Recent Issues of Concern to Agencies
SB 211
One of the major pieces of legislation that was adopted during the 2001 session was SB 211. Some frequently asked questions about SB 211 are discussed below.
What are the major elements of SB 211?
SB 211 makes 2 major changes to the Community Redevelopment Law (CRL) for redevelopment plans that were adopted prior to 1994. First, it allows an agency to delete the debt incurrence date from the plan. Second, it allows an agency to extend the time to implement redevelopment activities (plan effectiveness) and receive tax increment by 10 years.
How difficult are the amendments to complete?
The ability to remove the debt incurrence date is a simple amendment. The legislative body only needs to adopt an ordinance to do this. None of the substantial documentation and public hearing processes normally associated with a plan amendment are required.
Extensions of the plan effectiveness and receipt of tax increment deadlines are much more complicated to process, requiring procedures that extend beyond the normal plan amendment process. An agency must make a finding that significant blight remains based on the AB 1290 definitions of blight. After the time limit to receive tax increment would have expired, an agency is limited in its expenditure of tax increment to those parcels that are shown to be blighted or necessary to remove blight.. The housing set-aside is also increased from 20 to 30 percent immediately upon adoption of the amendment. Finally, state agencies may challenge the amendment.
Will we need to negotiate new pass through agreements?
No. The mandatory pass through provisions contained in AB 1290 will be triggered under either of the amendments. No negotiation is required. For those taxing entities for which existing pass through agreements exist, those agreements will continue to govern the payments of tax increment. The AB 1290 pass through payments are based on growth above tax increment levels in the year in which the old limit would have gone into effect. For example, if an agency removes a 1/1/2004 debt incurrence limit from its redevelopment plan, the agency would make pass through payments in 2004-05 based on 20 percent of the increase in tax increment from 2003-04 levels.
Will removal of the debt incurrence limit trigger the 30 percent housing set-aside?
No. The 30 percent housing set-aside is only triggered if you extend the plan effectiveness or receipt of tax increment time limit.
Santa Ana Unified School District Case
This case involved former Section 33676 of the CRL as it existed prior to 1994. If you have a project area that was adopted between 1986 and 1993, your agency could be affected by this case. Based on the provisions of the case, school districts can elect to receive payments from a project area if they have not entered into a pass through agreement. The payments are based on the growth in property taxes derived from the 2 percent inflation adjustment allowed by Proposition 13. If you are in a situation where you have a plan that was adopted during the above time frames and do not have pass through agreements with your schools, you should investigate this further.
