Los Angeles – Inland Empire – Oakland – Orange County – Palm Desert – Silicon Valley – Ventura County

Weathering The Financial Storm

California Contract Cities Association Fall Seminar

Oxnard, California

October 15, 2011

Los Angeles – Inland Empire – Oakland – Orange County – Palm Desert – Silicon Valley – Ventura County

Joseph P. Buchman

Burke Williams & Sorensen LLP444 S. Flower StreetSuite 2400Los Angeles, CA 90071www.bwslaw.com

(213) 236-2872 (direct)(213) 236-2700 (fax)jbuchman@bwslaw.com

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City Revenues

Tax Revenues • General Property Taxes• Sales and Use Tax and Transactions and

Use Tax• Gross Receipts Tax• Business License Fees and Taxes• Utility Users Tax• Transient Occupancy Tax

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City Revenues

Tax Revenues (Cont.)• Excise Taxes

• Development Tax• Admissions Tax• Parcel Tax• Documentary Transfer Tax

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City Revenues

Tax Revenues (Cont.)• Special Taxes

• Mello-Roos• Community Facilities Districts• Police and Fire Protection• Libraries• Transportation

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City Revenues

Tax Revenues (Cont.)• Special Benefit Assessment Districts

• Public Improvements: street, drainage, flood control, etc.

• Landscaping and Lighting• Business Improvement Districts • Infrastructure Financing Districts

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City Revenues

Charges, Rates and Fees• Development Fees• Sewer Service Charges and

Connection Fees• Solid Waste Fees• Water Service Charges and

Connection Fees• Franchise Fees: Cable TV, Electricity,

Telephone, Gas and Oil

8

City Revenues

Charges, Rates and Fees (Cont.)• Fines and Forfeitures• Park and Recreation Fees• Airport• Ports and Harbors• Licenses and Permits

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City Revenues

Intergovernmental Agencies• State Subventions• Federal and State Grants• County and Other Local Agencies

Revenue Sharing

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City Revenues

Other Financing Sources• Revenues From Use of Money and

Property• Gifts• Sale of Bonds• Leasing Public Property

1111

Summary of City Revenues

Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2009 (2/3/2011).

1212

City Revenues: Illustration

ServiceCharges

(water, sewer, refuse, etc.)

39%

Fees8% State &

Fed 10%

NotRestricted

36%

Debt Service

1%

Taxes 3%

Lic & Permits 2%Assessments 1%

x

Utility UserTax 4%

Sales Tax 10%

Property Tax11%

Other Tax 7%

Other 4%

1313

Revenue Losses:The California Triple Flip -- Local Sales Tax for Property Tax

Decrease Local Sales Tax Rate -0.25%

Property Taxin Lieu of Sales Tax

State FiscalRecovery Fund

$1.4 Billion

Schools

State General Fund

Increase State SalesTax Rate +0.25%

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Revenue Losses: Educational Revenue Augmentation Funds ERAF Shifts

• Property Tax Shift from Cities, Counties and Special Districts to Schools Since 1992

• FY 2010-11 amount equals $7.5 billion.

• “SERAF” from Redevelopment Agencies

• FY 2010-11 SERAF total is $350 million; FY 2009-10 total was $1.7 billion

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City Expenditures

General Government• Legislative• Management and Support

Public Safety• Police• Fire• Emergency Medical Services• Street Lighting

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City Expenditures

Transportation• Streets, Highways and Storm Drains• Public Transit• Airports• Ports and Harbors

Community Development• Planning• Construction and Engineering Regulation

Enforcement

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City Expenditures

Health• Solid Waste Disposal• Sewers

Culture and Leisure• Parks and Recreation• Libraries

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City Expenditures

Public Utilities• Water• Gas• Electricity

1919

Summary of City Expenditures

Source: State Controller’s Cities Annual Report for Fiscal Year ending 6/30/2009 (2/3/2011).

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Redevelopment Agencies

Property Tax Increment Funding Expenditures for Community

Redevelopment Current and Future Status

Unsettled

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Redevelopment Agencies

January 10, 2011• Governor Brown releases budget proposal,

includes elimination of redevelopment.

June 15• State Legislature passes ABx1 26 and 27.

June 28• Legislature passes new budget bill, and

forwards ABx1 26 and 27 to Governor for signature. Governor signs, and the bills take effect immediately.

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Redevelopment Agencies

July 18• CRA and LOCC file suit in California Supreme

Court challenging constitutionality of ABx1 26 and 27 and requesting stay.

August 11• Supreme Court announces it will hear lawsuit,

and issues order staying portions of ABx1 26 and all of ABx1 27.

August 18

• Supreme Court modifies Stay Order.

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Redevelopment Agencies

August 22• CRA and LOCC request additional clarification

of Stay Order.

September 14• Supreme Court denies request for further

clarification of Stay Order.

January 15, 2012 • Supreme Court decision expected.

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ABX1 26 Dissolution Bill

Freezes redevelopment agency activities other than as necessary to meet “enforceable obligations.”

Requires preparation of Enforceable Obligation Payment Schedule within 60 days of Effective Date.

Preliminary draft of Recognized Obligation Payment Schedule to Successor Entity by September 30.

Dissolution by October 1, 2011.

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ABx1 27 (“Pay to Play” Bill)

“Alternative Voluntary Redevelopment Program.”

Department of Finance Calculates Remittance Payment Amounts.

August 15 Appeal Deadline.

Adoption of Continuation Ordinance by October 1 (or Resolution of Intent, which extends deadlines until November 1).

First payment January 15, second May 15.

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Closing thoughts…

“If I'm on the course and lightning starts, I get inside fast. If God wants to play through, let him.”

“I've always been in the right place and time. Of course, I steered myself there.”

-- Bob Hope