BILL ANALYSIS
AB 1176
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 1176 (Ammiano)
As Amended September 2, 2009
Majority vote
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|ASSEMBLY: |80-0 |(May 11, 2009) |SENATE: |40-0 |(September 4, |
| | | | | |2009) |
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Original Committee Reference: L. GOV.
SUMMARY : Revises the special statute that controls how local
officials can form, finance, and operate an infrastructure
financing district (IFD) along the San Francisco waterfront, at
Pier 70, on land that is under the jurisdiction of the Port of San
Francisco.
The Senate amendments :
1)Define "ERAF" as the Educational Revenue Augmentation Fund.
2)Define "ERAF-secured debt" as the debt incurred to finance a
Pier 70 IFD subject to a Pier 70 enhanced financing plan that is
secured by and will be repaid from the ERAF share.
3)Define "ERAF share" as the county ERAF portion of incremental
tax revenue committed to a Pier 70 IFD under a Pier 70 enhanced
financing plan.
4)Prohibit a Pier 70 IFD plan from being formed for at least three
full fiscal years after the effective date of this bill.
5)Prohibit any new debt secured by the ERAF share to be issued
after the 20th year in which the IFD first incurs debt.
6)State that beginning in the 21st year after the IFD first incurs
debt, it may collect only the amount of ERAF share necessary to
meet ERAF-secured debt (payment and coverage) requirements.
7)Require the dollar amount for the ERAF-secured debt to be
specified in a schedule stating the amount of ERAF share
required annually to meet the debt requirements until all
ERAF-secured debt is paid in full.
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8)Require that all ERAF share above the annual debt requirements
be paid into the state ERAF beginning in the 21st year after the
district first incurs debt.
9)Clarify that the portion of incremental tax revenue of San
Francisco to be allocated to the Pier 70 IFD must be equal to
the portion of the incremental tax revenue of the county ERAF
proposed to be committed to the Pier 70 IFD.
EXISTING LAW :
1)Clarifies that an IFD can be formed on urban waterfront
property.
2)Clarifies that IFDs can be used to finance public infrastructure
projects on public trust lands.
3)Specifies that if all of the land within a proposed IFD belongs
to a public agency, that agency is a landowner and will be
allowed to vote on issues relating to the district.
4)Waives the requirement for an election to form the IFD if all of
the land within the proposed IFD is publicly owned.
5)Authorizes environmental remediation work as a type of project
that is eligible for IFD spending in San Francisco.
6)Adds, for the purposes of San Francisco, four more examples to
the statutory list of activities whose costs are eligible to be
covered by an IFD:
a) Seismic and life-safety improvements;
b) Landmark rehabilitation;
c) Structural work on piers; seawalls, and wharves;
d) Hazardous material remediation; and,
e) Storm water management facilities, other utility
infrastructure, or public access improvements.
7)Clarifies that if an IFD includes tideland and submerged lands,
whether filled or unfilled, and finances facilities located on
these lands, these facilities must serve and promote uses and
purposes consistent with the public trust.
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8)Specifies that facilities built by an IFD on tideland or
submerged lands are public trust assets subject to the
administration and control of the trust grantee of the public
lands on which they are constructed.
9)Clarifies that if the facilities built on the trust lands are
capitol facilities and are not owned
by the public agency administering the public trust land, but are
owned and operated by another entity that has a license from or
an agreement with the public entity, then those facilities would
not become public trust assets.
10)Expands the definition of "debt," as it applies to San
Francisco, to include commercial paper and variable rate demand
loans.
11)Allows an IFD in San Francisco to extend the diversion of
property tax increment revenues for up to 10 additional years if
local officials amend the IFD plan, analyze its fiscal impacts
on other local governments, hold a public hearing, and obtain
the consent of all of the other local governments.
12)Declares, as it applies to San Francisco, that infrastructure
improvements that increase public access to public trust lands
satisfy the requirement that the public facilities are of
communitywide significance and provide significant benefits to
an area larger than the IFD.
AS PASSED BY THE ASSEMBLY , this bill:
1)Defined various terms for the purposes of an IFD created in the
waterfront area of San Francisco, including the following:
a) "Base year" means the fiscal year during which any
infrastructure plan adopted under this chapter becomes
effective;
b) "Board" means the Board of Supervisors of the City and
County of San Francisco, which is the legislative body for
any district formed in San Francisco;
c) "District" means any district created under this chapter,
including any project area within a district;
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d) "Port" means the Port of San Francisco; and,
e) "San Francisco" means the City and County of San
Francisco.
2)Added, for the purposes of San Francisco, shoreline restoration
and other repairs and improvements to maritime facilities to the
statutory list of activities whose costs are eligible to be
covered by an IFD.
3)Clarified that facilities on land, located in a previously
formed district that the Port subsequently leases, sells, or
otherwise transfers to any person, are free of the public trust,
the Burton Act, and any additional restrictions on use or
alienability created by the Burton Act transfer agreement,
provided that the State Lands Commission has concurred in the
lifting of trust restrictions on the transferred property, will
remain in and subject to the district.
4)Stated that for a district created along the San Francisco
Waterfront the plan provisions established for other IFDs do not
apply.
5)Stated that the Board will initiate proceedings for the
establishment of a district by adopting a resolution of
intention to establish the proposed district that does all of
the following:
a) States an infrastructure financing district is proposed to
be established and describes the boundaries of the proposed
district;
b) States the type of public facilities proposed to be
financed by the district;
c) States that incremental property tax revenue from San
Francisco, and some or all affected taxing entities within
the district may be used to finance these public facilities,
or, alternatively, that incremental property tax revenue from
San Francisco, and no other taxing entity within the
district, may be used to finance these public facilities;
and,
d) Directs the Executive Director of the Port, or an
appropriate official designated by the Executive Director, to
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prepare a proposed infrastructure financing plan.
6)Required that the proposed infrastructure financing plan be
consistent with the general plan of San Francisco.
7)Required that the proposed infrastructure financing plan to
include all of the following:
a) A map and legal description of the proposed district that
may include all or a portion of the district designated by
the Board in its resolution of intention;
b) A description of the public facilities required to serve
the development proposed in the district, including those to
be provided by the private sector, those to be provided by
governmental entities without assistance under this chapter,
those public improvements and facilities to be financed with
assistance from the proposed district, and those to be
provided jointly; and,
c) A financing section that shall contain all of the
following:
i) A statement that specifies the maximum portion of the
incremental tax revenue of San Francisco and of any
affected taxing entity proposed to be committed to the
district;
ii) A limitation on the use of levied taxes allocated to
and collected by the district providing that no less than
20% of that amount must be expended on shoreline
restoration, removal of bay fill, or waterfront public
access to, or environmental remediation of, the San
Francisco waterfront;
iii) A projection of the amount of incremental tax revenues
expected to be received by the district, assuming a period
of 45 years from the base year of the infrastructure
financing plan;
iv) Projected sources of financing public facilities to be
assisted by the district, including debt to be repaid with
incremental tax revenues;
v) A limitation on the number of dollars of taxes that
may be divided and allocated to the district. Taxes shall
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not be divided or be allocated to the district beyond this
limitation, except by amendment of the infrastructure
financing plan pursuant to the procedures in this
subdivision;
vi) A date on which the effectiveness of the
infrastructure financing plan and all tax allocation to the
district will end and a time limit on the district's
authority to repay indebtedness with incremental tax
revenues received under this chapter, not to exceed 45
years from the date of the Board's resolution of intent to
issue bonds to be repaid with incremental tax revenues
under this chapter;
vii) An analysis of the costs to San Francisco of providing
facilities and services to the district while the area is
being developed and after the area is developed and of the
tax, fee, charge, and other revenues expected to be
received by San Francisco as a result of expected
development in the district;
viii) An analysis of the projected fiscal impact of the
district and the associated development upon any
affected taxing entity; and,
ix) A statement that the district will maintain accounting
procedures in accordance with procedures established for
local governments overseeing trusting lands.
8)Stated that for Pier 70 IFD, the financing plan may contain a
provision that allocates a portion of the incremental tax
revenues of San Francisco and of other designated affected
taxing entities to the Pier 70 IFD.
9)Stated that the maximum portion of incremental tax revenue of
San Francisco to be allocated to the Pier 70 IFD must be equal
to the portion of the incremental tax revenue of the county ERAF
proposed to be committed to the Pier 70 IFD.
10)Stated that the Board shall not enact a resolution forming the
Pier 70 IFD and providing for the division of taxes of any
affected taxing to the IFD unless the affected taxing entities
approve such a division of taxes.
11)Stated that if an affected taxing entity has not approved the
infrastructure financing plan prior to the Board's approval, the
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Board may amend the infrastructure financing plan to remove the
allocation of tax revenues of the non-consenting affected taxing
entity.
12)Stated that if the infrastructure financing plan is amended as
stated above, San Francisco will be required to match the lost
revenue dollar for dollar.
13)Required that the Board hold a public hearing regarding the
infrastructure financing plan no earlier than 60 days after the
plan has been sent to each affected taxing entity, or in the
absence of any affected taxing entities, no earlier than 30 days
after the plan has been lodged with the clerk of the Board.
14)Provided that no election is necessary for the formation of the
Pier 70 IFD.
15)Specified that if the approved plan allocates to the Pier 70
IFD 100% of the incremental tax revenue of San Francisco, then
the IFD shall not make a payment to ERAF, but if the plan
allocated less than 100% of the incremental tax revenue of San
Francisco to the IFD then the IFD shall pay a proportionate
share of the incremental tax revenue into ERAF.
16)Allowed owners of land that's contiguous to the Port's
waterfront jurisdiction to request their addition of that land
to the IFD, provided that the landowners agree to conditions
regarding public access to the waterfront, based on standards
set by the San Francisco Bay Conservation and Development
Commission.
17)Allowed, with an affected taxing entity's permission, the Pier
70 IFD to subordinate payments to the affected taxing entity to
the IFD's loans, bonds, or other debts.
18)Required San Francisco's waterfront IFD to annually file with
the county auditor a detailed statement of indebtedness and a
detailed reconciliation statement.
19)Declared that it implements the IFD statutes and constitutional
provisions.
20)Declared that the property tax increment revenues received
under provisions of this measure are not "proceeds of taxes."
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FISCAL EFFECT : According to the Senate Appropriations Committee,
this bill would result in a General Fund cost to backfill any
property tax increment shifted from ERAF to the proposed San
Francisco waterfront IFD. Appropriations staff notes that the
magnitude of this potential cost is unknown because it is unclear
how much economic activity would occur in the absence of the bill.
COMMENTS : 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. That small
project is the only example of local officials' use of the 1990
IFD law. San Francisco's proposal to set up large 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.
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
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improvements. Due to the extraordinary unfunded capital plan
liabilities on the Port's property, the City and County of San
Francisco is seeking to make various changes to San Francisco's
IFD law to authorize the use of IFD moneys on a more diverse group
of projects.
Pier 70 is a 65-acre brownfields site on San Francisco's Central
Waterfront and encompasses the oldest continuously operating
shipyard on the West Coast. For over 150 years, some portion of
this site was used for ship building and repair. The federal
government controlled portions of the site until 1967. Since the
state's transfer of the property to the City of San Francisco in
1969, Pier 70 has remained fallow, failing to attract private
investment. The blighted nature of this land, need for seismic
retrofitting of historic buildings and environmental clean-up has
prevented private investment.
According to the author, this bill will provide the public
investment needed to attract private investment and development.
This bill expands the Port's infrastructure financing powers, by
directing capture of 90% of growth in property taxes from Port
revitalization efforts of the Pier 70 area, provided that the Port
expends at least 20% of these revenues on waterfront parks,
environmental remediation, and removal of contaminated bay fill.
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916) 319-3958
FN: 0002689