BILL ANALYSIS
SB 1398
Page 1
Date of Hearing: August 4, 2010
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 1398 (DeSaulnier) - As Amended: June 1, 2010
Policy Committee: Local
GovernmentVote:5-0
Urgency: No State Mandated Local Program:
Yes Reimbursable: Yes
SUMMARY
This bill reallocates property taxes attributable to a new
public utility power plant in Contra Costa County from the City
of Oakley and most non-enterprise special districts in the
county to the Oakley Redevelopment Agency. The bill also:
1)Allocates 2% of the property tax revenues to the East Contra
Costa Fire Protection District ($130,000 more than under
existing law).
2)Exempts the taxes reallocated to the redevelopment agency from
pass-through agreements to other affected jurisdictions, and
from the existing-law requirement for the agency to set aside
20% of the new proceeds for low- and moderate-income housing.
3)Requires the Oakley Redevelopment Agency to reimburse the
County Auditor for reasonable costs related to the
reallocations required by this bill.
FISCAL EFFECT
1)No direct effect on state costs or revenues, since the bill
does not impact property taxes going to school districts.
2)The bill redirects about $2.7 million of property taxes within
the county, and reduces funds that would otherwise be
available for low income housing. Of this total, $500,000
would be from the City of Oakley (where the redevelopment
agency is located) and $2.2 million from various water,
sanitary, park, hospital, and other special districts within
Contra Costa County.
SB 1398
Page 2
3)Exemption from 20% low income housing set-aside would reduce
funding for low and moderate income housing by about $500,000
per year.
4)The bill contains a provision stating that it will reimburse
the county for mandated costs determined by the Commission on
State Mandates. These costs would be for the added property
tax computations required of the County Auditor. However,
actual state reimbursements are unlikely, since the bill
requires the redevelopment agency to reimburse the county for
reasonable expenses related to the reallocations.
COMMENTS :
1)Background - property tax allocations of utilities . The
California Constitution requires the State Board of
Equalization (BOE) to assess public utilities for property tax
purposes. The BOE allocates the assessed value of combined
utility property among the counties based on the amount of
property the utility owns in each county. Within each county,
state law prescribes a method for allocating the taxes, where
property tax growth placed in a county-wide pool and then
distributed to each local taxing agency (cities, county,
special districts, and school districts) based on their
historical share of overall property taxes, regardless of
whether the utility is located within the agency's boundaries.
In recognition of the need to rapidly expand the state's
electrical generating capacity, and the impact that new
generating facilities have on local communities, the
Legislature enacted SB 1317 (Torlakson), Chapter 872/2006, to
compensate communities that accept energy projects with a
bigger share of property tax revenues attributable to the
project. However, that law only compensates cities or
counties, not redevelopment agencies.
2)Background - low and moderate income housing . Existing law
requires that not less than 20% of all property tax increment
allocated to a redevelopment agency to be used by the agency
for purposes of increasing, improving, and preserving the
community's supply of housing available to low and moderate
SB 1398
Page 3
income households.
3)Rationale . The California Energy Commission is considering a
proposal to construct a 600 megawatt power plant to be located
within a redevelopment project area in the City of Oakley
(Contra Costa County). Oakley officials claim that the
modified allocation method created by the SB 1317 allocates
insufficient revenues to their redevelopment project area.
This bill creates an exception to current allocation method
for the purpose of sending more property tax revenues to the
Oakley Redevelopment Agency. According to the author, current
law creates a disincentive for the City of Oakley to support a
new power generating facility within its boundaries.
4)Opposition. The California Special Districts Association
(CSDA) opposes the bill, indicating that the incentives
provided in existing law for power plant siting are adequate,
and that inclusion of redevelopment agencies "sets an
unfortunate precedent and will ultimately result in reducing
or otherwise eliminating property tax allocations to special
districts as provided for in SB 1317."
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081