BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 2292 HEARING: 6/18/14
AUTHOR: Bonta FISCAL: No
VERSION: 6/11/14 TAX LEVY: No
CONSULTANT: Weinberger
INFRASTRUCTURE FINANCING DISTRICTS
Adds public capital facilities or projects that include
broadband to the types of facilities that an infrastructure
financing district can finance.
Background and Existing Law
Cities and counties can create Infrastructure Financing
Districts (IFDs) and issue bonds to pay for community-scale
public works (SB 308, Seymour, 1990). To re-pay the bonds,
an IFD diverts property tax increment revenues from other
local governments for 30 years. However, an IFD can't
divert property tax increment revenues from schools. Every
other local agency that will contribute its property tax
increment revenue to the IFD must approve the plan. Unlike
former redevelopment project areas, the property in an IFD
doesn't have to be blighted, but an IFD can't overlap a
redevelopment project area. State law declares, but does
not require, that an IFD should include substantially
undeveloped areas.
To form an IFD, the city or county must develop an
infrastructure plan, send copies to every landowner,
consult with other local governments, and hold a public
hearing. Once the other local officials approve, the city
or county must still get the voters' approval to:
Form the IFD (requires 2/3-voter approval).
Issue bonds (requires 2/3-voter approval).
Set the IFD's appropriations limit (requires
majority-voter approval).
In the wake of redevelopment agencies' dissolution, the
Legislature has considered several recent proposals,
including a component of Governor Brown's 2014 State
Budget, to make it easier for local governments to use IFDs
to finance local economic development projects.
AB 2292 -- 6/11/14 -- Page 2
State law allows cities to establish, purchase, and operate
works to furnish inhabitants with light, water, power,
heat, transportation, or means of communication (California
Constitution, Article XVI, Section 9). State law also
allows some special districts, including municipal utility
districts and public utility districts to provide works for
supplying inhabitants with communications services. In
2008, the Legislature implemented one of the California
Broadband Task Force's recommendations by allowing
community services districts (CSDs) to provide broadband
facilities and services in an area where a private provider
is either unable or unwilling to provide those facilities
and services (Senate Bill 1191, Alquist, 2008).
Officials in the City of San Leandro want to promote
economic development in their city by financing the
expansion of an 11-mile high-speed fiber optic network that
the city recently deployed. They want the Legislature to
clarify that broadband infrastructure projects qualify for
financing through an IFD.
Proposed Law
Assembly Bill 2292 directs that any infrastructure
financing district may finance public capital facilities or
projects that include broadband. AB 2292 defines
"broadband" as communications network facilities that
enable high-speed Internet access.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . AB 2292 provides cities and
counties with a tool to expand broadband projects that
would bring high-speed communications, jobs, and new
businesses to local communities. Access to high-speed
fiber optic networks, like the one in San Leandro, provides
businesses with a significant competitive advantage,
helping them to grow and become industry leaders.
AB 2292 -- 6/11/14 -- Page 3
Businesses connecting to San Leandro's high-speed fiber
loop enjoy Internet speeds of up to 10 gigabytes per
second, which is roughly 2,000 times the average speed of
an Internet connection in the U.S. By adding
broadband-related projects to the list of facilities an IFD
can finance, AB 2292 will allow San Leandro and other local
governments to create and expand broadband networks that
will help keep California at the forefront of the
innovation economy.
2. Definition . AB 2292 defines "broadband" as
communications network facilities that enable high-speed
Internet access, but doesn't define what is considered
"high-speed." To clarify the author's intention of
allowing IFDs to finance communications infrastructure that
provides speeds that are substantially higher than what is
generally available through standard Internet connections,
the Committee may wish to consider amending AB 2292 to
specify a standard for what constitutes "high-speed"
Internet access.
3. Nothing new ? State law says that the types of public
facilities of communitywide significance that an IFD may
finance are not limited to the types of projects that are
listed in statute. As a result, a city-wide fiber optic
network may already qualify for IFD financing, despite not
being specifically mentioned in the state laws governing
IFDs. AB 2292 may only clarify what is already allowable
under current law.
4. Gut and amend . As introduced and passed by the
Assembly, AB 2292 allowed an IFD within parts of the City
of Oakland to finance public capital facilities or projects
that include freight rail. The Senate Governance & Finance
Committee never heard that version of the bill. The June
11 amendments deleted most of AB 2292's contents and
inserted the current language relating to IFD financing for
broadband projects.
Assembly Actions
Not relevant to the June 11, 2014 version of the bill.
Support and Opposition (6/12/14)
AB 2292 -- 6/11/14 -- Page 4
Support : City of San Leandro.
Opposition : Unknown.