PURPOSE

The purpose of this report is to receive authorization from the City Council to extend the Plan effectiveness date, and the debt repayment and receipt of tax increment date for the Golden State, City Centre, and West Olive Redevelopment Project Areas as authorized under SB 1096.

BACKGROUND

During the 2002-2003 Fiscal Year, every Redevelopment Agency was required to make an Educational Revenue Augmentation Fund (ERAF) payment to the County Auditor.  In an effort to offset the financial burden caused by the ERAF payment, SB 1045, adopted in 2003 by the California Legislature, authorized agencies to amend their redevelopment plans to extend the time of effectiveness of the plan by one year for payment of the 2003-2004 Fiscal Year ERAF payment.  On January 6, 2004, as allowed by SB 1045 for payment of ERAF during the 2003-2004 Fiscal Year, the City Council adopted an Ordinance extending the Plan effectiveness date, and the debt repayment and receipt of tax increment date by one year for the Golden State, City Centre, West Olive, and South San Fernando Redevelopment Project Areas. 

Senate Bill 1096, adopted in 2004 by the California Legislature, will also require every redevelopment agency to make an ERAF payment to the County Auditor during the 2004-2005 and 2005-2006 Fiscal Years.  This allocation was determined based on a statewide aggregate allocation of $250 million.  Individual agency payments are determined as a proportion of that agency�s share of total tax increment collected state-wide.  Each agency must allocate the specified amount established by the county auditor for deposit into the ERAF on or before May 10, 2005, and 2006.  In Burbank, the 2004-05 contribution of $2,477,335.52 was paid by the Burbank Redevelopment Agency (�Agency�) on April 20, 2005.  The 2005-06 Fiscal Year payment will be paid on or before the May 10, 2006 deadline.     

SB 1096 authorizes agencies to amend their redevelopment plans to extend the time of effectiveness of the plan by one year for each year of the ERAF payments.  The extension can be made if the existing time limit has no more than 10 years remaining with no other requirements, or if the existing time limit is between 10 years and 20 years provided that the agency can make the following findings:

1. Agency is in compliance with Housing Fund requirements;

2. Agency has an adopted Implementation Plan;

3. Agency is in compliance with applicable replacement housing production requirements; and

4. Agency is not subject to sanctions for Housing Fund excess surplus.

Three of the four redevelopment plans in the City meet the requirements.  Therefore, as the 2004-2005 ERAF payment has been made, staff proposes a one year time limit extension as allowable by SB 1096.

The proposed time extension for the plan effectiveness date and the debt repayment and receipt of tax increment date does not alter any of the other time limits, specifically the expiration of the Agency�s powers of eminent domain.[1]

ANALYSIS

The time limitations required by SB 1096 will be counted individually for each Plan from the date of the adoption of each Plan. The Golden State, City Centre, and West Olive Redevelopment Project Areas meet the eligibility requirements as stated above.  Both the Golden State and City Centre Redevelopment Project Areas have existing Plan Limits of less than 10 years.  The West Olive Redevelopment Project Area has an existing Plan Limit of 12 years.  The Agency meets the four requirements as stated above, and therefore qualifies for the extension. The South San Fernando Redevelopment Project Area does not qualify for a time extension under SB 1096 as that Plan�s effectiveness date is more than 20 years from the fiscal year in which the 2004-05 ERAF payment was made.  Therefore, City Council has the authority to extend the time limit on the Plan effectiveness date for the Golden State, City Centre, and West Olive Redevelopment Plans as follows:

SB 1096 further authorizes agencies having to make an ERAF payment to amend their redevelopment plans to extend the time limit on the use of tax increment to pay indebtedness by one year for each year of the ERAF payments.  The table on the next page summarizes the existing and proposed time limits for the repayment of indebtedness under SB 1096 for Golden State, City Centre, and West Olive:

SB 1096 allows an agency to extend these time limits by adopting an Ordinance that contains findings that the funds used to make a payment to the Education Revenue Augmentation Fund would otherwise have been used to pay the costs of projects and activities necessary to carry out the goals and objectives of the Redevelopment Plans.

While the ERAF contribution creates a financial burden on the Burbank Redevelopment Agency by reducing the number and type of projects that can be carried out in the short term, the ability to extend the life of each project area by one year offsets this burden in the long term.

By extending the Plan effectiveness date and the date for debt repayment and receipt of tax increment by one year, the Agency will receive an estimated $57,158,079 in net tax increment during that year.   The table below summarizes the estimated value of the additional year in each of the project areas based on a 2% increase in assessed value per year, by project area.

FISCAL IMPACT OF ADDITIONAL YEAR OF TAX INCREMENT

These additional funds will be used to pay the costs of projects and activities necessary to carry out the goals and objectives of the Redevelopment Plan, and the repayment of debt.

Pursuant to Section 33333.6 of the Health and Safety Code, notice of a public hearing was mailed to each affected taxing agency at least 30 days prior to the public hearing and a notice was published in the Burbank Leader, a local newspaper, on Saturday, August 20, 2005 and Wednesday, August 24, 2005, not less than 10 days prior to the date of the public hearing.

CONCLUSION

SB 1096 requires the Burbank Redevelopment Agency to make an ERAF payment for the 2004-05 and 2005-06 Fiscal Years.  Furthermore, the Bill gives authority to the City to extend its Redevelopment Plan limits to help minimize the impact that the ERAF payment may have on the Agency�s ability to do projects and repay debt by allowing agencies to extend the Plan effectiveness date, and the date to use tax increment to repay debt.  SB 1096 makes no mention of timeframes for passing the appropriate ordinance to make these amendments.  However, the California Redevelopment Association (CRA) recommends that agencies complete these amendments after the ERAF payment for the appropriate fiscal year has been made.  Staff recommends extending the time limits for the Golden State, City Centre, and West Olive Redevelopment Plans by one year for the 2004-05 ERAF payment.  After the payment has been made for the 2005-06 Fiscal Year, staff may return at that time for a second one year time extension for the City Council�s consideration after May 2006.

FISCAL IMPACT

By extending the Plan effectiveness date and the date for debt repayment and receipt of tax increment by one year for the Golden State, City Centre, and West Olive Redevelopment Project Areas, the Agency will have another year to complete projects, receive tax increment and repay debt.  The Agency will receive an estimated total of $57,158,079 in net tax increment during that year.  

RECOMMENDATION

Staff recommends that the City Council introduce the ordinance extending the Plan effectiveness date, and the debt repayment and receipt of tax increment date by one year for the Golden State, City Centre, and West Olive Redevelopment Project Areas. 

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