The Assembly Appropriations Committee voted last week to approve Senate Bill 33 by state Sen. Lois Wolk, D-Davis, to remove obstacles to financing public works using infrastructure financing districts. The bill will next be heard on the Assembly floor.
“IFDs use growth in property taxes, not new taxes, to finance important projects like highways and sewer projects without adversely affecting our schools, core local services, or the state general fund,” Wolk said in a news release. “SB 33 removes key impediments to forming IFDs, gives local officials the flexibility and decision-making authority to determine project priorities at the ground level, and works to ensure IFDS are fiscally accountable to their communities.”
IFDs use growth in property taxes to pay for public projects such as highways, water and sewer projects, flood control, libraries and parks. Unlike redevelopment agencies, which were officially dissolved in 2012, IFDs require the consent of local agencies before diverting their tax increment. IFDs do not divert school property taxes or use the power of eminent domain.
SB 33 removes the statutory requirement for voters to approve districts’ formation or issuing bonds for projects, and creates rigorous accountability requirements through an annual, independent audit, given to public agencies and landowners. The measure also extends the term of IFD bonds from 30 years to 40 years, giving local governments longer to repay their debt and lowering their monthly debt payments.
Additionally, SB 33 would authorize IFDs to be used for flood levees and bypasses, habitat restoration, brownfield clean up, and projects consistent with sustainable community strategies — required to help California meet its greenhouse gas reduction target.
“California cities face many infrastructure challenges, including deteriorated streets and roads, and outdated sewer and water systems. Unfortunately, IFD law’s restrictive and confusing requirements have made the tool virtually useless,” said Dan Carrigg with the League of California Cities, which supports the bill. “SB 33 improves on IFDs to provide cities with a viable financing mechanism to begin to address critical infrastructure issues.”
SB 33 is also supported by groups including the California State Association of Counties, California Building Industry Association, California Special Districts Association, Sacramento Area Council of Governments, California Professional Firefighters and several local Chambers of Commerce.