BILL ANALYSIS
SB 530
Page 1
Date of Hearing: June 30, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
SB 530 (Dutton) - As Amended: April 28, 2009
SENATE VOTE : 36-1
SUBJECT : Redevelopment: payments to taxing entities.
SUMMARY : Applies specified redevelopment pass-through reporting
and repayment requirements to redevelopment project areas that
were formed before January 1, 1994, and amended after January 1,
1994, as prescribed. Specifically, this bill:
1)Applies specified redevelopment pass-through reporting and
repayment requirements to redevelopment project areas that
were formed before January 1, 1994, and amended after January
1, 1994 to:
a) Increase the limitation on the number of dollars to be
allocated to the agency;
b) Increase, or eliminate the time limit on the
establishing of loans, advances, and indebtedness, pursuant
to specified statutes; or,
c) Lengthen the period during which the redevelopment plan
is effective if the redevelopment plan being amended
contains specified provisions.
EXISTING LAW :
1)Requires redevelopment agencies (RDA) to report all payments
calculated and paid to affected local taxing agencies from tax
increment revenues.
2)Specifically establishes a reporting process with the
following requirements:
a) Each RDA must submit a report by October 1, 2008, to the
county auditor and each affected local taxing entity
(including K-14 education agencies) that describes each
post-1993 project area or expansion, the amounts of
statutorily required pass-through payments that the RDA was
SB 530
Page 2
obligated to make from 2003-04 through 2007-08, the amount
of payments that it actually disbursed, and the portion of
the pass-through payments or obligations to K-14 education
agencies that must be reported as property tax revenues
(43.3% for K-12 districts, 47.5% for community colleges,
and 19% for county offices of education). The report must
identify pass-through obligations outstanding as
of June 30, 2008, and the dates on which they were paid or
will be paid. Each RDA must provide a similar report for
the 2008-09 fiscal year (FY) by October 1, 2009;
b) The county auditor must review each report and issue a
finding of concurrence or return the report to the RDA for
revision. An RDA that revises its report to gain
concurrence may also file a statement of dispute if it
continues to disagree with the auditor;
c) By December 15, 2008, and annually thereafter through
2014, county auditors must report to the State Controller
and identify RDAs that have remaining unpaid pass-through
obligations to K-14 education agencies for FYs 2003-04
through 2008-09. The State Controller (Controller), in
turn, must provide an annual report by February 1 to the
Legislative Analyst's Office and the Department of Finance
that identifies, by RDA, the status of their report and
concurrence by the auditor and the status of pass-through
obligations to K-14 education agencies. The Controller
also must report at that time to the State Department of
Education (CDE) and the Board of Governors of the
California Community Colleges (Board) the amounts of
payments received by K-14 educational agencies from RDAs
for pass-through obligations for 2003-04 through 2008-09.
CDE and the Board are to adjust revenue limit
apportionments or funding allocations to correct any
underreporting (or over reporting) of property tax from
pass-through payments.
If necessary to avoid fiscal hardship, these adjustments can
be made over a period of up to eight years (for K-12) or
five years (for community colleges);
d) After February 1, 2009, any RDA that has not reported or
obtained concurrence for its reports, or that has an unpaid
outstanding net pass-through obligation to a K-14 education
agency for the 2003-04 through 2007-08 period (and for
SB 530
Page 3
2008-09 starting in 2010) will be prohibited from spending
money for any obligations incurred after June 30, 2008,
with limited exceptions, and its monthly operation and
administration spending would have to be reduced by 25%.
Furthermore, after February 1, 2009, interest would start
to accrue
at 150% of the Pooled Money Investment Account rate on any
unpaid outstanding obligation to K-14 education agencies,
with accrual beginning 60 days after the end
of the FY for which the payment was due. The Controller,
with the concurrence of the Director of Finance could waive
these provisions for up to one year if the Controller finds
that payment of a disputed amount would impose a fiscal
hardship on an RDA, the RDA has met all other requirements
and made all other required payments, and the dispute is
likely to be resolved in the RDA's favor;
e) The percentage of any outstanding unpaid pass-through
obligations to K-14 education agencies that is treated as
property tax revenue must be paid into the county
Educational Revenue Augmentation Fund (ERAF), with the
remainder paid to the school district, county office of
education, or community college district. The ERAF
payments will offset General Fund school apportionment
obligations and will not be subject to "excess ERAF"
allocations to local governments. This ERAF recovery
mechanism applies only to pass-through obligations incurred
by RDAs from 2003-04 through 2008-09 that have not been
disbursed to K-14 education agencies by October 1 of 2008
or 2009 (for 2008-09); and,
f) Counties may require RDAs to reimburse their costs for
carrying out these provisions.
FISCAL EFFECT : None
COMMENTS :
1)Assembly Bill 1389 (Committee on Budget) Chapter 751, Statutes
of 2008, requires the Controller to submit a report
summarizing specified information reported by redevelopment
agencies regarding their tax increment payments to local
taxing entities. AB 1389 resulted
from two reviews performed by the State Controller's Office
SB 530
Page 4
(SCO), which revealed that redevelopment agencies had
understated and underreported tax increment pass-through
payments to local educational agencies, and that local
educational agencies underreported pass-through payments
received to CDE and the Board. The underpayments resulted in
excess state General Fund obligations to the local educational
agencies (i.e. school districts, community college districts,
and county offices of education).
2)The redevelopment agency reports are required to contain
specified information for FYs 2003-04 through 2007-08. The
information includes, but is not limited to, project
descriptions, gross tax increment received, pass-through
payments required to be made,
pass-through payments actually made, outstanding pass-through
payment obligations, and the date when the outstanding payment
obligations are expected to be made.
The redevelopment agencies filed their reports with their
respective county auditors for review to determine if the
county auditor concurred with the information reported. If
the county auditor did not concur, the report was returned to
the redevelopment agency for revision. If the redevelopment
agency revised the report to receive concurrence from the
county auditor, but still did not agree with the county
auditor's calculations, a statement
of dispute could be submitted to the county auditor along with
the revised report. After review, the county auditor
forwarded the reports to the SCO. A redevelopment agency that
did not receive concurrence, or that had outstanding payment
obligations as of February 1, 2009, is subject to severe
sanctions.
3)There is consensus among redevelopment officials, county
officials, and SCO staff that
pre-1994 project areas that have been amended since 1994 were
inadvertently omitted from the redevelopment language in AB
1389, last year's budget trailer bill. SB 530 corrects that
error.
4)Support Arguments : Supporters argue that the provisions of
this measure eliminate some
of the confusion created by the reporting requirements
established in AB 1389 and will provide the SCO and RDAs with
clarity on who is required to report to the Controller.
SB 530
Page 5
Opposition Arguments : Opposition could argue that there are a
myriad of other issues that stemmed out of the AB 1389
reporting requirements that still need to be addressed and
that
SB 530 should be amended to address other concerns.
REGISTERED SUPPORT / OPPOSITION :
Support
CA Redevelopment Association
Opposition
None on file
Analysis Prepa00red by : Katie Kolitsos / L. GOV. / (916)
319-3958