SAN FRANCISCO — Gov. Jerry Brown's altered infrastructure financing district proposal is a step in the right direction, but still needs work to make it useful for cities, according to the League of California Cities.
With his budget in January, Brown introduced his proposals to change current IFD law, which include lowering the voter-approval threshold for forming such a district to 55%, expanding IFD activities, and allowing IFD projects to overlap with former redevelopment project areas.
Such changes are seen as possibly enabling IFDs to fill some of the void left by the elimination of California redevelopment agencies.
Under current law, cities and counties can create IFDs to divert incremental property tax growth in the districts for projects such as highways, transit, water and sewer systems, and solid waste facilities.
The use of incremental property tax growth to back debt is similar to the financing of redevelopment, which was eliminated under 2011 legislation. Redevelopment financing did not require voter approval, but IFDs now require two-thirds voter approval for formation and also to issue debt.
Brown signed a bill in February that enacted one part of his proposal — allowing IFDs to be created in former redevelopment project areas.
In his May budget revision proposal, Brown advocated a new "Enhanced IFD Law."
His enhanced IFD law would maintain the proposed 55% vote threshold, but clarify some additional uses for IFD law. The proposal also includes a requirement for the Department of Finance to approve of the creation of an IFD, provided that all pending issues and litigation associated with a jurisdiction's redevelopment agency are resolved.
"There has been limited interest by cities on the usefulness of the Governor's proposal," the League of Cities said last week in an analysis of the IFD proposal. "The requirement for two separate votes remains problematic and DOF signoff adds to the perception that the tool will be little used, except on the urban edge or parcels with few if any residents."
Most of the state's 482 cities are represented in the league.
The league said that under the governor's proposal, additional language would be needed to ensure that the structure of the measure would not raise issues with the state constitution's debt limit.
The analysis also suggests that if any of the former redevelopment areas are included in an enhanced IFD, then all of the former RDAs should be included in order to avoid confusion and opposition.
The league specifically takes issue with the governor's 55% threshold vote, which it considers a key hurdle to the usefulness of the IFD tool, and suggests some alternatives.
These include establishing a single consolidated approval process or adopting the same process that is currently used for property assessments instead of an automatic vote. Under this process, a protest process would be allowed and if protests exceed a majority protest then the enhanced IFD would not go forward.
The league is continuing its support of Senate Bill 33, introduced by Senator Lois Wolk, D-Davis. Her bill would completely remove the voter -approval requirement.
"It is positive that the Governor has put a proposal on the table for discussion, but more work needs to be done to ensure that cities will find it useful," the league said.