BILL ANALYSIS �
AB 1450
Page 1
( Without Reference to File )
CONCURRENCE IN SENATE AMENDMENTS
AB 1450 (Garcia)
As Amended August 27, 2014
2/3 vote. Urgency
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|ASSEMBLY: | |(April 1, 2014) |SENATE: | | |
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(vote not relevant) (vote not available)
Original Committee Reference: ED.
SUMMARY : Enacts provisions that would allow revenues from a
voter-approved pension property tax to be allocated to the city
or county whose voters approved the tax, in specified
conditions.
The Senate amendments delete the Assembly version of this bill,
and instead:
1)Find and declare all of the following:
a) The California Constitution limits property-based tax
levies, with exceptions to these limits only when a local
jurisdiction obtains the approval of its voting electorate
to use additional property-based tax levies for specific
purposes approved by the voting electorate, in accordance
with applicable constitutional and statutory provisions.
b) With the enactment of AB 26 X1 (Blumenfield), Chapter 5,
Statutes of 2011-12 First Extraordinary Session, the
Legislature intended that, upon dissolution of
redevelopment agency (RDAs) in the State of California,
property taxes that would have been allocated to RDAs are
no longer deemed tax increment.
c) It is the intent of the Legislature in enacting this act
to do all of the following:
i) If an RDA had previously pledged revenues derived
from the imposition of a property tax rate, approved by
the voters of a city, county, or city and county to make
payments in support of pension programs and levied in
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addition to the property tax rate limited by the
California Constitution, to pay a portion of the debt
service due on indebtedness incurred by the former RDA on
an approved Recognized Obligation Payment Schedule
(ROPS), then the successor agency shall continue to
pledge those revenues, in a commensurate rate going
forward. For example, if revenues derived from a pension
tax rate approved by the voters of a city, county, or
city and county were pledged to pay up to 25% of the
annual debt service for the indebtedness approved in a
ROPS, the successor agency shall continue to pay up to
25% of the annual debt service on the indebtedness until
maturity. Any and all excess pledged revenues derived
from the pension property tax rate that are not necessary
to pay the debt service on the indebtedness shall be
allocated and paid to the city, county, or city and
county whose voters approved the pension property tax
rate;
ii) Ensure that the use of revenues derived from the
imposition of a property tax rate approved by the voters
of a city, county, or city and county, to make payments
in support of pension programs and levied in addition to
the property tax rate limited by the California
Constitution, is consistent with the use approved by the
voters of a city, county, or city and county, once
revenues from such property tax rates are not needed to
pay approved indebtedness of a former RDA;
iii) Implement the allocation and distribution of
voter-approved, property-based tax revenues for pension
programs under the RDA dissolution process in a manner
that would have been consistent with the allocation and
distribution of those revenues had RDAs not been
dissolved, in accordance with applicable constitutional
provisions; and,
iv) It is the intent of the Legislature that this act
not affect any property tax allocations that occurred
prior to July 1, 2014.
2)Require the county auditor-controller, prior to allocating
moneys in each Redevelopment Property Tax Trust Fund (RPTTF)
pursuant to the specified formula in existing law, to
additionally deduct the revenues allocated as follows:
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a) On January 2, 2015, and each January 2 and June 1
thereafter, to a city or county that levies a property tax
rate, approved by the voters of a city or county to make
payments in support of pension programs and levied in
addition to the property tax rate limited by the California
Constitution, an amount of property tax revenues equal to
the amount of revenues derived from the imposition of that
tax rate that were allocated to the RPTTF for that fiscal
period. Provides that this paragraph shall not apply to
the extent that revenues derived from the imposition of a
property tax rate are not deposited into a RPTTF as
provided by 3) through 6) below.
3)Allow a city or county that levies a property tax rate,
approved by the voters of a city or county to make payments in
support of pension programs and levied in addition to the
property tax rate limited by the California Constitution, to
make a request to an oversight board to prohibit revenues
derived from the imposition of that property tax rate from
being deposited into a RPTTF.
4)Provide, based on substantial evidence that a former RDA made
a pledge of revenues that specifically included revenues
derived from the imposition of a property tax rate, approved
by the voters of a city or county to make payments in support
of pension programs and levied in addition to the property tax
rate limited by the California Constitution, that an oversight
board may deny a request pursuant to 3) above, in an amount
not to exceed the amount of revenues pledged by the former
RDA.
5)Provide, notwithstanding any other law, for the 2014-15 fiscal
year and each fiscal year thereafter, except to the extend an
oversight board denies a request as provide in 4) above, that
any revenues derived from the imposition of a property tax
rate, approved by the voters of a city or county to make
payments in support of pension programs and levied in addition
to the property tax rate limited by the California
Constitution, shall not be allocated to a RPTTF and shall
instead be allocated to, and when collected shall be paid
into, the fund of the city or county whose voters approved the
tax.
6)Provide, notwithstanding any other law, all allocations of
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revenues derived from the imposition of a property tax rate,
approved by the voters of a city or county to make payments in
support of pension programs and levied in addition to the
property tax rate limited by the California Constitution, made
by any county auditor-controller prior to July 1, 2014, shall
be deemed correct and shall not be affected by this bill.
Provides that a city, county, county auditor-controller,
successor agency, or affected taxing entity shall not be
subject to any claim for money, damages, or reallocated
revenues based on any allocation of such revenues prior to
July 1, 2014.
7)State that no inference shall be drawn from the enactment of
this act with respect to the use, distribution, or allocation
of revenues derived from the imposition of a property tax
rate, approved by the voters of a city, county, or city and
county to make payments in support
of pension programs and levied in addition to the property tax
rate limited by the California Constitution, as specified,
made by any county auditor-controller prior to July 1, 2014.
8)Provide that the Legislature is aware of City of San Jose,
etc. v. Sharma et al., Court of Appeal Case No. C074539, which
is pending litigation. Declares the express intent of the
Legislature that no party in that pending litigation be in any
way prejudiced by the passage of this bill. Exempts the City
of San Jose Successor Agency from the provisions of this bill,
except for 2 a) above. States, furthermore, that this bill
shall not be indicative of any legislative intent concerning
any issues before the courts in that litigation, and that no
provision in this bill shall be relied upon in any way
regarding the issues pending before the courts in that
litigation.
9)Provide that reimbursement to local agencies and school
districts shall be made, if the Commission on State Mandates
determines that this act contains costs mandated by the state.
10)Contain an urgency clause, with the facts constituting the
necessity as "in order to avoid underfunded pension programs
as a result of revenues derived from the imposition of a
property tax rate, approved by the voters of a city, county,
or city and county to make payments in support of pension
programs and levied in addition to the property tax rate
limited by the California Constitution, being allocated first
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to successor agencies to make payments on the indebtedness
incurred by the dissolved RDAs, with remaining balances being
allocated in accordance with applicable constitutional and
statutory provisions, instead of being paid entirely into the
fund of the city, county, or city and county whose voters
approved the tax."
EXISTING LAW :
1)Dissolves RDAs and institutes a process for winding down their
activities.
2)Defines "enforceable obligations."
3)Requires successor agencies make payments due to enforceable
obligations, as specified.
4)Requires successor agencies to prepare a ROPS, before each
six-month fiscal period, in accordance with specified
requirements, and requires the schedule to identify one or
more
of the following sources of payment:
a) Low- and Moderate-Income Housing Fund;
b) Bond proceeds;
c) Reserve balances;
d) Administrative cost allowance;
e) The RPTTF, as specified; and,
f) Other revenue sources, including rents, concessions,
asset sale proceeds, interest earnings, and any other
revenues derived from the former redevelopment agency, as
approved by the oversight board.
5)Requires each successor agency to have an oversight board of
seven members to approve certain actions of the successor
agency.
6)Requires the Department of Finance (DOF) to review the actions
of an oversight board.
7)Requires DOF to issue a finding of completion to the successor
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agency, within five business days, once the following
conditions have been met and verified:
a) The successor agency has paid the full amount as
determined during the due diligence reviews and the county
auditor-controller has reported those payments to DOF;
b) The successor agency has paid the full amount as
determined during the July True-up process; or,
c) The successor agency has paid the full amount upon a
final judicial determination of the amounts due and
confirmation that those amounts have been paid by the
county auditor-controller.
8)Allows the successor agency, upon receiving the finding of
completion, to:
a) Retain dissolved redevelopment agency assets;
b) Place loan agreements between the former redevelopment
agency and sponsoring entity on the ROPS, as an enforceable
obligation, provided the oversight board makes a finding
that the loan was for legitimate redevelopment purposes;
and,
c) Utilize proceeds derived from bonds issued prior to
January 1, 2011, in a manner consistent with the original
bond covenants.
9)Requires, after DOF issues a finding of completion, the
successor agency to prepare a long-range property management
plan that addresses the disposition and use of the real
properties of the former redevelopment agency, and requires
the report to be submitted to the oversight board and DOF for
approval no later than six months following the issuance to
the successor agency of the finding of completion.
10)Limits property tax to 1% except for specific bonded debt,
pursuant to the California Constitution.
AS PASSED BY THE ASSEMBLY , this bill revised, for the purposes
of pupil suspension and expulsion, the definition of bullying
via an electronic act from the "creation and transmission" of a
communication to the "creation or transmission" of a
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communication, via an electronic act originated on or off the
schoolsite.
FISCAL EFFECT : According to the Senate Appropriations
Committee, this bill contains unknown General Fund costs, likely
exceeding $10 million annually beginning in 2014-15, due to the
diversion of revenues from pension tax rates from the RPTTF to
the city or county that imposed the pension tax rate.
An estimated $40 million in pension property tax revenues was
deposited into RPTTFs in 2012-13 following the dissolution of
RDAs. These revenues are currently distributed to local taxing
entities pursuant to dissolution statutes. This bill would
instead allocate revenues derived from pension tax rates to the
cities and counties that imposed the supplemental rate, except
for amounts dedicated to pay recognized obligation bond
issuances. This diversion is likely to result in over $10
million in reductions of property tax allocations to schools.
Any amounts diverted away from schools would typically result in
corresponding General Fund expenditures to meet the minimum
funding guarantees of Proposition 98 (1988).
COMMENTS :
1)Background on voter-approved pension property tax levies.
There are some cities throughout the state whose voters
historically approved a tax for pension obligations for city
staff, including 12 cities in Los Angeles County. Some
pension levies were approved as early as the 1920s, with some
cities amending and increasing their levy through the late
1970s. The amounts of the levies also vary by city and range
from 0.05% to 0.45%. These rates are levied in addition to
the 1% general property tax rate.
Under redevelopment law, redevelopment agencies created
project areas that captured incremental property tax growth
within the project areas. For older RDAs, agencies received
growth in property tax revenue collected under the 1% rate, as
well as additional rates levied to fund debt - such as pension
obligations. RDAs could then pass on to cities the portion of
tax increment that was intended by voters to be used for
pension obligations and other debts.
Under RDA dissolution, RDAs no longer pass on the tax
increment growth of pension tax revenues to cities. This is
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because property tax increment is no longer allocated to RDAs.
Instead, a county auditor-controller deposits former RDA
property tax increment, including tax increment attributable
to pension taxes, into a trust fund. Revenues deposited to
the trust fund are first used to pay outstanding RDA
obligations. Remaining revenues are then distributed to the
other local governments whose jurisdiction overlaps with the
former RDA based on each local government's share of the 1%
property tax. As a result, some pension tax revenues that
RDAs previously passed on to cities are now being allocated to
other local governments, including schools.
2)Purpose of this bill. This bill would authorize a city or
county that levies a property tax rate, approved by the voters
of a city or county to make payments in support of pension
programs and levied in addition to the general property tax
rate, to make a request to an oversight board to prohibit
revenues derived from that property tax rate from being
deposited into a Redevelopment Property Tax Fund. This bill
would authorize an oversight board to deny this request based
on substantial evidence that a former redevelopment agency
made a pledge of revenues that specifically included revenues
derived from the imposition of that property tax rate. This
bill, for the 2014-15 fiscal year and each fiscal year
thereafter, except to the extent an oversight board denies a
request, would prohibit any revenues derived from the
imposition of that property tax rate from being allocated to a
RPTTF, and would, instead, require these revenues to be
allocated to, and when collected to be paid into, the fund of
the city or county whose voters approved the tax.
This bill would require all allocations of revenues derived
from the imposition of that property tax rate made by any
county auditor-controller prior to July 1, 2014, to be deemed
correct, and would prohibit any city, county, county
auditor-controller, successor agency, or affected taxing
entity from being subject to any claim, as specified. This
bill would require, to the extent that revenues derived from
the imposition of a property tax rate, approved by the voters
of a city or county to make payments in support of pension
programs and levied in addition to the general property tax
rate, are deposited into a RPTTF, the county-auditor
controller to allocate moneys from each RPTTF to a city or
county that levies a property tax as so described after
certain other allocations have been made.
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This bill provides that the Legislature is aware of City of
San Jose, etc. v. Sharma et al., which is pending litigation,
and declares the express intent of the Legislature that no
party in that pending litigation be in any way prejudiced by
the passage of this bill. This bill also states, furthermore,
that this bill shall not be indicative of any legislative
intent concerning any issues before the courts in that
litigation, and that no provision in this bill shall be relied
upon in any way regarding the issues pending before the courts
in that litigation.
This bill is author-sponsored.
3)Author's statement. According to the author, "County auditors
now deposit the pension increment, along with other tax
increments, into a trust fund that is used to pay off RDA debt
obligation- depriving cities of the funding. Without that
funding, many already cash-strapped cities are going to have
to make difficult decisions regarding services they can
provide. These cities have already tightened their belts and
have made very deep cuts, there is not much left to cut."
4)Related legislation. This bill is similar to SB 663 (Lara) of
the current legislative session, which was held in the
Assembly Appropriations Committee. SB 663 would have
required, for the 2014-15 fiscal year and each year
thereafter, voter-approved pension property tax revenues to be
allocated to the fund of the city or county whose voters
approved the tax, rather than the revenues being allocated to
the RPTTF pursuant to the RDA dissolution process. This bill
differs from SB 663 in that it specifically addresses the
pending litigation in the City of San Jose, and also clarifies
that a city or county can retain tax increment revenues if it
gets oversight board approval.
5)Arguments in support. Supporters argue that this bill will
establish that pension related tax levies should be allocated
to the impacted taxing entities to pay for their pension
obligations as voters approved and intended, and that this
bill is also necessary to prevent the ongoing loss of this
pension tax revenue, which today threatens municipal jobs and
services in impacted cities.
6)Arguments in opposition. Unknown.
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7)Urgency clause. This bill contains an urgency clause and will
require 2/3 vote of each house.
8)Substantially amended. This bill was substantially amended in
the Senate and the Assembly-approved provisions of the bill
were deleted.
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
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