BILL ANALYSIS �
AB 2259
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Date of Hearing: April 25, 2012
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 2259 (Ammiano) - As Amended: April 19, 2012
SUBJECT : Infrastructure financing districts: America's Cup and
waterfront district venues.
SUMMARY : Modifies infrastructure financing district (IFD)
provisions for the City and County of San Francisco related to
the America's Cup. Specifically, this bill :
1)Allows a waterfront district (district) to finance
improvements that may be publicly owned, to protect against
potential sea level rise.
2)Deletes from current law the requirement that the board of
supervisors submit a fiscal analysis to the California
Infrastructure and Economic Development Bank (I-Bank) for
review and approval.
3)Modifies the requirements to be included in the district's
infrastructure financing plan, to specify that in the event
that San Francisco divides a district into project areas, the
project areas can share the limitation on the aggregate number
of tax dollars of levied taxes and the limit may be divided
among the project areas, or allows a separate limit to be
established for a project area.
4)Modifies the requirements of the Pier 70 enhanced financing
plan with respect to the issuance of ERAF-secured debt, if
specified conditions are met.
5)Specifies that annexation will take effect on the effective
date of the ordinance of the board's annexation approval, for
any public or private owner of land not within an existing
district, but that has any boundary line contiguous to a
boundary of the district and who petitions the board for
inclusion of the land in the district.
6)Specifies that the base year of land annexed into a district
will be the fiscal year in which the assessed value of the
annexed land was last equalized prior to the effective date of
the annexation, or a subsequent fiscal year specified in the
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ordinance of the board approving the annexation.
7)Defines the term "base year" to mean the fiscal year in which
taxable property in the district was last equalized prior to
the effective date of the ordinance adopted to create the
district, or a subsequent fiscal year specified in the
infrastructure financing plan for the district.
8)Modifies the definition of "public facilities" with respect to
what can be financed by a district in order to specify that
those facilities financed may be publicly owned or privately
owned utility infrastructure if they are available to or serve
the general public, and includes within the definition of
"public facilities" any capital facility fees used to pay for
public facilities.
9)Modifies provisions related to a special waterfront district
(Port America's Cup district), as follows:
a) Allows for acquisition of publicly owned waterfront
lands held by trustee agencies;
b) Allows improvements to publicly owned waterfront lands
financed by a special waterfront district, as specified, to
be outside the district.
c) Clarifies that improvements are subject to specified
set-aside requirements contained in existing law that
mandates that 20% of the special waterfront district ERAF
share allocated to a Port America's Cup district must be
set aside for federally- or state-owned waterfront lands;
d) Clarifies that all improvements in a Port America's Cup
district are deemed to be public capital facilities of
communitywide significance;
e) Requires, if any portion of the 20% set-aside funds are
allocated to a federal or state trustee agency, all of the
following to apply:
i) The special waterfront district enhanced financing
plan for the Port America's Cup district must specify the
portion of the 20% set-aside funds that is allocated to
any federal or state trustee agency;
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ii) Specifies that the trustee agency's proposed use of
the 20% does not need to be described in the enhanced
financing plan;
iii) Requires San Francisco to direct the county auditor
or officer responsible for the payment of taxes in the
funds of the respective taxing entities to pay the 20%
set-aside funds allocated to the federal or state trustee
agency directly to such trustee agency;
iv) Provides that the special waterfront district is not
required to report on a federal or state trustee agency's
use of the set-aside funds in its annual statement of
indebtedness or any other report required pursuant to
existing law;
v) Requires the special waterfront district to use
commercially reasonable efforts to enter into a contract
with the federal or state trustee agency under which the
agency will agree to report to the I-Bank on an annual
basis on its use of the 20% set-aside funds;
vi) Requires the report to be submitted no later than
nine months after the end of each fiscal year in which
the federal or state trustee agency receives or spends
the 20% set-aside funds; and,
vii) Clarifies that the failure of San Francisco to enter
into a contract with the federal or state trustee agency
will not prevent the allocation of 20% set-aside funds to
the trustee agency for specified purposes.
f) Deletes from current law the provision that allows a
district to finance reimbursement payments made to the
I-Bank for the reasonable cost of the review and approval
of the fiscal analysis.
10)Revises the definition of "Port America's Cup district" to
include one or more of Seawall Lot 330, Pier 19, Pier 23, and
Pier 29.
11)Revises the $1 million cap of the county ERAF portion of
incremental tax revenues committed to a district to include an
adjustment each fiscal year, after the 2011-12 fiscal year, by
the amount of any percentage increase in the assessed value of
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the taxable property in the district as shown upon the
assessment roll used in connection with the taxation of the
property.
12)Makes changes to the definitions of other terms related to
districts.
13)Makes legislative findings and declarations as to the
necessity of a special statute for the City and County of San
Francisco.
EXISTING LAW :
1)Finds and declares that providing the ability to capture
property tax increment revenues to finance needed public
facilities in waterfront lands in San Francisco that are
subject to the public trust to the public agencies with the
responsibility to administer those areas will further the
objectives of the public trust and enjoyment of those trust
lands by the people of the state.
2)Authorizes the City and County of San Francisco to create
infrastructure financing districts, including districts that
include specified waterfront property, adopt infrastructure
financing plans for those districts, and issue bonds financed
by projected increases in ad valorem property taxes to fund
certain public facilities, as specified.
3)Authorizes the adoption of infrastructure financing plans for
special waterfront districts that include the waterfront area
in the City and County of San Francisco designated as the
America's Cup venues, and the use of specified tax revenues
produced in the districts for the construction of the Port of
San Francisco's maritime facilities at Pier 27, improvement of
publicly held waterfront lands used as viewing sites, and
other matters, subject to specified allocation procedures.
4)Requires the county board of supervisors to submit a fiscal
analysis to the I-Bank for review and approval before adopting
the resolution authorizing the issuance of debt pursuant to
these provisions.
5)Requires, with respect to the special waterfront district,
that the ERAF share produced in a Port America's Cup district
with a special waterfront district enhanced financing, 20% of
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that amount be set aside to finance costs of specified
improvements to federally or state-owned waterfront lands
approved by trustee agencies.
FISCAL EFFECT : Unknown. This bill is keyed fiscal.
COMMENTS :
1)Under the Burton Act (Chapter 1333, Statutes of 1968), the
state conveyed certain state tidelands along the San Francisco
waterfront, generally extending from Fisherman's Wharf to
Candlestick Point, to the City and County of San Francisco,
through its Port, in 1969 in trust for public trust and Burton
Act trust purposes, subject to the obligation on the part of
the City and County San Francisco to assume $55 million in
state debt obligations then existing relating to the
waterfront properties.
The San Francisco waterfront is a valuable public trust asset
of the state and provides special maritime, navigational,
recreational, cultural, and historical benefits to the people
of the region and the state. The Port of San Francisco has
estimated 10-year capital plan liabilities of $1.9 billion to
bring its existing facilities, including facilities listed or
eligible for listing on the National Register of Historic
Places, to a level of compliance with current codes.
Realizing the goals of the Port's waterfront land use plan,
the Bay Conservation and Development Commission special area
plan and the Port's capital plan and removal of the
deteriorating conditions along the San Francisco waterfront
are matters of statewide significance.
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
adjacent to the Legoland theme park.
2)In 2005, the Legislature adopted SB 1085 (Migden), Chapter
213, Statutes of 2005, authorizing the Port of San Francisco
to enact infrastructure financing districts to finance
specified waterfront improvements.
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3)In February 2010, the BMW ORACLE Racing Team, sailing for the
Golden Gate Yacht Club, won the 33rd America's Cup, off the
coast of Valencia, Spain. On December 31, 2010, the team
designated the City and County of San Francisco to host the
34th America's Cup sailing regatta. The team anticipates
holding the 34th America's Cup match in San Francisco Bay in
2013, with preliminary races worldwide beginning in 2011 and
in San Francisco Bay in 2012.
4)AB 1199 (Ammiano), Chapter 664, Statutes of 2010, revised the
special statute that controls how local officials can form,
finance, and operate an IFD along the San Francisco
waterfront, at Pier 70, on land that is under the jurisdiction
of the Port of San Francisco. Due to the extraordinary
unfunded capital plan liabilities on the Port's property, the
City and County of San Francisco sponsored AB 664 (Ammiano),
Chapter 314, Statutes of 2011, to make various changes to San
Francisco's IFD law to authorize the use of IFD moneys for a
more diverse group of projects.
5)According to the author, and sponsor - the San Francisco Port
Commission - this bill is a clean-up measure to AB 664
(Ammiano). Since AB 664 was chaptered, the sponsors of the
America's Cup race have dialed back the plans for the race,
and the Port, through this bill, wants to revise IFD law
related to the America's Cup in order to reflect those plans.
This bill allows tax increment from the district to be used to
finance improvements that may be publicly owned to protect
against potential sea level rise, as well as facilities that
may be publicly owned or privately owned utility
infrastructure if the facilities are available to or serve the
general public.
Provisions in the bill remove the requirement that the I-Bank
review and sign off on the enhanced financing plan and delete
the provisions in existing law that require the City and
County of San Francisco to reimburse the I-Bank for the
reasonable cost of the review and approval of the fiscal
analysis.
Existing law requires, for the ERAF share produced in a Port
America's Cup district, 20% of that amount to be set aside to
finance the costs of specified improvements to federally or
state-owned waterfront lands approved by trustee agencies.
This bill allows the ERAF share to be used to finance other
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costs, in addition to the planning, design and construction of
improvements to publicly owned waterfront lands as is current
law, for the acquisition of those lands, under the
jurisdiction of the trustee agencies. The bill provides that
those lands are not required to be in the district, and
imposes new requirements and grants certain exceptions in the
event that any portion of the set-aside funds is allocated to
a federal or state trustee agency.
For consistency, the bill modifies the definitions of several
terms for waterfront districts.
Other provisions in the bill allow the district to restructure
or refinance debt as necessary, and create a
cost-of-living-adjustment-type (COLA) increase on the amount
of tax increment that can be shifted per year from the state's
share of the ERAF. Specifically, the bill revises the $1
million cap of the county ERAF portion of incremental tax
revenues committed to a district to include an adjustment each
fiscal year, after the 2011-12 fiscal year, by the amount of
any percentage increase in the assessed value of the taxable
property in the district as shown upon the assessment roll
used in connection with the taxation of the property.
The Committee may wish to consider if the COLA, as written,
could be calculated at an extremely high rate since the value
of some lands is currently low and the percentage increase
might be large. The Committee may wish to ask the author and
sponsor to clarify that that is not the intent of the COLA.
6)Support arguments : With the scaling back of the plans for the
America's Cup, supporters believe that IFD law related to
waterfront districts must be amended for consistency purposes.
Opposition arguments : None on file.
REGISTERED SUPPORT / OPPOSITION :
Support
San Francisco Port Commission �SPONSOR]
Opposition
None on file
AB 2259
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Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958