BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 1398|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
UNFINISHED BUSINESS
Bill No: SB 1398
Author: DeSaulnier (D), et al
Amended: 8/20/10
Vote: 27
SENATE LOCAL GOVERNMENT COMMITTEE : 3-2, 4/19/10
AYES: Kehoe, DeSaulnier, Price
NOES: Cox, Aanestad
SENATE APPROPRIATIONS COMMITTEE : 7-3, 5/27/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Denham, Walters, Wyland
NO VOTE RECORDED: Cox
SENATE FLOOR : 30-3, 6/3/10
AYES: Alquist, Ashburn, Calderon, Cedillo, Corbett,
Correa, DeSaulnier, Ducheny, Dutton, Florez, Hancock,
Huff, Kehoe, Leno, Liu, Lowenthal, Negrete McLeod,
Oropeza, Padilla, Pavley, Price, Romero, Runner,
Simitian, Steinberg, Strickland, Wolk, Wright, Wyland,
Yee
NOES: Cogdill, Denham, Walters
NO VOTE RECORDED: Aanestad, Cox, Harman, Hollingsworth,
Wiggins, Vacancy, Vacancy
SUBJECT : Property tax revenue allocations: public
utilities: qualified
property
SOURCE : City of Oakley
Oakley Redevelopment Agency
CONTINUED
SB 1398
Page
2
DIGEST : This bill revises property tax formulas to
allocate property tax revenues from a proposed public
utility power plant in Contra Costa County to benefit the
Oakley Redevelopment Agency.
ANALYSIS : The California Constitution requires the State
Board of Equalization (BOE) to assess public utilities for
property tax purposes. The BOE assesses utility property
as a unit, instead of assessing the individual value of
separate properties owned by the utility. State law
allocates the property tax revenues from state-assessed
public utilities differently than the property tax revenues
from locally-assessed properties.
Assembly Amendments double-jointed the bill with AB 308
(Cook).
Until 1988-89, state law allocated property tax revenues
from all state-assessed property on a situs basis among tax
rate areas. The complexity and administrative cost of
tracking property holdings and allocating property tax
revenues among thousands of small geographic locations led
the Legislature to create the current countywide method for
allocating unitary property tax revenues (AB 2890
[Hannigan], Chapter 1457, Statutes of 1986).
Under the countywide method, the BOE allocates the unitary
assessed value of utility property among the counties based
on the amount of property within each county. County
auditors allocate the property tax revenues from unitary
properties using a formula based on the amount of unitary
revenues received by the county's taxing jurisdictions in
1987-88. For years after 1987-88, each taxing jurisdiction
receives up to 102% of its prior year unitary property tax
revenues. The county auditor allocates the remaining
property tax revenue from the county's unitary roll to all
taxing jurisdictions in proportion to their shares of
property tax revenues derived from locally-assessed
property.
This bill:
SB 1398
Page
3
1. Defines "qualified property" to mean both of the
following:
A. All plant and associated equipment, including
substation facilities and fee-owned land and
easements, placed in service by a public utility in
the Oakley RDA project area on or after January 1,
2011, and related to the following:
(1) Electrical substation facilities that meet
either of the following conditions:
(a)The high-side voltage of the facility's
transformer is 50,000 volts or more.
(b)
The substation facilities are
operated at 50,000 volts or more.
(2) Electric generation facilities that have a
nameplate generating capacity of 50 megawatts or
more.
(3) Electric transmission line facilities of
200,000 volts or more.
B. Any additions, modifications, reconductoring, or
equivalent replacements to the plant and associated
equipment made after the plant and associated
equipment are placed into service.
2. Provides, notwithstanding any other law, that all of the
following shall apply, for the fiscal year (FY) 2011-12
and each FY thereafter:
A. The revenue from the property tax assessed on
qualified property, which is owned by a public
utility and assessed by the Board of Equalization
(BOE), shall be allocated entirely within the county
in which the qualified property is located.
B. Provides that the county auditor shall allocate
the non-debt service portion of the property tax
revenues as follows:
SB 1398
Page
4
(1) First, to the county in which the
qualified property is located and to all of the
school entities located in that county, the
amount of property tax revenues that would have
otherwise been allocated to the county and school
entities or districts had this section not been
enacted.
(2) Second, to the East Contra Costa Fire
Protection District, an amount equal to two
percent of the property tax revenues.
(3) Third, to any special district formed
pursuant to the Regional Park, Park and
Open-Space, and Open-Space Districts Act, an
amount of property tax revenues equal to the
amount of property tax revenues allocated to
that special district in FY 2010-11.
(4) Fourth, to the redevelopment agency
governing the project area in which the
qualified property is located, the balance of
the property tax revenues.
C. Allocates revenues from the debt-service rate in
two steps:
(1) Provides that the revenues go to taxing
jurisdictions in those Contra Costa County tax
rate areas in which the qualified electrical
facility is located in an amount equivalent to
the BOE's current-year assessed value of the
qualified property multiplied by any override
rate adopted by the local agency for the year.
(2) Provides that the balance of the revenues
shall be allocated pursuant to the general
allocation statute.
3. Provides that a public utility shall provide to BOE a
description of the qualified property in the form
prescribed by BOE so that separate valuation can be
determined.
SB 1398
Page
5
4. Provides that BOE shall transmit to the auditor of
Contra Costa County the information necessary to
identify the qualified property and the corresponding
assessed value data necessary to make the property tax
revenue allocations as required under this bill.
5. States that the Legislature finds and declares that a
special law is necessary in order to ensure that the
Oakley RDA receives sufficient tax increment.
6. Provides that no reimbursement is required because the
bill provides for reimbursement to a local agency in the
form of additional revenues that are sufficient in
amount to fund the new duties established in this
measure.
7.Contains chaptering-out amendments to ensure that there
is no conflict with AB 308 (Cook).
Background
The Legislature has created some exceptions to this
countywide unitary tax allocation method. When the City of
Chula Vista (San Diego County) was willing to accept a
proposed electrical power plant, legislators directed that
the resulting property tax revenues would be allocated to
schools and the county government under the unitary tax
method, but the share that would have gone to all cities in
San Diego County under the unitary tax method would instead
go just to Chula Vista. This exception would have lasted
for 10 years and then it would have sunsetted and the
regular unitary tax method would have applied (AB 1108
[Peace], Chapter 1045, Statutes of 1993). The Legislature
approved similar exceptions for an electrical power plant
in the City of Escondido (AB 2558 [Plescia], Chapter 640,
Statutes of 2004), a PG&E education and training center in
the City of Livermore (SB 53 [Lockyer], Chapter 465,
Statutes of 1991), and a PacBell computer center in the
City of Fairfield, (AB 454 [Klehs], Chapter 921, Statutes
of 1987).
The Legislature also created an exception to the countywide
unitary tax allocation method for all newly constructed
SB 1398
Page
6
public-utility-owned large-scale electrical generation,
substation, and transmission facilities. That exception
allocates a greater share of unitary property tax revenues
to the city or county in which a qualified electrical
facility is located (SB 1317 [Torlakson], Chapter 872,
Statutes of 2006).
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 say that the
modified allocation method created by the Torlakson bill
allocates insufficient revenues to their redevelopment
project area. They want the Legislature to create an
exception to that modified allocation method to send more
unitary property tax revenues from the proposed Oakley
power plant on a site basis to the Oakley Redevelopment
Agency.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
According to the Senate Appropriations Committee analysis:
Fiscal Impact (in thousands)
Major Provisions 2010-11 2011-12
2012-13 Fund
Property tax allocation annual
gain of about $4,000 to Oakley
Local
RDA and corresponding loss to other
local entities
SUPPORT : (Verified 8/30/10)
City of Oakley (co-source)
Oakley Redevelopment Agency (co-source)
Contra Costa Building and Construction Trades Council
Diablo Water District
Ironhouse Sanitary District
Oakley Chamber of Commerce
Oakley Redevelopment Agency
SB 1398
Page
7
OPPOSITION : (Verified 8/30/10)
California Special Districts Association
Howard Jarvis Taxpayers Association
AGB:DLW:do 8/30/10 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****