BILL ANALYSIS �
AB 910
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Date of Hearing: May 4, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 910 (Torres) - As Amended: April 25, 2011
SUBJECT : Infrastructure financing districts: facilities and
projects.
SUMMARY : Authorizes an infrastructure financing district (IFD)
to finance affordable housing facilities and economic
development projects. Specifically, this bill :
1)Authorizes an IFD to finance affordable housing facilities and
economic development projects that provide significant
benefits to an area larger than the IFD.
2)Specifies that an election is not required to form an IFD,
adopt an infrastructure financing plan, or issue bonds, if the
IFD is implementing an affordable housing or economic
development plan or a transit village plan.
EXISTING LAW :
1)Authorizes 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.
2)Allows an IFD to divert property tax increment revenues from
other local governments, excluding school districts, for up to
30 years, in order to pay back bonds issued by the IFD.
3)Requires that in order to form an IFD a city or county must
develop an infrastructure plan, send copies to every
landowner, consult with other local governments, and hold a
public hearing.
4)Requires that when forming an IFD, local officials must find
that its public facilities are of communitywide significance
and provide significant benefits to an area larger than the
IFD.
5)Requires that every local agency who will contribute its
property tax increment revenue to the IFD approve the plan.
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6)Requires a two-thirds voter approval of the formation of the
IFD and the issuance of bonds.
7)Requires majority voter approval for setting the IFD's
appropriations limits.
8)Specifies that public agencies that own land in a proposed IFD
may not vote on issues regarding the district.
9)Authorizes IFDs to issue a variety of debt instruments,
including bonds, certificates of participation, leases, and
loans.
10)Requires any IFD that constructs dwelling units to set aside
not less than 20% of those units to increase and improve the
community's supply of low- and moderate-income housing
available at an affordable housing cost to persons and
families of low- and moderate-income.
FISCAL EFFECT : None
COMMENTS :
1)According to the author the purpose of AB 910 is to allow IFDs
to be used to finance affordable housing and economic
development. IFD's have been used to finance public capitol
facilities, and by adding affordable housing and economic
development activities, communities will have the benefit of
an additional tool to finance these important functions.
2)Cities and counties can 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 are prohibited
from diverting property tax increment revenues from schools.
3)For several years, local officials were reluctant to form IFDs
because they worried about the constitutionality of using tax
increment revenue from property that was not within the
redevelopment project area. When a 1998 Attorney General's
opinion allayed those concerns, the City of Carlsbad formed an
IFD in 1999 to fund the public works for a new hotel located
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adjacent to the Legoland theme park. That small project is
the only example of local officials' use of the 1990 IFD law.
The broader use of IFDs may attract more attention and the
appellate courts may be asked to determine whether it is
constitutional to divert property tax increment to IFDs.
4)Public officials continue to search for ways to raise the
capital they need to invest in public works projects, like
public transit facilities, infill development, or clean water.
One concept recognizes that expanded public structures can
boost the value of nearby property. Higher property values
produce higher property tax revenues. Property tax increment
financing captures those property tax increment revenues.
When redevelopment officials use property tax increment
financing to eradicate blight, state law does not require
voter approval. When local officials use IFDs to capture
property tax increment revenues, state law requires a
two-thirds approval.
5)Since the creation of IFD law there have been multiple bills
that have tailored IFD law to specific local circumstances.
In 1999 the Legislature created a parallel law for IFDs to
stimulate development and international trade in the "border
development zone," about 400 square miles next to the Mexico
border �SB 207 (Peace), Chapter 773, Statutes of 1999].
However, San Diego officials have yet to use this authority.
In 2005, the Legislature passed SB 1085 (Migden), Chapter 213,
Statutes of 2005, which provided for changes and additions to
the IFD Law to enable the City and County of San Francisco to
finance needed public infrastructure improvements to specified
waterfront properties. This authority was expanded even
further for San Francisco last year in AB 1199 (Ammiano),
Chapter 664, Statutes of 2010.
6)Support arguments: Supporters argue that AB 910 creates a
more flexible development tool to finance needed housing and
economic development projects. Given the "opt-in" nature of
IFDs tax increment financing, more local governments will have
a voice in if their growth in property tax is allocated, a
luxury currently not provided to them under redevelopment law.
7)Opposition arguments: Opposition could say that by removing
the voter approval requirements for the creation of an IFD and
the issuance of tax allocation bonds will remove any input or
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direct voter oversight. Moreover, with the removal of the
voting requirement the measure is creating more of a
redevelopment type agency without the requirement of making a
finding of blight.
REGISTERED SUPPORT / OPPOSITION :
Support
None on file
Opposition
CA Association of REALTORS
Howard Jarvis Taxpayers Association
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958