BILL ANALYSIS
SB 863
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SENATE THIRD READING
SB 863 (Budget and Fiscal Review Committee)
As Amended October 7, 2010
2/3 vote. Urgency
SENATE VOTE :Vote not relevant
SUMMARY : Makes various changes to state laws governing local
government contracts entered into pursuant to the Williamson Act
and state laws governing community redevelopment agencies.
Specifically, this bill :
1)Makes changes to existing laws governing the revision of
Williamson Act contracts with landowners. Recently adopted law
authorizes a county to revise the term of Williamson Act
contracts with landowners and allow for a reassessment of the
property in any fiscal year in which payments from the state
to the county as reimbursement for reduced property tax
revenue are less than half of the actual amount of reduced
property tax revenue. This bill would reenact that law and add
an urgency clause. In addition, this bill would add
clarifications and administrative direction to counties. This
bill would provide a county's determination regarding forgone
revenues shall be based on the higher of the county's share of
the general property tax or 20%. The bill also:
a) Allows the contract term to be extended up to 3 years as
necessary to restore the contract to its full length if
increased revenue is not realized by the county;
b) Establishes that the additional assessed value due to
the revised contract is 10 percent of the difference
between the restricted value under the original contract
and the adjusted base year value; and,
c) Provides that landowners may choose not renew their
contract at any time, but a landowner who withdraws prior
to the effective date shall be subject to term modification
and additional assessed value.
2)Provides relief from penalties for redevelopment agencies that
experienced a substantial reduction in their tax increment in
the 2009-10 fiscal year which prevented them from paying their
share of last year's contribution to ERAF. The penalties would
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include a prohibition on issuing new debt to finance new
projects. In order to qualify for such relief, the
redevelopment agency must have adopted a resolution revealing
specified financial data to show they could not pay; the
county reduced the tax increment in the 2009-10 fiscal year by
20% or more; the agency agrees to remit the owed amount over a
period of 30-years or less; and the agency recognizes they may
use any legally available funds to make the payments over time
and may pay off the debt early. Given that this is a limited
relief that would pertain to a limited universe of
redevelopment agencies who are unable to pay, there would be
no budget year fiscal impact.
3)Removes the debt cap on the San Diego Centre City
Redevelopment area. The debt cap imposes a limit on the
amount of property tax increment revenues that go to the
redevelopment agency over the life of the project. By
removing the cap, the redevelopment agency would be able to
continue to receive property tax revenue increments and issue
additional debt. Officials indicate that the RDA would not
hit its existing debt cap of $3 billion for another 10 years.
Thus, there would be no near term impact. Removing the cap
could eventually curtail the property tax revenues that would
otherwise flow to local governments, depending upon future
development in the project area. Consequently, to the extent
that local education agencies do not receive additional
property tax revenues in the future, there could be additional
General Fund costs.
4)Urgency Clause. Declares this bill take effect immediately as
an urgency statute.
FISCAL EFFECT : Changes to the Williamson Act would not result in
any fiscal effect on the state. The relief granted certain
redevelopment agencies would not result in any direct state
costs in the near term.
Analysis Prepared by : Mark Ibele / BUDGET / 916-319-2099
FN: 0007248
SB 863
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