SB1262 (Torlakson) INFILL INCENTIVE PROGRAM: QUESTIONS AND ANSWERS

What does SB1262 do?

SB1262 requires county transportation commissions in the more densely populated areas of California to use a portion (5%) of their transportation capital funding as fiscal incentives and financial rewards for local governments that are building new compact housing and retail developments in “infill” locations.  Cities and counties that qualify for the incentive grant are then free to fund a transportation project with the revenue they are awarded.

Why does the bill link the use of transportation funds as incentives for infill development and affordable housing? What’s the connection between “infill” development and transportation?

Many counties across California have started to realize that their traffic congestion problems are in large part due to the lack of affordable housing close to jobs and other services. In an analysis of traffic congestion problems by the San Mateo City/County Association of Governments (CCAG), a study found that the most effective traffic reduction strategy was to build new housing within walking distance from shops, workplaces, schools and mass transit facilities.

Does SB1262 reduce money for transportation projects? Does it divert money from transportation programs into non-transportation uses?

Absolutely not -- SB1262 does not reduce the total funding for transportation projects and it does not divert transportation funds to non-transportation uses. It rewards cities and counties who are building new "infill housing and retail developments with transportation dollars to allow them to spend them on transportation projects of their choosing. Rather than pursuing punitive measures, SB1262 establishes a positive financial "incentive" program; it turns red tape into red carpet.

How do local governments benefit from SB1262?

Local governments have never been rewarded for building infill development – especially housing. There are no real tax incentives to build housing anymore in California, one of the reasons we have failed to produce enough housing and are in the midst of an affordable housing crisis statewide. SB1262 provides a large carrot in the form of transportation funds – that will reward local jurisdictions who are building housing and promoting infill development.

How does the private sector benefit from SB1262?

To be eligible for a grant, local governments must have development projects that are proposed but not yet permitted. Once a “transportation incentive grant” is awarded, local governments have two years to break ground on the project, thus starting a clock ticking on the development project – the promise of the incentive grant thus provides an impetus for fast-tracking the approval and permitting process for a development project, something which is tremendously helpful for private sector builders and developers who are often used to projects taking five years or more to secure all needed permits and paperwork.

Has this idea of transportation incentives ever been tested? Do we even know if it works?

Indeed, the idea of using transportation funds as incentives for infill housing and compact development was pioneered by San Mateo County in 1999. Under that initial two year pilot program, several cities were awarded incentive grants including Redwood City, who won a $700,000 transportation grant for permitting and breaking ground on a 400 unit apartment complex close to their main street, shops and an adjacent commuter rail station. The program was so popular – it also used STIP funding – that is was recently doubled in size and renewed. Similar programs have been approved at the nine county Bay Area Metropolitan Transportation Commission (MTC) and in Monterey County. Sacramento and Fresno Councils of Government are also pursuing similar proposals. 

Our county is worried about being able to use all of its available STIP funding for future transportation capital projects. Doesn’t SB1262 reduce money available for programming in the STIP by leaving the discretion up to each city in terms of how they spend their 10% share?

If a county designs a program that leaves maximum flexibility for how the city spends its grant, yes. But SB1262 allows each county to design its own program with its own guidelines, so if a county were worried about fully funding all projects already on a countywide list, it could design its incentive program in order to advance specific projects already on the STIP list within each local jurisdiction that was awarded the incentive grant. This would reduce the appeal of the program from a local government point of view since it would limit the flexibility of cities to apply the grant to any transportation project of their choosing within their jurisdiction – but it could be done if a county wanted to maintain control over programming and advancing all its STIP funding.

Would a transportation incentive grant under SB1262 have to be spent on transportation improvements in and around the development project that the grant was intended to fund?

Counties can create a geographic nexus between the transportation incentive grants and the projects that are awarded. For example, a county could require that a transportation incentive grant be spent on a transportation project that related to the housing project in question – i.e. intersection improvements, street landscaping, additional parking etc. Again, this nexus would in some part reduce the appeal of the program from a local government point of view, but it’s entirely permissible within the guidelines established under SB1262.

To see the full text of the bill visit http://www.leginfo.ca.gov and search for SB1262.