Infrastructure

LAEDC Signs onto REAL Coalition Letter in Support of AB 294

By April 10, 2013 No Comments

April 4, 2013

The Honorable Chris Holden
California State Assembly
State Capitol, Room 5119
Sacramento, CA 95814

RE: AB 294 (Holden) – SUPPORT

Dear Assemblymember Holden:

On behalf of the Regional Economic Association Leaders of California (R.E.A.L.)—an association of 21 of California’s most influential business and economic development associations, representing more than 11,000 employers providing more than three million jobs across the state—we want to express our strong support for Assembly Bill (AB) 294 (Holden), which is a measure that would leverage the Educational Revenue Augmentation Fund (ERAF) portion of tax increment generated within infrastructure financing districts to increase the bonding capacity within those districts, allowing them to finance even more critical infrastructure development and realize even greater job gains. This is especially important for local communities, providing them with a much-needed tool, as they struggle greatly with the demise of Redevelopment Agencies (RDA) to find legitimate and effective vehicles to spur job creation, reduce blight, and invigorate neighborhoods.

As you know, Infrastructure Financing Districts (IFDs) provide an opportunity for local governments to fund public infrastructure (such as highways, transit facilities, and libraries) by using bond proceeds that are repaid through property tax increment. While IFDs have been authorized in statute since 1990, overly complex and onerous barriers (such as the requirement of two-thirds voter approval for both the creation of the IFD and issuance of bonds associated with it) have prevented its full utilization. Though several efforts have been made to apply IFDs to specific local areas—such as San Francisco with AB 1199 (Ammiano) in 2010 and San Diego with SB 207 (Peace) in 1999—only a handful of projects have been delivered using this broader statutory authority in over 20 years. This is why we also strongly support SB 33 (Wolk) to remove some of the most onerous barriers associated with the creation of and issuance of bonds tied to IFDs, as a way to activate their improved use and to accelerate our state’s jobs recovery.

We see AB 294 as a complementary effort to IFD law reform bills like SB 33 that can really increase the value and usefulness of a district for economic development purposes. Specifically, AB 294 does the following to add more financing power and bonding capacity to IFDs, while providing for additional layers of accountability:

• Authorizes IFDs—whether in their current statute or improved through efforts like SB 33—to utilize the ERAF portion of incremental tax revenue, after certain conditions have been met.
• Provides that if an IFD wants to utilize the ERAF portion of tax increment that they include this intention in their statutorily required financing plan, obtain an economic analysis, and submit this economic analysis for approval to the California Infrastructure and Economic Development Bank (I-Bank). In order to receive I-Bank approval, the economic analysis must show that there is a “reasonable probability” that the development would result in a net increase to the state’s General Fund (i.e., a net value that is greater than the amount of ERAF diversion).
• Allows for IFDs to finance brownfield cleanup that promotes infill development.

With the elimination of RDA, local governments are in critical need of additional tools—like IFDs and this additional ERAF source to bring much-needed infrastructure development and jobs to our regions and throughout the State of California. And so, we want to thank you for your leadership on this and other economic development efforts, and we want to offer our formal support for AB 294—a bill we see as critical to strengthening our economy and providing local governments with needed tools to support California communities after redevelopment’s demise.

Sincerely,
Lucy Dunn
President & CEO
Orange County Business Council

Carl Guardino
President and CEO
Silicon Valley Leadership Group
Ron Addington
President & CEO
Business Council of San Joaquin County

Bill Allen
President & CEO
Los Angeles County Economic Development Corporation
Karen Engel
Executive Director
East Bay Economic Development Alliance

Mark Cafferty
President & CEO
San Diego Economic Development Coporation

Randy Gordon
President & CEO
Long Beach Area Chamber of Commerce

Paul Granillo
President & CEO
Inland Empire Economic Partnership
Billie Greer
President
Southern California Leadership Council
Joseph J. Haraburda
President & CEO
Oakland Metropolitan Chamber of Commerce

Cynthia Kurtz
President & CEO
San Gabriel Valley Economic Partnership
Jim Wunderman
President & CEO
Bay Area Council

Robert Linscheid
President & CEO
San Francisco Chamber of Commerce

Matthew R. Mahood
President & CEO
San Jose Silicon Valley Chamber of Commerce

Cynthia Murray
President & CEO
North Bay Leadership Council
Roger Niello
President and CEO
Sacramento Metro Chamber of Commerce

Al Smith
President & CEO
Greater Fresno Area Chamber of Commerce
Gary Toebben
President & CEO
Los Angeles Area Chamber of Commerce

 

Download a full copy of the letter here.