BILL ANALYSIS �
SB 536
Page 1
Date of Hearing: August 17, 2011
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Felipe Fuentes, Chair
SB 536 (DeSaulnier) - As Amended: June 21, 2011
Policy Committee: Local
GovernmentVote:6-1
Urgency: Yes State Mandated Local Program:
Yes Reimbursable: No
SUMMARY
This bill revises property tax allocations for Contra Costa
County so the Oakley Redevelopment Agency will receive increased
property tax revenues resulting from the construction of a
proposed public utility power plant within the city.
Specifically, this bill:
1)Requires the Contra Costa county auditor to allocate property
tax revenues from the construction of the power plant to the
County of Contra Costa and to all of the school entities
located in that county, in an amount that would have otherwise
been allocated to the county and school districts had this
bill not been enacted and make additional specified
allocations to the East Contra Costa Fire Protection District
and East Bay Regional Parks District.
2)Directs the Contra Costa county auditor to allocate to the
Oakley Redevelopment Agency the balance of the property tax
revenues and require the redevelopment agency to reimburse the
County Auditor for reasonable costs related to the
reallocations required by this bill.
3)Requires the Oakley Redevelopment Agency to develop one new
housing unit for extremely low income persons for each 40 jobs
created within the project area and requires the units to
comply with the existing requirements of redevelopment law.
FISCAL EFFECT
This bill would not change the amount of property tax revenues
ultimately derived from the Oakley power plant, but would change
SB 536
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the distribution of those revenues. The Oakley Redevelopment
Agency would gain annually $2.7 million at the expense of other
local governments in Contra Costa County. Of this total,
approximately $500,000 would be from the City of Oakley (where
the redevelopment agency is located) and $2.2 million from
various Contra Costa water, sanitary, park, hospital and other
special districts.
There is no net state impact because the bill requires 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 and prior to making the allocation
to the Oakley Redevelopment Agency.
COMMENTS
1)Purpose . According to the author, current law creates a
disincentive for the City of Oakley to support a new power
generating facility within its boundaries. The author notes
that the residents of Oakley will be the most impacted if a
power plant is built within their community and without the
financial incentive that can be used to reduce blight in the
community and provide the necessary services to the facility.
The author notes the existing allocation method will apportion
insufficient revenues, $3,500, to their redevelopment project
area.
2)Background . This bill revises property tax allocation
formulas to allow property tax revenues from a new PG&E power
plant proposed in Contra Costa County to be allocated to the
Oakley Redevelopment Agency. The project is estimated to be
completed in June 2016.
3)Property tax allocation . The State Board of Equalization
assesses the property owned by utilities and railroads, called
unitary property. Generally, incremental growth revenues from
state-assessed properties are distributed countywide with all
entities received a share in the revenues, regardless of where
the project was sited.
The Legislature enacted SB 1317 (Torlakson), Chapter 872 of
2006, creating an exception to the countywide unitary tax
allocation method for specified newly constructed electrical
generation, substation and transmission facilities. That
exception allocates a greater share of unitary property tax
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revenues to the city or county in which a qualified electrical
facility is located. The result is that SB 1317 compensates a
community that accepts an energy project with a bigger share
of future unitary property tax revenues. However, the SB 1317
formula only provides funds for cities or counties, not
redevelopment agencies.
4)Housing funds . 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 income households. The allocations made
in this bill would not be tax increment and as property tax
revenues they would not be subject to the requirement to spend
20 % of its additional revenues for affordable housing. The
bill, however, does have a requirement to build housing for
each 40 jobs that are created.
5)Opposition . The Department of Finance argues the property tax
allocation formulas in existing law were a statewide
compromise negotiated among power plant operators and
surrounding special districts and that an exception
redirecting property tax revenues to the Oakley Redevelopment
Agency, to the detriment of other Contra Costa County special
districts, would establish an undesirable precedent and is
contrary to previous agreements. The Department of Finance
also notes that the property tax shift from special districts
to a redevelopment agency could violate Article XIII, Section
25.5 of the California Constitution. While the Legislature
can to shift property taxes between cities, counties and
special districts by a two-thirds vote, this section does not
authorize shifting property tax revenues from these entities
to redevelopment agencies.
6)Previous legislation . A substantially similar bill, SB 1398
(DeSaulnier) of 2010, died on the Senate floor, awaiting
concurrence.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081