Senate Standing Committee on Local Government

Here we go. The Senate committee and local government will come to order. Good morning. Thank you for joining us for this meeting. The Senate welcomes the public in person, and we are holding our committee meetings here in the O Street Building.

I ask all members of the committee be present in Room 2200 so we can establish our quorum and begin our hearing. We are hearing today SB 226 by Senator Cabaldon and SB 594, Senator Padilla on a referral pursuant to Senate rule 29.10 D. These bills were significant significantly amended in the Assembly, so the Senate rules committee returned the bill to committee to hear those changes.

Before we hear our presentation, we'd like to have a quorum, but we see we don't have a quorum yet, so we will start as a sub committee. With that, I want to welcome Assembly Member Senator Cabaldon.

Good morning, and you may proceed.

Good good morning. Thank you, Madam Chair and and members for the opportunity to present SB 226, which was was substantially amended in the Assembly. SB 226 makes a straightforward, small, but actually quite consequential change to the existing infrastructure revitalization financing districts. As this committee is well aware, there are millions of different kinds of, what seems like millions of different kinds of tax increment financing districts. Infrastructure revitalization districts are not well known, but they can provide an important alternative in very specific situations.

SB 226 simply clarifies that commercial, uses which are currently authorized in the law does include entertainment and sports facilities, which are by their nature, commercial. Infrastructure, revitalization financing districts allow local, communities to fund major infrastructure and development proposals using the new tax revenue that's generated solely because of the project that is built. Importantly, they do not divert money from the general fund or for or for other revenue purposes in a community.

And in fact, because they simply deal with the increment with the increment, they increase overall economic, development and taxing capacity in the communities in which they sit. When a community is putting together, an infrastructure revitalization project for hundreds of millions or billions of dollars, and that kind of, investment requires certainty for it to occur.

That's why SB 226 is is before you. Not that it makes a substantive change in the law, but to make it absolutely clear so that there's no uncertainty from future litigation that maybe commercial isn't entertainment, which it is in every other context. SB 226 seeks to solve this. It's not pure in this case, it's not a theoretical exercise. SB 226 was was amended in the in the

in the

Assembly because we have a lot a live project. The city of Sacramento West Sacramento is taking the lead for California's proposal for the the next expansion team for Major League Baseball. Major League Baseball has has announced that they intended to consider two new expansion teams, one on the West Coast and one in the West and one in the East.

And the principal California proposal is from the Sacramento region, which is as I know the Chair is aware is home to the the currently home to the to the Sacramento a's as well as the Sacramento River Cats triple a team. And the City of West Sacramento through the use of this infrastructure revitalization district instrument as well as others is in a position to be highly competitive with private sector partners in the region in the battle with other states to to bring that expansion team to California.

So by solidifying that legal foundation for the projects, it would allow us to move forward both locally but statewide with our expansion proposal and bring economic benefits to the local community, but also to the region and to the state of California as a whole. With me, in support of the bill is the city manager of the city of West Sacramento, former president of the California Association of Local Economic Development, and probably the 1 of the state's number 1 wiz, well, whiz kids.

He's worked for the city for a long time in the in the in the in the domain of infrastructure finance and tax increment financing. Erin Laurel.

Good morning. You will have a couple of minutes.

Good morning. I I will keep it actually very brief. Good morning, Madam Chair and members of the committee. Thank you for that introduction, Senator Cabaldon. Always always too generous.

He did a great job of summarizing the bill and its purpose and importance to our city and really to the broader context of economic development in California for these types of projects. Our city, as you know, has been involved in developing this proposal. It's extremely important to our financing plan and in our discussions with our private sector partners to have this clarification.

So it's a minor change to the existing law, but a very important one going forward for projects like this as we try to bring a major league baseball team, back to California. So, with that, I'm here to answer any questions you have and, urge your eye vote.

Thank you.

Thank you. Thank you very much. Anyone, else is that it for your principal witnesses? Yes. Okay.

So anyone here in support of SB 226, please come forward.

Good morning. Ross Buckley on behalf of the city of Sacramento in support.

Thank you. Anyone else in support? Seeing none, anyone in opposition? K. Seeing none, bring it to the dias.

Any questions or comments from our members? Senator Chuck?

Yeah. Thank you for the introduction and it looks sounds like it's a necessary measure. But can you explain once again what the specific major amendments took place at this Assembly?

Yes. Thank you, Senator. So the the Assembly amendments, remove the prior version of contents of this building instead insert this this amendment to clarify what existing law. So existing law says that a local jurisdiction may use an infrastructure revitalization district in order to make investments in infrastructure and in projects that are, you know, a long list of the of what what qualifies. One one item on that list are commercial and industrial facilities, and that commercial commercial facilities do include sports and entertainment.

That's both that's that's what they are. But the the language simply adds including sports and entertainment facilities, so that it's absolutely clear that there's not a a legal ambiguity that would result in litigation. And in part because, you know, this will be a competition with other with other other states and other places, and we want to minimize the likelihood of mischief that would then potentially threaten the entire financing for the project.

If and when somebody investor comes along and we don't need this public funding through this IRFTE and we'll invest our own money and then what happens?

If the investor so the so this this will not by itself fund the whole Major League Baseball project. This is one component of of many as, I know in your own in your own city as mayor, you've done many projects like that, like this as well. So there will be any professional sports franchise does require many and and many large private sector investors, and that will be the case for this project as well.

These are private sector enterprises, but the infrastructure associated with them and some of the core elements of the project typically do involve public sector investment because they generate substantial economic activity beyond this the project itself. And so this will allow for the certainty both for two kinds of investors.

One is the investors that are purchasing the in infrastructure revitalization district bonds, that they know that when they purchase those bonds, the bonds themselves will be protected from potential litigation in this particular area. And then second, for the private sector investment investors in the project or in the team itself, that they will know that with they commit to making their investments of hundreds of millions or billion dollars that that this component of the infrastructure financing will also be secure.

That clears my question and and time comes, I would love to make a motion.

Okay. Senator Choi makes a motion. Okay. We wanna establish quorum.

[Roll Call] you have a.

Okay. We've established a quorum. Just one question. I think I know the answer. But this is not this bill would not limit it to a particular project right now.

So and and for how long would that would this be available to you? Just just to clarify.

That's correct. It it would not be for a specific project. The IRFD tool is available across the state of California now. It would not limit the duration of of the use of that tool. I will say that once you establish one of these districts, you have forty years to, collect increment on it.

So that's the only limitation.

Okay. Okay. Great. Alright. If there are no questions, we don't mind the competition in in LA.

So wish wish you all the luck. Wish you all the luck. So with that, we have a motion by Senator Choi. We'll call the roll.

The motion.

Sorry. Closing remarks.

Simply ask for an eye vote. Thank you very much, madam Chair.

Okay. Go ahead.

The motion is that the Assembly amendments be concurred in. [Roll Call] Four zero.

Okay. Thank you.

Thank you.

Bill is on call. Thank you very much. Thank you for your testimony. Next, we have do we have we have one more bill, SB 594. Any sense?

We will convene in a few minutes on recess now.

Good morning, madam Chair, members.

Okay. We will now hear from Senator Padilla on SB 594. You may proceed.

Thank you, Madam Chair. Members, thank you for your patience. Please to present. This bill would allow federally recognized Indian tribes to receive the same information from short term rental facilitators currently provided to city and county governments. You know under current law, local and county governments can enact ordinances that require such to closure disclosures to provide key information such as addresses, zip codes, market dynamics, short term rental properties that are exist in their markets and jurisdiction.

It's used by Canadian city and county governments to help facilitate the collection of their transient occupancy taxes. However, short term rental properties are not only located within jurisdictions of city and county governments. At some smaller scale, they're also exist on tribal lands. Tribes have the authority, as you know, to enact administer TOT on their properties, but current law excludes them from receiving the same information in short term rental facilities that is provided to city and county government, specifically alignment and enforcement.

They cannot access or compel the production of such information in state court, and that is the distinction.

That is why we have the need for a state statute. Without access to this information, these governments have a more difficult time administering. And of course, as you well know, these revenues are really important for essential tribal services, including safety, environmental protection, fire, and emergency response. It extends existing law that I know the Chair is familiar with, ensuring the tribal governments have the same powers that cities and counties have under short term rental facilitator act of 2025.

Here with me today is Nick Brokaw, partner in Sacramento Advocates.

Thank you very much. Welcome. Good morning. Good morning. Two minutes, please.

Hey. Good morning, Madam Chair and Members. Thank you very much. Nick Brokaw here with Sacramento Advocates on behalf of the Arcuacayante Band of Kaweah Indians. Of course, we wanna begin by thanking the Senator for bringing this bill forward as he notes it's fundamentally about parity and and fairness.

Under the leadership of madam Chair, of course, current law allows California city and county governments to receive limited information such as the address of a property from short term rental facilitators. This information is vital for city and county governments to impose and administer transient occupancy taxes on those short term rental properties located within their jurisdiction. Of course, as the Senator just noted, short term rental properties, they aren't just located, in the jurisdictions of city and county governments. They also can be located on tribal land.

And while tribes, federally recognized tribes do have the right to administer and enact these taxes on lodging facilities located on tribal lands.

State law currently excludes tribes from receiving the same information from short term rental facilitators that can be provided to city and county governments. As a result, it's much more difficult for tribes to receive the information they need to administer these taxes for these properties And of course these taxes generate revenue that's vital for essential government services including public safety, fire and emergency response, infrastructure, environmental protection and tourism management.

These services benefit the reservation community, consisting both tribal and non tribal members as well as visitors to the state of California. SB 594 would only apply to federally recognized tribes located in California and only when the tribe imposes a transient occupancy tax. It's not expand on regulatory authority or alter jurisdictional boundaries.

It simply recognizes tribal governments for purposes of administering a tax function that's the equivalent to that of city and county governments. As the bill promotes parity, fairness, revenue integrity, and advances California's policy of cooperative intergovernment relations, on behalf of Agua Caliente, I respectfully ask for your support today. Thank you.

Alright. Thank you very much. Any other principal witness?

I have no others.

Okay. Anyone else here in support of SB 594? Okay. Is there anyone in opposition to SB 594? Seeing none.

Bring them back to the dais. Any? He moves the bill. Senator Laird moves the bill. Any questions?

Senator Choi, questions or comments?

Yeah. I would just support that, you know, that sounds like that's a necessary measure, but now up as you stated, Indian travel government has their sovereign right to enact their taxation regulations and the power to collect tech the TOT taxes. And now this bill, as I hear, is that local government, the non tribal government, needs to collect the data of a DOT located within the tribal land.

If that is the case, my understanding is that a non tribal government nearby would not have any power to collect the the the the tax from from the tribal land. Can you clarify what the misunderstanding?

Sure. If if Absolutely. Okay. So vice vice chairman, the way this works, we're we're talking about short term rental facilitator properties that are located only on tribal land. Yeah.

So in the case of Agua Caliente, we have 34,000, acres of land. Our reservation runs through a couple different cities, but we're talking about properties located exclusively on tribal land. So this would provide the tribe the right and the ability to ascertain that information that they need to collect and ultimately levy that tax. So it it it doesn't infringe upon any any, abilities of another local government in a similar or nearby jurisdiction to do the same.

Here, policy analysis, opposition position states that federally recognizes tribes possess inherent sovereign authority to tax and regulate activities within their jurisdiction, including the authority to impose transient occupancy taxes. This bill will nevertheless places the state legislature in the unusual position of establishing procedures governing how tribal governments obtain information and enforce tax related requirements against the short term rental facilities. That's what it says.

Yes. So so I think a couple different points here. So tribes have the ability to assess and levy a transient occupancy tax. This bill doesn't change that, doesn't impact that. Tribes have the ability to pass a local ordinance just as a local city or county government possesses that same right to do that.

The issue is that a tribal government right now can't always track down the information they need to collect and ultimately assess that tax. So a city or local

That's their business, isn't it? The tribe they are able or unable. Why do we have to bother?

Madam Chair, if maybe I can help.

Yeah. And I could add a quest an answer to that too as well, but you go ahead and answer that.

Madam Chair, thank you. Excuse the interruption to my witness, Senator. Perhaps, sir, there's no registered opposition on this bill. I think the point of this bill does not deal with the ability of tribal governments to assess which they have, you know, in their sovereign power. This is about their ability to, fund operationally collect the data they need to formulate, those TOTs when they seek to implement them.

And the absence of that data makes that very hard. The reason we need a state statute and we need to build here is we need to be able to align that parallel to the tribal government's function and to their ability to compel the production of that if it becomes necessary in a state court. And the in order for them to do that in a state court, they need state legislation. So that is the distinction.

This bill has nothing to do with the tribal government sovereign powers to assess or formulate that as sovereign to the tribal government.

This is about the ability of them to compel the production and functionally be able to access that information in an operational way. Sort of an unintended consequence and we're trying to address that in this bill.

Okay. Thank you.

Thank you, were good . Okay. Thank you. Any other questions or comments? Alright.

Senator Laird made the motion. You can proceed. Oh, I'm sorry. Closing remarks.

Respectfully ask for an Aye vote.

Thank you.

The motion is yet the Assembly amendments be concurred in. [Roll Call]

Thank you, Madam Chair, Members.

Okay. The bill will remain on call. Thank you very much for being here. Thanks. Recess.

Local government committee will go on recess. To vote.

[Roll Call]

The bill remains on call. Thank you.

[Roll Call]

Thank you. Bill remains the bill remains on call. We will be on recess. We are reconvening local government, committee and opening the rule to first SB 226.

[Roll Call]

Six zero? The bill is up.

[Roll Call]

Bill is out and we're done. Thank you, Senator. Thank you to all the individuals who participated in public testimony today. If you were not able to testify, please submit your comments or suggestions in writing to Senate local gov committee or visit our website. Your suggestions and comments are very important to us.

Thank you to everyone for your patience and cooperation. We've concluded the agenda. Senate local gov committee is adjourned.