Boomerang Funds: Residual property taxes distributions under the Redevelopment Dissolution Laws

Karen TiedemannGoldfarb & Lipman1300 Clay Street, 11th FloorOakland, CA 94612510-836-6336ktiedemann@goldfarblipman.com

goldfarb lipman attorneys

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OVERVIEW

What are “boomerang funds”?

How are boomerang funds distributed to taxing entities?

Exploring opportunities and restraints on use of boomerang funds

Open Dialogue

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WHAT ARE “BOOMERANG FUNDS”

Property taxes distributed to “affected taxing entities” under AB 1x 26 and AB 1484 that would formerly have been part of redevelopment “tax increment” system

Potential sources of boomerang funds:

July 12th True Up Payments (§34183.5); Due Diligence Review Payments (§34179.6); Land disposition under Long-Range Property

Management Plan (§34191.3); and Semiannual Residual Distributions from

Redevelopment Property Tax Trust Fund (RPTTF) (§34183).

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LRPM PLAN LAND DISPOSITION

Four Tranches of Property Distribution under LRPM Plan: Public Use Project described in Redevelopment

Plan For Enforceable Obligation For Liquidation but plan can direct use of

sales proceeds for: Enforceable obligations; For project identified in approved redevelopment

plan; or Distribution to taxing entities

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BIANNUAL RPTTF ROPS DISTRIBUTIONS

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TIMING OF POTENTIAL DISTRIBUTIONS

Potential Source Date of Potential Distribution

July 12th True Up Payment

One time distribution made on or about July 16, 2012

Due Diligence Reviews Distributions made by Auditor- Controllers 5 days after receipt of DDR Payments from successor agency(Nov/Dec 2012 for Housing DDR and April 2013 for Non-Housing DDR)

LRPM Plan Land Disposition-

Distribution from sales proceeds but only if plan doesn’t provide for other use

RPTTF Residual Distribution

Subject to availability based on RPTTF Residual Distributions January 2 and June 1 of every year

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HYPOTHETICAL DISTRIBUTION OF PROPERTY TAXES IN CITY “A”

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Distribution of $1,000,000:•$495k will go to School Districts•$295k will go to the County•$95k will go City•$95k will go to “Other Taxing Entities”•$20k will go to “County ERAF”

POTENTIAL OPPORTUNITIES

Local Efforts: San Francisco Proposition C- Dedicated $50 million of residual

distributions and unspent bond proceeds to fund affordable housing

City of Fremont dedicated portions of residual from Housing Fund Due Diligence Review it received to fund economic development and affordable housing activities

County of Los Angeles dedicated $11 million to affordable housing; exploring ways to invest $200 million of residual funds for economic development and affordable housing purposes

Regional/State Efforts: No examples to date, but discussions on joint efforts

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CONSIDERATIONS/RESTRAINTS

Part of “general fund” revenues Authority to spend on affordable housing is clear for

cities/counties but other taxing entities Subject to annual allocations and competition on general

fund demands Residual distributions are property taxes-

Issues arise in spending property taxes outside of jurisdiction

Residual distributions to school districts reduce State subvention

State realignment goals offsets amounts available to Counties

Bonding Restrictions on multi-year pledge Subject to general obligation bond 2/3 voter approval

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DISCUSSION

Local focus and advocacy in short-term

Think about how the amounts and timing of potential residual distributions fit with affordable housing development processes and timelines

Underscores need for state-wide permanent source financing

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