State Sen. Lois Wolk, D-Davis, has resumed her effort to remove obstacles barring the use of infrastructure financing districts, a flexible financing tool that can be used to pay for public works projects, create high-paying jobs and promote sustainable growth.
“Having served in local government, I know how important public works projects are to our communities. I also know that local governments need the flexibility to determine local priorities,” said Wolk, who chairs the Senate Governance and Finance Committee. “My legislation will give local government officials a flexible, rigorous tool to finance public works projects and promote economic development, while embedding more program and fiscal accountability measures.”
Senate Bill 33 makes it easier for local governments to utilize IFDs. IFDs, like redevelopment agencies, which were dissolved by the California Supreme Court in January 2012, can be used to divert property taxes from a local government’s general fund to pay for public projects such as highways, transit, water and sewer projects, flood control, libraries, parks, child care and solid waste facilities.
Unlike redevelopment agencies, IFDs require the consent of local agencies before diverting their tax increment. Additionally, unlike redevelopment agencies, IFDs do not divert school property taxes or use the power of eminent domain.
“I applaud Senator Wolk’s commitment to removing unnecessary obstacles hindering the use of IFDs, a useful financing tool that can be used to support a wide variety of local infrastructure,” said Daniel Carrigg, legislative director of the League of California Cities. “California’s local governments face many challenges in financing and upgrading infrastructure to meet the needs of our growing population and support a prosperous economy. By enabling the use of IFDs, SB 33 provides a real solution to these challenges.”
Wolk’s legislation removes the statutory requirement for voters to approve the formation of an IFD or to issue debt, just as there was no voter approval required for the formation of redevelopment agencies. The bill 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.
“I remain committed to making it easier for local governments to utilize IFDs to fund important projects like flood protection and clean drinking water without adversely affecting our schools, core local services or the state general fund,” Wolk said.