is deemed a "landowner" for purposes of
voting on an SIFD bond proposal, if there are fewer than 12
registered voters within the SIFD, as specified.
Add several statutes to ensure that an SIFD's financing
activities comply with the Public Trust Doctrine, as
specified.
Related
Legislation: SB 628 (Beall), Chap 785/2014, authorizes the
formation of EIFDs governed by a public finance authority to
finance public capital facilities or other specified projects of
communitywide significance using property tax increment revenues
from local agencies that volunteer to participate in the
district. (see above)
Staff
Comments: SB 63 would require the State Lands Commission to
review an SIFD infrastructure financing plan and any findings
made by the harbor agency regarding bond issuance proposals, and
to make seven specified findings when considering proposals by
SIFD public finance authorities for issuing bonds to pay for
port or harbor infrastructure. Specifically, the SLC must make
all of the following findings in order to grant approval to a
bond issuance proposal:
(1) The funding of the SIFD furthers the state's interest in
its tidelands, ports, and harbors.
(2) The SIFD's principal purposes are to further port and
harbor infrastructure.
(3) The execution of the financing section of the
infrastructure finance plan is more likely than not to
result in the outcomes proposed.
(4) No revenues shall be made available to local governments
as a result of SIFD approval from state revenues, revenues
SB 63 (Hall) Page 5 of
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derived from granted lands, or from ports or harbors,
except for specified written agreements between the harbor
agency and public finance authority.
(5) The harbor agency and public finance authority
participating in the SIFD have each completed all
procedural requirements, financial due diligence, and made
all findings required by the bill and EIFD law.
(6) All projects and uses in the proposed SIFD are
consistent with the state tidelands trust and the
conditions of any grants, and the statewide interests in
the operations of ports and harbors.
(7) No agreements by the harbor agency that may control the
discretion of the agency to maintain its port or harbor
operations or to cede any such control to the discretion of
a third party were made as a condition of participation in
the SIFD.
SLC costs related to these duties are unknown, and would likely
depend upon the number of proposals presented to the Commission
for review, and the scope and complexity of the proposals.
Submission of proposals for consideration is likely to be
intermittent, and many of the required activities noted above
are well within the SLC's purview of experience and could be
accomplished within existing resources. Other duties, such as
those noted in points 4 and 5 above, would require outside
expertise or specialized training of SLC staff. Staff estimates
that SLC costs could be in the range of $150,000 in a given
year.
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