BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | SB 63| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- UNFINISHED BUSINESS Bill No: SB 63 Author: Hall (D), et al Amended: 9/1/15 Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 6-1, 4/15/15 AYES: Hertzberg, Nguyen, Beall, Hernandez, Lara, Pavley NOES: Bates SENATE APPROPRIATIONS COMMITTEE: 5-2, 5/28/15 AYES: Lara, Beall, Hill, Leyva, Mendoza NOES: Bates, Nielsen SENATE FLOOR: 36-2, 6/2/15 AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, Cannella, De León, Galgiani, Glazer, Hall, Hancock, Hernandez, Hertzberg, Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire, Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen, Pan, Pavley, Roth, Stone, Vidak, Wieckowski, Wolk NOES: Gaines, Nielsen NO VOTE RECORDED: Fuller, Runner ASSEMBLY FLOOR: 76-2, 9/03/15 - See last page for vote SUBJECT: Seaport infrastructure financing districts SOURCE: Author DIGEST: This bill authorizes cities and counties to establish Seaport Infrastructure Financing Districts. SB 63 Page 2 Assembly Amendments add double-jointing language to avoid chaptering out conflicts in the event that both this bill and AB 313 (Atkins), which also amends Sections 53398.52, 53398.62, and 53398.69 of the Government Code, are enacted into law. ANALYSIS: Existing law: 1) Allows cities and counties to create infrastructure financing districts (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 can divert property tax increment revenues, which are revenues generated from increases in property values within the IFD above property values in the base-year when the IFD was formed. However, IFDs can't divert property tax increment revenues from schools (SB 308, Seymour, Chapter 1575, Statutes of 1990). 2) Allows local officials to create Enhanced Infrastructure Financing Districts (EIFDs), which augment the tax increment financing powers that are available to local government under the IFD statutes. City or county officials can create an EIFD, which is governed by a public finance authority, to finance public capital facilities or other specified projects of communitywide significance that provide significant benefits to the district or the surrounding community (SB 628, Beall, Chapter 785, Statutes of 2014). This bill: 1) Allows city and county officials to establish Seaport Infrastructure Financing District (SIFDs). SB 63 Page 3 2) Defines a SIFD as an EIFD that finances port or harbor infrastructure pursuant to specified statutes. 3) Declares that the statutes governing EIFDs also apply to SIFDs, except that statutes enacted by the bill with respect to SIFDs prevail if they conflict with any provision of the EIFD statutes. 4) Adds "port or harbor infrastructure" to the existing statutory list of public capital facilities that an EIFD can finance. 5) Expands the statutory definition of "port or harbor infrastructure" to include any capital improvement that improves environmental quality, if the improvement's primary or predominant use directly benefits a port or harbor. 6) Directs that a city or county must direct a harbor agency to prepare an infrastructure financing plan for a SIFD. 7) Requires that if the public finance authority governing an SIFD proposes to initiate proceedings to issue bonds for port or harbor infrastructure, it must submit the proposal for review and approval by the affected harbor agency and the State Lands Commission (SLC), pursuant to a process that must comply with specified requirements related to timelines, public meetings, findings, and other prerequisites. 8) Requires a harbor agency to reimburse the SLC for its direct administrative costs of considering a SIFD proposal. 9) Prohibits a SIFD's public finance authority from proceeding with a bond issuance unless the SLC votes in favor of the SB 63 Page 4 authority's proposal to issue bonds. 10)Expands the definition of "landowner," for the purpose of a vote to approve bonds for an SIFD, to include an entity that is paying possessory interest tax on state-owned land. 11)Allows a SIFD's public finance authority to issue bonds only if two-thirds of the voters voting on the proposition vote in favor of issuing the bonds. 12)Contains several provisions to ensure that SIFDs' financing activities comply with the Public Trust Doctrine. Specifically, this bill: a) Declares that all permanent fixtures and capital improvements to the real property of a harbor agency that administers public trust tidelands made pursuant to a SIFD's approved infrastructure financing plan must be a trust asset once completed, with specified exceptions. b) Requires that, if a harbor agency administering granted public trust property is a department of a local governmental body, any negotiations between the harbor agency and the local government body with respect to any infrastructure financing, operations, or any other activity requiring action by the harbor agency must be undertaken at arm's length in recognition of the duties of the harbor agency to effectuate statewide interests. c) Requires that the SLC must retain absolute discretion over the determination of whether or not investment of local resources in port or harbor infrastructure, the actions of a harbor agency, or any other action taken by a SIFD is consistent with the state's interests in its tidelands and submerged lands. SB 63 Page 5 d) Declares that its provisions do not preclude the SLC from enforcing the state's interests in its tidelands. e) Directs that a harbor agency that manages granted state tidelands retains its status as a trustee whether or not it is located within a SIFD and clarifies that its provisions do not preclude the harbor agency from conducting its duties as a trustee of state tidelands. f) States that its provisions do not grant any authority to any public financing authority, or the local governments that compose the public finance authority, to manage, direct, control, or exercise jurisdiction over a harbor agency and its management of port or harbor infrastructure. 13)Contains extensive findings and declarations relating to the necessity and benefits of increased public investment in port and harbor infrastructure projects. 14)Specifies that this bill's provisions do not apply to the Stockton Port District or to a river port district established pursuant to specified statutes. Comments Purpose of the bill. California's ports and harbors make major contributions to the state's economy, creating jobs, investing in businesses, and generating tax revenues. However, California ports are losing market share to competitors outside of the state partially because of subsidies that other jurisdictions provide for port infrastructure improvements. This bill will provide ports with access to vital public financing tools, through the formation of SIFDs, which will augment their current reliance on revenue bonds backed by fees or lease revenues. SB 63 Page 6 Using the financing tools enacted by last year's EIFD legislation, this bill will facilitate investments in California seaports that will save money, improve economic competitiveness, and create jobs while also protecting the environment. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: No According to the Assembly Appropriations Committee: Ongoing intermittent costs, unknown, but potentially in the range of $100,000 to $150,000 in any given year, to the State Lands Commission (SLC). These costs would be fully reimbursed by harbor agencies from the proceeds of bonds issued for SIFD proposals. Staff notes that costs for review and approval of SIFD bond issuance proposals would likely depend on the number of proposals presented to SLC for review, and the scope and complexity of the proposals. Submission of proposals is likely to be intermittent, and many of activities required by this bill are within SLC's purview and could be absorbable within existing resources. Other activities would require outside expertise or specialized training of SLC staff. Negligible state costs related to the diversion of property tax increment for SIFD purposes because the school share of tax increment cannot be redirected to fund EIFD projects. As such, there would be no backfill of property tax revenues from the General Fund. SUPPORT: (Verified9/3/15) Associated General Contractors City of Los Angeles Pacific Merchant Shipping Association Unified Port of San Diego OPPOSITION: (Verified9/3/15) SB 63 Page 7 None received ASSEMBLY FLOOR: 76-2, 9/03/15 AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom, Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang, Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle, Daly, Dodd, Eggman, Frazier, Gallagher, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Hadley, Roger Hernández, Holden, Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder, Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina, Melendez, Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas, Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner, Waldron, Weber, Wilk, Williams, Wood, Atkins NOES: Beth Gaines, Grove NO VOTE RECORDED: Harper, Patterson Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119 9/4/15 8:26:20 **** END ****