BILL ANALYSIS                                                                                                                                                                                                    






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          |SENATE RULES COMMITTEE            |                         SB 63|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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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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