BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
308 (Cook)
Hearing Date: 08/12/2010 Amended: 06/23/2010
Consultant: Mark McKenzie Policy Vote: L Gov 5-0
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BILL SUMMARY: AB 308, an urgency measure, would continue the
property tax revenue allocation methodology for a specified
utility property located in the Inland Valley Development Agency
redevelopment project area in San Bernardino County, despite a
recent change in ownership that triggers a change in
allocations.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Foregone property tax Likely in the range of $2,000
annuallyGeneral
revenues to schools ---------see staff comments----------
Reimbursable local mandate likely minor costs as the bill
would continue General
the historical allocation methodology
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STAFF COMMENTS: SUSPENSE FILE.
Formed in 1990, the Inland Valley Development Agency (IVDA) is a
joint powers authority comprised of the County of San Bernardino
and the cities of Colton, Loma Linda, and San Bernardino. The
IVDA is responsible for redeveloping the non-aviation portion of
the former Norton Air Force Base and surrounding properties.
Southern California Edison's (SCE's) Mountainview power plant is
located in the City of Redlands within an IVDA redevelopment
project area. Until this year, an unregulated subsidiary of SCE
owned the Mountainview power plant. Existing law, pursuant to
AB 81 (Migden), Chapter 57 of 2002, requires property tax
revenues derived from electrical facilities owned by unregulated
private companies be distributed on a situs basis; revenues are
allocated only to those entities in the local tax rate area in
which the electrical facilities are located. A large percentage
of the property taxes derived from the Mountainview power plant
currently are allocated to the IVDA (approximately $4.5 million
out of a total of over $8.3 million in tax revenues).
SCE, a regulated public utility, took ownership of the plant in
March 2010, which triggers a change in the property tax revenue
allocation methodology. Existing law, pursuant to AB 1317
(Torlakson), Chapter 872 of 2006, requires property tax revenues
derived from specified electrical facilities that are owned by
regulated public utility to be allocated as follows: the
county, K-14 school districts, and non-enterprise special
districts receive the same percentage of tax revenues they
received in the previous year; the city receives 90 percent of
the remaining property tax revenues; and the city or water
district that provides water service to the power plant receive
the remaining 10 percent of revenues. All other entities,
including redevelopment entities such as the IVDA, would receive
none of the revenues derived from regulated electrical utility
property. This formula is intended to benefit the community in
which the power plant is located to mitigate the negative
impacts of those facilities.
Page 2
AB 308 (Cook)
AB 308 would prevent the change in allocations of property tax
revenues derived from SCE's Mountainview power plant that that
would otherwise occur as a result of the shift in ownership from
an unregulated company to a regulated public utility.
Specifically, this bill would require the allocation of property
tax revenues pursuant to the situs-based methodology specified
in AB 81 if: the property is constructed by a wholly owned
subsidiary of a utility prior to January 1, 2007 and placed into
service by the utility itself on or after that date; the
property is located in a redevelopment project area of a joint
powers authority (JPA), as specified; and the JPA adopts a
resolution stating that the property is subject to a
redevelopment plan and sends a copy of the resolution to the
Board of Equalization (BOE) and the county auditor prior to
January 1, 2011. The bill would also authorize BOE to amend the
2010-11 tax rolls in order to provide for these allocations.
AB 308 would preserve the status quo for the allocation of
property tax revenues derived from the Mountainview power plant,
despite the change in ownership to a regulated public utility.
This would ensure that the IVDA receives sufficient tax
increment funding to repay loans, advances, and other
indebtedness incurred by the redevelopment agency to finance or
refinance redevelopment projects. Absent this bill, some local
entities in San Bernardino County would receive higher
allocations of property tax revenues and others would get lower
amounts than they received prior to the transaction that shifted
ownership of the power plant to SCE from an unregulated
subsidiary. If this bill is not enacted, for example, the IVDA
would cease to receive approximately $4.5 million annually,
while San Bernardino County, the City of Redlands, Redlands
Unified School District, and the San Bernardino Valley Municipal
Water District would all benefit from dramatic increases in
property tax revenue allocations. The allocations to several
agencies would be unchanged and several others would cease to
receive allocations altogether.
Staff notes that this bill would result in approximately $2
million less property tax revenue for K-14 schools (primarily
the Redlands Unified School District) than they would otherwise
receive beginning in the 2010-11 fiscal year. The state General
Fund is generally required to backfill any property tax losses
to schools. Some of this impact would be mitigated by continued
pass-through payments made by the IVDA to school districts, but
these payments are not subject to Proposition 98. It should be
noted that schools that would benefit in the absence of this
bill would not receive any of the increased revenues if it
weren't for a simple corporate transfer of the power plant
property from an unregulated subsidiary to a regulated public
utility.
This bill would also create a reimbursable state-mandated local
program by changing the manner in which county officials
allocate property tax revenues. Any costs to revert to previous
years' allocation formulas are likely to be minor. There could
also be costs to send out corrected tax bills if the bill is
enacted after county officials send these notices out in the
fall.