BILL ANALYSIS
Senate Appropriations Committee Fiscal Summary
Senator Christine Kehoe, Chair
1398 (DeSaulnier)
Hearing Date: 05/27/2010 Amended: 04/14/2010
Consultant: Mark McKenzie Policy Vote: L.Gov. 3-2
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BILL SUMMARY: SB 1398 would revise property tax allocation
formulas to allow the property tax revenues from a public
utility power plant in Contra Costa County to be allocated to
the Oakley Redevelopment Agency at the expense of other local
entities in the county.
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Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12 2012-13 Fund
Property tax allocationannual gain of $2,500-$3,000 to Oakley
RDA Local and corresponding loss to
other local entities
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STAFF COMMENTS: SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Current law generally provides that property that is assessed by
a County Assessor is allocated to the jurisdictions (schools,
city, county, and special district) in which the property is
physically located. Property owned by utilities is assessed by
the Board of Equalization as a unit and allocated to all
jurisdictions in a county based on each jurisdiction's
proportionate share of the county's total property tax revenue.
Under this countywide system, all schools, cities, and special
districts in a county receive a share in the property tax
revenues, regardless of whether any state-assessed property is
located within its boundaries. Recognizing that the area around
a power plant bears most of the burden of that facility, the
Legislature enacted SB 1317 (Torlakson), Chapter 872 of 2006),
creating an exception to the countywide unitary tax allocation
method for all newly constructed public-utility-owned large
scale electrical generation, substation, and transmission
facilities. This exception allows the city or county in which a
qualified electrical facility is located to receive most of the
property tax revenues attributable to the facility; the county,
schools, and non-enterprise special districts receive their
share of the property tax revenues, while other local entities
receive none of the revenues.
The California Energy Commission is considering a proposal to
construct a 600 megawatt power plant that would be located
within a redevelopment project area in the City of Oakley
(Contra Costa County). This bill would create an exception to
the modified allocation method created by SB 1317 to send more
unitary property tax revenues from the proposed power plant on a
situs basis to the Oakley Redevelopment Agency.
SB 1398 would create an exception to the formulas for allocating
property tax revenues for public-utility-owned large scale
electrical generation, substation, and transmission facilities
placed in service in the Oakley Redevelopment Project Area on or
after January 1, 2011. Specifically, this bill would require
the property tax revenue derived from specified new electrical
facilities to be allocated entirely within the county in which
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SB 1398 (DeSaulnier)
the facilities are located as follows:
The county and K-12 school districts that serve the parcel on
which the utility property is located will receive the same
amount of property tax revenues that would have otherwise been
allocated to the county and those school districts. (these
entities are held harmless)
The balance of the property tax revenues attributable to the
utility property would be allocated to the redevelopment
agency (RDA) in which the property is located. These revenues
would be included in the redevelopment agency's tax increment.
All other entities in the county that would have otherwise
received a share of the public utility's property tax under
the countywide method will receive no share of the property
tax revenue derived from the qualified property.
The amount of property tax revenues dedicated to debt-service
would first go to taxing jurisdictions in those Contra Costa
County tax rate areas in which the facility is located in an
amount equal to the BOE's current year value of the property
multiplied by a specified override rate, with the balance
being allocated pursuant to general allocation formulas.
This bill would not change the amount of property tax revenues
ultimately derived from the Oakley power plant, but would change
the distribution of those revenues. Property tax revenue
allocation is a zero sum game and changing allocation formulas
creates winners and losers. The clear winner would be the
Oakley RDA, which would capture a large share of the property
tax revenues attributable to the electrical facilities at the
expense of Contra Costa school districts (except those that
serve the parcel on which the facilities are located) and
special districts. Some of the school and special district
losses would be offset by higher pass-through payments by the
redevelopment agency. Staff notes that the General Fund must
backfill the difference between the property tax revenues school
districts receive under existing law and the amounts they will
receive under SB 1398. Staff estimates that approximately $1
million to $1.5 million of the $4 million in annual revenues
that are directed to the RDA would have otherwise flowed to
schools. Staff recommends an amendment to require the county
auditor to allocate property tax revenues to all K-12 schools in
the county in an amount that they would have received in the
absence of this bill prior to making the allocation to the RDA.
Staff notes that this bill would impose new duties upon county
auditors with respect to the allocation of property tax revenues
derived from state-assessed property, resulting in an unknown,
likely minor reimbursable state mandate. Staff notes that
pursuant to Proposition 1A, which was passed by the voters in
November 2004, this bill requires approval by a 2/3 vote in each
house of the Legislature because it changes the pro rata shares
in which ad valorem property tax revenues are allocated among
local agencies.
Proposed amendments would require the county auditor to allocate
property tax revenues to the county and K-12 schools in the
county in an amount they would have otherwise received in the
absence of this bill prior to making an allocation to the RDA.
The amendments would also require the RDA to reimburse the
county auditor for any costs for revising formulas for the
allocation of property taxes as a result of this bill.