California Legislature—2015–16 Regular Session

Assembly Bill No. 1009

Introduced by Assembly Member Cristina Garcia

February 26, 2015

An act to amend Section 34183 of the Health and Safety Code, relating to local government, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 1009, as introduced, Cristina Garcia. Local government: redevelopment: revenues from property tax override rates.

Existing law dissolved redevelopment agencies and community development agencies as of February 1, 2012, and provides for the designation of successor agencies to wind down the affairs of the dissolved redevelopment agencies. Existing law requires revenues equivalent to those that would have been allocated to each redevelopment agency, had the agency not been dissolved, to be allocated to the Redevelopment Property Tax Trust Fund of each successor agency for making payments on the principal of and interest on loans, and moneys advanced to or indebtedness incurred by the dissolved redevelopment agencies. Existing law requires, from February 1, 2012, to July 1, 2012, inclusive, and for each fiscal year thereafter, the county auditor-controller, after deducting administrative costs, to allocate property tax revenues in each Redevelopment Property Tax Trust Fund in a specified manner.

This bill would authorize 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 would authorize an oversight board to deny this request based on substantial evidence that a former redevelopment agency made a pledge of revenues that specifically included revenues derived from the imposition of that property tax rate. This bill, for the 2015-16 fiscal year and each fiscal year thereafter, except to the extent an oversight board denies a request, would prohibit any revenues derived from the imposition of that property tax rate from being allocated to a Redevelopment Property Tax Trust Fund and would, instead, require these revenues to be allocated to, and when collected to be paid into, the fund of the city or county whose voters approved the tax. The bill would require all allocations of revenues derived from the imposition of that property tax rate made by any county auditor-controller prior to July 1, 2015, to be deemed correct, and would prohibit any city, county, county auditor-controller, successor agency, or affected taxing entity from being subject to any claim, as specified. This bill would require, to the extent that revenues derived from the imposition of 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, are deposited into a Redevelopment Property Tax Trust Fund, the county-auditor controller to allocate moneys from each Redevelopment Property Tax Trust Fund to a city or county that levies a property tax as so described after certain other allocations have been made.

By adding to the duties of local government officials, this bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

(a) The Legislature finds and declares all of the
following:

(1) 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.

(2) 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 been allocated to
redevelopment agencies are no longer deemed tax increment.

(3) It is the intent of the Legislature in enacting this act to do
all of the following:

(A) 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 to make payments
in support of pension programs 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,
then the successor agency shall continue to pledge those revenues,
in a commensurate rate going forward. For example, if revenues
derived from a pension tax rate approved by the voters of a city,
county, or city and county were pledged to pay up to 25 percent
of the annual debt service for the indebtedness approved in a
recognized obligation payment schedule, the successor agency
shall continue to pay up to 25 percent of the annual debt service
on the indebtedness until maturity. Any and all excess pledged
revenues derived from the pension property tax rate that are not
necessary to pay the debt service on the indebtedness shall be
allocated and paid to the city, county, or city and county whose
voters approved the pension property tax rate.

(B) Ensure that the use of revenues derived from the imposition
of a property tax rate approved by the voters of a city, county, or
city and county, to make payments in support of pension programs
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,
or city and county, once revenues from such property tax rates are
not needed to pay approved indebtedness of a former
redevelopment agency.

(C) Implement the allocation and distribution of voter-approved,
property-based tax revenues for pension programs 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.

(4) Further, it is the intent of the Legislature that this act not
affect any property tax allocations that occurred prior to July 1,
2015.

SEC. 2.  

Section 34183 of the Health and Safety Code is
amended to read:

34183.  

(a) Notwithstanding any other law, from February 1,
2012, to July 1, 2012, and for each fiscal year thereafter, the county
auditor-controller shall, after deducting administrative costs
allowed under Section 34182 and Section 95.3 of the Revenue and
Taxation Code, allocate moneys in each Redevelopment Property
Tax Trust Fund as follows:

(1) Subject to any prior deductions required by subdivision (b),
first, the county auditor-controller shall remit from the
Redevelopment Property Tax Trust Fund to each local agency and
school entity an amount of property tax revenues in an amount
equal to that which would have been received under Section 33401,
33492.140, 33607, 33607.5, 33607.7, or 33676, as those sections
read on January 1, 2011, or pursuant to any passthrough agreement
between a redevelopment agency and a taxing entity that was
entered into prior to January 1, 1994, that would be in force during
that fiscal year, had the redevelopment agency existed at that time.
The amount of the payments made pursuant to this paragraph shall
be calculated solely on the basis of passthrough payment
obligations, existing prior to the effective date of this part and
continuing as obligations of successor entities, shall occur no later
than May 16, 2012, and no later than June 1, 2012, and each
January 2 and June 1 thereafter. Notwithstanding subdivision (e)
of Section 33670, that portion of the taxes in excess of the amount
identified in subdivision (a) of Section 33670, which are
attributable to a tax rate levied by a taxing entity for the purpose
of producing revenues in an amount sufficient to make annual
repayments of the principal of, and the interest on, any bonded
indebtedness for the acquisition or improvement of real property
shall be allocated to, and when collected shall be paid into, the
fund of that taxing entity. The amount of passthrough payments
computed pursuant to this section, including any passthrough
agreements, shall be computed as though the requirement to set
aside funds for the Low and Moderate Income Housing Fund was
still in effect.

(2) Second, on June 1, 2012, and each January 2 and June 1
thereafter, to each successor agency for payments listed in its
Recognized Obligation Payment Schedule for the six-month fiscal
period beginning January 1, 2012, and July 1, 2012, and each
January 2 and June 1 thereafter, in the following order of priority:

(A) Debt service payments scheduled to be made for tax
allocation bonds.

(B) Payments scheduled to be made on revenue bonds, but only
to the extent the revenues pledged for them are insufficient to make
the payments and only if the agency’s tax increment revenues were
also pledged for the repayment of the bonds.

(C) Payments scheduled for other debts and obligations listed
in the Recognized Obligation Payment Schedule that are required
to be paid from former tax increment revenue.

(3) Third, on June 1, 2012, and each January 2 and June 1
thereafter, to each successor agency for the administrative cost
allowance, as defined in Section 34171, for administrative costs
set forth in an approved administrative budget for those payments
required to be paid from former tax increment revenues.

begin insert

(4) (A) Fourth, on January 2, 2016, and each January 2 and
June 1 thereafter, to 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
property tax rate limited by subdivision (a) of Section 1 of Article
XIII A of 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 Redevelopment
Property Tax Trust Fund for that fiscal period.

end insert begin insert

(B) This paragraph shall not apply to the extent that revenues
derived from the imposition of a property tax rate described in
subparagraph (A) are not deposited into a Redevelopment Property
Tax Trust Fund as provided by subdivision (f).

end insert begin delete

(4) Fourth

end delete

begin insert (5) end insert begin insert   end insert begin insert Fifth, end insert on June 1, 2012, and each January 2 and June 1
thereafter, any moneys remaining in the Redevelopment Property
Tax Trust Fund after the payments and transfers authorized by
paragraphs (1) to begin delete (3), end delete begin insert (4), end insert inclusive, shall be distributed to local
agencies and school entities in accordance with Section 34188.

(b) If the successor agency reports, no later than April 1, 2012,
and May 1, 2012, and each December 1 and May 1 thereafter, to
the county auditor-controller that the total amount available to the
successor agency from the Redevelopment Property Tax Trust
Fund allocation to that successor agency’s Redevelopment
Obligation Retirement Fund, from other funds transferred from
each redevelopment agency, and from funds that have or will
become available through asset sales and all redevelopment
operations, are insufficient to fund the payments required by
paragraphs (1) to (3), inclusive, of subdivision (a) in the next
six-month fiscal period, the county auditor-controller shall notify
the Controller and the Department of Finance no later than 10 days
from the date of that notification. The county auditor-controller
shall verify whether the successor agency will have sufficient funds
from which to service debts according to the Recognized
Obligation Payment Schedule and shall report the findings to the
Controller. If the Controller concurs that there are insufficient
funds to pay required debt service, the amount of the deficiency
shall be deducted first from the amount remaining to be distributed
to taxing entities pursuant to begin delete paragraph (4), end delete begin insert paragraphs (4) and
(5) of subdivision (a), end insert and if that amount is exhausted, from
amounts available for distribution for administrative costs in
paragraph begin delete (3). end delete begin insert (3) of subdivision (a). end insert If an agency, pursuant to the
provisions of Section 33492.15, 33492.72, 33607.5, 33671.5,
33681.15, or 33688 or as expressly provided in a passthrough
agreement entered into pursuant to Section 33401, made
passthrough payment obligations subordinate to debt service
payments required for enforceable obligations, funds for servicing
bond debt may be deducted from the amounts for passthrough
payments under paragraph begin delete (1), end delete begin insert (1) of subdivision (a), end insert as provided
in those sections, but only to the extent that the amounts remaining
to be distributed to taxing entities pursuant to begin delete paragraph end delete
begin insert paragraphs end insert (4) begin insert and (5) of subdivision (a) end insert and the amounts available
for distribution for administrative costs in paragraph (3) begin insert of
subdivision (a) end insert have all been exhausted.

(c) The county treasurer may loan any funds from the county
treasury to the Redevelopment Property Tax Trust Fund of the
successor agency for the purpose of paying an item approved on
the Recognized Obligation Payment Schedule at the request of the
Department of Finance that are necessary to ensure prompt
payments of redevelopment agency debts. An enforceable
obligation is created for repayment of those loans.

(d) The Controller may recover the costs of audit and oversight
required under this part from the Redevelopment Property Tax
Trust Fund by presenting an invoice therefor to the county
auditor-controller who shall set aside sufficient funds for and
disburse the claimed amounts prior to making the next distributions
to the taxing entities pursuant to Section 34188. Subject to the
approval of the Director of Finance, the budget of the Controller
may be augmented to reflect the reimbursement, pursuant to
Section 28.00 of the Budget Act.

(e) Within 10 days of each distribution of property tax, the
county auditor-controller shall provide a report to the department
regarding the distribution for each successor agency that includes
information on the total available for allocation, the passthrough
amounts and how they were calculated, the amounts distributed
to successor agencies, and the amounts distributed to taxing entities
in a manner and form specified by the department. This reporting
requirement shall also apply to distributions required under
subdivision (b) of Section 34183.5.

begin insert

(f) (1) 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 property tax rate
limited by subdivision (a) of Section 1 of Article XIII A of the
California Constitution, may make a request to an oversight board
to prohibit revenues derived from the imposition of that property
tax rate from being deposited into a Redevelopment Property Tax
Trust Fund.

end insert begin insert

(2) Based on substantial evidence that a former redevelopment
agency 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 or county to make payments in
support of pension programs and levied in addition to the property
tax rate limited by subdivision (a) of Section 1 of Article XIII A of
the California Constitution, an oversight board may deny a request
made pursuant to paragraph (1) in an amount not to exceed the
amount of revenues pledged by the former redevelopment agency.

end insert begin insert

(3) 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 by paragraph (2), any revenues
derived from the imposition of 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 property tax rate
limited by subdivision (a) of Section 1 of Article XIII A of the
California Constitution, shall not be allocated to a Redevelopment
Property Tax Trust Fund and shall instead be allocated to, and
when collected shall be paid into, the fund of the city or county
whose voters approved the tax.

end insert begin insert

(4) Notwithstanding any other law, all allocations of revenues
derived from the imposition of 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 property tax rate
limited by subdivision (a) of Section 1 of Article XIII A of the
California Constitution, made by any county auditor-controller
prior to July 1, 2015, shall be deemed correct and shall not be
affected by this act. 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.

end insert

SEC. 3.  

(a) No inference shall be drawn from the enactment
of this act with respect to the use, distribution, or allocation of
revenues derived from the imposition of a property tax rate,
approved by the voters of a city, county, or city and county to make
payments in support of pension programs and levied in addition
to the property tax rate limited by subdivision (a) of Section 1 of
Article XIII A of the California Constitution, made by any county
auditor-controller prior to July 1, 2015.

(b) The Legislature is aware of City of San Jose, etc. v. Sharma
et al., Court of Appeal Case No. C074539, which is pending
litigation. It is the express intent of the Legislature that no party
in that pending litigation be in any way prejudiced by the passage
of this act. Therefore, the provisions of this act, except the addition
of paragraph (4) to subdivision (a) of Section 34183 of the Health
and Safety Code, shall not apply to the City of San Jose Successor
Agency. Furthermore, this act shall not be indicative of any
legislative intent concerning any issues before the courts in that
litigation, and no provision of this act shall be relied upon in any
way regarding the issues pending before the courts in that litigation.

SEC. 4.  

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
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

SEC. 5.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to avoid underfunded pension programs as a result of
revenues derived from the imposition of a property tax rate,
approved by the voters of a city, county, or city and county to make
payments in support of pension programs and levied in addition
to the property tax rate limited by subdivision (a) of Section 1 of
Article XIII A of the California Constitution, being allocated first
to successor agencies to make payments on the indebtedness
incurred by the dissolved redevelopment agencies, with remaining
balances being allocated in accordance with applicable
constitutional and statutory provisions, instead of being paid
entirely into the fund of the city, county, or city and county whose
voters approved the tax, it is necessary that this act take effect
immediately.