Assembly Standing Committee on Local Government

In the interest of time, we're going to get started as a subcommittee since we don't we're going to start as a subcommittee since we don't have a quorum. Welcome to the Local Government Committee hearing. We do have three items on the agenda, but before we get started, I'm going to go through some housekeeping items.

I would like to remind the public that for these and future hearings, testimony will be in person as we are no longer using a moderated telephone service. We also accept written testimony through the position letter portal on the Committee's website. I would also like to go over some ground rules for appropriate conduct.

The Assembly has experienced a number of disruptions to Committee and floor proceedings in the last few years. Conduct that disrupts, disturbs, or otherwise impedes the orderly conduct of the hearing is prohibited. Such conduct may include talking or making loud noises from the audience, uttering loud, threatening, or abusive language, speaking longer than the time allowed.

Extended discussion might not relate to the subject of the hearing or the bill and any other disruptive acts. To address these disruptive acts, I will conduct the following steps. If an individual disrupts the hearing process, I will direct them to stop and warn them that continuous disruptions may result in removal from the capitol building.

I will also document on the record individual involved and the nature of this disruptive contact and I may temporarily receive the hearing. If the conduct does not stop, I will request the assistance of the sergeants and escort individual out of the capitol building.

We do not have a quorum as I stated. We have three items on the agenda and we're going to hear them out of order since our item number one, Senator Padilla is not here yet, but we do have Assembly Member Friedman if you're ready.

Thank you, Mister Chair and Members. Under current law, enhanced infrastructure financing districts, or EIFDs, may only collect tax increment for up to 45 years from the date of the first bond issuance.

However, because of the relatively slow appreciation and property values, in many cases it may take 10 to 15 years before revenues are sufficient to borrow against or begin paying down debt.

AB 761 extends the period of available EIFD tax increment from 45 years to 75 years to align the term with that of a federal transportation infrastructure finance and innovation TIFIA loan, which is administered by the U.S. Department of Transportation.

This is to allow our transit agencies to try to get newly offered federal money so that we align our terms with what they're looking for as they make grants. This is to bring money into California for needed transit. LA Metro and LA area municipalities are exploring the utilization of EIFDs, EIFDs, EIFDs. Anyone knows? EIFDs. EIFDs.

Okay, that doesn't help. Okay. For a number of local passenger rail projects. LA Metro is in the middle of one of the largest regional transit expansion programs in the nation.

Though most of the projects are fueled by a combination of the local, county-wide sales tax and state or federal grants, rising projects costs are limiting the pace of that expansion, meaning more support from local cities and counties will be needed to keep projects and climate goals on schedule.

AB 761 is narrowly tailored to apply to districts formed after January 1st, 2025, for the purpose of financing and constructing passenger roll projects through a federal TIFIA loan. It also ensures that 45 years after the issuance of the TIFIA loan, all tax increment will be used for repayment of that loan.

This bill gives local jurisdictions a tool to fund much-needed transit projects that will give local and state transportation greenhouse gas reduction goals a chance to work. With me today to speak in support of AB 761 is Silvia Solis Shaw on behalf of the City of West Hollywood and John Skoglund for Los Angeles County. Thank you.

Good afternoon, Mister Chair and Members. Silvia Solis Shaw on behalf of the City of West Hollywood, the city would like to thank Assembly Member Friedman for authoring this measure. Expanding rail service through the city has been a priority for our council for over 20 years.

Recently, we have partnered with LA County Supervisor Horvath and with LA Metro on this priority and have determined that the creation of an EIFD, I just say the letters, would be necessary to finance the extension of the rail line, known as the K Line, in a northern direction through Mid-city and Miracle Mile neighborhoods in the City of Los Angeles and through West Hollywood to Hollywood.

The K Line north extension will transform regional mobility in one of the most congested parts of LA County and will connect these communities as well as many job centers and destinations along the way.

This bill will facilitate the financing of these transit projects and will also increase the positive impact transit-oriented developments that continue to grow in the LA region.

And we hope that these will lead to inclusionary affordable housing projects as well as expanding on first and last-mile planning to identify bike and pedestrian improvements needed to expand the reach of these transit stations.

So, for these reasons, the City of West Hollywood is pleased to be a co-sponsor of AB 761, and we ask for your support of this measure.

Thank you. Before we move to the second witness, we just have quorum. You can have the secretary call the roll, please.

[Roll call]

Second witness, please. We have a quorum.

Thank you. John Skogland with the County of Los Angeles urging your support of AB 761. LA Metro, Los Angeles County, and cities like Los Angeles and West Hollywood are committed to expanding rail service, but they're facing significant cost increases. Steel prices up 83%, concrete, 50%, and machinery, 37% since 2016, along with slow sales, tax growth and tight labor market

Enhanced infrastructure financing districts are a strong solution to help finance large-scale infrastructure projects. However, these revenues build slowly, particularly in the early years, which can delay projects.

EIFDs in combination with federal TIFIA loans can help provide those upfront capital costs while also benefiting from the flexible loan terms such as deferred payments until five years after project completion, expending repayment periods, helping to bridge the funding gap during those early years.

AB 761 proposes extending the periods for EFIDs from 45 years to 75 years specifically for passenger rail projects. This would lower annual payments, increasing financial capacity, and make EFIDs more viable tool for funding these essential programs. Strongly, strongly urge your aye vote on AB 761. Thank you.

Thank you. Are there any other witnesses in the room that want to come in support? Please state your name, affiliation and position on the bill.

Thank you, Mister Chairman and Members.

Not on yet.

Testing. Testing. Thank you, Mister Chairman and Members. Andrew Antwih with Shaw Yoder Antwih Schmelzer and Lange here on behalf of the Los Angeles County Metropolitan Transportation Authority. As the author mentioned, Los Angeles County is in the midst of a rail explosion. We're here to support. Thank you.

Thank you. Is there anyone else? Seeing none. How about any primary witnesses in opposition? No primary witnesses? Anybody else that wants to go on the record in opposition? Seeing none. I'll take it back to the Committee Members. Any questions, comments? We have a first and a second. Assembly Member, would you like to close?

I don't believe this bill has any opposition. It's a priority for County of LA and I would urge an aye vote. Thank you.

Thank you for bringing this bill forward today. I'm always very supportive of finding creative ways to use our existing resources to help provide the critical infrastructure our communities need. I will be supporting the bill today. The motion is that the Senate amends be concurred in. Secretary, please call the roll.

The motion is recommendation that the Senate amendments be concurred in. [Roll call]

6-0. The bill is out. Thank you very much.

Thank you everybody.

Thank you. We are going back to the order on the agenda. That's item number one on the agenda, SB 1070. Senor Padilla, whenever you're ready.

Thank you, Mr. Chair. We on? All right, just gotta speak up. All right, thank you, Mr. Chairman and Members. Here to address changes to 1070. There are only two hospital serving patients in Imperial County, and the region, as you know, faces serious challenges connecting residents to healthcare providers.

In 2023, the Legislature approved AB 918 to form an Imperial Valley Healthcare District, a countywide healthcare system to stabilize healthcare in one of the state's most underserved communities. Part of the measure required that the newly formed board of the Imperial Valley Healthcare District recommend a funding source mechanism to be placed before voters in March 2024 or November 2024.

Unfortunately, as is reflected in your analysis, parties involved have not provided crucial information needed to recommend a funding source as required by statute in time for this election cycle. Therefore, more time is needed fundamentally to allow this district to stand up in an effective way so that it could serve its constituents in an effective way. This bill would extend the deadline to November 2026 election. With me today is Katie Burnworth, who is the Board Chair of the Imperial Valley Healthcare District.

Please go ahead.

Thank you, Chair and Members. My name is Katie Burnworth. I'm Board President of the Imperial Valley Healthcare District, in support of SB 1070, authored by Senators Padilla and Assembly Member Garcia. We are grateful for the legislators' time and attention, as our Imperial County faces an urgent health care crisis.

Last year, AB 918, jointly authored by Assembly Member Garcia and Senator Padilla, set the framework to consolidate two existing healthcare districts into one countywide healthcare district, bringing together our two distressed local hospitals to improve our regional healthcare systems and protect access to emergency care.

This merger aims to financially stabilize and provide economies of scale in our rural underserved area. Our Imperial Valley Healthcare District has worked tirelessly to fulfill our obligations under AB 918 and achieve our integration milestones. While our district has made tremendous headway, the lack of cooperation and obstruction from Pioneers Memorial Healthcare District has stalled our efforts to place the necessary funding mechanism on this upcoming November ballot.

Instead of cooperating to create a more sustainable healthcare system, they have filed lawsuits and refused to file the necessary information needed to propose an accurate tax to the voters for permanent funding mechanism. The Attorneys General's Office has recognized that Pioneers Memorial Healthcare District's unwillingness to cooperate is not just a breach of their obligations in AB 918, but a direct harm to the very constituents that they are sworn to serve.

For these reasons, we urge the Legislature to pass SB 1070, allowing our Imperial Valley Healthcare District the time needed to recommend an accurate and equitable permanent funding mechanism to our voters in Imperial County. We respectfully urge your aye vote as we strive to continue creating a healthcare system that truly serves the needs of our Imperial County residents with the healthcare that they deserve. Thank you.

Thank you. Is there anybody else in the public that wants to be added on in support? Please state your name, affiliation, and position on the bill.

Assembly Member Eduardo Garcia, 36 Assembly District, in support of the bill.

Thank you, sir. Is there anybody else? How about any primary witnesses in opposition to the measure?

Sorry, rearranging a little. Thank you. Thank you, Mr. Chair and Committee Members. Sarah Bridge on behalf of the Association of California Healthcare Districts, here respectfully opposed to SB 1070 today. I will keep my comments brief since I know we've all had a long day.

Our opposition really rests on the crux that this is sort of taking it out of the local process. AB 918, which we raise concerns with during the process, removed LAFCO's ability and the local voters to make the decision of whether or not they wanted to expand and dissolve the requisites healthcare districts mentioned in this legislation.

While we don't have an issue with the top line proposal in SB 1070, we were really hoping to see this unfold through the local process and then the subsequent legislation that was mentioned by both the support and in the analysis. We'd like to see both the local process and the legislation carry out before the Legislature takes another attempt at making changes to the law. For those reasons, we are in respectful opposition today. Thank you.

Thank you.

Thank you, Mr. Chair and Committee Members. My name is Chris Bjornberg, and I'm the CEO at Pioneers Memorial Healthcare District in Brawley, California. I'm here today representing the district to respectfully oppose SB 1070 unless amended. This bill would extend the deadlines for the Imperial Valley Healthcare District created in AB 918 without extending any other provisions.

Our hospital is essential to the community that we serve and to the network of care delivered to the Imperial Valley. While we support a countywide healthcare district approach, we have concerns about the process and procedures used to achieve this goal. SB 1070 proposes amendments to AB 918, one, that no longer require a countywide approval, and two, extend the countywide tax proposal deadline. As a result of AB 918, citizens were prevented from voting on their representation on IVHD.

Those who in the Heffernan Memorial Healthcare District and Pioneers Memorial Healthcare District, who are the only ones paying taxes to support healthcare in the Valley, will continue to bear the burden exclusively and without consent, with the representation on IVHD board being especially diluted.

Additionally, contrary to what some Committee Members may have been told, PMHD never had the opportunity to review or provide input on SB 1070. This lack of consultation is concerning and underscores the need for more inclusive and transparent process. Our request to the author of the Legislature has been straightforward.

IVHD, in conjunction with Pioneers Memorial Hospital, is not ready to merge by December 1. SB 1070 offers the Legislature an opportunity to address this issue. We appreciate the efforts of the author and the Committee staff to address the needs of our community. However, for the reasons stated above, we respectfully request your no vote on this measure.

Thank you. Anybody else in the room that wants to go on the record in opposition? Seeing none, I take it back to the Committee Members. Questions, comments? Mr. Essayli.

Thank you, Mr. Chair. This seems a little complicated, so I have a couple questions. First, the opposition. If this bill doesn't pass, and they're not able to seek this tax revenue, what happens to the hospitals?

As far as those that are in current operation, nothing happens. We continue to operate.

Okay. And you're able to operate without... What is this fight about? It seems like they're trying to create a hospital district to take over the hospitals. Is that what it is?

Correct.

You don't want to be taken over?

The board of PMHD does not want the process to play out the way that's aligned.

So is this like government taking over these hospitals? It'd be run by government?

Essentially, yes. Because right now, currently, the district hospital is government. Correct. And PMHD is a district hospital where ECRMC is not. So it would be combining both of them into a district together.

Okay, well, let me ask the Senator. It's your bill. They've had two years to do it. They didn't do it. Why come in last minute and give them an extension? It seems like if there's so much resistance, the community may not want this deal. And the hospitals seem to be functioning just fine.

Thank you, Mr. Chairman. Mr. Chairman and Assembly Member, I think that's sort of ironic. This isn't an opportunity, respectfully to the opposition, to relitigate the merits of 918. The record is replete and fat with the reasons why such a district needs to be stood up and needs to be given a reasonable opportunity to succeed in compliance.

I think your own analysis clearly lays out a number of facts as to why we're here today and why, in fact, I would probably use the term frustration, intentional frustration, and some litigation. Some of these cases, with respect to the LAFCO process, required intervention from the AG. So there's been noncompliance issues, there's been non-cooperation issues.

There's been litigation that has drug this out by design. The people of this region... The question of whether you need to establish a district to retain the solvency of this health care infrastructure and to continue the viability of healthcare delivery systems in this underserved community is beyond doubt. And that was established and settled when 918 was chaptered.

Are you saying these hospitals are going to go under if this bill doesn't pass?

Do you want to address?

So I want to say that these hospitals would have went under had AB 918 not passed.

That's not my question.

I know, but this...

But hold on. You don't get to answer the question you want to answer. You have to answer my questions. My question is very specific.

Okay. No...

If this bill doesn't pass, will these hospitals go under? Excuse me, I'm speaking.

Yes, Mr. Essayli, I believe that she was trying to answer your question. Can you answer his question specifically?

Please. Thank you.

Yes. So this bill here is just an extension of AB 918. We've done a fiscal analysis, which should be in your bill analysis, that shows that both hospitals merged in now with the Heffernan Memorial Healthcare District, which has now had been absorbed by Imperial Valley Healthcare District, supplies supplemental funds that neither hospitals had received prior to this. So the long story short, yes, we do have financial stability to get us through to these next two years while we ask for this extension, knowing that we will need a supplemental tax moving forward.

My question is if you think the hospitals are going to go under if this bill doesn't pass.

No.

They will not go under. Okay, so what is the... I guess my other question is, what is the urgency? Why are we... I guess my frustration is... My frustration is this process is a gut and amend. This language came into print August 22. I've had people from your district reach out to me and the opposition reach out to me. So we really haven't had time to dig into it.

And it feels like it's being rushed to keep the opposition from really being able to meaningfully oppose the bill. If we're talking about a tax that can't even be voted on until 2026, what's the rush? Why can't we deal with this in regular order next year?

There's an urge... Sorry.

The bill is here in front of us. I understand you have a question for them. The process allows for this bill to be in front of us. If you want to answer, go ahead and answer.

I would... Thank you, Mr. Chairman and Members. I would just say, look, the basis for why the 918 was chaptered and why it was supported and necessary, that question has been settled. This is merely a reasonable way to make sure that existing statute is enacted upon. And there is an urgency to it and there is a financial element to it, as is discussed in your analysis.

But can we deal with it next year during regular process? Would there be any harm in dealing with it next year?

Go ahead and answer.

You can answer anyone. And that's my last question.

So to answer your questions, I will say this. The way that the healthcare exists in the community currently, and I've been there for six months now. So the way that the healthcare exists in the community right now, it is the benefit of the community that these two hospitals come together. There is no doubt about that. If that does not happen, if the two hospitals are allowed to be separate, there is a strong possibility that the other hospital could go under. I do not believe that that's a possibility for PMHD, but the problem exists at this point in time.

If that other hospital is allowed to go under, then that creates a problem for me, as PMHD, I do not have the infrastructure to support healthcare in that community by myself. When the ship goes down, you lose the good swimmers. They will jump first. Which means good nurses, good providers, all of those people will leave our community, which is going to make it very difficult for me and PMHD. So there is a necessity for the two hospitals to come together.

I believe that 100%. In this scenario that you're speaking of right now, one of the issues that I think is there is the fact that you have a new hospital district that is being represented by seven people. If this new hospital district were to continue to move forward and this doesn't happen, for example, then the likelihood that the current seven members of that board being sued because they cannot meet the obligations of AB 19 as it currently stands is it goes way up.

And now you run into a situation in a community, a small community like that, where the community healthcare is at a crossroads, where nobody will want to serve on that board, because now they're going to run the chance of being sued simply because of what they've seen from not being able to meet the obligations of AB 918.

Okay, thank you for that answer. Assembly Member Ramos, you had a question.

Thank you. Senator Padilla, in the bill, it talks about being able to go back to the electorate to make the final decision on this at a future ballot. So those constituents in this district will weigh in on the future funding of this district, and they'll have a chance to have that voice heard. Is that correct?

Mr. Chairman. Mr. Chairman, Assembly Member, absolutely. So that is just a reflection of the existing statute. It's giving the statute a reasonable opportunity, given the circumstances, to execute what you just described. Those people do need to weigh in, and they're, in order to maintain the viability of services. And that is what this bill does.

Thank you. And I believe I moved the bill earlier.

Okay, we have a first and a second. Do you want to close, Senator?

Again, the question of the bill per se has been settled. It's law. This is a reasonable piece of legislation that will allow the existing statute to be appropriately implemented for the benefit of the patients in this region. And I respectfully ask for an aye vote.

Thank you. Thank you for presenting this bill today. We do have a first and a second. I will be voting aye on your bill. The motion is do pass. Secretary, please call the roll.

[Roll Call]

7-2, the bill is out. Congratulations. Thank you.

Thank you, Mr. Chairman and Members.

The third item on the agenda is AB 2443. I am the author. I'm passing the gavel to the Vice Chair, and I will be going down to present AB 2443.

You may proceed.

Thank you. Madam Vice Chair and Committee Members, I am here to present a district bill that is very important to my community. This is a very simple bill that will allow three cities in my district, the cities of Victorville, Palmdale and Lancaster, to raise critical needed resources at the local level.

My district, Assembly District 39 is a brand new district that straddles the Los Angeles County, then San Bernardino county lines. One of the primary things that communities in my district have in common is that they have been left behind. When people think of Los Angeles County, they're not thinking about Palmdale and Lancaster.

And when people think of San Bernardino, county, they're not thinking about the Delanto and Victorville and Hesperia, which is also part of my district. My communities in the high desert are consistently forgetting about left out of critical resources at both the Senate and the county level.

These measures simply allows them to do it themselves to raise funds locally to meet the local needs of these cities. With that respectfully ask for your aye vote. Thank you.

Thank you. Do we have any witnesses in support?

I do not have any witnesses in support.

Okay. Any witnesses in the public? No. Is there opposition? Seeing no opposition. We have a motion in a second. Any comments or questions of Committee? No?

I'll make a comment real quick. I appreciate you, chair, for bringing this Bill forward. I know what it's like. I have this, a similar Bill for. My own cities in the community and some others across the state. And this is extremely important to give. It up to the voters to determine their future.

And so thank you again for bringing. The Bill forward and was happy to make the motion.

Thank you.

Thank you. Would you like to close?

I respectfully ask for your aye vote. Thank you very much, Madam Vice Chair.

Thank you. The motion is Senate amendments be concurrent and secretary, please call the roll.

[Roll Call]

The vote is 7-2.

Thank you, Madam Vice Chair. That is the end of the agenda items. But we do have some missing votes that we need to go over. You want to start with the votes that are missing? Madam Chair? Secretary.

AB 761. [Roll Call]

That's 9-0. The bill is out, and that's it. With that, we adjourn the Committee hearing. Thank you very much for being here. Thank you, Committee Members.