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SB-711 Infrastructure finance: Local-State Sustainable Investment Incentive Program.(2017-2018)

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Date Published: 02/17/2017 09:00 PM
SB711:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2017–2018 REGULAR SESSION

Senate Bill No. 711


Introduced by Senator Hill

February 17, 2017


An act to add and repeal Article 5.5 (commencing with Section 63047.55) of Chapter 2 of Division 1 of Title 6.7 of the Government Code, relating to infrastructure finance.


LEGISLATIVE COUNSEL'S DIGEST


SB 711, as introduced, Hill. Infrastructure finance: Local-State Sustainable Investment Incentive Program.
Existing law establishes in state government the Strategic Growth Council, which is responsible for taking various actions related to supporting the planning and development of sustainable communities, including actions to reduce greenhouse gas emissions, promote water conservation, reduce fuel consumption, encourage infill development, and revitalize urban centers.
Existing law authorizes certain local agencies to form community revitalization and investment authorities within community revitalization and investment areas, as defined, to carry out provisions of the Community Redevelopment Law related to infrastructure, affordable housing, and economic revitalization.
Existing property tax law requires the county auditor, in each fiscal year, to allocate property tax revenue to local jurisdictions in accordance with specified formulas and procedures, subject to certain modifications. Existing law requires an annual reallocation of property tax revenue from local agencies in each county to the Educational Revenue Augmentation Fund (ERAF) in that county for allocation to specified educational entities.
The Bergeson-Peace Infrastructure and Economic Development Bank Act establishes the Infrastructure and Economic Development Bank within the Governor’s Office of Business and Economic Development. The bank is authorized, among other things, to issue bonds, approve the issuance of certain bonds, invest moneys, and make loans.
This bill, until January 1, 2025, would establish in state government the Local-State Sustainable Investment Incentive Program, which would be administered by the Strategic Growth Council. The bill would authorize cities, counties, city and counties, enhanced infrastructure financing districts, and community revitalization and investment authorities to apply to the Strategic Growth Council to participate in the program and would authorize the council to approve applications for projects meeting specific criteria on and after July 1, 2018.
The bill would require the Strategic Growth Council to adopt policies and procedures and approve no more than $10 million per year in reductions in annual ERAF contributions for applicants for projects approved through this program. The projects that could be eligible for funding would include, among others, projects providing facilities or services within a disadvantaged community and affordable housing projects.
The bill would require the Strategic Growth Council to circulate application materials and related analysis to the Department of Finance and the State Infrastructure and Economic Development Bank for review and would authorize the council to require the applicant to reimburse it, the department, and the bank for reasonable costs of review.
The bill would require the Strategic Growth Council, upon approval of a project application, to issue an order directing the county auditor to reduce the total amount of ad valorem property tax revenue otherwise required to be contributed to the county’s ERAF from the applicant by the annual reduction amount approved. The bill would require a city or county, if the applicant is an enhanced infrastructure financing district or community revitalization investment authority, to transfer to the district or authority an amount of property tax revenue equal to the reduction amount approved by the Strategic Growth Council. The bill would authorize applicants to use approved amounts to incur debt or issue bonds or other financing to support the project.
The bill also would require each applicant that has received funding to submit annual reports, as specified, and would require the Strategic Growth Council to provide a report to the Joint Legislative Budget Committee that includes certain project information. By imposing additional duties on local officials, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to the statutory provisions noted above.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 The Legislature finds and declares all of the following:
(a) The goals of the Local-State Sustainable Investment Incentive Program, as established by this act, are to maximize opportunities to expand the availability of affordable housing, encourage active transportation, support greater infill and compact development, reduce greenhouse gas emissions and vehicle miles traveled, and assist local entities in the planning of sustainable communities.
(b) The enactment of this program will further important state public policies and goals through local government projects that local agencies are willing to approve but lack adequate funding for, including, but not limited to, projects to do the following:
(1) Reduce greenhouse gas emissions.
(2) Increase affordable housing or the number of affordable units available to very low, lower, and moderate-income families.
(3) Result in increased densities of housing or mixed-use projects, thereby reducing development and housing costs.
(4) Increase high-quality jobs through the rehabilitation, construction, and maintenance of infrastructure that supports economic development.
(5) Improve the quality of life in disadvantaged communities.
(c) In recent years, the voters have approved significant augmentations in state revenue to support schools via the passage of Propositions 30 and 55, thus providing stability to school funding.
(d) The purpose of this act is to create a program whereby the Strategic Growth Council, after appropriate analysis, may approve a reduction in the amount of annual property tax revenue that an applicant local agency would otherwise be required to contribute to an Educational Revenue Augmentation Fund (ERAF), based upon a determination that the approved reduction would result in projects that would maximize important greenhouse gas reductions, affordable housing, or other policy benefits.

SEC. 2.

 Article 5.5 (commencing with Section 63047.55) is added to Chapter 2 of Division 1 of Title 6.7 of the Government Code, to read:
Article  5.5. Local-State Sustainable Investment Incentive Program

63047.55.
 There is in state government the Local-State Sustainable Investment Incentive Program, which shall be administered by the Strategic Growth Council.

63047.60.
 (a) A city, county, city and county, enhanced infrastructure financing district, or community revitalization and investment authority may file an application with the Strategic Growth Council to participate in the program established by Section 63047.55.
(b) The Strategic Growth Council shall adopt policies and procedures for the receipt and evaluation of applications submitted pursuant to subdivision (a).
(c) The Strategic Growth Council shall establish annual priorities and may approve in the aggregate no more than ten million dollars ($10,000,000) per year in annual ERAF reductions for projects approved through this program.

63047.65.
 For purposes of this article, the following definitions apply:
(a) “Affordable housing” includes housing developments, or portions of housing developments, that provide workforce housing affordable to households earning up to 150 percent of countywide median income, and housing developments, or portions of housing developments, that provide housing affordable to “lower,” “low,” “very low,” or “extremely low” income households, as those terms are defined in state law.
(b) “Community revitalization and investment authority” has the same meaning as contained in Section 62001.
(c) “Disadvantaged community” has the same meaning as contained in Section 39711 of the Health and Safety Code.
(d) “Enhanced infrastructure finance district” has the same meaning as contained in subdivision (f) of Section 53398.51.
(e) “ERAF” means an Educational Review Augmentation Fund as described in Article 3 (commencing with Section 97) of Chapter 6 of Part 0.5 of Division 1 of the Revenue and Taxation Code.
(f) “Project” shall include, but not be limited to, any of the following:
(1)  Public infrastructure necessary for the development of a transit priority project.
(2)  A project that provides facilities or services within a disadvantaged community.
(3) An infrastructure project that implements the state’s priorities as determined pursuant to subdivision (c) of Section 63047.60.
(4) A project that provides affordable housing.
(g) “Transit priority project” has the same meaning as contained in Section 21155 of the Public Resources Code.

63047.70.
 (a) An application to participate in the program established pursuant to Section 63047.55 shall include, in the manner prescribed by the Strategic Growth Council, all of the following information:
(1) A description of the project to be completed by the applicant.
(2) A description of the housing or commercial development that the project seeks to support.
(3) A verification that the affordable housing or other development that the project seeks to support is located on a parcel that is zoned for the type of development proposed for that parcel.
(4) A description of how the project will further local and statewide policy goals and objectives, including how the project may complement other previous or proposed state or local investments in infrastructure or services.
(5) An economic and policy analysis, paid for by the applicant and prepared by an individual or entity approved by the Strategic Growth Council, that includes the following information as it pertains to the application:
(A) The estimated cost of providing services or facilities by the project.
(B) The estimated revenue available to provide services or facilities by the project.
(C) Identification of the public resources available to invest in the project or the services or facilities needed by the project, as proposed.
(D) The amount of the reduction in its ERAF contribution requested by the applicant local agency to complete the project or the services or facilities needed by the project, as proposed.
(E) An analysis of whether the project, as proposed, is as follows:
(i) Financially feasible, with the requested reduction of the applicable local agencies’ annual ERAF contribution.
(ii) Financially feasible, but at lower densities, with fewer or no affordable units, or less greenhouse gas reduction benefit. This part of the analysis shall include an evaluation of the environmental and policy impacts associated with the proposed project not moving forward at the density and level of affordable housing proposed, or not moving forward at all due to a lack of resources.
(F) An analysis of how the development described in paragraph (2) will result in an increased amount of revenue to the General Fund, including estimated income taxes, sales taxes, property taxes, and other revenue generated, with a net present value that is greater than the net present value of the total amount of the requested reduction in ERAF contributions over a 35-year period. This part of the analysis also shall evaluate whether the development complements or maximizes other state investments in infrastructure adjacent to or benefiting the property, or contributes to achieving the public policies that the program seeks to support.
(b) The Strategic Growth Council shall circulate the application and the analysis described in paragraph (5) of subdivision (a) to the Department of Finance and the State Infrastructure and Economic Development Bank for review and comment within 45 days of receipt, and consider the comments received from these entities when making its decisions.
(c) The Strategic Growth Council may establish a process for the public to comment on an application for financing.
(d) The Strategic Growth Council may require the applicant to reimburse it, as well as the Department of Finance and the State Infrastructure and Economic Development Bank, for the reasonable cost incurred by each of these entities for the review of the applicant’s application for financing.

63047.75.
 (a) On or after July 1, 2018, the Strategic Growth Council may approve applications submitted pursuant to this article.
(b) The Strategic Growth Council shall not approve an application unless it determines that the reduction in ERAF contributions is necessary to make the proposed project financially feasible and that it would significantly advance important greenhouse gas reduction, affordable housing, or other policy benefits.
(c) The Strategic Growth Council may approve a reduction in ERAF contributions that is less than the amount requested by the applicant.

63047.80.
 (a) Upon approval of an application for a reduction in ERAF contributions, which shall be conditioned upon the future approval of the project as proposed, the Strategic Growth Council shall issue an order directing the county auditor to reduce the total amount of ad valorem property tax revenue otherwise required to be allocated to the county’s ERAF from the applicant, or the city or county that established the enhanced infrastructure financing district or the community revitalization investment authority, by the annual amount approved by the Strategic Growth Council.
(b) If the applicant is an enhanced infrastructure financing district or community revitalization investment authority, the city or county that established the district or authority shall annually allocate to the district or authority an amount of property tax revenue equal to the amount of the annual reduction approved by the Strategic Growth Council.

63047.83.
 The applicant may use the additional revenue approved by the Strategic Growth Council to incur debt or issue bonds or other financing to support the project.

63047.84.
 (a) On or before July 1, 2019, and annually thereafter, each applicant that has received financing pursuant to the program for any fiscal year shall provide a report to the Strategic Growth Council that includes all of the following information for the previous fiscal year:
(1) The amount of money that the county auditor reallocated to the applicant from the ERAF for financing under the program.
(2) The purposes for which that reallocated money was used.
(3) The actions taken during the fiscal year to implement the project.
(b) On or before March 1, 2019, and annually thereafter, the Strategic Growth Council shall provide a report to the Joint Legislative Budget Committee that includes all of the following information for the preceding fiscal year:
(1) The name, location, and general description of each project approved under the program.
(2) The total amount of money that county auditors reallocated from the ERAF under the program in the previous fiscal year.
(3) An evaluation of the value of the state’s investment through the funding provided by this program as measured by a net revenue increase to the General Fund and progress towards achieving the purposes and intent of the program.

63047.90.
 This article shall remain in effect only until January 1, 2025, and as of that date is repealed.
However, the repeal of this article shall not affect the continuing annual reallocation of property taxes for financing approved by the Strategic Growth Council prior to the repeal of this article, and a county auditor shall continue to comply with the order of the council pursuant to Section 63047.80.

SEC. 3.

 If the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made pursuant to Part 7 (commencing with Section 17500) of Division 4 of Title 2 of the Government Code.