BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  AB 468
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          CONCURRENCE IN SENATE AMENDMENTS
          AB 468 (Smyth)
          As Amended  August 18, 2011
          Majority vote.  Urgency
           
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          |ASSEMBLY:  |76-0 |(June 1, 2011)  |SENATE: |37-0 |(August 30,    |
          |           |     |                |        |     |2011)          |
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           Original Committee Reference:    L. GOV.  

           SUMMARY  :  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. 
           

           The Senate amendments  move the implementation date of the bill 
          from fiscal year (FY) 2011-12 to fiscal year 2012-13.

           EXISTING LAW  :

          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 county.

          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. 

           AS PASSED BY THE ASSEMBLY  , this bill:









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          1)Prohibited the county auditor from reducing the City of Simi 
            Valley's Tax Equity Act (TEA) payment when the City receives 
            additional property tax revenue due to the consolidation of a 
            maintenance or improvement district, commencing in FY 2011-12.

          2)Required the City of Simi Valley to reimburse the auditor for 
            the actual and reasonable costs incurred by the auditor to 
            administer the provisions of the bill. 

          3)Provided that reimbursement is required because the 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 the bill imposes.

          4)Stated 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)Stated that this act 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.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, no fiscal impact to the state.

           COMMENTS  :  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% 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 








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          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.    

          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 2012-13, 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. 

          Support arguments:  According to the sponsor, the City of Simi 
          Valley, this bill allows the City the necessary flexibility to 
          dissolve its light maintenance district and become the 
          district's successor entity, which will allow the City to 
          maintain and operate all street lights into the future.  The 
          bill also requires the City to reimburse the county auditor for 
          costs incurred by the auditor's work in administering the 
          allocation changes.

          Opposition arguments:  None on file.
           

          Analysis Prepared by  :    Debbie Michel / L. GOV. / (916) 
          319-3958                                               

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