JOHN K. VAN DE KAMP Attorney General
RODNEY O. LILYQUIST Deputy Attorney General
AGO 83-301
No. 83-301
California Attorney General Opinion
Office of the Attorney General State of California
July 26, 1983
THE
HONORABLE NICHOLAS C. PETRIS, MEMBER OF THE CALIFORNIA
SENATE, has requested an opinion on the following question:
In
determining the yearly amount of the business inventory
subvention payable to a redevelopment agency, is the actual
tax rate or an assumed tax rate of $4 per $100 of assessed
value to be used for the computation?
CONCLUSION
In
determining the yearly amount of the business inventory
subvention payable to a redevelopment agency, the actual tax
rate is to be used for the computation.
ANALYSIS
Under
the Community Redevelopment Law (Health and Safety Code,
§§ 33000-33738), the governing body of a community
may prepare, adopt, and implement a redevelopment plan for
the elimination of blighted areas within the community.
(Redevelopment Agency v. Malaki (1963) 216
Cal.App.2d 480, 482; Redevelopment Agency v. Hayes
(1954) 122 Cal.App.2d 777, 800-802; Jacobs & Levine,
Redevelopment: Making Misused & Disused Land
Available and Usable (1957) 8 Hastings L.J. 241,
250-253.)
A
redevelopment project is normally funded by what is known as
"tax increment financing." Bonds are issued by the
redevelopment agency to cover the costs of redevelopment. The
principal and interest on the bonds are paid from a portion
of all property taxes collected in the project area. As the
assessed valuation of taxable property in the project area
increases due to its redevelopment, the taxes levied on such
property that normally would go to the appropriate taxing
agency are divided between the taxing agency and the
redevelopment agency. The taxing agency receives the same
amount of money it would have received based upon the
assessed valuation existing at the time the project was
approved, while the additional money resulting from the rise
in assessed valuation goes to the redevelopment agency for
repayment of the project's indebtedness. (Cal. Const.,
art. XVI, § 16; Health & Saf. Code, § 33670;
Redevelopment Agency v. Cooper (1968) 267 Cal.App.2d
70, 72-73; 27 Ops.Cal.Atty.Gen. 352, 353-354 (1965).)
While
the passage of Proposition 13 (Cal. Const., art. XIII A,
§§ 1-6) in June 1978 reduced the amount of tax
increment revenues available to a redevelopment agency, it
did not change the basic structure of financing redevelopment
projects throughout the state. (Pasadena Redevelopment
Agency v. Pooled Money Investment Bd. (1982) 136
Cal.App.3d 290, 292; Schuster & Recht, Tax Allocation
Bonds in California After Proposition 13 (1983) 14
Pacific L.J. 159, 176-178.)
In
1979, as part of a broad program to revise state and local
taxation after Proposition 13, the Legislature granted a 100
percent property tax exemption for business inventories.
(Stats. 1979, ch. 1150; see Rev. & Tax. Code, §
219.) The Legislature thus eliminated one source of property
tax revenues for local governments, including redevelopment
agencies. To offset the...
