"Enhanced Infrastructure Financing Districts": New California Infrastructure Financing Law Passes Legislature
By Albert Reyes.
Enhanced Infrastructure Financing Districts will soon become a reality for many cities and counties looking for a mechanism to perform some functions previously done by redevelopment agencies. Senate Bill 628 (SB 628) passed the State legislature on August 30, 2014 which, when signed by the Governor, would expand the use of Infrastructure Financing Districts.
SB 628 authorizes the legislative body of a city or county to establish an enhanced infrastructure financing district, adopt an infrastructure financing plan, and issue bonds, for which only the enhanced infrastructure financing district is liable, to finance public capital facilities or other specified projects of communitywide significance.
Under SB 628 the legislative body is required to establish a public financing authority (a governing board of the enhanced infrastructure financing district, comprised of members of the legislative body of the participating entities and of the public), prior to the adoption of a resolution to form an enhanced infrastructure district and infrastructure financing plan. Unlike current state law for infrastructure financing districts, a two-thirds vote is not required to form an enhanced infrastructure financing district. Proceedings for the establishment of an enhanced infrastructure financing district require the adoption of a resolution of intention that, among other things, states the boundaries of the enhanced infrastructure financing district, the type of public facilities and development proposed to be financed or assisted by the enhanced infrastructure financing district, and the need for the district and the goals the enhanced infrastructure financing district proposes to achieve. The legislative body is required to hold a public hearing before passing a resolution that adopts the infrastructure financing plan. After the plan is adopted, the legislative body may adopt a resolution of formation creating the enhanced infrastructure financing district.
The public financing authority may issue bonds upon approval of 55% of the qualified electors of the enhanced infrastructure financing district. Tax increment financing would fund infrastructure projects such as highways, interchanges, transit facilities, sewage treatment and water reclamation plants, brownfield restoration and other environmental mitigation, low and moderate income housing, and transit priority projects, pursuant to the infrastructure financing plan and the agreement of affected taxing entities. The enhanced infrastructure financing district would exist for 45 years from the date on which the issuance of bonds is approved.
As a way to fill the void left by the dissolution of redevelopment agencies, SB 628 authorizes an enhanced infrastructure financing district to finance a project or portion of a project that is located in, or overlaps with, a redevelopment project area or former redevelopment project area. Cities or counties that created a redevelopment agency are prohibited from creating a district until the successor agency has received a finding of completion, the city or county certifies that no former redevelopment agency assets are the subject of litigation involving the state, where the city or county, the successor agency or the designated local authority are a named plaintiff and other events related to the wind down of the former redevelopment agency have been satisfied. The debt or obligation of an enhanced infrastructure financing district is subordinate to an enforceable obligation of a former redevelopment agency.
With the absence of redevelopment, SB 628 provides cities and counties the authority they need to build public infrastructure and it will increase investment in a variety of infrastructure through multiple funding streams, including private investment and procurement.