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League Supports SB 711 (Hill), Local-State Sustainable Investment Incentive Program

Cities Encouraged to Support Measure Focused on Addressing Local Financing Gaps for TOD, Affordable Housing and Facilities within a Disadvantaged Community

March 10, 2017
Despite all the state’s focus on infill development and greenhouse gas reduction, the sobering reality is that — absent sufficient resources to address financing gaps — many desirable projects fail to pencil-out.
 

Such missed opportunities will frustrate the state’s efforts to achieve its greenhouse gas reduction goals.

While several new tools including, Enhanced Infrastructure and Finance Districts (EIFD) and Community Revitalization Investment Authorities (CRIA) have been established, they lack the concentrated financial lift in urban areas offered by the former redevelopment tool. Left unaddressed, this financing gap presents real challenges for the future development of infill urban areas and avoiding continued sprawl onto open lands where it is easier to develop.

Sen. Jerry Hill’s (D-San Mateo) SB 711 helps address this need by establishing a creative financing mechanism focused on filling the local funding gaps to maximize opportunities for large-scale transit-oriented development (TOD), affordable housing, and facilities within a disadvantaged community.

The measure creates a six-year pilot project to enable the Strategic Growth Council (SGC) to review and approve projects that the SGC agrees maximize state and local policy objectives, by authorizing the applying city or county to reduce its individual property tax contributions to Educational Revenue Augmentation Funds (ERAF), so the applying agency can invest these funds in the project.

Currently, cities, counties and special districts contribute $7.5 billion annually to ERAF funds, a mechanism established by the state in the early 1990s to allow the state to reduce its funding to schools. Full discretion in whether to approve projects is provided to the SGC (as an entity representing the state’s policy interests) and is capped at $10 million annually, over six years. SB 711 also requires substantial reporting and oversight.

From a local government perspective, the funding available via this measure is much more than it may appear. Each local government that is awarded an ERAF reduction will be able to receive that reduction on an annual basis for the life of the project. For instance, if a city is approved a $1 million per year annual reduction, they would receive that reduction for the life of the project financing (for instance, 35 years).  In short, a city that is trying to do the right thing gets to keep more of its own property taxes to help fund the project.

SB 711 creates a “win-win” for maximizing state-local development opportunities and climate goals by ensuring that some of financial lift of the former redevelopment tool is restored for projects that advance state priorities.  

Cities are encouraged to support this measure. The full text of the measure along with the League’s support letter and a sample letter cities can use can be found at www.cacities.org/billsearch by plugging SB 711 into the search function.

Sen. Hill’s background paper on SB 711 includes some additional information. 



 
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