BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 63|
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THIRD READING
Bill No: SB 63
Author: Hall (D), et al.
Amended: 6/1/15
Vote: 21
SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 4/15/15
AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Pavley
NOES: Bates
SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15
AYES: Lara, Beall, Hill, Leyva, Mendoza
NOES: Bates, Nielsen
SUBJECT: Seaport infrastructure financing districts
SOURCE: Author
DIGEST: This bill authorizes cities and counties to establish
Seaport Infrastructure Financing Districts.
ANALYSIS:
Existing law:
1)Allows 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,
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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 IFD was
formed. However, IFDs can't divert property tax increment
revenues from schools (SB 308, Seymour, Chapter 1575, Statutes
of 1990).
2)Allows local officials to create Enhanced Infrastructure
Financing Districts (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 (SB 628,
Beall, Chapter 785, Statutes of 2014).
This bill:
1) Allows city and county officials to establish Seaport
Infrastructure Financing District (SIFDs).
2) Defines a SIFD as an EIFD that finances port or harbor
infrastructure pursuant to specified statutes.
3) Declares that the statutes governing EIFDs also apply to
SIFDs, except that statutes enacted by the bill with respect
to SIFDs prevail if they conflict with any provision of the
EIFD statutes.
4) Adds "port or harbor infrastructure" to the existing
statutory list of public capital facilities that an EIFD can
finance.
5) Expands the statutory definition of "port or harbor
infrastructure" to include any capital improvement that
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improves environmental quality, if the improvement's primary
or predominant use directly benefits a port or harbor.
6) Directs that a city or county must direct a harbor agency
to prepare an infrastructure financing plan for a SIFD.
7) Requires that if the public finance authority governing an
SIFD proposes to initiate proceedings to issue bonds for
port or harbor infrastructure, it must submit the proposal
for review and approval by the affected harbor agency and
the State Lands Commission (SLC), pursuant to the following
process:
a) A harbor agency, after receiving a public financing
authority's resolution proposing to issue bonds for a
SIFD, must consider the proposal within 60 days. During
that time, the harbor agency's governing body must act at
public meeting to either vote to give preliminary
approval of the proposal, or disapprove the proposal and
return it to the public financing authority. A harbor
agency may give preliminary approval only if it makes
four specified findings. The agency is prohibited from
granting preliminary approval unless:
i) The seaport infrastructure financing
district will operate independently of any other
prior or concurrent agreements between the harbor
agency and the public financing authority, or the
local governments that make up the public financing
authority.
ii) No transfers of funds or obligations, as
defined, or future transfers of funds or obligations
contingent on the approval of the SIFD, its
financing, or projects within the district, are
created between the harbor agency and the public
financing authority, or the local governments that
make up the public financing authority.
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b) If a harbor agency votes to give preliminary
approval to a proposal to issue bonds, it must
immediately forward its preliminary approval to the SLC
for its consideration.
c) The SLC, after receiving a harbor agency's
preliminary approval of a proposal to issue bonds for a
SIFD, must consider the proposal and either grant or deny
final approval. Before granting final approval, the SLC
must review the infrastructure financing plan prepared by
the harbor agency and the findings that the harbor agency
made in its preliminary approval. The SLC cannot grant
final approval unless it makes seven specified findings.
d) If the SLC grants final approval, it must
immediately forward its approval to the public financing
authority for further action.
8) Requires a harbor agency to reimburse the SLC for its
direct administrative costs of considering a SIFD proposal.
9) Prohibits a SIFD's public finance authority from
proceeding with a bond issuance unless the SLC votes in
favor of the authority's proposal to issue bonds.
10) Expands the definition of "landowner," for the
purpose of a vote to approve bonds for an SIFD, to include
an entity that is paying possessory interest tax on
state-owned land.
11) Allows a SIFD's public finance authority to issue bonds
only if two-thirds of the voters voting on the proposition
vote in favor of issuing the bonds.
12) Contains several provisions to ensure that SIFDs'
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financing activities comply with the Public Trust Doctrine.
Specifically, this bill:
a) Declares that all permanent fixtures and capital
improvements to the real property of a harbor agency that
administers public trust tidelands made pursuant to a
SIFD's approved infrastructure financing plan must be a
trust asset once completed, with specified exceptions.
b) Requires that, if a harbor agency administering
granted public trust property is a department of a local
governmental body, any negotiations between the harbor
agency and the local government body with respect to any
infrastructure financing, operations, or any other
activity requiring action by the harbor agency must be
undertaken at arm's length in recognition of the duties
of the harbor agency to effectuate statewide interests.
c) Requires that the SLC must retain absolute
discretion over the determination of whether or not
investment of local resources in port or harbor
infrastructure, the actions of a harbor agency, or any
other action taken by a SIFD is consistent with the
state's interests in its tidelands and submerged lands.
d) Declares that its provisions do not preclude the SLC
from enforcing the state's interests in its tidelands.
e) Directs that a harbor agency that manages granted
state tidelands retains its status as a trustee whether
or not it is located within a SIFD and clarifies that its
provisions do not preclude the harbor agency from
conducting its duties as a trustee of state tidelands.
f) States that its provisions do not grant any
authority to any public financing authority, or the local
governments that compose the public finance authority, to
manage, direct, control, or exercise jurisdiction over a
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harbor agency and its management of port or harbor
infrastructure.
13) Contains extensive findings and declarations relating to
the necessity and benefits of increased public investment in
port and harbor infrastructure projects.
14) Specifies that this bill's provisions do not apply to the
Stockton Port District or to a river port district
established pursuant to specified statutes.
Comments
Purpose of the bill. California's ports and harbors make major
contributions to the state's economy, creating jobs, investing
in businesses, and generating tax revenues. However, California
ports are losing market share to competitors outside of the
state partially because of subsidies that other jurisdictions
provide for port infrastructure improvements. This bill will
provide ports with access to vital public financing tools,
through the formation of SIFDs, which will augment their current
reliance on revenue bonds backed by fees or lease revenues.
Using the financing tools enacted by last year's EIFD
legislation, this bill will facilitate investments in California
seaports that will save money, improve economic competitiveness,
and create jobs while also protecting the environment.
FISCAL EFFECT: Appropriation: No Fiscal
Com.:YesLocal: No
According to the Senate Appropriations Committee, this bill
would result in unknown administrative costs to the SLC. Costs
for review and approval of SIFD bond issuance proposals could be
absorbable but potentially up to $150,000 in a given year
depending on the number and complexity of the proposals
submitted for consideration. These costs would be fully
reimbursed by harbor agencies from the proceeds of bonds issued
for SIFD proposals.
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SUPPORT: (Verified5/29/15)
Pacific Merchant Shipping Association
Port of San Diego
OPPOSITION: (Verified5/29/15)
None received
Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
6/1/15 15:51:17
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