Uniform Guidelines for the Implementation Of Assembly Bill No. 15 4X(2009)

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1 Uniform Guidelines for the Implementation Of Assembly Bill No. 15 4X(2009) The Borrowing of Property Tax Revenues from Counties, Cities, and Special Districts in Connection with the State of California Budget for Fiscal Year Prepared By: The Accounting Standards Committee of the California State Association of County Auditors 1

2 Table of Contents Section I Introduction and Background Section II Suspension of Prop 1A - AB 15 4X A) Establishment of Supplemental Revenue Augmentation Fund (SRAF) B) Definition of State Loan amount and Property Tax Revenues C) Calculations of the Loan amount D) Method and Timing of Allocations to SRAF E) Transfer from the SRAF fund by County Office of Education F) Reporting G) Repayment of the Loan amount 2

3 Section I Introduction and Background On November 2, 2004, the voters of California amended the State Constitution by passing Prop 1A which added Section 25.5 to Article XIII. Prop 1A prohibits the State legislature from modifying the manner in which ad valorem property tax revenues are allocated to local agencies as prescribed by the State Constitution under subdivision (a) of Section 1 of Article XIIIA. However, the provisions of Prop 1A can be suspended based on the following conditions: Proclamation by the Governor declaring state s fiscal hardship and the suspension of the protection to local agencies of their rightful claim to all allocable property tax revenues due to them. Enactment by State Legislature by 2/3 votes for an urgency statute to suspend Prop 1A protection to local agencies. Loan amount shall not exceed 8% of the total property tax revenues allocated to all local agencies within each county for the fiscal year immediately proceeding the fiscal year when suspension of Prop 1A was approved. Loan from the suspension of Prop 1A must be repaid within 3 years following the year of the loan plus interest. Loan from the suspension must be paid back before another suspension can occur. The suspension can occur no more than twice within 10 consecutive fiscal years. On July 28, 2009, as part of the budget package, the Legislature passed and the Governor signed into law ABX4 14 and ABX4 15. Subsequently, the Legislature passed and the Governor signed into law Senate Bill 67. Highlights of these legislations are: 1. ABX4-14: suspended the property tax protection provisions of Proposition 1A for FY ABX4-15 and SB 67: allowed the State to borrow from the FY property tax allocation (including Triple Flip Sales tax adjustments (Triple Flip) and the Vehicle License Fees (VLF)) of local agencies and requires the State to fully repay the local agencies property tax revenue reductions (loan amount) no later than June 13, In addition, the legislation includes the following provisions: a. Hardship provision (exemption): Local agencies in danger of bankruptcy or unable to provide core services may apply for a reduction or elimination of their loan amounts to the State Department of Finance (DOF). The application is to be made 30 days after the issuance on bonds under GC 6590 or December 1, 2009, whichever date is earlier, and only to the extent that the local agency did not receive bond proceeds for the full amount of Proposition 1A receivables. The cap for the hardship exemption amount for each county is 10% of the combined total loan amounts for all local agencies in the county. If the hardship exemption is granted, the State DOF will certify to the auditor of the county in which the requesting local agency is located of the amount by December 10, The hardship amount will be reallocated to the other local agencies in the county to make up for the difference, which means the loan 3

4 amounts of the other local agencies will be more than 8% of their property tax revenues. b. Inter-agency agreement: For the original computed 8% loan amounts, two or more local agencies in a county may agree to reallocate exclusively among themselves all or part of their loan, and must notify the county of that agreement and the reallocation specified in that agreement by November 2, If the final loan amounts are higher than the original computed loan amount, then local agencies may enter into an inter-agency agreement after November 2, 2009 for the difference. c. A redevelopment agency may, on behalf of its legislative body (city, city and county, or county), pay all or portion of the legislative body s loan amount and if so elects shall notify the county auditor by November 2, Upon receiving the notification, the auditor shall reduce the loan amount of the city, city and county, or county prior to the transfer of loan amount to SRAF. d. The State shall fully reimburse the loan amounts to cities, city-county, counties and special districts on June 6, 2013 but no later than June 13, However, the State may repay before June 6, 2013 with a minimum 30 day written notice to the Joint Legislative Budget Committee by the Director of Finance. e. The local agencies have option to participate in the California Statewide Communities Development Authority (CSCDA) securitization. The loan amount, as required under Revenue and Taxation (R&T) , from each local agency does not reduce its property tax revenues for the purpose of computing the SB 2557 Property Tax Administrative Fees or the Supplemental 5% administrative fee. In addition, the loan amount does not impact the computation for Tax Equity Allocations (also known as TEA or No/Low) pursuant to R&T 98 (c) for Qualified City(ies). For the purpose of this legislation: the local agency means a city, county, and special district as defined by R&T 95(a), Proposition 1A receivable means the right to payment of loan amount due or to become due to a local agency. [GC 53610(a)]. It is recommended that the aforementioned loan amounts be done at the jurisdictional level (outside of the AB 8 process) for the following reasons: 1. The loan amount is not a reduction of property tax revenues. 2. The loan amount is only for fiscal year The State must fully repay the local agencies loan amounts no later than June 30, R&T (d) directs the county Auditor to calculate the requirements of R&T 96.1 without regard to the local agencies loan amounts in section R&T As with previous guidelines developed to implement other provisions of the law, the objective of these guidelines are to: (1) develop a reasonable document counties may rely upon as an accepted standard to follow in complying with the statutes, (2) promote uniformity in the implementation of the statues and (3) minimize unnecessary and costly time consuming and burdensome documentation and record keeping. 4

5 It is with deepest appreciation that we acknowledge the work of the following individuals who significantly contributed to these guidelines: Rod Dole, Sonoma County Auditor-Controller-Treasurer-Tax Collector, Member, Member, Member, Member Simona J. Padilla-Scholtens, Solano County Auditor-Controller, President Steve Ybarra, Contra Costa Auditor-Controller Dave Irish, Sacramento County Director of Finance Julie Valverde, Sacramento County Assistant Auditor-Controller Thomas Tyrrell Patrick Faulkner Thomas Parker Paul Okada Daniel M. Wolk Carol Orth Bob Campbell Sally Zutter Janelle Austin Darlene Hoang Kathy Rael Kim Le Juan R. Perez Lane Hicks Nenita J. Dejesus Ed Price Irene Lui Jacelyn Ma Mary Jo Walker Jun Adeva Pam Johnston Erick Roeser Todd Filgas Los Angeles County, Office of County Counsel Marin County, Office of County Counsel Sacramento County, Office of County Counsel San Mateo County, Office of County Counsel Solano County, Office of County Counsel Alameda County Contra-Costa County El Dorado County Kern County Los Angeles County Marin County Sacramento County San Diego County San Diego County San Diego County Santa Barbara County Santa Clara County Santa Clara County Santa Cruz County Solano County Sonoma County Sonoma County Stanislaus County Also, we deeply appreciate the assistance of the following organizations who lent their time and immeasurable help: Richard Arrow Greg Brummels, Moises Laurel Jean K. Hurst, Jennifer B. Henning Michael Coleman, Betsy Strauss Marianne.O'Malley Chris Hill, Mark Hill Adam Dondro Tom Vu Retired Auditor-Controller, County of Marin Office of the California State Controller California State Association of Counties League of California Cities Office of the Legislative Analyst, State of California Department of Finance, State of California Office of the California Assembly Budget Committee California Special District Association 5

6 Section II Local agencies Loan to State II A - Establishment of Supplemental Revenue Augmentation Fund (SRAF) Each county must establish a Supplemental Revenue Augmentation Fund (SRAF) in the county treasury [R&T (a)(2)], and the county auditor must transfer the aggregate loan amounts into the SRAF as described below in Section II D. Administration of the SRAF is delegated to the county office of education. II B - Definition of State Loan Amount and Property Tax Revenues Section 25.5 of Article XIII of the California Constitution commonly referred to as Prop 1A, states: Ad valorem property tax revenues means all revenues derived from the tax collected by a county under subdivision (a) of Section 1 of Article XIIIA, regardless of any of this revenue being otherwise classified by statute. Subdivision (a) of Section 1 of Article XIIIA provides that The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax is to be collected by the counties and apportioned according to law to the districts within the counties. While R&T (a)(1)(a) does say loan amounts should be calculated based on property tax revenue allocated to local agencies "for" the fiscal year, the legislative intent is the loan amounts should be calculated based on the amounts received by local agencies "in" the fiscal year. This is because the word "in" is used in all other sections of AB 15 4X when referring to the fiscal year in which ad valorem property tax revenues are received. Pursuant to Chapter 14, Statutes of 2009, R&T requires the county auditor to reduce the amount of ad valorem property tax revenues to be apportioned to each local agency for the fiscal year by the local agency s loan amount. The loan amount, as required by the State, shall be determined as follows: a. 8% of the total ad valorem property tax revenues apportioned to each local agency within the county in fiscal year [R&T (a)(1)(A)]. b. 8% of the Triple Flip and the VLF in-lieu in fiscal year [R&T (a)(1)(B)]. Although the property tax in-lieu of Sales and Use Tax (R&T 97.68) is included in the 8% base to calculate the loan amount, the loan amount can not be used to reduce the property tax in-lieu of Sales and Use Tax apportioned to a city, county, or city and county. The loan amount does not impact the calculation of: the SB 2557 property tax administrative fees, the Supplemental 5% administrative fee, the Tax Equity Allocations, Redevelopment tax increments, or Redevelopment Pass-throughs. 6

7 The property tax revenues consisting of various property tax rolls as shown in section of the Accounting Standards Procedures issued by the State Controller s Office including other items considered in the calculation are listed below: A. Revenues included in the calculation of the loan amount: (Exhibit B) Secured /Unsecured (including Aircraft) / Supplemental (Net of tax increment distributed to redevelopment agencies under H&S code 33670(b) as AB 8 allocation is made subject to this allocation.) Unitary / Utility (All SBE rolls) Pipeline Rights of Way TEA allocations adjustments R&T 97.4 (AB 860) TI payment to ERAF (for Counties that have ERAF at TRA level). This adjustment results in a reduction to the 8% base. Inflation / 2% RDA payments (H&S 33676) Roll Corrections (prior years and current year; positive or negative) Property Tax In-Lieu of Vehicle License Fee Property Tax In-Lieu Local Sales and Use Tax Revenue o Estimate Amount o True-up amount B. Revenues excluded from the calculation of the loan amount: Williamson Act Disaster Relief Open space subvention AB 1290 Mandated RDA Pass Through payments (H&S and H&S ) Negotiated RDA Pass-through payments (H&S 33401) Homeowners Exemption reimbursement U.S. Fish & Wildlife Revenue Sharing State Fish & Game In-lieu of Taxes State Highway Property Rental Tax Racehorse Tax Timber Yield Tax Federal Grazing Fees Excess ERAF as applicable (may apply to Marin, San Mateo, Mono, Napa, Riverside) Non-roll accounting adjustments Bond debt services For the purpose of computing the 8% amount, the property tax revenues exclude any property tax revenues received from other Counties for the local agency with a boundary across county lines. Each county will compute the loan amount based on the property tax revenues apportioned by the county regardless of the county of control. [R&T (c)(1)]. (Exhibit A). II C Calculation of the Loan amount The loan amount to be transferred from each local agency to SRAF includes the computed 8% amount of property tax revenues, the hardship exemption, and any inter-agency agreement between the local agencies as applicable. The steps to compute the final loan amount from each local agency in a county for transfer to SRAF follows. (Exhibit C): 7

8 Step 1: Compute the 8% amount a. For Special Districts R&T (a)(1)(A). Property Tax Revenues allocated in X 8% b. For Cities and Counties R&T (a)(1). Property Tax Revenues allocated in (including VLF & SUT) X 8% Step 2: Re-allocate the hardship exemption R&T (b)(2)(A). a. Sum of the 8% amounts from local agencies not granted hardship exemption (non hardship local agency). Exclude the amount(s) from local agency(ies) granted the hardship exemption(s). b. Sum of the hardship exemptions R&T (b)(2)(B). The Director of Finance may not grant aggregate decreases to local agencies within a single county exceeding 10 percent of the combined total of the 8% amounts under subdivision (a) for all local agencies in that county. c. Determine the proportionate share of the 8% amount for each non hardship local agency from the total 8% amount. o 8% amount of non hardship local agency sum of non hardship local agencies 8% amounts. d. Re-allocate the hardship exemptions. o Non hardship local agency s proportionate share multiplied by the sum of hardship exemptions. Step 3: Re-allocate any loan amounts in accordance with inter-agency agreements. Any local agencies entering into an agreement to reallocate their reduction amounts shall, no later than November 2, 2009, notify the county auditor of that agreement and the reallocations specified in that agreement, except for the inter-agency agreement entered after November 2, 2009 due to the reallocation of hardship exemption. The auditor shall thereafter implement subdivision (a) with respect to those local agencies in accordance with that agreement. [R&T (b)(3)(A)]. Step 4: The total of the loan amounts will not change from the total of the original 8% loan amount calculation; however a local agency s 8% loan amount may change based on the reallocation of hardship exemption and applicable inter-agency agreements. Loan amount = Original loan amount ± hardship exemption ± inter-agency agreements II D Method and Timing of Allocations to SRAF The county auditor is required to transfer and report the loan amounts, on specific dates, to the State Department of Finance (Exhibit D - Important dates for Prop 1A Suspension). The county auditor shall transfer the loan amount from each affected local agency to the Supplemental Revenue Augmentation Fund, SRAF, in two equal shares, on January 15, 2010 and on May 3, Example: Wine County s countywide loan amount for the cities, special districts and county is calculated to be $23,440,000. The County s loan amount is $16,501,324, and the cities and special districts combined loans amount is $6,938,676. On January 15, 2010 and on May 3, 2010, transfer one half of the loan amount to SRAF. 8

9 Supplemental Revenue Augmentation Fund (SRAF) Cash $11,720, Due to County of Wine $8,250, Due to City of Merlot $1,058, Due to Zinfandel Community Services $ 264, Due to Cabernet Sauvignon Library $ 8, Due to Sauvignon Recreation & Park $ 102, Due to Merlot Fire Protection $ 74, Due to Zinfandel Water District $ 264, Due to Cabernet Sanitary District $ 970, Due to Syrah Fire Protection $ 725, While the county auditor is required to calculate the loan amounts and transfer the money in the SRAF, the county office of education is assigned to administer the money deposited in the fund. The bill does not address the details of how the loan amounts would be paid back from the State. Therefore, this guideline will not present a sample journal entry for the recording of State repayment. The Due-To accounts shown above will, however, maintain a proper record of the original loans from each local agency within the county. II E - Transfers from the SRAF fund by County Office of Education As directed by the state Director of Finance, the county office of education shall transfer the money deposited in SRAF to the State Controller for costs of state services provided in that county. [R&T (c)(1)]. State entities responsible for the services being reimbursed shall keep records of their expenditures per county and provide the information to the State DOF, when requested. [R&T (c)(2)(A)]. The county office of education shall make the transfer and provide the information to the State Controller within five days of notification by the State DOF. [R&T (c)(2)(C)]. Any money not transferred to the State Controller in the fiscal year shall be retained in the SRAF to be drawn in a subsequent fiscal year. [R&T (c)(2)(D)]. If the Director of Finance determines that some or all of the money remaining in the SRAF is not necessary to fund state services and costs, then that portion shall be transferred to the county s Educational Revenue Augmentation Fund (ERAF) no later than June 1, The portion of SRAF transferred to the county s ERAF shall not be apportioned to community college districts, and shall not be used to increase any allocation of excess ERAF to cities, counties, cities and counties, and special districts. [R&T (c)(3)]. II F Reporting On or before September 15, 2009, each county auditor shall prepare a list of each taxing agency within the county containing the name of the taxing agency and the estimated amount of the Proposition 1A receivable for each taxing agency. [GC (e)(1)]. (Exhibit E, Exhibit E Cover). It is recommended that the county auditor send the prepared list to the State DOF, Legislative Analyst s Office, and each local agency. 9

10 On or before October 30, 2009, each county auditor shall prepare a list of each taxing agency within the county containing the name of the taxing agency and the final certified amount of the Proposition 1A receivable for each taxing agency. [GC (e)(2)]. (Exhibit F, Exhibit F Cover). It is recommended that the county auditor send the prepared list to the State DOF, Legislative Analyst s Office, and each local agency. When the transfer of one half of the loan amount to SRAF is completed, the county auditor must file a report with the State DOF and provide copies to each local agency within the County. The reports should specify the loan amount transferred from each local agency to SRAF. The first report must be filed on or before January 15, 2010 and the second report must be filed on or before May 15, 2010 (R&T (c)(4)(A)). (Exhibit G1, Exhibit G2). In addition, county auditors are required to provide the State DOF, the Legislative Analyst s Office, and each local agency with information detailing how each local agency s loan amount was calculated. This information must also be reported on or before January 15, 2010 and on or before May 15, 2010 (R&T (c)(4)(B)). (Exhibit C, Exhibit H). II G - Repayment of the loan amounts The State of California is required to fully reimburse all cities, counties and special districts on June 6, 2013 but not later than June 13, 2013 for the loan amount that is to be advanced to the state during the fiscal year. However, the State may repay before June 6, 2013 with a minimum 30 day written notice to the Joint Legislative Budget Committee by the Director of Finance. The local agencies have options to participate in the California Statewide Communities Development Authority (CSCDA) securitization. The State Controller shall maintain a detail accounts payable ledger and will pay off the loan directly to the SCDA or any local agency holding the loan as an accounts receivable. A. Local agency sells its entire Prop. 1A receivable to bonding authority (GC ): The State pays the bonding authority or any trustee or agent appointed by the authority (1) the principal amount on the bonds, (2) any applicable periodic interest, and (3) the accrued interest on the bonds on the date of maturity or upon call. B. Local agency sells a portion of its Prop, 1A receivable to bonding authority: The State pays: 1. To the bonding authority or designee for the portion sold by the local agency: (a) the principal amount on the bonds, (b) any applicable periodic interest, and (c) the accrued interest on the bonds on the date of maturity or upon call. 2. To the local agency: (a) the unpaid principal less the amount sold to the bonding authority, and (b) interest on the amount of (a) at a rate set by the State DOF that is higher than the rate of interest earned by the State s Pooled Money Investment Account but no greater than 6 percent. C. Local agency does not sell its Prop. 1A receivable to bonding authority: The State pays to the local agency: 10

11 (a) the unpaid principal, and (b) interest at a rate set by the State DOF that is higher than the rate of interest earned by the Pooled Money Investment Account but no greater than 6 percent. D. Local agency may purchase, with its revenues, Prop. 1A receivable from another local agency GC 53610(b). A local agency may sell its Prop. 1A receivable that have not been sold to a special fund of the local agency or another local agency. [GC 53999(a)(1)]. The purchaser of Prop. 1A receivables shall not offer them for securitization with the CSCDA. [GC 53610(c)]. On or before the effective date of the sale, the local agency shall notify the State Controller of the transaction. [GC 53999(d)]. The State pays to the purchaser: (a) the unpaid principal, and (b) interest at a rate set by the State DOF that is higher than the rate of interest earned by the Pooled Money Investment Account but no greater than 6 percent. The repayments may be made on June 6, 2013 but not later than June 13, 2013, upon order of the State Director of Finance. However, the State may repay before June 6, 2013 with a minimum 30 day written notice to the Joint Legislative Budget Committee by the Director of Finance. The repayments must take priority over all other obligations of the state, with the exception of payments to schools under Article XVI of the California Constitution and debt service on general obligation bonds for the fiscal year. 11

12 EXHIBIT A COUNTY OF WINE AUDITOR-CONTROLLER PROPERTY TAX REVENUES for the Purpose of Computing the 8% amount for Multi-County Special Districts PROPERTY TAX REVENUES FROM 8% AMOUNT FROM COUNTY of WINE R & T (a)(1) COUNTY of OCEAN R & T (a)(1) COUNTY of OZ R & T (a)(1) TOTAL COUNTY of WINE R & T (a)(1)(B) COUNTY of OCEAN R & T (a)(1)(B) COUNTY of OZ R & T (a)(1)(B) [1] [2] [3] [4] [5] [6] = [2] x 8% [7] = [3] x 8% [8] = [4] x 8% County of Wine 187,000, ,000,000 14,960,000 - City of Merlot 24,000,000 24,000,000 1,920,000 - City of Chardonnay 3,800,000 3,800, ,000 - Zinfandel Community Services 6,000,000 6,000, ,000 - Carbernet Sauvignon Library 200, ,000 16,000 - Sauvignon Recreation & Park 3,000,000 3,000, ,000 - Merlot Fire Protection 1,000, ,000 1,400,000 80,000 32,000 - Syrah Fire Protection 40,000,000 3,000,000 43,000,000 3,200, ,000 - Zinfandel Water District 6,000,000 14,000,000 20,000, ,000 1,120,000 - Cabernet Sanitary District 22,000,000 20,000 40,000,000 62,020,000 1,760,000 1,600 3,200,000 TOTAL 293,000,000 17,420,000 40,000, ,420,000 23,440,000 1,393,600 3,200,000 EXHIBIT A.xls

13 COUNTY OF WINE AUDITOR-CONTROLLER PROPERTY TAX REVENUES FOR THE PURPOSE OF COMPUTING THE 8% LOAN AMOUNT EXHIBIT B PROPERTY TAX REVENUES R & T (a)(1) (A) VEHICLE LICENSE FEE R & T IN LIEU LOCAL SALES AND USE TAX R & T APPORTIONED REVENUES Secured Unsecured Supplemental Unitary/Utility Pipeline AB860 TI Pymts to ERAF H&S TEA allocation Roll Corrections TOTAL [1] [2][a] [2][b] [2][c] [2][d] [2][e] [2][f] [2][g] [2][h] [2][i] [2] [3] [4] [5] = [2]+[3]+[4] County of Wine 95,964,000 14,389,600 9,596,400 incl in [2][a] n/a n/a 50,000 incl in [2][a-c] incl in [2][a-c] 120,000,000 60,000,000 7,000, ,000,000 City of Merlot 5,600, , ,000 incl in [2][a] n/a n/a 10,000 incl in [2][a-c] 7,000,000 15,000,000 2,000,000 24,000,000 Zinfandel Community Services 4,800, , ,000 incl in [2][a] n/a n/a incl in [2][a-c] 6,000, ,000,000 Carbernet Sauvignon Library 160,000 24,000 16,000 incl in [2][a] n/a n/a incl in [2][a-c] 200, ,000 Sauvignon Recreation & Park 2,400, , ,000 incl in [2][a] n/a n/a incl in [2][a-c] 3,000,000 3,000,000 Merlot Fire Protection 800, ,000 80,000 incl in [2][a] n/a n/a incl in [2][a-c] 1,000,000 1,000,000 Zinfandel Water District 4,800, , ,000 incl in [2][a] n/a n/a 3,000 incl in [2][a-c] 6,000,000 6,000,000 Cabernet Sanitary District 17,590,000 2,651,000 1,759,000 incl in [2][a] n/a n/a incl in [2][a-c] 22,000,000 22,000,000 City of Chardonnay 1,600, , ,000 incl in [2][a] n/a n/a incl in [2][a-c] incl in [2][a-c] 2,000,000 1,000, ,000 Syrah Fire Protection 31,990,000 4,804,000 3,199,000 incl in [2][a] n/a n/a 7,000 incl in [2][a-c] 40,000,000 3,800,000 40,000,000 GRAND TOTAL 165,704,000 24,855,600 16,570,400 incl in [2][a] n/a n/a 70,000 incl in [2][a-c] incl in [2][a-c] 207,200,000 76,000,000 9,800, ,000,000 EXHIBIT B.xls

14 PROPERTY TAX REVENUES R & T (a)(1) (A) EXHIBIT C COUNTY OF WINE AUDITOR-CONTROLLER Calculations Of Loan Amounts for Cities, Counties, and Special Districts VEHICLE LICENSE FEE R & T IN LIEU LOCAL SALES AND USE TAX R & T APPORTIONED REVENUES R & T (a)(1)(B) - 8% AMOUNT GRANTED HARDSHIP EXEMPTION R & T (b)(1) NON HARDSHIP TAXING ENTITY PERCENTAGE SHARE OF LOAN ALLOCATION OF HARDSHIP EXEMPTION R & T (b)(2)(A) RE-ALLOCATION OF INTER- AGENCY AGREEMENTS R & T (b)(3)(A) AMOUNT TO BE TRANSFERRED TO SRAF and REPORTED R & T (c)(4)(b) / (c)(4)(c) [1] [2] [3] [4] [5] = [2]+[3]+[4] [6] = [5] x 8% [7] [8] = [6] (a) [9] =[8] x sum[7] [10] [11] =[6]-[7]+[9]±[10] [12] =[11]/[5] NON HARDSHIP (EXEMPTION) TAXING ENTITY County of Wine 120,000,000 60,000,000 7,000, ,000,000 14,960, % 1,541,324 16,501, % City of Merlot 7,000,000 15,000,000 2,000,000 24,000,000 1,920, % 197,816 2,117, % Zinfandel Community Services 6,000, ,000, , % 49, , % Carbernet Sauvignon Library 200, ,000 16, % 1,648-17, % Sauvignon Recreation & Park 3,000,000 3,000, , % 24,728 (60,000) 204, % Merlot Fire Protection 1,000,000 1,000,000 80, % 8,242 60, , % Zinfandel Water District 6,000,000 6,000, , % 49, , % Cabernet Sanitary District 22,000,000 22,000,000 1,760, % 181,332-1,941, % TOTAL 165,200,000 75,000,000 9,000, ,200,000 19,936, % 2,054,000-21,990,000 (a) TAXING ENTITY GRANTED HARDSHIP EXEMPTION City of Chardonnay 2,000,000 1,000, ,000 3,800, ,000 (304,000) % Syrah Fire Protection 40,000,000 40,000,000 3,200,000 (1,750,000) - 1,450, % LOAN % TOTAL 42,000,000 1,000, ,000 43,800,000 3,504,000 (2,054,000) - 1,450,000 GRAND TOTAL 207,200,000 76,000,000 9,800, ,000,000 23,440,000 (2,054,000) 2,054,000-23,440,000 EXHIBIT C.xls

15 Important Dates for PROP 1A Suspension EXHIBIT D [Extracted from R&T Code Section and GC Code Section ] Date Reference Task County Auditor COE DOF Local Agency County RDA State 9/15/2009 GC (e)(1), (3) 10/30/2009 GC (e)(2), (3) Prepare a list of taxing agency within the county, with each local agencyʹs name and the estimated Prop 1A receivable and make it available upon request. Prepare a list of taxing agency within the county with each local agencyʹs name and the final certified Prop 1A receivable (subject to hardship provision) and make it available upon request. x x Notify county auditor if thereʹs agreement between local agencies 11/2/2009 R&T (b)(3)(a) to reallocate the 8% amount; Exception: Agency may enter into agreement after 11/2/2009 for any Prop 1A receivable created due x to share of hardship provision. 11/2/2009 R&T (b)(3)(b) Notify county auditor the amount of the 8% amount paid by the County RDA on behalf of the county, if any. x 12/1/2009 or 30 days after issurance on bonds under GC Section 6590 (whichever is earlier) R&T (b)(1) Deadline for local agency to submit written request to Department of Finance (ʺDOFʺ) for ʺhardship provisionʺ. x 12/10/2009 R&T (b)(2)(a) Certify to county auditor of the approved ʺhardship provisionʺ and the local agencyʹs decreased in 8% amount. x Prepare a list of taxing agency within the county with each local 12/15/2009 Recommendation Only agencyʹs name and the final certified Prop 1A receivable (with x adjustment for hardship provision) Notify county auditor if thereʹs agreement between local agencies 1/8/2010 Recommendation Only to reallocate the 8% amount after 11/2/2009 for any Prop 1A x receivable created due to share of hardship provision. R&T (a)(2) Transfer half of the loan amount to Supplemental Revenue Augmentation Fund (ʺSRAFʺ). x 1/15/2010 R&T (c)(4)(a) Report to DOF each local agency ʹs transferred property tax and send copy of report to each local agency. x R&T (c)(4)(b) Provide DOF, Legislative Analystʹs Office and each local agency details of how each local agencyʹs loan amount was calculated. x 5/3/2010 R&T (a)(2) Transfer half of the loan amounts to Supplemental Revenue Augmentation Fund (ʺSRAFʺ). x R&T (c)(4)(a) Report to DOF of each local agency ʹs loan amount. x 5/15/2010 R&T (c)(4)(b) Provide DOF, Legislative Analystʹs Office and each local agency details of how each local agencyʹs loan amount was calculated. x 6/1/2010 R&T (c)(3) Directed by DOF to transfer the unused SRAF to countyʹs ERAF (K 12 only, not community college). x 6/6/2013 6/13/2013 R&T (e)(1) State to fully reimburse the loan amounts incurred. x

16 Exhibit E cover LETTERHEAD for AUDITOR, COUNTY OF WINE September 15, 2009 To: Department of Finance, Legislative Analyst s Office, and each local agency RE: Computation of the AB 15 X4(2009) loan amounts We have computed the AB 15X4(2009) loan amounts for the local agencies in County of Wine in accordance to Revenue and Taxation Code Section Attached is the detailed worksheet of the computed amounts. Please contact our office if we can be of further assistance. Very truly yours, AUDITOR, COUNTY OF WINE

17 COUNTY OF WINE AUDITOR-CONTROLLER ESTIMATED PROP 1A RECEIVABLES R & T EXHIBIT E PROPERTY TAX REVENUES R & T (a)(1) (A) VEHICLE LICENSE FEE R & T IN LIEU LOCAL SALES AND USE TAX R & T APPORTIONED REVENUES R & T (a)(1)(B) - 8% AMOUNT [1] [2] [3] [4] [5] = [2]+[3]+[4] [6] = [5] x 8% County of Wine 120,000,000 60,000,000 7,000, ,000,000 14,960,000 City of Merlot 7,000,000 15,000,000 2,000,000 24,000,000 1,920,000 City of Chardonnay 2,000,000 1,000, ,000 3,800, ,000 Zinfandel Community Services 6,000, ,000, ,000 Cabernet Sauvignon Library 200, ,000 16,000 Sauvignon Recreation & Park 3,000,000 3,000, ,000 Merlot Fire Protection 1,000,000 1,000,000 80,000 Syrah Fire Protection 40,000,000 40,000,000 3,200,000 Zinfandel Water District 6,000,000 6,000, ,000 Cabernet Sanitary District 22,000,000 22,000,000 1,760,000 TOTAL 207,200,000 76,000,000 9,800, ,000,000 23,440,000 EXHIBIT E- R&T xls

18 Exhibit F cover letter LETTERHEAD for AUDITOR, COUNTY OF WINE Date To: Department of Finance, Legislative Analyst s Office, and each local agency RE: Certification of Prop 1A Receivable Amounts This is to certify the Proposition 1A Receivable amounts for the local agencies in County of Wine as of October 30, 2009 in accordance to Revenue and Taxation Code Section Attached is the listing of Prop 1A Receivable amount as required under Government Code section (e) (2). Please contact our office if we can be of further assistance. Very truly yours, AUDITOR, COUNTY OF WINE

19 COUNTY OF WINE AUDITOR-CONTROLLER CERTIFICATION OF PROP 1A RECEIVABLES Government Code (e)(2) DUE on or before October 30, 2009 PROPERTY TAX REVENUES R & T (a)(1) (A) VEHICLE LICENSE FEE R & T IN LIEU LOCAL SALES AND USE TAX R & T APPORTIONED REVENUES EXHIBIT F R & T (a)(1)(B) - 8% AMOUNT [1] [2] [3] [4] [5] = [2]+[3]+[4] [6] = [5] x 8% County of Wine 120,000,000 60,000,000 7,000, ,000,000 14,960,000 City of Merlot 7,000,000 15,000,000 2,000,000 24,000,000 1,920,000 City of Chardonnay 2,000,000 1,000, ,000 3,800, ,000 Zinfandel Community Services 6,000, ,000, ,000 Carbernet Sauvignon Library 200, ,000 16,000 Sauvignon Recreation & Park 3,000,000 3,000, ,000 Merlot Fire Protection 1,000,000 1,000,000 80,000 Syrah Fire Protection 40,000,000 40,000,000 3,200,000 Zinfandel Water District 6,000,000 6,000, ,000 Cabernet Sanitary District 22,000,000 22,000,000 1,760,000 TOTAL 207,200,000 76,000,000 9,800, ,000,000 23,440,000 EXHIBIT F- GC (e)(2).xls

20 EXHIBIT G1 REPORTING OF THE 1 st TRANSFER OF LOAN AMOUNT TO THE SUPPLEMENTAL REVENUE AUGMENTATION FUND Completed form must be filed with the State Department of Finance State by January 15, 2010 and copies to the local agencies. Please file the completed form with: Department of Finance Attn: Chris Hill 915 L Street Sacramento, CA COUNTY OF WINE Contact Person Telephone Number Add additional pages as needed or attach spreadsheet with adjustment information. County of Wine $ 8,250, City of Merlot 1,058, Zinfandel Community Services 264, Cabernet Sauvignon Library 8, Sauvignon Recreation & Park 102, Merlot Fire Protection 74, Zinfandel Water District 264, Cabernet Sanitary District 970, Syrah Fire Protection 725, TOTAL $11,720,000.00

21 EXHIBIT G2 REPORTING OF THE 2nd TRANSFER OF LOAN AMOUNT TO THE SUPPLEMENTAL REVENUE AUGMENTATION FUND Completed form must be filed with the State Department of Finance State by May 15, 2010 and copies to the local agencies. Please file the completed form with: Department of Finance Attn: Chris Hill 915 L Street Sacramento, CA COUNTY OF WINE Contact Person Telephone Number Add additional pages as needed or attach spreadsheet with adjustment information. County of Wine $ 8,250, City of Merlot 1,058, Zinfandel Community Services 264, Cabernet Sauvignon Library 8, Sauvignon Recreation & Park 102, Merlot Fire Protection 74, Zinfandel Water District 264, Cabernet Sanitary District 970, Syrah Fire Protection 725, TOTAL $ 11,720,000.00

22 Exhibit H LETTERHEAD for AUDITOR, COUNTY OF WINE Date To: Department of Finance, Legislative Analyst s Office, and each local agency RE: Computation of the AB 15 X4(2009) loan amounts We have computed the AB 15X4(2009) loan amounts for the local agencies in County of Wine in accordance to Revenue and Taxation Code Section Attached is the detailed worksheet of the computed amounts. Please contact our office if we can be of further assistance. Very truly yours, AUDITOR, COUNTY OF WINE

23 APPENDIX A Legislative Text of Bills Relating to The Borrowing of Property Tax Revenues from Counties, Cities, and Special Districts Under the Suspension of Proposition 1A (2004) in Connection with the State of California Budget for Fiscal Year

24 APPENDIX A 1 Text of Original Bill Assembly Bill 15, 4 th Extraordinary Session ABX4 15

25 Assembly Bill No. 15 CHAPTER 14 An act to amend Section of the Education Code, to amend Sections 6585, 6588, 6590, 6591, 6592, and of, and to add Section to, the Government Code, to amend Section of the Health and Safety Code, and to add Section to the Revenue and Taxation Code, relating to local government finance, making an appropriation therefor, and declaring the urgency thereof, to take effect immediately. [Approved by Governor July 28, Filed with Secretary of State July 28, 2009.] legislative counsel s digest AB 15, Gaines. Property tax revenue allocations. Existing property tax law requires the county auditor, in each fiscal year, to allocate property tax revenue among local jurisdictions in accordance with specified formulas and procedures, and generally requires that each jurisdiction be allocated an amount equal to the total amount of revenue allocated to that jurisdiction in the prior fiscal year, subject to certain modifications, and that jurisdiction s portion of the annual tax increment, as defined. The California Constitution prohibits the Legislature from enacting a statute that modifies the manner of apportioning ad valorem property tax revenues so as to reduce the percentage of the total amount of ad valorem property tax revenues that are collected countywide and allocated among all local agencies, as defined, in a county below the percentage that these agencies would receive under the law in effect on the operative date of that prohibition. The California Constitution authorizes the suspension of that prohibition for a fiscal year, if certain conditions are met, including the condition that a full repayment is made to local agencies in an amount equal to the total amount of revenue losses, including interest, resulting from modifications of ad valorem property tax allocation to local agencies. This bill would generally require the auditor of each county to reduce the amount of ad valorem property tax revenue apportionments to each local agency for the fiscal year by 8% of the total amount of ad valorem property tax revenue apportioned to that local agency in the fiscal year, and would require each county auditor to transfer those revenues to a Supplemental Revenue Augmentation Fund, to be transferred therefrom by the county office of education to the Controller in amounts as directed by the Department of Finance to reimburse the state for costs of providing various services in that county. This bill would require full repayment to local agencies of the reduction amounts, including interest, as determined by the Controller, and would make an appropriation therefor. This bill would 96

26 Ch authorize the issuer of bonds issued pursuant to provisions of this bill, or any local agency that did not participate in the sale of its right of repayment as provided in this bill, to seek a writ of mandamus exclusively in the California Supreme Court, if full repayment to local agencies has not occurred as of a specified date. The Marks-Roos Local Bond Pooling Act of 1985 authorizes joint powers authorities to, among other things, issue bonds and loan the proceeds to local agencies to finance specified types of projects and programs. In addition, a joint powers authority may purchase, with the proceeds of its bonds or its revenue, a local agency s right to payment of moneys due or to become due to a local agency out of funds payable in connection with vehicle license fees to a local agency pursuant to specified provisions of law, also known as a VLF receivable, and may pledge, assign, resell, or otherwise transfer any of these receivables for the purpose of securing bonds issued to finance the purchase price of the receivables, subject to specified criteria. This bill would additionally authorize a joint powers authority to purchase, with the proceeds of bonds or its revenue and subject to the same criteria, a local agency s right to receive moneys in repayment of its revenue losses, with interest as provided by law, resulting from the modification of ad valorem property tax revenue allocations described above. This bill would also require the authority to purchase all of these receivables offered for sale by local agencies to the extent that it can sell bonds therefor, and would authorize the authority to impose an administrative fee for the costs of administering the purchase. By modifying the manner in which county auditors apportion ad valorem property tax revenues, this bill would impose a state-mandated local program. The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions. The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. The Governor issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on July 1, This bill would state that it addresses the fiscal emergency declared by the Governor by proclamation issued on July 1, 2009, pursuant to the California Constitution. This bill would declare that it is to take effect immediately as an urgency statute. Appropriation: yes. 96

27 3 Ch. 14 The people of the State of California do enact as follows: SECTION 1. Section of the Education Code is amended to read: (a) (1) Pursuant to paragraph (2) of subdivision (b) of Section 41204, the Director of Finance shall annually adjust the percentage of General Fund revenues appropriated for school districts and community college districts, respectively, in fiscal year for purposes of applying paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution, to reflect those property tax revenue allocation modifications required by the qualifying provisions in a manner that ensures that those modifications will have no net fiscal impact upon the amounts that are otherwise required to be applied by the state for the support of school districts and community college districts pursuant to Section 8 of Article XVI of the California Constitution. (2) For purposes of this section, qualifying provisions, means all of the following: (A) The amendments made to Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of the Revenue and Taxation Code and Article 7 (commencing with Section 33680) of Chapter 6 of Part 1 of Division 24 of the Health and Safety Code during the Regular Session to the Regular Session, inclusive, and during any Extraordinary Session concurrently held during those session years, inclusive. (B) Section of the Revenue and Taxation Code. (C) Section of the Revenue and Taxation Code. (b) Notwithstanding any other provision of law, for the fiscal year and each fiscal year thereafter, the percentage of General Fund revenues appropriated for school districts and community colleges districts, respectively, in fiscal year , for purposes of paragraph (1) of subdivision (b) of Section 8 of Article XVI of the California Constitution, shall be deemed to be the percentage of General Fund revenues that would have been appropriated for those entities if the qualifying provisions had been operative for the fiscal year. (c) It is the intent of the Legislature in enacting the act adding this section to ensure both of the following: (1) That the changes required by the qualifying provisions in the allocations of ad valorem property tax revenues do not have a net fiscal impact upon school districts, as defined in Section , or community college districts. (2) That the changes required by the qualifying provisions in the allocations of ad valorem property tax revenues do not have a net fiscal impact upon the amounts of revenue otherwise required to be applied by the state for the support of school districts and community college districts pursuant to Section 8 of Article XVI of the California Constitution. SEC. 2. Section 6585 of the Government Code is amended to read: The definitions in this section shall govern the construction and interpretation of this article. 96

28 Ch (a) Authority means an entity created pursuant to Article 1 (commencing with Section 6500). In the case of an authority issuing bonds pursuant to this chapter in which VLF receivables, as defined in subdivision (j), or Proposition 1A receivables, as defined in subdivision (g), are pledged to the payment of the bonds, other than VLF receivables or Proposition 1A receivables so pledged for a county of the first class, an authority shall consist of not less than 100 local agencies. (b) Bond purchase agreement means a contractual agreement executed between the authority and the local agency whereby the authority agrees to purchase bonds of the local agency. (c) Bonds means bonds (including, but not limited to, assessment bonds, redevelopment agency bonds, government issued mortgage bonds, and industrial development bonds), notes (including bond, revenue, tax, or grant anticipation notes), commercial paper, floating rate, and variable maturity securities, and any other evidences of indebtedness and also includes certificates of participation or lease-purchase agreements. (d) Cost, as applied to a public capital improvement or portion thereof financed under this part, means all or any part of the cost of construction, renovation, and acquisition of all lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and interests acquired or used for a public capital improvement; the cost of demolishing or removing any buildings or structures on land so acquired, including the cost of acquiring any lands to which the buildings or structures may be moved; the cost of all machinery and equipment; finance charges; interest prior to, during, and for a period after, completion of that construction, as determined by the authority; provisions for working capital, reserves for principal and interest and for extensions, enlargements, additions, replacements, renovations, and improvements; the cost of architectural, engineering, financial and legal services, plans, specifications, estimates, administrative expenses, and other expenses necessary or incident to determining the feasibility of constructing any project or incident to the construction or acquisition or financing of any public capital improvement. (e) Legislative body means the governing body of a local agency. (f) Local agency means a party to the agreement creating the authority, or an agency or subdivision of that party, sponsoring a project of public capital improvements, or any city, county, city and county, authority, district, or public corporation of this state. (g) Proposition 1A receivable means the right to payment of moneys due or to become due to a local agency, pursuant to clause (iii) of subparagraph (B) of paragraph (1) of subdivision (a) of Section 25.5 of Article XIII of the California Constitution and Section of the Revenue and Taxation Code. (h) Public capital improvements means one or more projects specified in Section (i) Revenue means all income and receipts of the authority from a bond purchase agreement, bonds acquired by the authority, loans, installment sale agreements, and other revenue-producing agreements entered into by 96

29 5 Ch. 14 the authority, projects financed by the authority, grants and other sources of income, VLF receivables purchased pursuant to Section , Proposition 1A receivables purchased pursuant to Section , and all interest or other income from any investment of any money in any fund or account established for the payment of principal or interest or premiums on bonds. (j) VLF receivable means the right to payment of moneys due or to become due to a local agency out of funds payable in connection with vehicle license fees to a local agency pursuant to Section of the Revenue and Taxation Code. (k) Working capital means money to be used by, or on behalf of, a local agency for any purpose for which a local agency may borrow money pursuant to Section 53852, or for any purpose for which a VLF receivable or a Proposition 1A receivable sold to an authority could have been used by the local agency. SEC. 3. Section 6588 of the Government Code is amended to read: In addition to other powers specified in an agreement pursuant to Article 1 (commencing with Section 6500) and Article 2 (commencing with Section 6540), the authority may do any or all of the following: (a) Adopt bylaws for the regulation of its affairs and the conduct of its business. (b) Sue and be sued in its own name. (c) Issue bonds, including, at the option of the authority, bonds bearing interest, to pay the cost of any public capital improvement, working capital, or liability or other insurance program. In addition, for any purpose for which an authority may execute and deliver or cause to be executed and delivered certificates of participation in a lease or installment sale agreement with any public or private entity, the authority, at its option, may issue or cause to be issued bonds, rather than certificates of participation, and enter into a loan agreement with the public or private entity. (d) Engage the services of private consultants to render professional and technical assistance and advice in carrying out the purposes of this article. (e) As provided by applicable law, employ and compensate bond counsel, financial consultants, and other advisers determined necessary by the authority in connection with the issuance and sale of any bonds. (f) Contract for engineering, architectural, accounting, or other services determined necessary by the authority for the successful development of a public capital improvement. (g) Pay the reasonable costs of consulting engineers, architects, accountants, and construction, land-use, recreation, and environmental experts employed by any sponsor or participant if the authority determines those services are necessary for the successful development of public capital improvements. (h) Take title to, and sell by installment sale or otherwise, lands, structures, real or personal property, rights, rights-of-way, franchises, easements, and other interests in lands that are located within the state that 96