BILL ANALYSIS Ó
AB 2647
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CONCURRENCE IN SENATE AMENDMENTS
AB 2647 (Wagner)
As Amended August 5, 2014
Majority vote
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|ASSEMBLY: |78-0 |(May 15, 2014) |SENATE: |36-0 |(August 27, |
| | | | | |2014) |
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Original Committee Reference: L. GOV.
SUMMARY : Clarifies property tax revenues attributable to the El
Toro Project Area for the former Lake Forest Redevelopment
Agency (RDA) in light of the dissolution of redevelopment.
The Senate amendments revise language in this bill to clarify
property tax revenues attributable to the El Toro Project Area
for the former Lake Forest RDA, as follows:
1)Delete language for the Orange County Auditor Controller
(Auditor Controller) to create the Lake Forest Redevelopment
Property Tax Trust Fund (RPTTF) account.
2)Require, after deducting administrative costs and pass-through
amounts, and making the required bankruptcy payment and the
pre-existing bond obligations payments, the Auditor Controller
to deposit into the Lake Forest RPTTF the transfer agreement
amount, as set forth in the applicable Recognized Obligation
Payment Scheduled (ROPS) submitted by the Orange County
Development Authority successor agency and approved by the
Department of Finance, to the extent moneys are available from
the portion of the former Orange County Development Agency's
RPTTF attributable to the El Toro Project Area.
3)Specify that the payment described in 2) above, shall be paid
prior to all payments listed on the ROPS of the Orange County
Development Authority successor agency, other than specified
payments, unless otherwise required by statute or applicable
bond covenants.
4)Define "transfer agreement amount" to mean the amount of the
payment required to be made by the Orange County Development
Agency to the former Lake Forest RDA pursuant to the transfer
agreement, less the amount of passthrough payments
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attributable to the El Toro Project Area that are disbursed by
the Auditor Controller pursuant to existing law.
EXISTING LAW :
1)Dissolves redevelopment agencies as of February 1, 2012, and
provides for the designation of successor agencies.
2)Requires successor agencies to wind down the affairs of the
dissolved redevelopment agencies.
3)Defines "enforceable obligations."
4)Requires successor agencies make payments due to enforceable
obligations, as specified.
5)Requires each successor agency to have an oversight board of
seven members to approve certain actions of the successor
agency.
6)Requires the Department of Finance to review the actions of an
oversight board.
7) Finds and declares all of the following:
a) The Orange County Board of Supervisors established the
Neighborhood Development and Preservation Project on June
28, 1988;
b) The Orange County Neighborhood Development and
Preservation Project consists of 13 independent areas
either within the territorial jurisdiction of incorporated
cities or the sphere of influence of existing cities;
c) The County of Orange and affected cities are in
agreement that the territorial jurisdiction for the
Neighborhood Development and Preservation Project areas for
those areas presently within the boundaries of an
incorporated city, and areas which upon their annexation or
inclusion otherwise are included within the boundaries of
an incorporated city should be transferred to the
appropriate city; and,
d) If any portion, including a subarea of the Orange County
Neighborhood Development and Preservation Project, of the
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territory is currently within the boundaries of a city, or
is subsequently annexed to a city or otherwise included
within the boundaries of a city, the territorial
jurisdiction of the agency of the county over that portion
including a subarea
of the project area, of the territory in the Orange County
Neighborhood Development and Preservation Project may be
transferred from the agency of the county to the agency of
the city pursuant to existing law, except as specified.
AS PASSED BY THE ASSEMBLY , this bill:
1)Required the Auditor Controller to do both of the following:
a) Establish a separate RPTTF for the former Lake Forest
(RDA); and,
b) Allocate property tax revenues attributable to the El
Toro Project Area between the RPTTF established for the
former Orange County Development Agency and the RPTTF
established for the former Lake Forest RDA, as provided
below.
2)Required all property tax revenues deposited by the Auditor
Controller pursuant to provisions in existing law that require
the auditor-controller to determine the amount of property
taxes that would have been allocated to each RDA in the
county, had the RDA not been dissolved, during each fiscal
year that are attributable to the Neighborhood Preservation
and Development Project Area, including the El Toro Project
Area, to be initially placed in the Fund for the former Orange
County Development Agency.
3)Required the Auditor Controller, prior to January 2, 2015, and
prior to each June 1 and January 2 thereafter, or such other
RPTTF distribution date as may be determined by the
Legislature, to determine the sum of the following:
a) For each six-month fiscal period, the amount of
administrative costs and negotiated and statutory
passthrough obligations pursuant to provisions in existing
law; and,
b) For each fiscal year, both of the following:
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i) The transfer amount required by existing law related
to the transfer from the Orange County Development Agency
to the Orange County general fund, as specified; and,
ii) All other obligations secured by a prior claim on,
or pledge of, moneys in the Redevelopment Property Tax
Trust Fund of the former Orange County Development
Agency, including tax allocation bonds, as applicable,
that are payable on a basis prior to any transfer to the
former Lake Forest RDA pursuant to the Transfer Agreement
or pursuant to existing law contained in the Community
Redevelopment Law related to restrictions on RDA
operations and dissolution of RDAs and designation of
successor agencies, or any other law.
4)Required, if the moneys in the RPTTF established for the
former Orange County Development Agency, exclusive of property
tax revenues attributable to the El Toro Project Area, are
sufficient to pay all obligations described in 3) above, the
Auditor Controller to deposit into the Redevelopment Property
Tax Trust Fund established by the former Lake Forest RDA the
amount by which the property tax revenues attributable to the
El Toro Project Area exceeds the amount to be retained by the
Orangey County Development Agency pursuant to the transfer
agreement, and require the moneys to be distributed in
accordance with existing law for passthrough agreements.
5)Required, if the moneys in the RPTTF established for the
former Orange County Development Agency, exclusive of property
tax revenues attributable to the El Toro Project area, are not
sufficient to pay all obligations described in 3) above, the
Orange County Auditor Controller to distribute the moneys in
the RPTTF established for the former Orange County Development
Agency that are attributable to the El Toro Project Area as
follows:
a) An amount equal to the greater of either the following
shall be retained in the Fund established for the former
Orange County Development Agency and distributed in
accordance with existing law for passthrough agreements:
i) The amount to be retained by the Orange County
Development Agency pursuant to the transfer agreement;
or,
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ii) The amount necessary to fund the balance of the
obligations described in 3) above, in excess of the
amount otherwise available in the RPTTF for the former
Orange County Development Agency without regard to
property tax revenues attributable to the El Toro Project
Area.
b) Requires the remainder to be deposited into the RPTTF
established for the former Lake Forest RDA and distributed
in accordance with existing law for passthrough agreements.
6)Stated that this section shall not be construed to affect the
obligations of the successor agency to the Orange County
Development Agency under existing law related to the transfer
from the Orange County Development Agency to the Orange County
general fund, as specified. States that such obligations
shall be prior to any transfer of property tax revenues
directed by this section and this section shall be interpreted
and construed in a manner consistent with existing law related
to the transfer from the Orange County Development Agency to
the Orange County general fund.
7)Provided that this section is intended to implement the
transfer agreement in light of AB 26 X1 (Blumenfield), Chapter
5, Statutes of 2011-12 First Extraordinary Session and, except
as expressly set forth herein, this section is not intended to
alter the transfer agreement, which shall continue in full
force and effect in accordance with its terms.
8)Defined "El Toro Project Area" to mean the portion of the
former Orange County Development Agency's Neighborhood
Preservation and Development Project Area that transferred to
the Lake Forest RDA pursuant to the transfer agreement and
sections of RDA law related to the joint exercise or
delegation of power to redevelopment.
9)Defined "transfer agreement" to mean the Agreement to Transfer
Territorial Jurisdiction of a Noncontiguous Portion of a
Redevelopment Project Area dates as of July 6, 1999, entered
into among the County of Orange, the Orange County Development
Agency, the City of Lake Forest, the Lake Forest RDA, and the
City of Laguna Hills.
10)Found and declared that a special law is necessary and that a
general law cannot be made applicable because of the unique
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economic circumstances in the area served by the former City
of Lake Forest Redevelopment Agency relating to the payment of
debt service on pre-existing bonds secured by the El Toro
Project Area.
11)Required, if the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement
to local agencies and school districts for those costs shall
be made, as specified.
FISCAL EFFECT : According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS :
1)RDA Dissolution. As part of the winding down of redevelopment
agencies, AB 1484 (Blumenfield), Chapter 26, Statutes of 2012,
made various statutory changes associated with the dissolution
of redevelopment agencies and addressed a number of
substantive issues related to administrative processes,
affordable housing activities, repayment of loans from
communities, use of existing bond proceeds and the disposition
or retention of former redevelopment agency assets. Existing
law requires dissolved agencies to make payments due for
enforceable obligations and to perform duties required
pursuant to any enforceable obligation, and additionally
requires the county auditor controller to determine annually
the amount of property taxes that would have been allocated to
each RDA had the agency not been dissolved and to deposit that
amount into a Fund. County auditor controllers then allocate
moneys in the RPTTF for passthrough payment obligations,
enforceable obligations
of the dissolved RDA, and administrative costs.
2)Purpose of this bill. This bill seeks to correct the process
utilized to transfer funds to the Lake Forest Successor Agency
by clarifying the application of the dissolution legislation.
This bill is sponsored by the City of Lake Forest.
3)Author's statement. According to the author, "Prior to the
incorporation of the City of Lake Forest, the El Toro
Redevelopment Project Area was under jurisdictional control of
the County of Orange. When the City of Lake Forest
established the Lake Forest RDA and control over the Project
Area was subsequently transferred to Lake Forest, the City,
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County and Agency entered into a Transfer Agreement to
establish related terms, conditions and procedures. The
purpose of the Transfer Agreement was to allow the transfer of
tax increment from the Project Area to the Lake Forest RDA and
ensure the protection of the County's pre-existing bond
obligations.
"AB 1X 26 and Assembly Bill 1484 established a process by
which successor agencies may receive former tax increment for
the purpose of funding enforceable obligations and their
ongoing operation costs. While the Transfer Agreement served
the County and Agency well prior to dissolution, the
dissolution legislation did not clearly contemplate this type
of transfer structure. Specifically, the Lake Forest
Successor Agency is identified as an enforceable obligation of
the County's Successor Agency - the Orange County Development
Agency - and is being paid from the Orange County Development
Agency's Recognized Obligations Payment Schedule (ROPS). No
other former RDA is so dependent on another government
organization.
"It is not clear whether this transfer structure is consistent
with the dissolution legislation. In addition, the Successor
Agency's payment of former tax increment from the Orange
County Development Agency's ROPS has caused significant
confusion for the Department of Finance, which has
necessitated the expenditure of public resources to clarify
its unique circumstance through the Meet and Confer process.
Without legislative action to clarify this process and
mitigate the confusion, payments due to the affected tax
agencies, including school districts and public agencies could
be delayed or miss altogether."
4)Arguments in support. Supporters argue that this bill
provides a legislative solution that would affirm the process
of transferring funds from the County to the Lake Forest
Successor Agency as outlined by state law, and offers solution
to resolve these unique issues not contemplated by the
Legislature when it dissolved RDAs.
5)Arguments in opposition. None on file.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
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