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AB-1701 California Infrastructure and Economic Development Bank: economic development facilities: redevelopment agencies. (2019-2020)

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Date Published: 02/23/2019 04:00 AM
AB1701:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2019–2020 REGULAR SESSION

Assembly Bill
No. 1701


Introduced by Assembly Member Cervantes

February 22, 2019


An act to amend Sections 63045 and 63046 of, and to add Sections 63044.3 and 63044.4 to, the Government Code, relating to economic development, and making an appropriation therefor.


LEGISLATIVE COUNSEL'S DIGEST


AB 1701, as introduced, Cervantes. California Infrastructure and Economic Development Bank: economic development facilities: redevelopment agencies.
The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the California Infrastructure and Economic Development Bank (I-Bank) in the Governor’s Office of Business and Economic Development. Existing law, among other things, authorizes the I-Bank to make loans, issue bonds, and provide financial assistance for various types of projects that qualify as economic development or public development facilities. Existing law authorizes the I-Bank to consider a project for conduit financing for economic development facilities upon a filing of an application with the I-Bank by an appropriate participating party. The act establishes the California Infrastructure and Economic Development Bank Fund (I-Bank fund), a continuously appropriated fund, for support of the I-Bank and for expenditure for the purposes stated in the act.
The California Constitution, with respect to any taxes levied on taxable property in a redevelopment project established under the Community Redevelopment Law, as it then read or may be amended, authorizes the Legislature to provide for the division of those taxes under a redevelopment plan between the taxing agencies and the redevelopment agency, as provided. The portion of taxes diverted is the amount attributable to increases in assessed valuation of property in the redevelopment project area subsequent to establishment thereof and is commonly known as “tax increment” financing.
This bill would require the I-Bank to establish criteria, priorities, and guidelines for receiving and reviewing applications to enter into a development agreement with a redevelopment agency in which the redevelopment agency would agree to commit a portion of property tax increment to finance a project for economic development facilities in a low-income census tract, including an Opportunity Zone designated by the United States Treasury. This bill would allow the I-Bank to accept those applications and would authorize the I-Bank to issue either tax-exempt or taxable revenue bonds to provide financing for those projects. The bill would require the I-Bank, in order to use this financing method, to determine that the redevelopment agency has demonstrated its ability to support the upward mobility of local residents and inclusive economic growth within the project area, as specified. By expanding the I-Bank’s authority to finance additional projects, and thereby expanding the I-Bank’s authority to expend funds in a continuously appropriated fund, the bill would make an appropriation.
This bill would apply only if a successor law to the Community Redevelopment Law is enacted on or after January 1, 2020, that provides for the tax increment financing of redevelopment projects by a redevelopment agency.
Vote: 2/3   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known, and may be cited, as the Economic Development Bank Act of 2019.

SEC. 2.

 Section 63044.3 is added to the Government Code, to read:

63044.3.
 (a) After consulting with the appropriate state and local agencies, the bank shall establish criteria, priorities, and guidelines for receiving and reviewing applications to enter into a development agreement with a redevelopment agency that meets both of the following requirements:
(1) The redevelopment agency agrees to commit a portion of property tax revenues divided in accordance with, and allocated to a redevelopment agency pursuant to, Section 16 of Article XVI of the California Constitution to finance a project for economic development facilities in a low-income census tract, including an Opportunity Zone designated by the United States Treasury pursuant to Section 1400Z-1 of the Internal Revenue Code.
(2) The bank agrees to use any revenue so committed solely for the purpose described in paragraph (1).
(b) When the bank establishes or makes changes to the criteria, priorities, and guidelines, the bank shall notify the Governor, the appropriate fiscal and policy committees of the Legislature that exercise oversight of the bank, and the appropriate state and local agencies.
(c) This section shall apply only if a successor law to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) is enacted on or after January 1, 2020, that provides for the financing of redevelopment projects by a redevelopment agency as authorized in Section 16 of Article XVI of the California Constitution. “Redevelopment agency” shall not include a successor agency as defined in Section 34171 of the Health and Safety Code.

SEC. 3.

 Section 63044.4 is added to the Government Code, to read:

63044.4.
 (a) The bank may accept applications for a proposed property tax revenue commitment consistent with the criteria, priorities, and guidelines adopted by the board pursuant to Section 63044.3. At a minimum, the application shall include all of the following information:
(1) A list of projects to be financed through the commitment of property tax revenues divided in accordance with, and allocated to a redevelopment agency pursuant to, Section 16 of Article XVI of the California Constitution.
(2) A timeline for the development of the projects.
(3) Project valuations and economic impact assessments for each project proposed to be financed through the commitment of property tax revenues divided in accordance with, and allocated to a redevelopment agency pursuant to, Section 16 of Article XVI of the California Constitution.
(4) Other information required by the bank to assist in evaluating applications.
(b) This section shall apply only if a successor law to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) is enacted on or after January 1, 2020, that provides for the financing of redevelopment projects by a redevelopment agency as authorized in Section 16 of Article XVI of the California Constitution. “Redevelopment agency” shall not include a successor agency as defined in Section 34171 of the Health and Safety Code.

SEC. 4.

 Section 63045 of the Government Code is amended to read:

63045.
 In order to provide or arrange for the financing of economic development facilities, the bank may:
(a) Issue taxable revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to provide financing for economic development projects compatible with the public interest as specified in Section 63046.
(b) Issue taxable revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to provide financing for the revolving loan funds and economic development projects of small business development corporations, local economic development corporations, community development corporations, and nonprofit organizations, which revolving loan funds and economic development projects shall be compatible with the public interest.
(c) Issue tax-exempt revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to provide financing for economic development facilities as permitted by federal law and in accordance with applicable California law relating to the distribution of state allocations for private activity bonds. Projects so financed shall be compatible with the public interest as specified in Section 63046.
(d) Issue tax-exempt revenue bonds pursuant to Chapter 5 (commencing with Section 63070) for economic development facilities of public sector and nonprofit organizations qualifying for exemption under federal law.
(e) (1) Issue either tax-exempt or taxable revenue bonds pursuant to Chapter 5 (commencing with Section 63070) to providing financing for a project for economic development facilities in a low-income census tract, including an Opportunity Zone designated by the United States Treasury pursuant to Section 1400Z-1 of the Internal Revenue Code.
(2) The authority in paragraph (1) shall apply only if a successor law to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) is enacted on or after January 1, 2020, that provides for the financing of redevelopment projects by a redevelopment agency as authorized in Section 16 of Article XVI of the California Constitution. “Redevelopment agency” shall not include a successor agency as defined in Section 34171 of the Health and Safety Code.

SEC. 5.

 Section 63046 of the Government Code is amended to read:

63046.
 (a) No financing shall be made by the bank under this article unless the bank shall have first determined that the financing or assistance meets the following public interest criteria:

(a)

(1) The financing, loan, grant, or other assistance is for a project or a use in the State of California.

(b)

(2) Those seeking funds or other assistance are capable of meeting obligations incurred under relevant agreements.

(c)

(3) In the case of loans or bonds, payments to be made under applicable financing documents are adequate to pay the current expenses of the bank in connection with the financing and to make payments on the bonds.

(d)

(4) The proposed financing is appropriate for the specific project.
(b) (1) In addition to the requirement of subdivision (a), in the case of a project that is committing a portion of property tax revenues divided in accordance with, and allocated to a redevelopment agency pursuant to, Section 16 of Article XVI of the California Constitution to finance one or more economic development facilities, no financing shall be made by the bank under this article unless the redevelopment agency has entered into a development agreement with the bank pursuant to Section 63044.3 and 63044.4, and the bank determines that the redevelopment agency has demonstrated its ability to support the upward mobility of local residents and inclusive economic growth within the project area.
(2) The requirement in paragraph (1) shall apply only if a successor law to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the Health and Safety Code) is enacted on or after January 1, 2020, that provides for the financing of redevelopment projects by a redevelopment agency as authorized in Section 16 of Article XVI of the California Constitution. “Redevelopment agency” shall not include a successor agency as defined in Section 34171 of the Health and Safety Code.