BILL ANALYSIS �
AB 27 X1
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CONCURRENCE IN SENATE AMENDMENTS
AB 27 X1 (Budget Committee)
As Amended June 14, 2011
Majority vote. Budget Bill Appropriation Takes Effect
Immediately
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|ASSEMBLY: | |(June 3, 2011) |SENATE: |21-16|(June 15, |
| | | | | |2011) |
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(vote not relevant)
SUMMARY : Makes various changes to state laws to implement
provisions relating to redevelopment in the 2011-12 Budget Act
and is the second of two budget trailer bills that address
redevelopment agencies (RDAs). This bill creates an Alternative
Voluntary Redevelopment Program for cities or counties to opt
into. The first bill, SB 14 X1 or AB 26 X1, eliminates
redevelopment agencies and directs the resolution of their
activities. The first bill would not become effective unless
this bill also becomes effective. The requirements of this bill
would affect communities that elect to participate in the
Alternative Voluntary Redevelopment Program and the first bill
would not apply.
The Senate amendments delete the Assembly version of this bill,
and instead:
Addresses the requirements of a city or county that elects to
participate in the Alternative Voluntary Redevelopment Program
and maintains such participation; sets forth the calculation of
the voluntary payments made by cities or counties; addresses
various administrative activities required to be carried-out by
state and local entities.
Alternative Voluntary Redevelopment Program:
1)Allow RDAs to continue to carry out the provisions of the
Community Development Law if a city or county with that RDA
(community) elects to participate in the Alternative Voluntary
Redevelopment Program established by this bill. If a
community decides to participate in the program, it shall
adopt a non-binding resolution to that effect and notify the
Department of Finance prior to October 1, 2011. The
alternative program includes the following requirements or
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options for the community:
a) Requires adoption of a binding resolution to participate
in the program no later than November 1, 2011, or December
1, 2011, as specified;
b) Requires community remittances to schools, fire
districts, and transit districts as indicated in the
additional detail on remittances below;
c) Specifies intent for future Legislatures to reduce a
community's remittances below the baseline levels of this
bill, if certain reforms, or projects that meet statewide
goals, are adopted;
d) Specifies that participation in the program constitutes
an agreement on the part of the community to assign to the
state its rights to any payments owed from a RDA, in the
circumstance where the required community remittances are
not made;
e) Allows RDAs, for 2011-12 only, to be exempt from making
the full allocation to the Low and Moderate Housing Fund,
but includes the intent that these allocations be
maintained to the extent feasible and requires that RDAs
make a finding that it cannot meet its other obligations
unless the allocation is reduced; and,
f) Specifies that if a community falls out of compliance
with the voluntary program, the requirements of elimination
in the first bill are reestablished and the RDA is
prohibited from issuing new debt or engaging in other
activities.
Community Remittances:
2)Require participants in the Alternative Voluntary
Redevelopment Program to make community remittances from the
city or county that includes an RDA to fund schools, fire
districts, and transit districts. Such community remittances
can be funded from any available city or county funds. A
community may enter into an agreement with the RDA in that
jurisdiction for the RDA to transfer a portion of its tax
increment to the city or county, in an amount not to exceed
the annual remittance requirement, for the purpose of
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financing activities within the redevelopment area that are
related to redevelopment project goals.
3)Establish that the calculation for remittances in 2011-12 is
based on the combined average of: i) an RDA's proportional
share of net tax increment after debt and pass-throughs; and,
ii) an RDA's proportional share of gross tax increment after
pass-throughs, each as reported by 2008-09 Controller's
Report. The resulting proportional share for each RDA is
applied to $1.7 billion to determine the required remittance
for each community. A community that believes the data
utilized in the calculation is outdated such that debt as a
share of increment has increased more than 10% since the
2008-09 report, may request a proportionate reduction in its
payment through appeal to the Director of Finance.
4)Establish that the calculation for remittances in 2012-13 and
thereafter is based on the sum of two amounts:
a) For 2012-13, an amount equal to the same percentage
share of $400 million that the payment in 2011-12 was of
$1.7 billion. For years after 2012-13, an amount equal to
the prior year's payment adjusted by the percentage change
in the total amount of property tax increment revenue and
excluding new debt service added after November 1, 2011;
plus,
b) For 2012-13 and thereafter, 80% of the school share of
the property tax increment of new debt service added after
November 1, 2011, and for any new project areas or
expansions, excluding debt service related to low and
moderate income housing. The 80% of the school share would
reflect that the 20% low and moderate housing set-aside is
restored in 2012-13 and thereafter.
5)Provide language to the effect that future legislation would
be adopted allowing communities to reduce their remittances
below this 80% school share for new debt, if certain reforms,
or projects that meet statewide goals, are adopted. Such
projects could include those related to transportation,
housing, economic development, job creation, and environmental
protection.
6)Direct most of the community remittances in 2011-12 (all but
$4 million of the $1.7 billion) to county Education Revenue
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Augmentation Funds (ERAF). Funds in 2011-12 would be directed
to schools and districts that overlap with RDA areas,
allocated on the basis of Average Daily Attendance (ADA), and
would offset the state's Proposition 98 payment to schools.
In 2012-13, the amount directed to ERAF would be about $340
million. For 2012-13 and thereafter, funds for schools would
be on top of to the Proposition 98 funding level.
7)Direct about $4 million in 2011-12 and about $60 million in
2012-13 and thereafter, to special districts within the RDA
area that provide fire and transit services. The amounts
shall be transferred to the Special District Allocation Fund,
and allocated to those special districts based on their
proportional share of tax increment.
Other Matters:
8)Specify that most of the provisions of this bill are
non-severable to the other provisions, such that if one
provision is found invalid, other specified provisions are
also found invalid. Specifies that the provisions of this act
are severable with the provisions of the first bill, SB 14 X1
or AB 26 X1, which eliminates redevelopment. Thus, if
provisions of this bill are found invalid, the provisions of
the first bill could remain in effect. Provisions of the
first RDA bill specify it is enacted only if this bill is
enacted.
9)Appropriate $500,000 to the Department of Finance for
administrative costs associated with this bill.
10)Add an appropriation allowing this bill to take effect
immediately upon enactment.
AS PASSED BY THE ASSEMBLY , this bill expresses the intent of the
Legislature to enact statutory changes relating to the 2011
Budget Act.
FISCAL EFFECT : This legislation, together with SB 14 X1 or AB
26 X1, will result in $1.7 billion in additional funding as part
of the 2011-12 Budget Act.
COMMENTS : It is anticipated that cities and counties with RDAs
would choose to participate in the Alternative Voluntary
Redevelopment Program established in this bill. A community
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that elects to participate would provide a community remittance
equal to its proportional share of $1.7 billion to schools for
2011-12. In 2012-13, and thereafter, a community would provide
a community remittance equal to its proportional share of $400
million to schools and certain special districts, with specified
ongoing adjustments. For new debt or new project areas of
communities in the alternative program, the community remittance
would be 80% of the school shares, minus pass-throughs, to
schools. The bill includes language that future legislation
could reduce that payment if RDA projects meet certain criteria
for reform and statewide benefit. Thus, indirect state support
for redevelopment activities would continue for all projects,
with increased assistance for particular types of projects.
Analysis Prepared by: Mark Ibele / BUDGET / (916) 319 2099
FN: 0001299