On May 16, 2011, the California Senate approved SB 214, repealing several voter approval requirements for Infrastructure Financing Districts (IFDs). Under current California law, both cities and counties can form IFDs and use property tax increment generated within the IFDs to finance, for example, the purchase, construction or rehabilitation of public capital facilities with communitywide significance, such as highways, interchanges, sewage treatment facilities, child care facilities, libraries, parks, recreational facilities and open space. However, voter approvals are required at all stages of the process:
- Two-thirds of voters must approve the formation of an IFD;
- Two-thirds of voters must approve the issuance of TIF bonds; and
- A majority of voters must approve the principal amount of the proposed bond issuance, the maximum interest rate and the distribution of bond proceeds.
Typically, TIF projects in California are implemented by Redevelopment Agencies and voter approvals are not required. However, since the California Governor has proposed to eliminate Redevelopment Agencies, IFD projects could be a potential alternative method to use TIF for redevelopment in California. If SB 214 becomes law and these voter approval requirements are repealed, it may be easier for local governments to use TIF for IFD projects.