BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     AB 654


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          Date of Hearing:  May 13, 2015


                        ASSEMBLY COMMITTEE ON APPROPRIATIONS


                                 Jimmy Gomez, Chair


          AB  
          654 (Brown) - As Amended April 22, 2015


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          |Policy       |Housing and Community          |Vote:|6 - 0        |
          |Committee:   |Development                    |     |             |
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          |             |Local Government               |     |9 - 0        |
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          |-------------+-------------------------------+-----+-------------|
          |             |                               |     |             |
          |             |                               |     |             |
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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   
          Yes


          SUMMARY:


          This bill prohibits a county auditor from allocating to the  
          Redevelopment Property Tax Trust Fund (RPTTF), except as  
          specified, revenues derived from a property tax rate approved by  








                                                                     AB 654


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          voters in a city, county, or special district, to pay for the  
          State Water Project. 


          FISCAL EFFECT:


          Significant General Fund costs, likely in excess of $5 million  
          annually, beginning in 2016-17, due to the diversion of revenues  
          from State Water Project tax rates from the RPTTF to the city,  
          county, or special district that imposed the tax rate.  Any  
          amount of property tax revenue diverted away from schools would  
          typically result in corresponding General Fund expenditures to  
          meet the minimum funding guarantees of Proposition 98. On  
          average, schools receive 50% of property tax revenues in each  
          county.


          COMMENTS:


          1)Purpose. According to the author, "The measure would remedy  
            the situation in which the revenues derived from  
            voter-approved property tax overrides are being misallocated  
            in the course of the RDA dissolution process in the County of  
            San Bernardino.  Currently the San Bernardino County Auditor-  
            Controller is allocating the residual balances from each  
            former RDA's Redevelopment Property Tax Trust Fund to taxing  
            entities based on each agency's share of the 1% County General  
            Tax levy without taking into account any specific debt service  
            override tax.  This results in Valley District's Debt Service  
            Tax Override proceeds that are not needed for the payment of  
            approved former RDA expenses to be allocated out to all taxing  
            entities ignoring that a certain portion of that residual  
            balance was derived directly from Valley District's tax  
            override rate."











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          2)Background.  In the 1960s, the voters of San Bernardino County  
            approved a tax increase to fund State Water Projects in the  
            county.  After the creation of redevelopment, the Valley  
            Municipal Water District (Valley District) entered into pass  
            through agreements with the RDAs to receive some or all of the  
            property taxes they would have received pre-redevelopment.   

            According to Valley District, they had 23 negotiated  
            agreements with ten RDAs for project areas throughout its  
            service area. Although Valley District is receiving a portion  
            of the payment, Valley District indicates that it is not  
            receiving its entire pass through payment and is entitled to  
            an additional $10 million which is being distributed by the  
            San Bernardino county-auditor to other taxing entities out of  
            the residual balance remaining after all the obligations of  
            the RDA are paid. 





            Local water agencies can levy ad valorem rates above the 1%  
            rate to pay their annual obligations for water deliveries from  
            the State Water Project.  State courts have concluded that  
            such costs were voter-approved debt because voters approved  
            the construction, operation, and maintenance of the State  
            Water Project in 1960.  As a result, most water agencies that  
            have contracts with the State Water Project levy a  
            voter-approved debt rate. It is not clear how many, in  
            addition to Valley District, have pass through agreements with  
            former RDAs and could qualify for additional tax revenues  
            under this bill.





          3)Amendment. The bill needs an amendment to fill in the blank  
            date by which a county auditor-controller must deem as correct  








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            the allocation of revenues derived from the imposition of the  
            State Water Project property tax rate. The author has  
            indicated plans to add the date July 1, "2015."



          4)Related Legislation.  AB 1009 (Garcia), pending in this  
            Committee, authorizes a city or county that levies a property  
            tax rate, approved by the voters, 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 takes the same approach as AB 1009, but instead,  
            deals with property tax override rates approved by voters in  
            support of the State Water Project.





          Analysis Prepared by:Jennifer Swenson / APPR. / (916)  
          319-2081