BILL ANALYSIS �
AB 2647
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2647 (Wagner) - As Amended: April 10, 2014
SUBJECT : Redevelopment: El Toro Project Area: Former City of
Lake Forest Redevelopment Agency.
SUMMARY : Clarifies property tax revenues attributable to the El
Toro Project Area for the former Lake Forest Redevelopment
Agency in light of the dissolution of redevelopment.
Specifically, this bill :
1)Requires the Orange County Auditor Controller to do both of
the following:
a) Establish a separate Redevelopment Property Tax Trust
Fund (Fund) for the former Lake Forest Redevelopment Agency
(RDA); and,
b) Allocate property tax revenues attributable to the El
Toro Project Area between the Fund established for the
former Orange County Development Agency and the Fund
established for the former Lake Forest RDA, as provided
below.
2)Requires all property tax revenues deposited by the Orange
County Auditor Controller pursuant to provisions in existing
law that require the auditor-controller to determine the
amount of property taxes that would have been allocated to
each RDA in the county, had the RDA not been dissolved, during
each fiscal year that are attributable to the Neighborhood
Preservation and Development Project Area, including the El
Toro Project Area, to be initially placed in the Fund for the
former Orange County Development Agency.
3)Requires the Orange County Auditor Controller, prior to
January 2, 2015, and prior to each June 1 and January 2
thereafter, or such other Fund distribution date as may be
determined by the Legislature, to determine the sum of the
following:
a) For each six-month fiscal period, the amount of
administrative costs and negotiated and statutory
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passthrough obligations pursuant to provisions in existing
law; and,
b) For each fiscal year, both of the following:
i) The transfer amount required by existing law related
to the transfer from the Orange County Development Agency
to the Orange County general fund, as specified; and,
ii) All other obligations secured by a prior claim on,
or pledge of, moneys in the Redevelopment Property Tax
Trust Fund of the former Orange County Development
Agency, including tax allocation bonds, as applicable,
that are payable on a basis prior to any transfer to the
former Lake Forest RDA pursuant to the Transfer Agreement
or pursuant to existing law contained in the Community
Redevelopment Law related to restrictions on RDA
operations and dissolution of RDAs and designation of
successor agencies, or any other law.
4)Requires, if the moneys in the Redevelopment Property Tax
Trust Fund established for the former Orange County
Development Agency, exclusive of property tax revenues
attributable to the El Toro Project Area, are sufficient to
pay all obligations described in 3), above, the Auditor
Controller to deposit into the Redevelopment Property Tax
Trust Fund established by the former Lake Forest RDA the
amount by which the property tax revenues attributable to the
El Toro Project Area exceeds the amount to be retained by the
Orangey County Development Agency pursuant to the transfer
agreement, and require the moneys to be distributed in
accordance with existing law for passthrough agreements.
5)Requires, if the moneys in the Redevelopment Property Tax
Trust Fund established for the former Orange County
Development Agency, exclusive of property tax revenues
attributable to the El Toro Project area, are not sufficient
to pay all obligations described in 3), above, the Orange
County Auditor Controller to distribute the moneys in the Fund
established for the former Orange County Development Agency
that are attributable to the El Toro Project Area as follows:
a) An amount equal to the greater of either the following
shall be retained in the Fund established for the former
Orange County Development Agency and distributed in
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accordance with existing law for passthrough agreements:
i) The amount to be retained by the Orange County
Development Agency pursuant to the transfer agreement;
or,
ii) The amount necessary to fund the balance of the
obligations described in 3), above, in excess of the
amount otherwise available in the Fund for the former
Orange County Development Agency without regard to
property tax revenues attributable to the El Toro Project
Area.
b) Requires the remainder to be deposited into the Fund
established for the former Lake Forest RDA and distributed
in accordance with existing law for passthrough agreements.
6)States that this section shall not be construed to affect the
obligations of the successor agency to the Orange County
Development Agency under existing law related to the transfer
from the Orange County Development Agency to the Orange County
general fund, as specified. States that such obligations
shall be prior to any transfer of property tax revenues
directed by this section and this section shall be interpreted
and construed in a manner consistent with existing law related
to the transfer from the Orange County Development Agency to
the Orange County general fund.
7)Provides that this section is intended to implement the
transfer agreement in light of Assembly Bill 26 of the 2011-12
First Extraordinary Session of 2011 and, except as expressly
set forth herein, this section is not intended to alter the
transfer agreement, which shall continue in full force and
effect in accordance with its terms.
8)Defines "El Toro Project Area" to mean the portion of the
former Orange County Development Agency's Neighborhood
Preservation and Development Project Area that transferred to
the Lake Forest RDA pursuant to the transfer agreement and
sections of RDA law related to the joint exercise or
delegation of power to redevelopment.
9)Defines "transfer agreement" to mean the Agreement to Transfer
Territorial Jurisdiction of a Noncontiguous Portion of a
Redevelopment Project Area dates as of July 6, 1999, entered
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into among the County of Orange, the Orange County Development
Agency, the City of Lake Forest, the Lake Forest RDA, and the
City of Laguna Hills.
10)Finds and declares that a special law is necessary and that a
general law cannot be made applicable because of the unique
economic circumstances in the area served by the former City
of Lake Forest Redevelopment Agency relating to the payment of
debt service on pre-existing bonds secured by the El Toro
Project Area.
11)Requires, if the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement
to local agencies and school districts for those costs shall
be made, as specified.
EXISTING LAW :
1)Dissolves redevelopment agencies as of February 1, 2012, and
provides for the designation of successor agencies.
2)Requires successor agencies to wind down the affairs of the
dissolved redevelopment agencies.
3)Defines "enforceable obligations."
4)Requires successor agencies make payments due to enforceable
obligations, as specified.
5)Requires each successor agency to have an oversight board of
seven members to approve certain actions of the successor
agency.
6)Requires Department of Finance to review the actions of an
oversight board.
7) Finds and declares all of the following:
a) The Orange County Board of Supervisors established the
Neighborhood Development and Preservation Project on June
28, 1988;
b) The Orange County Neighborhood Development and
Preservation Project consists of 13 independent areas
either within the territorial jurisdiction of incorporated
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cities or the sphere of influence of existing cities;
c) The County of Orange and affected cities are in
agreement that the territorial jurisdiction for the
Neighborhood Development and Preservation Project areas for
those areas presently within the boundaries of an
incorporated city, and areas which upon their annexation or
inclusion otherwise are included within the boundaries of
an incorporated city should be transferred to the
appropriate city; and,
d) If any portion, including a subarea of the Orange County
Neighborhood Development and Preservation Project, of the
territory is currently within the boundaries of a city, or
is subsequently annexed to a city or otherwise included
within the boundaries of a city, the territorial
jurisdiction of the agency of the county over that portion
including a subarea
of the project area, of the territory in the Orange County
Neighborhood Development and Preservation Project may be
transferred from the agency of the county to the agency of
the city pursuant to existing law, except as specified.
FISCAL EFFECT : This bill is keyed fiscal.
COMMENTS :
1)Purpose of this bill . This bill seeks to correct the process
utilized to transfer funds to the Lake Forest Successor Agency
by clarifying the application of the dissolution legislation.
It requires the Orange County Auditor Controller to determine
the amount of property taxes generated from the El Toro
Project Area of the Neighborhood Development and Preservation
Project Area, and requires the Auditor Controller to determine
the amount necessary to satisfy the bond obligations that
pre-existed the creation of the City of Lake Forest RDA and to
deposit those funds into the Fund of the Orange County
Development Agency, and to deposit the remaining funds
attributable to the El Toro Project Area into the Successor
Agency's Fund.
This bill is sponsored by the City of Lake Forest.
2)RDA Dissolution . As part of the winding down of redevelopment
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agencies, AB 1484 (Blumenfield), Chapter 26, Statutes of 2012,
made various statutory changes associated with the dissolution
of redevelopment agencies and addressed a number of
substantive issues related to administrative processes,
affordable housing activities, repayment of loans from
communities, use of existing bond proceeds and the disposition
or retention of former redevelopment agency assets. Existing
law requires dissolved agencies to make payments due for
enforceable obligations and to perform duties required
pursuant to any enforceable obligation, and additionally
requires the county auditor controller to determine annually
the amount of property taxes that would have been allocated to
each RDA had the agency not been dissolved and to deposit that
amount into a Fund. County auditor controllers then allocate
moneys in the Fund for passthrough payment obligations,
enforceable obligations
of the dissolved RDA, and administrative costs.
3)Author's statement . According to the author, "Prior to the
incorporation of the City of Lake Forest, the El Toro
Redevelopment Project Area was under jurisdictional control of
the County of Orange. When the City of Lake Forest
established the Lake Forest RDA and control over the Project
Area was subsequently transferred to Lake Forest, the City,
County and Agency entered into a Transfer Agreement to
establish related terms, conditions and procedures. The
purpose of the Transfer Agreement was to allow the transfer of
tax increment from the Project Area to the Lake Forest RDA and
ensure the protection of the County's pre-existing bond
obligations.
"AB 1X 26 and Assembly Bill 1484 established a process by
which successor agencies may receive former tax increment for
the purpose of funding enforceable obligations and their
ongoing operation costs. While the Transfer Agreement served
the County and Agency well prior to dissolution, the
dissolution legislation did not clearly contemplate this type
of transfer structure. Specifically, the Lake Forest
Successor Agency is identified as an enforceable obligation of
the County's Successor Agency - the Orange County Development
Agency - and is being paid from the Orange County Development
Agency's Recognized Obligations Payment Schedule (ROPS). No
other former RDA is so dependent on another government
organization.
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"It is not clear whether this transfer structure is consistent
with the dissolution legislation. In addition, the Successor
Agency's payment of former tax increment from the Orange
County Development Agency's ROPS has caused significant
confusion for the Department of Finance, which has
necessitated the expenditure of public resources to clarify
its unique circumstance through the Meet and Confer process.
Without legislative action to clarify this process and
mitigate the confusion, payments due to the affected tax
agencies, including school districts and public agencies could
be delayed or miss altogether."
4)Arguments in support . Supporters argue that the bill provides
a legislative solution that would affirm the process of
transferring funds from the County to the Lake Forest
Successor Agency as outlined by state law, and offers solution
to resolve these unique issues not contemplated by the
Legislature when it dissolved RDAs.
5)Arguments in opposition . None on file.
REGISTERED SUPPORT / OPPOSITION :
Support
City of Lake Forest [SPONSOR]
California State Association of Counties
South Orange County Community College District
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958