BILL NUMBER: AB 664AMENDED BILL TEXT AMENDED IN ASSEMBLY APRIL 13, 2011 INTRODUCED BY Assembly Member Ammiano FEBRUARY 17, 2011 An act to add Section 53395.9 to the Government Code, relating to infrastructure financing districts. LEGISLATIVE COUNSEL'S DIGEST AB 664, as amended, Ammiano. Infrastructure financing districts: America's Cup district. Existing law authorizes the City and County of San Francisco to create infrastructure financing districts, including districts that include specified waterfront property, adopt infrastructure financing plans for those districts, and issue bonds financed by projected increases in ad valorem property taxes to fund certain public facilities, pursuant to a specified procedure. Existing property tax law establishes various procedures and requirements with respect to the annual apportionment and allocation of ad valorem property tax revenues, including increased revenues from these infrastructure financing districts. This bill would authorize the adoption under these provisions of a financing plan for a waterfront district that includes the waterfront area in the City and County of San Francisco designated as the America's Cup venues, and the use of specified tax revenues produced in the district for the construction of the Port of San Francisco's cruise terminal project at Pier 27, and related work, and improvement of publicly-held waterfront lands used as viewing sites, subject to specified allocation procedures. It would require the county board of supervisors to submit a fiscal analysis to the California Infrastructure and Economic Development Bank for review and approval before adopting the resolution authorizing the issuance of debt pursuant to these provisions. This bill would make legislative findings and declarations as to the necessity of a special statute for the City and County of San Francisco. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. The Legislature finds and declares all of the following: (a) Areas of San Francisco, including portions of the San Francisco waterfront, are characterized by deteriorating conditions that cannot be remedied by private investment alone, and require the use of public financing mechanisms to finance the rectification of deteriorating conditions. (b) In February 2010, the BMW ORACLE Racing Team (and its successors, the "team"), sailing under the burgee of the Golden Gate Yacht Club, won the 33rd America's Cup, off the coast of Valencia, Spain. The America's Cup, which was first awarded in 1851, is the oldest sporting trophy in sailing history. On December 31, 2010, the team designated the City and County of San Francisco to host the 34th America's Cup sailing regatta. The team has designated as the potential venue for the 34th America's Cup the San Francisco waterfront area generally between the Golden Gate Bridge to the north and the Bay Bridge to the south. The team anticipates holding the 34th America's Cup match in San Francisco Bay in 2013, with preliminary races worldwide beginning in 2011 and in San Francisco Bay in 2012. (c) An economic impact study by the Bay Area Council's Economic Institute and Beacon Economics released in July 2010 concludes that hosting the America's Cup on the San Francisco Bay would generate nearly 9,000 jobs and $1.4 billion in direct spending in the San Francisco Bay area and California, and nearly $1.9 billion nationwide. The study reports that the America's Cup is the world's third largest sporting competition after the Olympics and soccer's World Cup. (d) The San Francisco waterfront is a valuable public trust asset of the state that provides special maritime, navigational, recreational, cultural, and historical benefits to the people of the region and the state. Realizing the goals of the port waterfront land use plan, the San Francisco Bay Conservation and Development Commission special area plan, and the port capital plan is a matter of statewide significance, and rectifying the deteriorating conditions along the San Francisco waterfront caused by deferred maintenance since 1969 by providing a financing mechanism, through the use of incremental property tax revenues, is a matter of statewide importance that will further the purposes of both the public trust and the Burton Act trust. Public facilities along the San Francisco waterfront to be financed pursuant to the infrastructure financing district law will increase public access to, and use or enjoyment of, public trust lands and are, therefore, facilities of statewide and communitywide significance. (e) The City of San Francisco has agreed to provide the team with venues for regattas, team and competitor facilities, sponsorship activities, spectator viewing, and ancillary activities. The venues will be located on water areas, piers and wharves, and waterfront and landside property under Port of San Francisco jurisdiction, generally from Pier 19 to Pier 80, and will include shared use of the city's new cruise terminal facility to be built on Pier 27; all of the venues, as determined from time to time, are collectively referred to as the "America's Cup venues." The City and County of San Francisco intends to establish infrastructure financing districts to finance public facilities along the San Francisco waterfront through its port, including a district covering the America's Cup venues. Due to the extraordinary capital needs of the port, it is the intent of the Legislature in enacting this act to provide the City and County of San Francisco and its port the widest latitude, within the framework of the infrastructure financing district law, to create and operate infrastructure financing districts in the manner that provides the optimal financing options to construct needed public facilities on public trust waterfront lands in order to meet the stated goals of statewide significance. SEC. 2. Section 53395.9 is added to the Government Code, to read: 53395.9. (a) This section shall apply only to a waterfront district in the City and County of San Francisco comprising some or all of the America's Cup venues. (b) An America's Cup district may be created as a waterfront district pursuant to, and shall be subject to, all applicable requirements of Sections 53395.3 and 53395.8, except as provided inandthis section. (c) (1) The America's Cup ERAF share produced in an America's Cup district shall be used only to finance the following: (A) Construction of the Port of San Francisco's cruise terminal project at Pier 27. (B) Planning and design work that is directly related to the port' s Pier 27 cruise terminal project. (C) Planning, design, and construction of improvements to publicly-owned waterfront lands held by trustee agencies, such as the National Park Service and the California State Parks, and used as public spectator viewing sites for America's Cup related events. (2) An America's Cup enhanced financing plan shall provide that the proceeds of ERAF-secured debt are restricted for use to finance directly, reimburse the port for its costs related to, or refinance other debt incurred, in the construction of the port's cruise terminal project. (3) Twenty percent in the aggregate of the America's Cup ERAF share allocated to the port under this section shall be set aside to finance costs of improvements to federally- or state-owned waterfront lands approved by trustee agencies such as the National Park Service or the California State Parks as provided in subparagraph (C) of paragraph (1). (d) (1) Before adopting the resolution authorizing the issuance of debt by an America's Cup district authorized by this section, the board of supervisors shall submit a fiscal analysis to the California Infrastructure and Economic Development Bank for review and approval. (2) The bank may circulate the fiscal analysis to other state agencies, including, but not limited to, the Department of Finance, the Department of Housing and Community Development, and the Office of Planning and Research, and solicit their comments and recommendations. After considering the comments and recommendations of other state agencies, if any, the bank shall take one of the following actions: (A) Approve the fiscal analysis if the bank makes the finding required pursuant to paragraph (4). (B) Return the fiscal analysis to the board of supervisors with specific recommendations for changes that would allow the bank to approve the fiscal analysis. (3) The bank shall have 30 days from the receipt of the fiscal analysis to act pursuant to this subdivision. If the bank does not act within 30 days, the fiscal analysis shall be deemed approved. (4) For bank approval, the fiscal analysis shall demonstrate to the bank's reasonable satisfaction a reasonable probability that the economic activity proposed to occur as a result of hosting the America's Cup event in California would result in an amount of revenue to the General Fund with a net present value that is greater than the net present value of the amount of property tax increment revenues that would be diverted from ERAF over the term of the America's Cup district, taking into consideration all pertinent data. In reviewing the board's fiscal analysis, the bank shall consider only those General Fund revenues that would occur because of economic activity proposed to occur as a result of hosting the America's Cup event in California. The bank shall not consider those General Fund revenues that would have occurred if the America's Cup event were not held in California. (e) The county auditor or officer responsible for the payment of taxes into the funds of the respective taxing entities shall allocate and pay to an America's Cup district the portion of taxes required to be allocated pursuant to an approved America's Cup enhanced financing plan. If the plan allocates 100 percent of the incremental tax revenue to the district, then the district shall not make a payment to ERAF, but if the plan allocates less than 100 percent of the incremental tax revenue of San Francisco to an America's Cup district then the district shall pay a proportionate share of incremental tax revenue into ERAF. The district shall file a statement of indebtedness and a reconciliation statement annually in the same manner as described in subdivision (i) of Section 53395.8. (f) This section implements and fulfills the intent of this article and of Article XIII B and Section 16 of Article XVI of the California Constitution. The allocation and payment to the America's Cup district of the America's Cup ERAF share for the purpose of paying principal of, or interest on, loans, advances, or indebtedness incurred for facilities under this section shall not be deemed the receipt by the district of proceeds of taxes levied by or on behalf of the district within the meaning or for the purposes of Article XIII B of the California Constitution, nor shall this portion of taxes be deemed the receipt of proceeds of taxes by, or an appropriation subject to limitation of, any other public body within the meaning or for purposes of Article XIII B of the California Constitution or any statutory provision enacted in implementation of Article XIII B. The allocation and payment to a district of this portion of taxes shall not be deemed the appropriation by a district of proceeds of taxes levied by or on behalf of a district within the meaning or for purposes of Article XIII B of the California Constitution. (g) For purposes of this section, the following terms have the following meanings except as otherwise provided: (1) "America's Cup district" means a waterfront district that includes the waterfront area in the City and County of San Francisco designated as the America's Cup venues, excluding any venues within the Rincon Point-South Beach Redevelopment Project Area. (2) "America's Cup enhanced financing plan" means an infrastructure district financing plan for an America's Cup district that contains a provision identical to that authorized for a Pier 70 district under subparagraph (D) of paragraph (3) of subdivision (g) of Section 55395.8. (3) "America's Cup ERAF-secured debt" means debt incurred in accordance with an America's Cup enhanced financing plan that is secured by and will be repaid from the America's Cup ERAF share. (4) "America's Cup ERAF share" means the county ERAF portion of incremental tax revenue committed, as applicable, to an America's Cup district under an enhanced financing plan. (5) "Cruise terminal project" means all phases of the Port of San Francisco's public works project to build new cruise terminal facilities at Pier 27 in San Francisco and includes any public access and public open space improvements on Pier 27. (6) "ERAF" means the Educational Revenue Augmentation Fund. SEC. 3. The Legislature finds and declares that a special law is necessary and that a general law cannot be made applicable within the meaning of Section 16 of Article IV of the California Constitution because of the unique circumstances of the City and County of San Francisco. The facts constituting the special circumstances are: Areas of San Francisco, including the portions of the San Francisco waterfront, are characterized by deteriorating conditions that cannot be remedied by private investment alone, and require the use of public financing mechanisms to finance the rectification of the deteriorating conditions. In order to adapt the provisions of law governing infrastructure financing districts to these unique circumstances, this special act is necessary.