BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   SB 530|
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                                 THIRD READING


          Bill No:  SB 530
          Author:   Dutton (R)
          Amended:  4/28/09
          Vote:     21

           
           SENATE LOCAL GOVERNMENT COMMITTEE  :  4-0, 5/6/09
          AYES:  Wiggins, Cox, Kehoe, Wolk
          NO VOTE RECORDED:  Aanestad


           SUBJECT  :    Redevelopment:  payments to taxing entities

           SOURCE  :     California Redevelopment Association


           DIGEST  :    This bill applies the redevelopment pass-through  
          reporting and repayment requirements enacted by last year's  
          State Budget to redevelopment project areas that were  
          formed before January 1, 1994 and amended after January 1,  
          1994, as specified.

           ANALYSIS  :    State law lets redevelopment agencies divert  
          other local governments' property tax increment revenues so  
          that they can fight physical and economic blight.  To  
          alleviate the financial burden and detriment that these  
          other taxing entities may incur as a result of the adoption  
          of a redevelopment plan, redevelopment officials must  
          return a portion of their tax revenues from redevelopment  
          projects adopted or amended after January 1, 1994 to other  
          local taxing entities in the form of mandatory  
          "pass-through" payments (AB 1290, Isenberg, Chapter 942,  
          Statutes of 1993).
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          This bill applies the redevelopment pass-through reporting  
          and repayment requirements enacted by last year's State  
          Budget to redevelopment project areas that were formed  
          before January 1, 1994 and amended after January 1, 1994  
          to:

          1.Increase the limitation on the number of dollars to be  
            allocated to the agency, or

          2.Increase, or eliminate the time limit on the establishing  
            of loans, advances, and indebtedness, pursuant to  
            specified statutes, or

          3.Lengthen the period during which the redevelopment plan  
            is effective if the redevelopment plan being amended  
            contains specified provisions. 

           Comments
           
          There is consensus among redevelopment officials, county  
          officials, and the State Controller's Office staff that  
          pre-1994 project areas that have been amended since 1994  
          were inadvertently omitted from the redevelopment language  
          in AB 1389, last year's budget trailer bill.  This bill  
          corrects that error.  However, significant disagreements  
          over the implementation and interpretation of last year's  
          redevelopment pass-through reporting and repayment  
          requirements remain unresolved.  Discussions continue on  
          how to reconcile redevelopment agencies' last five years of  
          pass-through payments.  

          After reviewing the practices employed by school districts,  
          community colleges, and redevelopment agencies related to  
          the distribution and reporting of these pass-through  
          revenues, the California State Controller's Office issued a  
          report in May 2008 which found that:

          1.Many school districts and community colleges understated  
            the amount of pass-through payments they receive from  
            redevelopment agencies. 

          2.Some redevelopment agencies failed to make their  
            mandatory pass-through payments.

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          3.Redevelopment agencies made numerous reporting errors  
            which resulted in an understatement of pass-through  
            payments made to schools.

          The State Controller estimated that the cumulative effect  
          of these problems resulted in an excess State General Fund  
          obligation to schools of $33.8 million in 2005-06 and $29.4  
          million in 2006-07.

          In response to the Controller's report, a State Budget  
          trailer bill enacted procedures to identify and recover  
          pass-through payments that redevelopment agencies failed to  
          make to K-14 education agencies for fiscal years 2003-04  
          through 2007-08 and ensure proper payments in 2008-09 (AB  
          1389, Assembly Budget Committee, Chapter 751, Statutes of  
          2008). 

           FISCAL EFFECT  :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  5/11/09)

          California Redevelopment Association (source) 


          AGB:nl  5/11/09   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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