BILL ANALYSIS                                                                                                                                                                                                    Ó


          |SENATE RULES COMMITTEE            |                   AB 468|
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                                 THIRD READING

          Bill No:  AB 468
          Author:   Smyth (R)
          Amended:  5/27/11 in Assembly
          Vote:     27 - Urgency

           SENATE GOVERNANCE & FINANCE COMMITTEE  :  9-0, 6/22/11
          AYES:  Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez, 
          La Malfa, Liu
          SENATE APPROPRIATIONS COMMITTEE  :  9-0, 7/11/11
          AYES:  Kehoe, Walters, Alquist, Emmerson, Lieu, Pavley, 
            Price, Runner, Steinberg
          ASSEMBLY FLOOR  :  76-0, 6/1/11 - See last page for vote

           SUBJECT  :    Property taxes:  TEA formula allocation

           SOURCE :     City of Simi Valley

           DIGEST  :    This bill prohibits a reduction in the tax 
          equity allocation payments to the City of Simi Valley as a 
          result of that city serving as the successor agency of a 
          dissolved maintenance district, and requires Simi Valley to 
          reimburse the county auditor for any administrative costs.

           ANALYSIS  :    

          Existing law: 



                                                                AB 468

          1. Allows, under the Improvement Act of 1911, local 
             officials to create an assessment district to fund 
             transportation systems, street paving, grading, 
             sidewalks, parks, recreation areas, sewers, drainage 
             systems, fire protection, flood control systems, water 
             systems, and other necessary improvements. 

          2. Requires the auditor of each county with qualifying 
             cities, as defined, to make certain property tax revenue 
             allocations to those cities in accordance with a 
             specified Tax Equity Act (TEA) formula established in 
             statute and to make corresponding reductions in the 
             amount of property tax revenue that is allocated to the 

          3. Provides, whenever a jurisdictional change is not 
             required to be reviewed and approved by a local agency 
             formation commission, the local agencies whose service 
             area or service responsibilities would be altered by the 
             proposed change, shall give notice to the State Board of 
             Equalization and the assessor and auditor of each county 
             within which the territory subject to the jurisdictional 
             change is located.

          This bill clarifies how property taxes will be distributed 
          to the City of Simi Valley once the City becomes the 
          successor agency after the dissolution of the City's 
          maintenance district.  Specifically, this bill: 

          1. Prohibits the county auditor from reducing the City of 
             Simi Valley's TEA payment when the City receives 
             additional property tax revenue due to the consolidation 
             of a maintenance or improvement district, commencing in 
             fiscal year (FY) 2011-12.
          2. Requires the City of Simi Valley to reimburse the 
             auditor for the actual and reasonable costs incurred by 
             the auditor to administer the provisions of this bill. 

          3. Provides that reimbursement is required because this 
             bill provides for reimbursement to a local agency in the 
             form of additional revenues that are sufficient in 
             amount to fund the new duties that this bill imposes. 



                                                                AB 468

          4. States that the Legislature finds and declares that a 
             special law is necessary and that a general law cannot 
             be made applicable because of the need to ensure that 
             the City of Simi Valley can meet established timelines 
             to begin the process of immediately dissolving a 
             maintenance district and serving as its successor, to 
             simplify city accounting, and to give the city maximum 
             budget flexibility.

          5. States that this bill is an urgency statute necessary 
             for the immediate preservation of the public peace, 
             health, or safety in order to ensure that the City of 
             Simi Valley can meet established timelines to begin the 
             process of immediately dissolving a maintenance district 
             and serving as its successor, and to give the city 
             maximum budget flexibility.

          According to the Senate Governance and Finance Committee 

            "About 30 cities that never levied a property tax before 
            Proposition 13 are called no property-tax cities, and 
            about 60 cities that levied only low property tax rates 
            are known as low property-tax cities.  Counties must 
            shift some of their own property tax revenues to these 
            no/low cities in the form of TEA payments.  In most 
            counties, TEA payments to the no/low cities are equal to 
            7 percent of the property tax revenues generated within 
            their city limits. 

            "The Simi Valley Lighting Maintenance District was formed 
            by the Simi Valley City Council in 1969 under the 
            provisions of the Improvement Act of 1911 to serve as a 
            financing mechanism in order to provide lighting 
            maintenance services.  The Improvement Act of 1911 allows 
            local officials to levy benefit assessments on property 
            owners to pay for those public improvements and services 
            that specifically benefit their property.  A benefit 
            assessment is an involuntary charge that appears on a 
            property owner's annual property tax bill.  The amount of 
            the assessment is directly related to the amount of the 
            benefit their property receives. 



                                                                AB 468

            "The City of Simi Valley wants to take over the 
            responsibilities and dissolve the Simi Valley Lighting 
            Maintenance District.  In order to do this, Simi Valley 
            follows the process in existing law to dissolve the 
            district, and once dissolved, any remaining revenues will 
            be transferred to the general fund.  If assessments have 
            been pledged to pay off bonds, then the assessments must 
            continue until the bonds are paid for. 

            "However, there is concern that since Simi Valley is 
            considered a no/low property city that the dissolution of 
            the Simi Valley Lighting Maintenance District will impact 
            the TEA payment that Simi Valley receives.  This bill 
            remedies that problem by prohibiting, starting in FY 
            2011-12, the county auditor from reducing the TEA payment 
            by reason of the City of Simi Valley receiving property 
            taxes that were previously allocated to a maintenance or 
            improvement district."

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

          According to the Senate Appropriations Committee:

                         Fiscal Impact (in thousands)

           Major Provisions     2011-12      2012-13     2013-14    Fund  

          Property tax allocations      Allows for retention of 
          maintenance        Local
                             district property tax revenues with 
                             successor city while statutorily 
                             protecting Simi Valley TEA payment

          Auditor mandate    non-reimbursable mandate, all 
                             costs reimbursed by Simi Valley (local
                             fee disclaimer)

           SUPPORT  :   (Verified  7/12/11)

          City of Simi Valley (source)



                                                                AB 468

           ASSEMBLY FLOOR  :  76-0, 6/1/11
          AYES:  Achadjian, Alejo, Allen, Ammiano, Atkins, Beall, 
            Bill Berryhill, Block, Blumenfield, Bonilla, Bradford, 
            Brownley, Buchanan, Butler, Charles Calderon, Campos, 
            Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson, 
            Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani, 
            Beth Gaines, Galgiani, Gatto, Gordon, Grove, Hagman, 
            Halderman, Hall, Harkey, Hayashi, Roger Hernández, Hill, 
            Huber, Hueso, Huffman, Jones, Knight, Lara, Logue, Bonnie 
            Lowenthal, Ma, Mansoor, Mendoza, Miller, Mitchell, 
            Monning, Morrell, Nestande, Nielsen, Norby, Olsen, Pan, 
            Perea, Portantino, Silva, Skinner, Smyth, Solorio, 
            Swanson, Torres, Valadao, Wagner, Wieckowski, Williams, 
            Yamada, John A. Pérez
          NO VOTE RECORDED:  Garrick, Gorell, Jeffries, V. Manuel 

          AGB:kc  7/12/11   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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