BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 2647|
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THIRD READING
Bill No: AB 2647
Author: Wagner (R)
Amended: 8/5/14 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 6/18/14
AYES: Wolk, Knight, Beall, DeSaulnier, Hernandez, Liu, Walters
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 78-0, 5/15/14 (Consent) - See last page for
vote
SUBJECT : Redevelopment: El Toro Project Area: former City
of Lake Forest Redevelopment Agency
SOURCE : City of Lake Forest
DIGEST : This bill clarifies property tax revenues
attributable to the El Toro Project Area (ETPA) for the former
Lake Forest Redevelopment Agency (RDA) in light of the
dissolution of redevelopment. This bill requires the Orange
County Auditor-Controller (Auditor-Controller) to allocate
property tax revenues attributable to the ETPA between the
Redevelopment Property Tax Trust Fund (Fund) established for the
former Orange County Development Agency and the Fund established
for the former Lake Forest RDA, as provided.
ANALYSIS : Until 2011, the Community Redevelopment Law allowed
local officials to set up RDAs, prepare and adopt redevelopment
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plans, and finance redevelopment activities. Citing a
significant state General Fund deficit, Governor Brown's 2011-12
Budget proposed eliminating RDAs and returning billions of
dollars of property tax revenues to schools, cities, and
counties to fund core services. Among the statutory changes
that the Legislature adopted to implement the 2011-12 Budget, AB
26X1 (Blumenfield, Chapter 5, Statutes of 2011, First
Extraordinary Session) dissolved all RDAs. The California
Supreme Court's 2011 ruling in California Redevelopment
Association v. Matosantos upheld AB 26X1, but invalidated AB
27X1 (Blumenfield, Chapter 6, Statutes of 2011, First
Extraordinary Session), which would have allowed most RDAs to
avoid dissolution.
The Neighborhood Preservation and Development Project (NPDP),
established by Orange County's former Development Agency, was a
single redevelopment project area that consisted of 14 separate,
non-contiguous subareas. When the City of Lake Forest
incorporated in 1991, the City's boundaries encompassed almost
all of the subarea known as the ETPA. After the City of Lake
Forest created its RDA, the Legislature specified terms under
which Orange County's Development Agency could transfer, to a
city's RDA, jurisdiction over the portion of the NPDP's area
that fell within a city's boundaries. Pursuant to that statute,
in 1998, Orange County's Development Agency transferred
territorial jurisdiction over the portion of the ETPA located in
the City of Lake Forest to the City's RDA. In 1999, the County
and the City entered into a transfer agreement that formalized
the terms of the transfer.
This bill clarifies property tax revenues attributable to the
ETPA for the former Lake Forest RDA in light of the dissolution
of redevelopment. This bill requires the Auditor-Controller to
allocate property tax revenues attributable to the ETPA between
the Fund established for the former Orange County Development
Agency and the Fund established for the former Lake Forest RDA.
This bill requires the Auditor-Controller to:
Initially deposit into the former Orange County Development
Agency's Fund all property tax revenues attributable to the
NPDP Area, including the ETPA, that would have been allocated
to the RDA had it not been dissolved.
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After deducting the administrative costs, and remitting the
amounts required, the Auditor-Controller shall transfer the
sum of both of the following, determined for the entire fiscal
year, into the redevelopment obligation retirement fund of the
successor agency to the Orange County Development Agency for
distribution as required by law and applicable bond covenants:
1. 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
2. All other obligations secured by a prior claim on, or
pledge of, moneys in the 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.
The Auditor-Controller shall deposit into the Fund established
for the former Lake Forest RDA the transfer agreement amount, as
set forth in the applicable Recognized Obligation Payment
Schedule submitted by the successor agency to the Orange County
Development Agency and approved by the Department of Finance, to
the extent moneys are available from the portion of the former
Orange County Development Agency's Fund attributable to the
ETPA. These payments shall be paid prior to all payments listed
on the recognized obligation payment schedule of the successor
agency to the former Orange County Development Agency, other
than the payments described, unless otherwise required by
statute or applicable bond covenants.
This bill defines the "El Toro Project Area" as the portion of
the former Orange County Development Agency's NPDP Area that was
transferred to the Lake Forest RDA pursuant to the transfer
agreement and state law.
This bill defines "transfer agreement" as the specified
agreement dated as of July 6, 1999, entered 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.
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This bill defines "transfer agreement amount" to mean the amount
of the payment required to be made by the former Orange County
Development Agency to the former Lake Forest RDA pursuant to the
transfer agreement, less the amount of pass-through payments
attributable to the ETPA that are disbursed by the
Auditor-Controller.
This bill declares that its provisions should not be construed
to affect specified statutory obligations of the former Orange
County Development Agency related to the County's 1994
bankruptcy. This bill directs that those obligations must be
prior to any transfer of property tax revenues directed by this
bill's provisions and requires this bill's provisions to be
interpreted and construed in a manner consistent with the
statute that imposes those obligations.
This bill declares that its provisions are intended to implement
the 1999 transfer agreement in light of restrictions on
redevelopment agency operations in existing law and this part
and, with specified exceptions, is not intended to alter the
transfer agreement, which continues in full force and effect.
Background
RDAs used property tax revenues generated by growth in the
assessed value of properties in a project area - commonly known
as tax increment revenues - to repay their debts, including tax
allocation bonds, contracts with property owners and builders,
and advances and loans from their underlying cities and
counties. Orange County's Development Agency had committed tax
increment revenue from the ETPA to repay indebtedness it
incurred before it entered into the transfer agreement with Lake
Forest. To preserve the Orange County's Development Agency's
ability to repay its indebtedness, the transfer agreement
specified the manner in which the County's Development Agency
and Lake Forest's RDA were to receive tax increment revenues
from the part of the ETPA that was subject to the transfer
agreement. Specifically, the agreement directed the
Auditor-Controller to make, to the City of Lake Forest, a single
annual payment of the property tax increment revenues that
remained after the Auditor-Controller allocated property tax
increment revenues to Orange County's Development Agency,
pursuant to specified formulas, in an amount sufficient to repay
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or refinance the County Development Agency's existing
indebtedness related to the ETPA.
The transfer agreement worked well before RDAs were dissolved.
However, the state laws governing RDAs' dissolution have
complicated efforts to properly allocate property tax increment
revenues among the various affected taxing entities. City of
Lake Forest officials want the Legislature to clarify the manner
in which the Auditor-Controller must allocate property tax
revenues from the former ETPA to the successor agencies of the
former Orange County's Development Agency and Lake Forest's RDA.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Verified 8/12/14)
City of Lake Forest (source)
Association of California Cities - Orange County
California State Association of Counties
South Orange County Community College District
ARGUMENTS IN SUPPORT : According to the author, "AB 2647 will:
[c]orrect the process utilized to transfer funds to the Lake
Forest Successor Agency by clarifying the application of the
Dissolution Legislation; [e]nsure the timely distribution of
former tax increment to taxing agencies of the El Toro Project
Area pursuant to State law."
ASSEMBLY FLOOR : 78-0, 5/15/14
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Ch�vez, Chesbro, Conway, Cooley,
Dababneh, Dahle, Daly, Dickinson, Donnelly, Eggman, Fong, Fox,
Frazier, Beth Gaines, Garcia, Gatto, Gomez, Gonzalez, Gordon,
Gorell, Gray, Grove, Hagman, Hall, Harkey, Roger Hern�ndez,
Holden, Jones, Jones-Sawyer, Levine, Linder, Logue, Lowenthal,
Maienschein, Medina, Melendez, Mullin, Muratsuchi, Nazarian,
Nestande, Olsen, Pan, Patterson, Perea, John A. P�rez, V.
Manuel P�rez, Quirk, Quirk-Silva, Rendon, Ridley-Thomas,
Rodriguez, Salas, Skinner, Stone, Ting, Wagner, Waldron,
Weber, Wieckowski, Wilk, Williams, Yamada, Atkins
NO VOTE RECORDED: Mansoor, Vacancy
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AB:k 8/12/14 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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