BILL ANALYSIS
AB 1221
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Date of Hearing: May 9, 2007
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Anna Marie Caballero, Chair
AB 1221 (Ma) - As Introduced: February 23, 2007
SUBJECT : Transit village developments: tax increment financing.
SUMMARY : Allows a city or county that prepares a transit
village plan, with the agreement with each government agency
that operates every transit station in the transit village
district, to engage in tax increment financing to fulfill the
goals of a transit development plan. Specifically, this bill :
1)Authorizes a city or county that prepares a transit village
plan, by an ordinance approved by majority vote of the members
of its governing body, to initiate proceedings to issue bonds
to develop and make improvements to infrastructure as set
forth in the transit village plan, if the city or county is a
party to a written agreement that sets forth how the bond
proceeds will be used with respect to each government agency
that operates transit stations in the transit village
district.
2)Permits any bond financing plan for a transit village district
proposed by a city or county to contain a provision that tax
increment revenues derived from property within the transit
village district after the effective date of the ordinance may
be used to pay back the bonds so long as the local agency that
the funds would normal go to has agreed to participate in the
transit village district.
3)Specifies that when the bonds are paid in full, the tax
increment financing (TIF) mechanism will cease and the
participating local agencies will go back to receiving their
fair share of the property tax revenues.
4)Prohibits a redevelopment project area from being included in
a transit village district for purposes of accessing the
property tax allocated to the redevelopment project area.
5)Prohibits a redevelopment project area from including any
portion of a transit village district, unless the city or
county that prepared the transit village plan consents.
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EXISTING LAW :
1)Authorizes, under the Transit Village Development Planning Act
of 1994, a city or county to prepare a transit village plan
for a transit village development district that addresses the
following characteristics:
a) A neighborhood centered around a transit station that is
planned and designed so that residents, workers, shoppers,
and others find it convenient and attractive to patronize
transit;
b) A mix of housing types, including apartments, within not
more than a quarter mile of the exterior boundary of the
parcel on which the transit station is located;
c) Other land uses, including a retail district oriented to
the transit station and civic uses, including day care
centers and libraries;
d) Pedestrian and bicycle access to the transit station,
with attractively designed and landscaped pathways;
e) A transit system that should encourage and facilitate
intermodal service, and access by modes other than single
occupant vehicles;
f) Demonstrable public benefits beyond the increase in
transit usage; and
g) Sites where a density bonus of at least 25% may be
granted pursuant to specified performance standards.
2)Requires a transit village plan to include any five public
benefits from a list of 13 specified public benefits.
3)Authorizes cities and counties to create Infrastructure
Financing Districts (IFD) 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.
4)Allows an IFD to divert property tax increment revenues from
other local governments, excluding school districts, for up to
30 years, in order to pay back bonds issued by the IFD.
AB 1221
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5)Requires that in order to form an IFD a city or county must
develop an infrastructure plan, send copies to every
landowner, consult with other local governments, and hold a
public hearing.
6)Requires that when forming an IFD, local officials must find
that its public facilities are of communitywide significance
and provide significant benefits to an area larger than the
IFD.
7)Requires that every local agency who will contribute its
property tax increment revenue to the IFD approve the plan.
8)Requires a two-thirds voter approval of the formation of the
IFD and the issuance of bonds.
9)Requires majority voter approval for setting the IFD's
appropriations limits.
10)Specifies that public agencies that own land in a proposed
IFD may not vote on issues regarding the district.
11)Authorizes IFDs to issue a variety of debt instruments,
including bonds, certificates of participation, leases, and
loans.
FISCAL EFFECT : None
COMMENTS :
1)Many local governments and transit agencies understand the
benefits of using transit oriented development (TOD) as an
urban planning tool to help communities deal with the possible
negative impact of unrestricted growth and sprawl. Some of
these impacts include growing traffic gridlock and commuting
times, the loss of open space, and increased air and water
pollution. Working with local transit agencies, local
communities are creating strong centralized mixed-use
communities by developing TOD projects that are clustered
around train stations and bus centers. The environment and
local economies are enhanced by TOD, and the publicly
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supported transit systems benefit from nearby residents and
businesses.
2)However, there are roadblocks to TOD development in the state,
including the long planning process and spiraling construction
costs. The Transit Village Development Planning Act of 1994
provides no funding mechanism to help deliver the improvements
outlined in the legislation. The reality is that TOD projects
must compete with other local priorities and a scarcity of
transportation funding.
3)According to the author's office, AB 1221 helps resolve this
dilemma of transit village funding scarcity by making
available a new funding tool to communities and transit
districts that choose to pursue TOD. This bill allows local
communities to use TIF so they can finance current
improvements that will create future gains in property tax
revenues. The author points out that when a TOD project is
completed there is an increase in the value
of the surrounding areas that often spurs new investment. This
increased site value and investment creates additional taxable
property that can increase incoming tax revenues to local
communities. The increase in TIF would be used to finance the
debt issued to pay
for the project.
4)In statute there is currently a funding mechanism similar to
what AB 1221 is creating. This current mechanism is called
IFD. IFDs can fund infrastructure projects, including transit
projects using TIF. IFDs require the sign off of every
effected taxing entity and the creation of the IFD has to be
approved by two-thirds of the voters in the proposed district.
IFD law includes a high level of specificity regarding the
process of creating an IFD, establishing a financing plan, and
issuing bonds related to an IFD. This specificity is lacking
in the funding mechanism created in AB 1221. The Committee
may wish to ask why the existing IFD law is not being utilized
to fund TODs.
AB 1221
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REGISTERED SUPPORT / OPPOSITION :
Support
Bay Area Rapid Transit District [CO-SPONSOR]
CA Transit Association [CO-SPONSOR]
CA Association of Councils of Governments
Opposition
CA Rural Legal Assistance Foundation (unless amended)
Western Center on Law on Poverty (unless amended)
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958