BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 214|
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UNFINISHED BUSINESS
Bill No: SB 214
Author: Wolk (D)
Amended: 6/21/11
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 6-3, 4/27/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe, Liu
NOES: Huff, Fuller, La Malfa
SENATE FLOOR : 24-13, 5/16/11
AYES: Alquist, Calderon, Corbett, De León, DeSaulnier,
Evans, Hancock, Hernandez, Kehoe, Leno, Lieu, Liu,
Lowenthal, Negrete McLeod, Padilla, Pavley, Price, Rubio,
Simitian, Steinberg, Vargas, Wolk, Wright, Yee
NOES: Anderson, Berryhill, Blakeslee, Cannella, Correa,
Dutton, Emmerson, Fuller, Gaines, Harman, Huff, La Malfa,
Runner
NO VOTE RECORDED: Strickland, Walters, Wyland
ASSEMBLY FLOOR : Not available
SUBJECT : Infrastructure financing districts: voter
approval: repeal
SOURCE : Author
DIGEST : This bill eliminates the requirement of voter
approval to create an infrastructure financing district
(IFD) and revises the provisions governing the public
facilities that may be financed by an IFD.
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Assembly Amendments make clarifying and technical changes.
ANALYSIS : 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.
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.
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10.Requires any IFD that constructs dwelling units to set
aside not less than 20 percent 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.
11.Prohibits a local agency from providing any form of
financial assistance to a vehicle dealer or big box
retailer, or a business entity that sells or leases land
to a vehicle dealer or big box retailer, that is
relocating from the territorial jurisdiction of one
local agency to the territorial jurisdiction of another
local agency but within the same market area.
12.Requires the regional transportation plan for specified
regions to include an sustainable communities strategy
(SCS), as specified, designed to achieve certain goals
for the reduction of greenhouse gas emissions from
automobiles and light trucks in a region.
This bill eliminates the requirement of voter approval to
create an IFD and revises the provisions governing the
public facilities that may be financed by an IFD.
Specifically, this bill:
1. Requires an IFD to only finance structural or
nonstructural public capital facilities.
2. Adds the following to the types of facilities an IFD can
finance:
A. Facilities and watershed lands used for the
collection and treatment of water for urban uses;
B. Flood management, including levees, bypasses; and,
C. Habitat restoration.
3. Authorizes an IFD to finance the cleanup and development
of brownfields-properties contaminated by hazardous
waste under the provisions of the Polanco Redevelopment
Act.
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4. Removes the prohibition against an IFD including any
portion of a redevelopment project area.
5. Authorizes an IFD to finance any projects that implement
a SCS as required under SB 375 (Steinberg), Chapter 728,
Statutes of 2008.
6. Removes intent language that an IFD has to cover areas
that are substantially undeveloped.
7. Changes the time period that any action or proceeding to
attack, review, set aside, void, or annul the creation
of an IFD or the adoption of an infrastructure financing
plan from 30 days after the enactment of the ordinance
creating the IFD to 30 days after the date the
legislative body adopted the resolution adopting the
infrastructure financing plan.
8. Changes the time period that any action or proceeding to
attack, review, set aside, void, or annul the issuance
of bonds by the IFD from 30 days after the resolution
that the voters approved the issuance of bonds to 30
days from the date the legislative body adopted the
resolution providing for the issuance of bonds.
9. Prohibits an IFD from providing any form of financial
assistance to a vehicle dealer or big box retailer, or a
business entity that sells or leases land to a vehicle
dealer or big box retailer that is relocating from the
territorial jurisdiction of one local agency to the
territorial jurisdiction of another local agency but
within the same market area.
10.Requires the resolution of intention for the creation of
an IFD to state the need for the IFD and the goals the
IFD proposes to achieve by financing public facilities.
11.Requires the legislative body to direct the clerk to
mail a copy of the resolution of intention to create an
IFD to each affected taxing entity.
12.Removes the requirement that the public facilities of
the IFD are of communitywide significance.
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13.Expands the life of an IFD from 30 to 40 years.
14.Provides that in the case of an affected taxing entity
that is a special district that provides fire protection
service and where the county board of supervisors is the
governing authority or has appointed itself as the
governing board of the district, the plan shall be
adopted by a separate resolution approved by the
district's governing authority or governing board.
15.Removes the election requirement to form an IFD, adopt
an infrastructure financing plan, or issue bonds.
16.Requires an annual report to be sent to each land owner
and affected taxing entity in the IFD that contains all
of the following:
A. A summary of the IFD's expenditures;
B. A description of the progress made towards the
IFD's adopted goals; and,
C. An assessment of the status regarding completion
of the IFD's public works projects.
17.Prohibits the IFD, if it fails to provide the annual
report, from spending any funds to construct public
works projects until the annual report is submitted.
18.States that if the IFD fails to produce evidence of
progress made towards achieving its adopted goals for
five consecutive years, the IFD shall not spend any
funds to construct any new public works projects, except
to complete any public works projects that it had
started.
19.Requires, if the IFD fails, that any excess property tax
increment revenues that had been allocated for new
public works projects be reallocated to the affected
taxing entities.
20.Makes other technical and clarifying changes.
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Comments
According to the author, "SB 214 makes it easier for local
agencies to use IFDs to pay for public projects, without
impacting school district's share of property tax or the
state's general fund. In a fiscally distressed economic
climate, local officials need a flexible financing tool
that is rigorous and responsible. Currently, existing law
perversely incentivizes locals to pursue less accountable
financing mechanisms."
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.
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. 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.
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
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law requires a two-thirds approval.
Recognizing these barriers, this bill removes key
impediments to IFDs, such as the voting requirements to
form and bond the IFD. In addition, this bill extends the
term of the IFD bonds from 30 to 40 years, allowing for a
longer debt repayment period lowering monthly payments.
Also, to increase transparency, this bill includes measures
of programmatic and fiscal accountability, requiring IFDs
to annually report its progress and expenditures to its
affected taxing entities and landowners.
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 ÝPeace], 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.
Similar Legislation
AB 485 (Ma), 2011-12 Session, utilizes IFDs to create more
transit-oriented development and related low-income
housing.
AB 664 (Ammiano), 2011-12 Session, authorizes, under
existing authorization for the City of County of San
Francisco to create IFDs, the adoption of a financing plan
and use of IFD revenues for the portion of the San
Francisco waterfront district designated as the America's
Cup venue.
AB 664 (Ammiano), 2011-12 Session, also requires the County
Board of Supervisors to submit a fiscal analysis to the
California Infrastructure and Economic Development Bank for
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review and approval before adopting the resolution
authorizing issuance of debt.
AB 910 (Torres), 2011-12 Session, expands the list of
project IFDs can finance to include affordable housing
facilities and economic development.
SB 310 (Hancock), 2011-12 Session, which seeks to use IFDs
for transit priority projects.
AB 1836 (Fueur), 2007-08 Session, which would have repealed
the 2/3-voter approval for local officials to form an IFD,
repealed the 2/3-voter approval to issue tax bonds, and
extended the time an IFD could receive property tax
increment revenues from 30 years to 40 years. AB 1836's
intent was to adapt IFDs to public transit projects. The
bill failed passage in the Senate Local Government
Committee.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 4/28/11)
California Professional Firefighters
California Rural Legal Assistance Foundation
California Special Districts Association
California State Association of Counties
County of Yolo
Davis Board of Education Trustee Susan Lovenburg
Non-Profit Housing Association of Northern California
Imperial County Board of Supervisors
OPPOSITION : (Verified 4/28/11)
California Taxpayers Association
Howard Jarvis Taxpayers Association
ARGUMENTS IN SUPPORT : The California Special Districts
Association note in their letter of support that "Senate
Bill 214 removes a number of key impediments to forming and
utilizing Infrastructure financing districts, providing an
important alternative to traditional redevelopment agency
project area financing, specifically the use of mandatory
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tax increment financing."
ARGUMENTS IN OPPOSITION : According to the Cal Tax
"Eliminating voter approval for infrastructure financing
removes the people from the decision process of what their
communities will look like, how bonds are issued, and how
property tax revenues are spent. Tax increment financing
also produces unfavorable results for local school
districts and public safety, since property taxes are
earmarked for specific purposes."
AGB:kc 9/9/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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