Regional News

As Session Ends, California Muni Bills Close to Becoming Laws

SAN FRANCISCO — California lawmakers are wrapping up their legislative session this week, and several bills affecting public finance are nearing or are on the governor’s desk.

The Legislature has until the end of Friday to pass bills before its final recess. Legislation that is still in the pipeline in the final hours includes a potential substitute for redevelopment agencies, an extension of Los Angeles County’s Metropolitan Transportation Authority sales tax, and changes to school district bond anticipation note financing.

With the statewide shutdown of redevelopment agencies under 2011 legislation, a pressing question for local governments is finding an alternate method to finance development.

One bill nearing approval would revamp the powers of infrastructure financing districts and enable them to take on a development role for local governments that had been handled by RDAs.

Senate Bill 214 would repeal the voter-approval requirement currently required to form infrastructure financing districts and allow them to issue bonds. It would also expand the types of projects that could be funded. Right now, the voter threshold is so high that very few infrastructure financing districts have been approved.

The bill’s author, Sen. Lois Wolk, D-Davis, has said the bill is meant to take the best from redevelopment but narrow its taxing ability so it won’t affect school districts, which in the past overlapped with redevelopment agencies as taxing entities.

“Local governments need flexible, rigorous tools to finance public works projects,” Wolk said in an emailed statement Wednesday. “SB 214 updates a 20-year old tool, making it easier for locals to use infrastructure financing districts.”

Wolk, chair of the Senate Governance and Finance Committee, said the legislation would allow local governments to use the districts to fund important projects like flood control, brownfield cleanup and open-space restoration.

As it stands, cities and counties need a two-thirds voter approval to create the districts and issue bonds to pay for public works projects using tax increment financing. To set appropriations limits, they need a majority of voters to agree. TIF is the incremental property tax revenue growth in the district from rising tax assessments.

The legislation would also allow bonds to be issued through a resolution by a board, rather than a two-thirds vote, and extend the allowable bond maturities to 40 years from 30 years.

The only example of the use of the IFD law, passed in 1990, is when Carlsbad, Calif., formed a district in 1999 to fund the public works for a new hotel next to the Legoland theme park.

According to the legislative staff analysis of the bill, “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.”

The bill passed the Assembly on Wednesday and on Thursday it was awaiting a concurrence in the Senate on amendments before it could be sent to the desk of Gov. Jerry Brown.

The governor has until the end of September to sign or veto legislation passed by the end of the session.

A bill that could result in more bonds from the MTA, Assembly Bill 1446, has already been sent to the governor’s desk.

The legislation, authored by Assemblyman Mike Feuer, D-Los Angeles, allows the MTA to ask county voters to extend its Measure R sales tax authorization, allowing the MTA to bond against future tax revenue.

Measure R, approved by voters in 2008, allowed the MTA to collect a one-half-cent sales and use tax over 30 years for the construction of a network of subway and light rail lines.

Los Angeles Mayor Antonio Villaraigosa tried to get matching federal funds to try to accelerate completion of the city’s 30-year transportation plans funded by Measure R to a decade.

Amid the weak traction at the federal level, Los Angeles leaders pivoted towards an effort to ask local voters to approve the extension of Measure R to speed the construction.

“We need to get these transportation projects underway now,” Feuer said in a statement on the bill, saying the bill would help fund the projects that would ease traffic problems in his region.

Legislation sponsored by the California Public Securities Association that would change school district financing appears close to passing.

Assembly Bill 794 would allow the interest on school district bond anticipation notes to be paid from a tax levied for that purpose.

The property tax would need to be approved by a resolution of the boards of the school or community college districts if the principal of the notes doesn’t exceed the remaining principal of the authorized but unissued bonds.

The legislation would also allow the premium from the sale of the bonds to be used to pay the interest on the notes.

The CalPSA said in support of the bill, authored by Assemblyman Bob Wieckowski, D-Fremont, would help clear up ambiguous language in current law.

Different counties have different interpretations of whether or not interest from Bans can be paid through the tax authorized in a school bond election, according to the staff analysis. In counties where districts can only pay Ban interest upon maturity, rather than semi-annually, they face higher financing costs, according to the bill’s supporters.

The CalPSA spent $155,000 on lobbyists during the 2011 to 2012 session, partly to lobby for this bill, according to the California Secretary of State’s campaign finance web site.

The bill passed the Senate on Wednesday and was awaiting approval of amendments by the Assembly on Thursday before being sent to the governor.

The governor will consider another bill that could increase funding for state infrastructure projects.

Senate Bill 955 would allow the state’s two largest pension funds — the California Public Employees Retirement System and the California State Teachers’ Retirement System — to prioritize in-state investment in infrastructure projects over out-of-state projects.

CalPERS in 2011 allocated up to $800 million for investment in California infrastructure projects over three years, and CalSTRS has plans to invest up to $650 million, according to the legislation.

However, the bill plainly states that neither pension system would be required to take any action that jeopardizes its mission and authority.

Lawmakers are also expected to vote on a pension reform agreement. The Legislature will recess for this year’s session by the end of Friday.




Comments (0)

Be the first to comment on this post using the section below.

Add Your Comments:
Not Registered?
You must be registered to post a comment. Click here to register.
Already registered? Log in here
Please note you must now log in with your email address and password.

Upcoming Events

Already a subscriber? Log in here
Please note you must now log in with your email address and password.