BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                         SB 63|
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                                UNFINISHED BUSINESS 


          Bill No:  SB 63
          Author:   Hall (D), et al
          Amended:  9/1/15  
          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

           SENATE FLOOR:  36-2, 6/2/15
           AYES:  Allen, Anderson, Bates, Beall, Berryhill, Block,  
            Cannella, De León, Galgiani, Glazer, Hall, Hancock, Hernandez,  
            Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu,  
            McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell,  
            Nguyen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk
           NOES:  Gaines, Nielsen
           NO VOTE RECORDED:  Fuller, Runner

           ASSEMBLY FLOOR:  76-2, 9/03/15 - See last page for vote
           
           SUBJECT:   Seaport infrastructure financing districts


          SOURCE:    Author


          DIGEST:  This bill authorizes cities and counties to establish  
          Seaport Infrastructure Financing Districts.











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          Assembly Amendments add double-jointing language to avoid  
          chaptering out conflicts in the event that both this bill and AB  
          313 (Atkins), which also amends Sections 53398.52, 53398.62, and  
          53398.69 of the Government Code, are enacted into law.


          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, 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).  








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           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  
             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 a process that must  
             comply with specified requirements related to timelines,  
             public meetings, findings, and other prerequisites.


           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  








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             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' 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. 









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              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  
                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.   








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          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 Assembly Appropriations Committee:

           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.

           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.


          SUPPORT:   (Verified9/3/15)


          None received


          OPPOSITION:   (Verified9/3/15)


          None received









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           ASSEMBLY FLOOR:  76-2, 9/03/15
           AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia,  
            Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray,  
            Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer,  
            Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis,  
            Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte,  
            O'Donnell, Olsen, Perea, Quirk, Rendon, Ridley-Thomas,  
            Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond,  
            Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins
           NOES: Beth Gaines, Grove
           NO VOTE RECORDED: Harper, Patterson


          Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
          9/3/15 15:44:13


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