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California Special Districts Association

Wednesday
Feb 22nd
Impact of RDA Decision on Special Districts
Thursday, 12 January 2012 12:42
As CSDA reported in a December 29, 2011 Legislative Alert, the California Supreme Court in its decision of California Redevelopment Association v. Matosantos, has effectively eliminated redevelopment agencies (RDAs).  The impact of this ruling could significantly affect special districts currently within the boundaries of one or more RDAs. Such districts may begin to see the return of a portion of their previously diverted property tax revenues, and the largest special district within each RDA will need to appoint someone to a newly created oversight board.

ABx1 26—upheld by the Supreme Court—dictates the establishment of successor agencies and oversight boards and the distribution of the approximately $5.7 billion in annual property tax increment previously diverted from schools, counties, cities, and special districts.  Unless redevelopment proponents are able to delay its implementation or otherwise restore RDAs through legislation, their dissolution will begin February 1, 2012. A legislative proposal to push this deadline to early spring is expected to be introduced this week.

Current Timeline
In the disposition of its ruling, the Supreme Court extends all statutory deadlines established by ABx1 26, and arising before May 1, 2012, by four months.  Therefore, below are the major deadlines regarding implementation:

  • December 29: RDAs are prohibited from taking any new actions
  • February 1: RDAs are dissolved and no longer officially exist; Successor Agencies take control of all assets, etc.
  • March 1: Draft of the Recognized Obligation Payment Schedule is due
  • April 15: First Recognized Obligation Payment Schedule is submitted
  • May 1: Oversight Board must have been formed, elected a Chairperson and reported the name of the Chairperson and Board Members to the Department of Finance
  • May 15: Governor may appoint individuals to any position on an Oversight Board that has not been filled
  • July 1: County Auditor of each county must have completed a financial audit of each RDA
  • July 15: The financial audits by each County Auditor of each RDA must have been submitted to the State Controller

Oversight Boards
No later than May 1, 2012, the largest special district, by property tax share, with territory in the jurisdiction of each RDA, must appoint a representative to the new RDA Oversight Board.  If this district fails to appoint, the Governor may appoint in their place.  Each Oversight Board will consist of seven members.  While there are specified alternatives in some circumstances, the boards will generally be made up of the following:

  • 1 member appointed by the county BOS
  • 1 member appointed by the mayor for the city that formed the RDA
  • 1 member appointed by the largest special district, by property tax share, with territory in the territorial  jurisdiction of the RDA
  • 1 member appointed by the county superintendent of education or county board of education
  • 1 member appointed by the Chancellor of the California Community Colleges
  • 1 member of the public, appointed by the county BOS
  • 1 member representing the employees of the RDA, appointed by the mayor from the recognized employee organization representing the largest number of former RDA employees employed by the successor agency

Property Tax Increment
The Governor’s 2012-13 state budget proposal estimates that, in accordance with the Supreme Court’s order, special districts will receive an additional $170 million in the current year, 2011-12.  This is the amount of special district property tax increment expected to remain after required payments are made for “pass through” and the year’s pre-existing obligations or debts, plus administrative costs.  This amount is expected to grow over time to over $500 million annually as property values increase, debts are retired and RDA assets are monetized.

Besides the property tax increment returned to special districts, in 2011-12, K-14 schools are expected to receive an additional $1.05 billion, counties $340 million and cities $220 million.  Over time, these revenues should grow to $3.2 billion, $1.2 billion, and $671 million respectively.
 
 
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