Governor's May Revisions move some on IFD choices, not much on housing
The traditional May Revisions to Gov. Jerry Brown's budget proposal offer a big financing possibility for Infrastructure Financing Districts (IFDs), but relatively shallow support for efforts to finance and protect housing specifically.
The Governor's "May Revise" proposal would "clarify" that cities and counties could securitize their Vehicle License Fee (VLF) Swap income to finance the Governor's proposed "Enhanced" IFDs, potentially doubling the districts' power over tax revenue. The proposal would allow such districts to support housing among other purposes, and would provide some protections to keep housing affordable, but the proposal offers no real replacement for Redevelopment's former 20% housing set-aside.
The "May Revise" budget summary proposes to let alone the existing, relatively limited provisions for IFD creation that have been available to municipalities for years. Separately, it would authorize "Enhanced IFDs" with the new characteristics he had previously proposed, plus a few more.
The Governor's prior IFD expansion proposal included a broadened list of projects that the districts could finance, and a requirement of a 55% approval vote instead of the existing two-thirds requirement. (See http://www.cp-dr.com/node/3480 for details.)
The "May Revise" includes a nod to the broadly expressed objection that IFDs would not replace Redevelopment's former 20% set-aside of tax increment funds for low- and moderate-income housing. The new proposal would not actually require Enhanced IFDs to build housing, but it at least would allow such districts to finance affordable housing and would require long-term affordability covenants of 45 to 55 years for any affordable housing created or replaced. It would "clarify" that the districts "must replace any low- or moderate-income housing that is removed as part of a project plan, as is required under current IFD law".
While the housing concessions went a little farther than before, they didn't impress some affordable housing proponents. The Western Center on Law and Poverty posted a critical analysis of the May Revise proposal as a whole, saying it "fails to invest in poor Californians." Alongside criticisms of health and public benefits provisions, it said the May Revise "provides little in the way of new housing proposals." It said the May proposal for Enhanced IFDs "proposes some better housing protections... but there was essentially no movement on the litigation quid pro quo," meaning the continuing proposed requirement that jurisdictions wrap up their disputes with the state over distribution of ex-Redevelopment assets before using the Enhanced IFD mechanism.
The Western Center analysis said proposals for the use of cap-and-trade revenues, such as those by Senate President Pro Tem Darrell Steinberg, are "a focus for housing advocates," but the May Revise "contains no new proposals on the use of that funding and neither the Governor nor his staff addressed the issue."
As noted by the San Mateo Daily Journal, Assemblyman Kevin Mullin, D-South San Francisco, wrote: “One glaring omission is the continued lack of funding for affordable housing. The Governor’s infrastructure financing districts proposal is a woefully inadequate replacement for the loss of redevelopment funds for housing. The legislature must step up to address to provide a stronger alternative.”
Additionally, the new "Enhanced IFD" proposal would "clarify" that "monies received by cities and counties pursuant to the Vehicle License Fee Swap may be securitized to fund Enhanced IFD projects" and that, if local voters approved, an Enhanced IFD could impose "new fees or assessments to support projects identified in an Enhanced IFD project plan."
In its largely positive response to the budget proposal, the California Economic Summit organization estimated that the VLF Swap securitization option "would nearly double the property tax share available to IFDs, making about $400 million available each year for local infrastructure development."
Under the Governor's revised proposal, only Enhanced IFDs, not old-style IFDs, would carry the requirement that municipalities first resolve their disputes with the Department of Finance over the status of ex-Redevelopment assets and receive Findings of Completion on any required paybacks. The Governor's budget summary notes this distinction would give cities continuing access to the old-style IFD process regardless of their post-Redevelopment status. However, that's a minimal concession, since IFDs have only been approved three times in two decades; the Western Center analysis called the old mechanism "virtually unusable". (See http://www.cp-dr.com/node/3433.)
For more details see:
- The Governor's May Revision budget proposal summary (Proposed IFD changes are at Page 63): http://www.ebudget.ca.gov/FullBudgetSummary.pdf
- The League of California Cities analysis: http://bit.ly/1lDa76W
- San Mateo Daily Journal collecting several Bay Area legislators' written responses to the May Revise, including Mullin's: http://bit.ly/1gfz7TO
- The California Economic Summit response to the May Revise, including a link to figures on the VLF Swap possibility: http://bit.ly/1lzOztp
- Western Center on Law and Poverty responses: http://bit.ly/1lT16rZ and http://bit.ly/1lAtRqo
Further on state revenue predictions:
- Legislative Analyst's Office (LAO) suggesting actual state General Fund revenues may exceed the May Revise assumptions by more than $2 billion: http://lao.ca.gov/Publications/Detail/3017
- Sacramento Bee on that LAO report: http://bit.ly/1mLzMwJ
- LAO prediction, made earlier this May, that property tax revenues will rebound: lao.ca.gov/Publications/Detail/3010
Cate Long's "Muniland" blog at Reuters with exegesis on the LAO property tax report: http://reut.rs/1t8CWgd