BILL ANALYSIS �
AB 2259
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Date of Hearing: May 9, 2012
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
AB 2259 (Ammiano) - As Amended: April 19, 2012
Policy Committee: Local
GovernmentVote:9-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill 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 to finance improvements that may
be publicly owned, to protect against potential sea level
rise.
2)Deletes the requirement that the board of supervisors submit a
fiscal analysis to the California Infrastructure and Economic
Development Bank (I-Bank) for approval.
3)Revises the $1 million cap of the county Educational Revenue
Augmentation Fund (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.
4)Establishes conditions that must be met if any of the 20% set
aside for financing public improvements is allocated to a
federal or state trustee agency.
FISCAL EFFECT
By diverting funds from ERAF, the bill results in estimated
costs to the GF of millions of dollars per year, growing over
time with inflation. The state would backfill the property tax
ERAF revenues, under the terms of Proposition 98 where local
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property revenues allocated to school districts offset the
state's contribution to K-14 education funding on a dollar for
dollar basis. The diversions are on property tax revenues that
do not currently exist, but will be the ERAF-increment that
occurs as a result of the investment and improvements that are
envisioned in the legislation and the plan for the IFD.
COMMENTS
1)Purpose . According to the author, and sponsor, the San
Francisco Port Commission), this bill is a clean-up measure to
AB 664 (Ammiano), Chapter 314, Statutes of 2011. Since AB 664
was chaptered, the sponsors of the America's Cup race have
reduced the scope of the plans for the race, and the Port
Commission wants to revise IFD law related to the America's
Cup in order to reflect those plans. The author argues 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.
2)Background - IFDs . Existing law authorizes cities and counties
to create IFDs and issue bonds to pay for 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 (that is,
the growth in property tax revenues resulting from the
developments) from other local governments for 30 years.
However, IFDs cannot divert property tax increment revenues
from schools (although there is some ambiguity with respect to
the ERAF portion of school property taxes). There are numerous
requirements for the formation and operation of IFDs,
including extensive infrastructure planning and consultation
with other local governments, public hearings and voter
approval.
3)America's Cup. 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.
4)Inflation adjustment . The inflation adjustment revisions
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could allow the Port Commission to receive a much larger share
than inflation and dramatically restructure the revenue
sharing deal made in AB 664. 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.
Since the value existing in the IFD is low, the percentage
increase might be large as improvements are completed.
5)Previous legislation . 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. A key feature of
the bill is the financial provision that allows property tax
that would otherwise go to schools to be allocated to the IFD.
The state would have to backfill this money, but be paid back
by the increased taxes resulting from hosting this event. To
ensure the state recouped its losses, the bill provided for
the I-Bank to approve the financing plan.
6)There is no registered opposition to this bill .
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081