BILL ANALYSIS
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|SENATE RULES COMMITTEE | SB 26XXXX|
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UNFINISHED BUSINESS
Bill No: SB 26XXXX
Author: Ducheny (D)
Amended: 7/23/09
Vote: 27 - Urgency
SENATE FLOOR : Not relevant
ASSEMBLY FLOOR : Not available
SUBJECT : Budget Act of 2009: community redevelopment
SOURCE : Author
DIGEST : Assembly Amendments delete the prior version of
the bill expressing the intent of the Legislature to enact
statutory changes relating to the 2009 Budget Act.
This bill now provides the necessary statutory changes in
the area of community redevelopment in order to amend the
2009 Budget Act.
ANALYSIS : This bill shifts $1.7 billion in redevelopment
revenues to the Supplemental Educational Revenue
Augmentation Fund in 2009-10, thereby benefiting the State
General Fund. An additional $350 million is shifted in
2010-11. Complying redevelopment agencies receive a
one-year extension for the 2009-10 shift.
Background
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The California Constitution permits, and the Community
Redevelopment Law provides procedures for, redevelopment
agencies to divert property tax increment revenues to pay
for implementing redevelopment plans that eradicate blight.
Redevelopment agencies adopt redevelopment plans for their
project areas and they incur debt to finance their efforts.
The property tax increment revenues generated in a
redevelopment project area repay the redevelopment
agencies' debts. There are statutory time limits on
redevelopment plans' effectiveness and time limits for the
redevelopment agencies to receive property tax increment
revenues.
Proposed law:
For the 2009-10 and 2010-11 fiscal years, this bill
requires a redevelopment agency to remit a calculated
amount of money to the county auditor for deposit in the
new Supplemental Educational Revenue Augmentation Fund
(SERAF).
The State Director of Finance must determine each
redevelopment agency's amount, following a nine-step
calculation that considers the agency's proportionate share
of $1,700,000,000 in 2009-10 and $350,000,000 in 2010-11.
Half of an agency's proportionate share is based on an
agency's net property tax increment revenues while the
other half is based on the total property tax increment
revenues.
By November 15 of each fiscal year, the Director of Finance
must notify each redevelopment agency, its legislative
body, and each county auditor of these amounts. By March 1
of each fiscal year, the redevelopment agency must tell the
county auditor how it intends to fund its allocation to
SERAF. By May 10 of each fiscal year, a redevelopment
agency must remit its amount to the county auditor. The
county auditors must deposit the money into SERAF.
This bill allows a redevelopment agency to allocate less
than the required amount to SERAF if it adopts a resolution
documenting that it needs the money to make payments on
other, existing debts.
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The bill declares that these allocations to SERAF are an
indebtedness of the redevelopment project area to which
they relate, payable from the agency's property tax
increment revenues, and an indebtedness of the agency until
paid in full. The bill also makes legislative findings and
declarations in support of its provisions.
The SERAF funds are allocated to K-12 school districts or
county offices of education that are partially, or
entirely, within each redevelopment project area in
proportion to the average daily attendance of each school
district. The school districts and county offices of
education receiving funds under this section shall
distribute the fund to schools serving pupils living in the
redevelopment project areas or in housing supported by
redevelopment agency funds. The allocation to schools
within or nearby each redevelopment agency addresses the
issues raised in an adverse court ruling related to the
2008-09 shift. The Sacramento Superior Court in California
Redevelopment Association v. Genest invalidated the 2008-09
shift on the basis that the funds were to be transferred to
the county ERAFs for countywide education funding without
any specific linkage to the redevelopment projects or
areas.
This bill reduces the amount of property tax otherwise
received by school districts by an amount equivalent to the
SERAF transfer. The property tax otherwise received by
schools is deposited in the new Supplemental Revenue
Augmentation Fund (SRAF), which is created in associated
legislation in the budget package. The SRAF provides a
mechanism for State General Fund relief because SRAF funds
are expended, as directed by the Director of Finance, to
reimburse the State General Fund for state expenditures in
that county for health care, trial court, correctional, or
other services and costs. The Director of Finance may also
direct SRAF funds back to school districts and county
offices of education to offset State General Fund
expenditures.
For just 2009-10, this bill suspends the Community
Redevelopment Law's existing requirement that each
redevelopment agency must set aside 20 percent of its gross
property tax increment revenues in a Low and Moderate
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Income Housing Fund. Any amount suspended must be repaid
by June 30, 2015.
This bill allows a redevelopment agency to borrow from its
Low and Moderate Income Housing Fund in both 2009-10 and
2010-11. The bill requires a redevelopment agency to repay
those amounts borrowed in each fiscal years by June 30,
2015, and June 30, 2016, respectively.
For a redevelopment agency that allocates its full
proportionate share to the county auditor for deposit in
SERAF in 2009-10, this bill gives a one-year extension of
time on the effectiveness of the agency's redevelopment
plans and on the time for the agency to receive property
tax increment revenues.
For an agency that does not allocate its full proportionate
share, the bill permanently increases the amount of
property tax increment revenues that the agency must set
aside in the Low and Moderate Income Housing Fund by five
percent.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
DLW:nl 7/23/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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