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CITY COUNCIL AGENDA ITEM NO. 19


Meeting Date: May 14, 2002

Subject/Title: Approve a Resolution Electing to Receive all the Tax Revenues Allocated to the Agency Attributable to Annual Assessed Value Increases Calculated in the Proposed Added Area for the North Brentwood Redevelopment Plan and to Tax Rate Increases Imposed for the City 

Submitted by: Gina Rozenski, Redevelopment Analyst

Approved by: John Stevenson, Executive Director

RECOMMENDATION 
Approve a Resolution Electing to Receive all the Tax Revenues Allocated to the Agency Attributable to Annual Assessed Value Increases Calculated in the Proposed Added Area for the North Brentwood Redevelopment Plan and to Tax Rate Increases Imposed for the City. 

PREVIOUS ACTION
On June 26, 2001, the City Council of the City of Brentwood approved and adopted Resolution No. 2322 adding additional area to the North Brentwood Redevelopment Survey Area.

On October 2, 2001, the Planning Commission of the City of Brentwood approved and adopted Resolution No. 01-76 amending the boundaries of the North Brentwood Redevelopment Project Area, approving Amendments to the Preliminary Plans for the Merged Brentwood and North Brentwood Redevelopment Projects, and submitting the Amendments to the Preliminary Plans to the Redevelopment Agency of the City of Brentwood for its acceptance and preparation of an amendment to the official Redevelopment Plans for the Projects.

On January 22, 2002, the Redevelopment Agency approved a resolution accepting the Amendments to the Preliminary Plans for the Merged Brentwood and North Brentwood Redevelopment Project Areas, authorizing Agency staff to file information with appropriate taxing agencies and officials, and directing the amendments to the official Redevelopment Plans for the Projects be prepared.

On April 9, 2002, the Redevelopment Agency approved resolutions to adopt the Preliminary Report and refer it to the appropriate taxing entities, accepted and authorized circulation of the Draft Negative Declaration, and referred the Proposed Amendments to the Planning Commission and to the Project Area Committee for review and recommendations. 

BACKGROUND
Assembly Bill 1290, 1994, eliminated the past practice of case-by-case negotiations of pass-through agreements with affected taxing entities. AB1290 also eliminated the so-called “2% election” whereby taxing entities in the past could elect to receive their share of property taxes attributable to the automatic Proposition 13 inflation adjustment to the base year assessed value. AB1290 established a statutory sharing of tax increment with affected taxing entities for all redevelopment plans adopted on or after January 1, 1994.

The new statutory pass-through formula established three overlapping tiers of payments to affected taxing entities: 
1. Tier 1: 25% of gross tax increment in Year 1 to the end of the plan;
2. Tier 2: 16.8% from Year 11 to the end of the plan plus Tier 1;
3. Tier 2: 11.2% in Year 31 to the end plus Tier 1 and Tier 2.

Under AB1290, the sponsoring city that adopts the redevelopment plan does not automatically receive its share of the statutory pass-through. Rather, the city may elect to receive from the agency an amount equal to its share of the statutory pass-through payments arising exclusively from the first tier of the statutory pass-through formula. The sponsoring city may not share in the increases paid to other affected taxing entities for Tiers 2 and 3. The payment to a city, in effect, replaces the statutory 2% election amount that a city would have been permitted to receive under prior law, but which was eliminated by AB1290.

Consideration

The City Council is asked to elect to receive all the tax increment revenues allocated to the Redevelopment Agency equal to the amount the City of Brentwood would have received under the first tier of statutory pass-through payments, in addition to any tax revenues received by the Redevelopment Agency resulting from increases in tax rates imposed for the City of Brentwood. 

FISCAL IMPACT
During the 45-year life of the Plan for the Proposed Added Area, the Agency shall remit a portion of the collected tax increment revenues to the City of approximately $180,000 to $290,000, net present value. There has been no analysis performed regarding potential payments from the Agency to the City attributable to increases in tax rates since tax rate increases are purely speculative at this time. 

Attachments:
Resolution No. ____.

RESOLUTION NO. 

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF BRENTWOOD ELECTING TO RECEIVE ALL OR A PORTION OF THE TAX REVENUES PURSUANT TO HEALTH AND SAFETY CODE SECTIONS 33676 AND 33607.5

WHEREAS, the City Council adopted the North Brentwood Redevelopment Plan by Ordinance 496 on July 9, 1991 (the “Redevelopment Plan”); and

WHEREAS, the Redevelopment Agency of the City of Brentwood is preparing proposed Amendments to the North Brentwood Redevelopment Plan (the “Amendment”) which adds territory commonly referred to as the Sunset Industrial Area to the original Project Area (the “Added Area”); and

WHEREAS, Section 33676 of the Health and Safety Code provides that prior to the amendment of a redevelopment plan an affected taxing agency may elect to receive, in addition to the portion of taxes allocated to the affected taxing agency pursuant to Health and Safety Code Section 33670(a), all or any portion of the tax revenues allocated to the Agency for the Added Area pursuant to Health and Safety Code section 33670(b) which are attributable to the tax rate increases imposed for the benefit of the taxing agency after the tax year in which the ordinance adopting the Amendment becomes effective (the “Increases”); and

WHEREAS, for territory added on or after January 1, 1994, section 33607.5 of the Health and Safety Code provides that in any fiscal year in which a redevelopment agency receives tax increments, the community may elect to receive, and the agency shall pay to it, an amount equal to twenty-five percent (25%) of its proportionate share of the tax increments received by the agency from the Added Area after the amount required to be deposited in the Low and Moderate Income Housing Fund has been deducted (the “City Election”); and

WHEREAS, the City Council desires to receive the Increases and make the City Election;

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF BRENTWOOD DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. The City Council hereby elects to receive all Increases as herein defined.
Section 2. The City Council hereby elects to receive the City Election as herein defined.
Section 3. The City Clerk is hereby directed and authorized to transmit a copy of this resolution to the Executive Director of the Redevelopment Agency of the City of Brentwood and to the tax collector of Contra Costa County.

PASSED AND ADOPTED this 14th day of May, 2002, by the following vote: