BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 472|
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THIRD READING
Bill No: AB 472
Author: Ammiano (D)
Amended: 9/2/11 in Senate
Vote: 21
PRIOR VOTES NOT RELEVANT
SUBJECT : Infrastructure financing districts
SOURCE : Author
DIGEST : This bill changes the statute governing San
Franciscos waterfront infrastructure financing districts
(IFDs) and creates a new statute for San Franciscos special
waterfront IFDs.
Senate Floor Amendments of 9/2/11 delete the bill's current
language that declares that drug overdoses are not crimes
and instead insert language relating to San Francisco's use
of IFDs.
ANALYSIS : Current law allows cities and counties to
create 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 divert property tax increment revenues from other
local governments for 30 years. However, IFDs cannot
divert property tax increment revenues from schools (SB 308
(Seymour), Chapter 1575, Statutes of 1990).
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This bill changes the statute governing San Francisco's
waterfront IFDs and creates a new statute for San
Francisco's special waterfront IFDs.
I. Waterfront IFDs . Current law requires that the public
facilities financed by a waterfront IFD must be public
trust assets controlled by the Port of San Francisco,
except for utilities, public transportation facilities,
and facilities on land that's free of the public trust.
This bill substitutes the waterfront IFD for the Port's
control and also exclude any improvements financed by a
Treasure Island special waterfront IFD.
Current law prevents an IFD from overlapping a
redevelopment project area and from supplanting existing
facilities and services.
This bill lifts those restrictions for a waterfront IFD.
Current law limits IFDs' bonds to 30 years and
waterfront IFDs' bonds to 45 years, measured from the
date on which the IFD issues the bonds.
This bill changes the starting date for waterfront IFDs'
bonds to the date on which the waterfront IFD has
actually received $100,000 in property tax increment
revenues.
This bill contains procedures that allow San Francisco
to buy facilities that a waterfront IFD constructs,
either entirely or in phases, once a facility's purchase
value is more than $1 million.
Current law allows waterfront IFDs to divert property
tax increment revenues, but requires a waterfront IFD to
set-aside at least 20 percent of those revenues for
shoreline restoration, removal of bay fill, waterfront
public access, or environmental remediation of the San
Francisco waterfront.
This bill acknowledges a new requirement that a special
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waterfront IFD must set-aside revenues to finance
improvements to federally- or state-owned waterfront
lands used for America's Cup public spectator viewing
sites.
Current law allows the Pier 70 IFD to divert property
tax increment revenues, including revenues that would
have gone to the Educational Revenue Augmentation Fund
(ERAF).
This bill defines "affected taxing entity" for the
purpose of diverting these property tax increment
revenues. This bill provides that these allocations
apply to revenues that are available for allocation
under the applicable laws.
Current law contains an extended statement of
legislative intent regarding the allocation of property
tax increment revenues to a waterfront IFD.
This bill changes that statement and declares that these
revenues are not "proceeds of taxes" or an appropriation
subject for purposes of Article XIII B of the California
Constitution.
This bill allows San Francisco officials to issue
waterfront IFD bonds without the usual two-thirds-voter
approval. This bill allows officials to sell these
bonds a negotiated sale.
II. Special waterfront IFDs . This bill creates procedures
and powers for special waterfront IFDs, specifically for
a Treasure Island special waterfront IFD and a Port
America's Cup special waterfront IFD.
Treasure Island . This bill allows the San Francisco
Board of Supervisors to create one or more Treasure
Island special waterfront IFDs. This bill defines the
Treasure Island property to include both Treasure Island
(except for the Coast Guard property) and Yerba Buena
Island (except for the Jobs Corps property). A Treasure
Island special waterfront IFD cannot include a
redevelopment project area. A Treasure Island special
waterfront IFD can finance:
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Any facilities and services that an IFD and a
waterfront IFD can finance.
Affordable housing on Treasure Island.
Work to meet seismic safety standards on public
or private property on Treasure Island.
This bill prohibits a Treasure Island special waterfront
IFD from financing services or using harbor funds to pay
for its costs or to provide credit enhancement for its
debts.
If the Port of San Francisco succeeds the Treasure
Island Development Authority (TIDA) as trustee of public
trust lands, the amendments require the Port to hold the
land in trust under the TIDA act and not the Burton Act.
The Port must deposit any public trust land revenues
into the Treasure Island trust fund which is separate
from the harbor fund created by San Francisco's charter
and the Burton Act.
Port America's Cup . This bill defines the Port
America's Cup district to include the San Francisco
waterfront that is or may be an America's Cup venue,
including Treasure Island, but excluding any part of
Treasure Island that's in a Treasure Island special
waterfront IFD. A Port America's Cup special waterfront
IFD can finance facilities either in a Port America's
Cup district or on Treasure Island. On Treasure Island,
a Port America's Cup special waterfront IFD can finance
the same facilities and services as a Treasure Island
special waterfront IFD. In a Port America's Cup
district, a Port America's Cup special waterfront IFD
can only finance:
Construction of the Port's maritime facilities at
Pier 27.
Planning and design work for the Port's maritime
facilities at Pier 27.
Planning, design, and construction of
improvements to publicly owned waterfront lands used
as public spectator viewing sites for America's Cup
events.
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This bill requires a Port America's Cup special
waterfront IFD to spend the proceeds of debt secured by
ERAF money for the construction of the Port's Pier 27
maritime facilities, including public access and open
space improvements. This bill requires a Treasure
Island special waterfront IFD to spend the proceeds of
debt secured by ERAF money only to finance improvements
needed to develop Treasure Island property.
Set-aside requirements . Current law for waterfront IFDs
require San Francisco to set aside at least 20 percent
of the property tax increment revenues for shoreline
restoration, removal of bay fill, waterfront access, or
environmental remediation.
This bill waives those requirements for special
waterfront IFDs and imposes different requirements for
the Port America's Cup special waterfront IFD and the
Treasure Island special waterfront IFD.
This bill requires a Port America's Cup special
waterfront IFD (but not a Treasure Island special
waterfront IFD) to set aside at least 20 percent of its
share of property tax increment revenues from ERAF to
pay for improvements to federally or state-owned
waterfront lands used a public spectator viewing sites
for America's Cup events.
This bill requires a Treasure Island special waterfront
district to spend at least 20 percent of its property
tax increment revenues on affordable housing on Treasure
Island. The affordable housing units can be anywhere on
Treasure Island. Assisted rental units must remain
affordable for at least 55 years; assisted ownership
units must remain affordable for at least 45 years.
TIDA may allow sales of assisted ownership units if they
are subject to an equity sharing program. San Francisco
officials must record covenants that implement these
requirements.
State review and approval . Before authorizing debt by
either an America's Cup special waterfront IFD or a
Treasure Island special waterfront IFD, San Francisco
officials must submit a fiscal analysis to the
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California Infrastructure and Economic Development Bank
(I-Bank) for review and approval. The I-Bank can ask
other state agencies to comment and offer
recommendations.
This bill requires the I-Bank to act within 90 days to
either approve the fiscal analysis or return it with
specific recommendations for changes.
To approve the fiscal analysis, the I-Bank must find
that there is a reasonable probability that the economic
activity proposed to occur from hosting the America's
Cup or the development of the Treasure Island property
would result in State General Fund revenue with a net
present value greater than the net present value of the
property tax increment revenues diverted from ERAF over
the term of the special waterfront IFD. The I-Bank must
consider only those State General Fund revenues that
would occur as a result of hosting the America's Cup in
California or the development of the Treasure Island
property.
This bill prohibit the I-Bank from considering State
General Fund revenues that would have occurred
otherwise. This bill requires San Francisco officials
to reimburse the I-Bank's costs.
Property tax increment allocations . If the financing
plan for a special waterfront IFD allocates less than
100 percent of San Francisco's property tax increment
revenues to the special waterfront IFD, the amendments
require the special waterfront IFD to pay a
proportionate share of property tax increment revenues
to ERAF. The special waterfront IFD does not have to
pay ERAF if the special waterfront IFD receives 100
percent of San Francisco's property tax increment
revenues.
This bill includes a statement of legislative intent
which declares that the special waterfront IFD's
property tax increment revenues are not "proceeds of
taxes" for purposes of Article XIII B of the California
Constitution.
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III. Treasure Island Conversion Act . The 1997 Treasure
Island Conversion Act allowed San Francisco's county
supervisors to designate a public benefit nonprofit
corporation called the Treasure Island Development
Authority as the redevelopment agency for the former
navy base (AB 699 (Migden), Chapter 897, Statutes of
1997). In 2008, the Legislature modified TIDA's
authority for affordable housing, requiring consultation
with a Treasure Island/Yerba Buena Citizens Advisory
Board (AB 1496 (Leno), Chapter 318, Statutes of 2008).
Because redevelopment agencies face an uncertain fiscal
future, San Francisco officials now prefer to finance
the conversion of Treasure Island to civilian uses with
IFDs instead of with redevelopment project areas.
This bill repeals the authority of the San Francisco
Board of Supervisors to designate TIDA as a
redevelopment agency. This bill repeals the provisions
of the Treasure Island Conversion Act that relate to
TIDA's redevelopment duties, including the provisions
related to affordable housing and the citizens advisory
board. These changes do not take effect until the San
Francisco Board of Supervisors authorizes the first debt
for the Treasure Island special waterfront IFD. This
bill gives TIDA the power to administer the public trust
responsibilities for Treasure Island in place of the
Port of San Francisco.
Background
San Francisco's Waterfront Development Plans
The 1968 Burton Act resulted in transferring the state
tidelands along San Francisco's waterfront to the City and
County of San Francisco which assumed $55 million in state
debt obligations. The Port of San Francisco wants to
promote development, but lacks the public capital to
attract and retain private investors. The cost to
implement the Port's 10-year capital plan is $1.9 billion.
Naval Station Treasure Island is one of approximately 30
former military bases in California closed by federal
officials during the 1990s. Besides the usual problems
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with converting a former military base to civilian use,
land use decisions at "T.I." are complicated by the
constitutional public trust doctrine that applies to tide
and submerged lands. The 1968 Burton Act gave the San
Francisco Port Commission jurisdiction over San Francisco's
tide and submerged lands. When considering how to convert
Treasure Island to civilian uses, San Francisco officials
worried about jurisdictional conflicts between its Port and
redevelopment agency. Because a community can have only
one redevelopment agency, the Treasure Island Conversion
Act allowed San Francisco's supervisors to designate a
public benefit nonprofit corporation called the Treasure
Island Development Authority as the redevelopment agency
for the former navy base (AB 699 (Migden), Chapter 897,
Statutes of 1997).
In 2008, San Francisco voters approved a charter amendment
to divert most of the Pier 70 area's hotel tax and payroll
tax revenues to fund historic preservation and
infrastructure costs. To generate the rest of the needed
money, Port officials plan to use local general obligation
bonds, revenue bonds, and IFD bonds.
In 2010, the BMW ORACLE Racing Team won the America's Cup
in Valencia, Spain. San Francisco will host the 34th
America's Cup regatta along the waterfront. The Port of
San Francisco believes that the cost of rebuilding Piers
30-32, Seawall Lot 330, and Pier 50 will be $625 million.
To generate some of the needed money, Port officials want
to use IFD bonds.
San Francisco's IFDs
In 2005, legislators passed special provisions that apply
just to IFDs in San Francisco (SB 1085 (Migden), Chapter
213, Statutes of 2005). In 2010, the Legislature repealed
those special provisions and instead enacted a new special
statute governing the formation of IFDs along San
Francisco's waterfront, including special provisions for a
San Francisco waterfront IFD in the Pier 70 area (AB 1199
(Ammiano), Chapter 664, Statutes of 2010).
In early 2011, San Francisco created Infrastructure
Financing District No. 1 (Rincon Hill), relying on the
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standard IFD statutes. The Rincon Hill IFD is the second
IFD in California.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
AGB:mw 9/6/11 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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