De Kamp, 072683 CAAGO, AGO 83-301

Docket Nº:AGO 83-301
Case Date:July 26, 1983
Court:California
 
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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...

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