BILL ANALYSIS Ó
AB 654
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Date of Hearing: April 29, 2015
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Brian Maienschein, Chair
AB 654
(Brown) - As Amended April 22, 2015
SUBJECT: Redevelopment: revenues from property tax override
rates.
SUMMARY: Prohibits a county auditor from allocating revenues
derived from a property tax rate approved by voters in a city,
county, or special district, to pay for the State Water Project
to the Redevelopment Property Tax Trust Fund, except as
specified. Specifically, this bill:
1)Finds and declares all of the following:
a) The California Constitution limits property-based tax
levies, with exceptions to these limits only when a local
jurisdiction obtains the approval of its voting electorate
to use additional property-based tax levies for specific
purposes approved by the voting electorate, in accordance
with applicable constitutional and statutory provisions;
b) With the enactment of Chapter 5 of the 2011-12 First
Extraordinary Session (Assembly Bill 26), the Legislature
intended that, upon dissolution of redevelopment agencies
in the State of California, property taxes that would have
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been allocated to redevelopment agencies are no longer
deemed tax increment;
c) It is the intent of the Legislature in enacting this act
to do all of the following:
i) If a redevelopment agency had previously pledged
revenues derived from the imposition of a property tax
rate, approved by the voters of a city, county, or city
and county, or special district to make payments in
support of the State Water Project and levied in addition
to the property tax rate limited by subdivision (a) of
Section 1 of Article XIII A of the California
Constitution, to pay a portion of the debt service due on
indebtedness incurred by the former redevelopment agency
on an approved recognized obligation payment schedule
(ROPS), then the successor agency shall continue to
pledge those revenues, in a commensurate rate going
forward. For example, if revenues derived from a water
project property tax rate approved by the voters of a
city, county, city and county, or special district were
pledged to pay up to 25% of the annual debt service for
the indebtedness approved in a ROPS, the successor agency
shall continue to pay up to 25% of the annual debt
service on the indebtedness until maturity. Any and all
excess pledged revenues derived from the water project
property tax rate that are not necessary to pay the debt
service on the indebtedness shall be allocated and paid
to the city, county, city and county, or special district
whose voters approved the State Water Project-related
property tax rate;
ii) Ensure that the use of revenues derived from the
imposition of a property tax rate approved by the voters
of a city, county, city and county, or special district
to make payments in support of the State Water Project
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and levied in addition to the property tax rate limited
by subdivision (a) of Section 1 of Article XIII A of the
California Constitution, is consistent with the use
approved by the voters of a city, county, city and
county, or special district once revenues from such
property tax rates are not needed to pay approved
indebtedness of a former redevelopment agency; and,
iii) Implement the allocation and distribution of
voter-approved, property-based tax revenues for the State
Water Project under the redevelopment dissolution process
in a manner that would have been consistent with the
allocation and distribution of those revenues had
redevelopment agencies not been dissolved, in accordance
with applicable constitutional provisions.
d) Declares the intent of the Legislature that this act not
affect any property tax allocations that occurred prior to
July 1 of an unspecified year.
2)Requires the county auditor-controller, prior to allocating
moneys in each Redevelopment Property Tax Trust Fund (RPTTF),
pursuant to the specified formula in existing law, to
additionally deduct the revenues allocated as follows:
a) On January 2, 2016, and each January 2 and June 1
thereafter, to a city, county, or special district that
levies a property tax rate, approved by the voters of a
city, county, or special district to make payments in
support of the State Water Project and levied in addition
to the property tax rate limited by the California
Constitution, an amount of property tax revenues equal to
the amount of revenues derived from the imposition of that
tax rate that were allocated to the RPTTF for that fiscal
period. Provides that this paragraph shall not apply to
the extent that revenues derived from the imposition of a
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property tax rate are not deposited into an RPTTF as
provided by 3) through 6) below.
3)Allows a city, county, or special district that levies a
property tax rate, approved by the voters of a city, county,
or special district to make payments in support of the State
Water Project and levied in addition to the property tax rate
limited by the California Constitution, to make a request to
an oversight board to prohibit revenues derived from the
imposition of that property tax rate from being deposited into
an RPTTF.
4)Provides, based on substantial evidence that a former RDA made
a pledge of revenues that specifically included revenues
derived from the imposition of a property tax rate, approved
by the voters of a city, county, or special district to make
payments in support of the State Water Project and levied in
addition to the property tax rate limited by the California
Constitution, that an oversight board may deny a request
pursuant to 3), above, in an amount not to exceed the amount
of revenues pledged by the former RDA.
5)Provides, notwithstanding any other law, for the 2015-16
fiscal year and each fiscal year thereafter, except to the
extent an oversight board denies a request as provided in 4),
above, that any revenues derived from the imposition of a
property tax rate, approved by the voters of a city, county,
or special district to make payments in support of the State
Water Project and levied in addition to the property tax rate
limited by the California Constitution, shall not be allocated
to an RPTTF, and shall instead, be allocated to, and when
collected shall be paid into, the fund of the city, county, or
special district whose voters approved the tax.
6)Provides, notwithstanding any other law, all allocations of
revenues derived from the imposition of a property tax rate,
approved by the voters of a city, county, or special district
to make payments in support of the State Water Project and
levied in addition to the property tax rate limited by the
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California Constitution, made by any county auditor-controller
prior to July 1, of an unspecified year, shall be deemed
correct and shall not be affected by this bill. Provides that
a city, county, county auditor-controller, successor agency,
or affected taxing entity shall not be subject to any claim
for money, damages, or reallocated revenues based on any
allocation of such revenues prior to July 1, 2014.
7)Provides that reimbursement to local agencies and school
districts shall be made, if the Commission on State Mandates
determines that this act contains costs mandated by the state.
EXISTING LAW:
1)Dissolves RDAs and institutes a process for winding down their
activities.
2)Defines "enforceable obligations."
3)Requires successor agencies make payments due to enforceable
obligations, as specified.
4)Requires successor agencies to prepare a ROPS, before each
six-month fiscal period, in accordance with specified
requirements, and requires the schedule to identify one or
more
of the following sources of payment:
a) Low- and Moderate-Income Housing Fund;
b) Bond proceeds;
c) Reserve balances;
d) Administrative cost allowance;
e) The RPTTF, as specified; and,
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f) Other revenue sources, including rents, concessions,
asset sale proceeds, interest earnings, and any other
revenues derived from the former redevelopment agency, as
approved by the oversight board.
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 (DOF) to review the actions
of an oversight board.
7)Requires DOF to issue a finding of completion to the successor
agency, within five business days, once the following
conditions have been met and verified:
a) The successor agency has paid the full amount, as
determined during the due diligence reviews and the county
auditor-controller has reported those payments to DOF;
b) The successor agency has paid the full amount as
determined during the July True-up process; or,
c) The successor agency has paid the full amount upon a
final judicial determination of the amounts due and
confirmation that those amounts have been paid by the
county auditor-controller.
8)Allows the successor agency, upon receiving the finding of
completion, to:
a) Retain dissolved redevelopment agency assets;
b) Place loan agreements between the former redevelopment
agency and sponsoring entity on the ROPS, as an enforceable
obligation, provided the oversight board makes a finding
that the loan was for legitimate redevelopment purposes;
and,
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c) Utilize proceeds derived from bonds issued prior to
January 1, 2011, in a manner consistent with the original
bond covenants.
9)Requires, after DOF issues a finding of completion, the
successor agency to prepare a long-range property management
plan that addresses the disposition and use of the real
properties of the former redevelopment agency, and requires
the report to be submitted to the oversight board and DOF for
approval no later than six months following the issuance to
the successor agency of the finding of completion.
10)Limits property tax to 1%, except for specific bonded debt,
pursuant to the California Constitution.
11)Allows a governing body, pursuant to Section 11652 of the
Water Code entitled "Contracts with State Agencies" to,
whenever necessary, levy upon all property in the state agency
not exempt from taxation, a tax or assessment sufficient to
provide for all payments under the contract then due or to
become due within the then current fiscal year or within the
following fiscal year before the time when money will be
available from the next general tax levy.
FISCAL EFFECT: This bill is keyed fiscal and contains a
state-mandated local program.
COMMENTS:
1)Bill Summary. This bill would authorize a city, county, or
special district that levies a property tax override rate
approved by the voters of that city, county, or special
district to make payments in support of the State Water
Project and levied in addition to the general property tax
rate, to make a request to an oversight board to prohibit
revenues derived from that property tax rate from being
deposited into the RPPTF. The bill also authorizes an
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oversight board to deny the request, in certain circumstances,
and would prohibit any revenues, except if the oversight board
denies the request, derived from the imposition of that
property tax rate from being allocated to the RPPTF, and would
instead, require these revenues to be allocated to the fund of
the city, county or special district whose voters approved the
tax.
This bill is sponsored by the San Bernardino Valley Municipal
Water District (known as Valley District).
2)State Water Project and Burns-Porter Act of 1960. According
to the Department of Water Resources (DWR), the California
State Water Project is a water storage and delivery system of
reservoirs, aqueducts, powerplants and pumping plants. Its
main purpose is to store water and distribute it to 29 urban
and agricultural water suppliers in Northern California, the
San Francisco Bay Area, the San Joaquin Valley, the Central
Coast, and Southern California. Of the contracted water
supply, 70% goes to urban users and 30% goes to agricultural
users. The project is maintained and operated by DWR, makes
deliveries to two-thirds of California's population, and is
also operated to improve water quality in the Delta, control
Feather River flood waters, provide recreation and enhance
fish and wildlife.
The Project includes 34 storage facilities, reservoirs and
lakes, 20 pumping plants,
four pumping-generating plants, five hydroelectric power
plants, and about 7,000 miles of open canals and pipelines.
Local water agencies can levy ad valorem rates above the 1%
rate to pay their annual obligations for water deliveries from
the State Water Project. State courts have concluded that
such costs were voter-approved debt because voters approved
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the construction, operation, and maintenance of the State
Water Project in 1960. As a result, most water agencies that
have contracts with the State Water Project levy a
voter-approved debt rate.
3)Author's Statement. According to the author, "The measure
would remedy the situation in which the revenues derived from
voter-approved property tax overrides are being misallocated
in the course of the RDA dissolution process in the County of
San Bernardino. Currently the San Bernardino County Auditor-
Controller is allocating the residual balances from each
former RDA's Redevelopment Property Tax Trust Fund to taxing
entities based on each agency's share of the 1% County General
Tax levy without taking into account any specific debt service
override tax. This results in Valley District's Debt Service
Tax Override proceeds that are not needed for the payment of
approved former RDA expenses to be allocated out to all taxing
entities ignoring that a certain portion of that residual
balance was derived directly from Valley District's tax
override rate."
4)Related Legislation. AB 1009 (Garcia), pending in the
Assembly Appropriations Committee, authorizes a city or county
that levies a property tax rate, approved by the voters of a
city or county to make payments in support of pension programs
and levied in addition to the general property tax rate, to
make a request to an oversight board to prohibit revenues
derived from that property tax rate from being deposited into
a Redevelopment Property Tax Fund.
This bill takes the same approach as AB 1009, but instead,
deals with property tax override rates approved by voters in
support of the State Water Project.
5)Arguments in Support. According to the sponsor, "Prior to
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dissolution, $19.5 million (25%) of Valley District's property
taxes derived from the State Water Project tax rate set by the
Valley District board and Valley District's portion of the 1%
General Tax levy was being diverted to RDAs. After almost 3
years of the RDA dissolution wind down process, Valley
District is now receiving all but $10 million of the property
taxes derived from its Debt Service Override Tax rate and its
portion of the 1% General Tax levy. Valley District
management recently determined that some of this remaining $10
million in annual property tax revenue is being allocated to
other taxing entities. Further, if this error is not
corrected the effect on Valley District's tax proceeds will
increase significantly as the wind down process matures."
6)Arguments in Opposition. None on file.
7)Double-Referral. This bill is scheduled to be heard in the
Housing and Community Development Committee on April 29, 2015,
and will be heard by this Committee pending referral.
REGISTERED SUPPORT / OPPOSITION:
Support
San Bernardino Valley Municipal Water District [SPONSOR]
East Valley Water District
AB 654
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Opposition
None on file
Analysis Prepared by:Debbie Michel / L. GOV. / (916) 319-3958