BILL ANALYSIS Ó
SB 63
Page 1
Date of Hearing: August 19, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 63
(Hall) - As Amended June 1, 2015
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY: This bill would authorize cities and counties to
establish Seaport Infrastructure Financing Districts (SIFDs) to
finance seaport or harbor infrastructure projects.
Specifically, this bill:
1)Defines an SIFD as an Enhanced Infrastructure Financing
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District (EIFD) that finances seaport or harbor infrastructure
created in accordance with the EIFD law.
2)Adds seaport or harbor infrastructure to the list of projects
that may be financed using EIFD law, and expands the
definition of seaport or harbor infrastructure to include any
capital improvement that improves environmental quality.
3)Requires 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.
4)Requires and SIFD public finance authority to submit any
proposals for issuing bonds for seaport or harbor
infrastructure to the affected harbor agency and the State
Lands Commission (SLC) for review and approval pursuant to a
prescribed process.
5)Requires the harbor agency to reimburse the SLC, for its
administrative costs of considering the proposal, from bond
proceeds, if any.
6)Requires an SIFD public finance authority, upon receipt of
final approval from the SLC, to submit the proposal for
issuing bonds to the voters. The SIFD bonds may be issued if
two-thirds of the voters approve the proposition.
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7)Specifies 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.
8)Ensures that an SIFD's financing activities comply with the
Public Trust Doctrine.
9)Specifies that this bill does not apply to the Stockton Port
District or to a river port district.
FISCAL EFFECT:
1)Ongoing intermittent costs, unknown, but potentially in the
range of $100,000 to $150,000 in any given year, to the State
Lands Commission (SLC). These costs would be fully reimbursed
by harbor agencies from the proceeds of bonds issued for SIFD
proposals. Staff notes that costs for review and approval of
SIFD bond issuance proposals would likely depend on the number
of proposals presented to SLC for review, and the scope and
complexity of the proposals. Submission of proposals is
likely to be intermittent, and many of activities required by
this bill are within SLC's purview and could be absorbable
within existing resources. Other activities would require
outside expertise or specialized training of SLC staff.
2)Negligible 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 EIFD projects. As
such, there would be no backfill of property tax revenues from
the General Fund.
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COMMENTS:
1)Purpose. According to the author, "California's ports and
harbors are major contributors to the state's economy,
employing tens of thousands of workers, investing billions in
local and state businesses and creating hundreds of millions
in state and local tax revenues. Currently, our ports are
losing market share to competitors outside of the state
partially because other jurisdictions are subsidizing their
infrastructure improvements."
Last year the state of California revamped its public
financing tools to provide for EIFDs, in the wake of the
elimination of redevelopment agencies. EIFDs can provide
reinvestment financing to projects which span a wide range of
public infrastructure and private development projects,
including highways and transit infrastructure. SB 63 adds
seaports to the list of EIFD-approved projects.
2)Background. 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.
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Until 2011, the Community Redevelopment Law allowed local
officials to set up redevelopment agencies (RDAs), prepare and
adopt redevelopment plans, and use property tax increment
revenues to finance redevelopment activities. After state law
dissolved RDAs in 2011, local officials sought other ways to
use tax increment financing to raise the capital they need to
invest in public works projects. Last year, legislators
enacted SB 628 (Beall, 2014) to allow local officials to
create EIFDs, which augment the tax increment financing powers
that are available to local government under the IFD statutes.
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.
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. 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.
3)Public Trust Doctrine. 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
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activities. In general, the public trust doctrine provides
that public trust lands (filled and unfilled tide and
submerged lands and the beds of lakes, streams, and other
navigable waterways) are to be held in trust by the state for
the benefit of the people of California. The 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.
1)Prior
Legislation:4) SB 628 (Beall), Chapter 785, Statutes of 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.
Analysis Prepared by:Jennifer Swenson / APPR. / (916)
319-2081
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