HomeMy WebLinkAboutMINUTES - 06192001 - C.36 TO: BOARD OF SUPERVISORS CONTRA
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COSTA
FROM: John Sweeten, CountyAdministrator z
COUNTY
DATE: June 19, 2001
SUBJECT: AB 81 (Migden) - Oppose Unless Amended
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION(S):
OPPOSE AB 81 (Migden), which would transfer responsibility for assessing power plants from
County Assessors to the State Board of Equalization while allocating property tax revenues as
though the power plant was locally assessed, UNLESS AMENDED to delete the latter provision.
BACKGROUND/REASON(S) FOR RECOMMENDATION(S):
Currently, privately owned power plants are assessed by county assessors. Ensuing property tax
revenues are distributed to all jurisdictions in the tax rate area where the property is located. Contra
Costa County generally receives 12.5% of the property tax, except when the property is located in
redevelopment areas. Properties assessed by the State Board of Equalization are generally subject
to unitary tax, where Contra Costa County would receive 25% of the property tax.
AB 81 would transfer responsibility for assessment of the property tax for specified power plants over
50 megawatts in size from the county assessors to the State Board of Equalization. However, it
would not change the distribution of revenues.
CONTINUED ON ATTACHMENT: —YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR_RECOMMENDATION OF BOA OMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON June 19, 2001 APPROVED AS RECOMMENDEDa_OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
JS -UNANIMOUS(ABSENT ----- TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED
ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
Contact:Sara Hoffman,335-1090
ATTESTED Jame 19, 2001
JOHN SWEETEN,CLERK OF
THE BOARD OF SUPERVISORS
AND COUNTY ADMINISTRATOR
cc: CAO PWW&
BY, luat-�Z66EPUTY
BACKGROUND/REASON(S) FOR RECOMMENDATION( cont'd):
Historically, the State Board has assessed power plants much lower than local assessments.
According to the Contra Costa County Assessor, the State Board previously assessed power plants
in Contra Costa County 40°x6 lower than the current assessment by the County. The lower assessed
values obviously result in lower overall property taxes. Under the unitary tax distribution, the County
would receive 25% of the total property tax received, not an average of 12.5%, which would
compensate for a lower assessed value. However, since AB 81 retains the tax receipt
disbursements as though the property were locally assessed, it creates the potential of lower net
property tax receipts for Contra Costa County.
AMENDED IN ASSEMBLY JUNE 5, 2001
AMENDED IN ASSEMBLY MAY 30, 2001
AMENDED IN ASSEMBLY MAY 9, 2001
AMENDED IN ASSEMBLY APRIL 17, 2001
CALIFORNIA LEGISLATURE-2001-02 REGULAR SESSION
ASSEMBLY BILL No. 81
Introduced by Assembly Member Migden
January 4, 2001
An act to add 8eetion Sections 100.9 and 721.5 to the Revenue and
Taxation Code, relating to taxation.
LEGISLATIVE COUNSEL'S DIGEST
AB 81, as amended, Migden. Property taxation: state-assessed
property.
The California Constitution requires the State Board of Equalization
to assess the property, other than franchises, of companies transmitting
or selling gas or electricity. Existing regulations require the board to
assess an electric generation facility, for purposes of this constitutional
provision, only if (1) the facility was constructed pursuant to a
certificate of public convenience and necessity issued by the California
Public Utilities Commission to the company that presently owns the
facility or (2) the company owning the facility is a state assessee for
reasons other than its ownership of the generation facility or its
ownership of pipelines, flumes, canals, ditches, or aqueducts lying
within 2 or more counties.
95
AB 81 —2—
Existing property tax law provides for the valuation, as a unit, of
properties of a state-assessee that are operated as a unit as a primary
function of that assessee, and for the allocation of the assessed value of
the unit among various counties in which the state-assessee's unitary
property is located. Existing law also provides, pursuant to specified
formulas,for the application in each county of specified tax rates to
unitary assessed value, and for the allocation among jurisdictions in
that county of the resulting revenues.
This bill would require the board to annually assess every electric
generation faeilityfacilities, with specified exceptions, with a
generating capacity of 50 megawatts or more that is owned by an
electrical corporation, as defined.
existing regulatiefts that are in eenfliet with the bill's previsie
This bill also would require that the assessed value of electric
generation facilities required to be assessed by the board be allocated
exclusively to the county in which the facility is located, and that the
revenues derived from the assessment of this property be allocated in the
same percentage shares as revenues derived from locally assessed
property among the jurisdictions in which the property is located. By
establishing new duties with respect to the annual allocation of property
tax revenues derived from state-assessed property, this bill would create
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, including the creation of a State Mandates Claims
Fund to pay the costs of mandates that do not exceed $1,000,000
statewide and other procedures for claims whose statewide costs exceed
$1,000,000.
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.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: tie yes.
The people of the State of California do enact as follows:
1 SECTION 1. Section 100.9 is added to the Revenue and
2 Taxation Code, to read:
95
-3— AB 81
1 100.9. (a) Notwithstanding any other provision of law and
2 except as provided in subdivision (b),for the 2001-02 fiscal year
3 and each fiscal year thereafter, all of the following apply:
4 (1) The property tax assessed value of an electric generation
5 facility that is assessed by the State Board of Equalization shall be
6 allocated entirely to the county in which the facility is located, and
7 shall be allocated to that tax rate area in the county in which the
8 property is located.
9 (2) The total tax rate applied to the assessed value allocated
10 pursuant to subdivision(a)shall be the sum of the rates calculated
11 pursuant to subdivision (b) of Section 100.
12 (3) The revenues derived from the application of the total tax
13 rate described in subdivision (b) to the assessed value allocated to
14 a tax rate area pursuant to subdivision (a) shall be allocated
15 among the jurisdictions in that tax rate area, in those same
16 percentage shares that property tax revenues derived from locally
17 assessed property are allocated to those jurisdictions in that tax
18 rate area.
19 (b) Subdivision (a) does not apply to the assessed value or the
20 revenues derived from that assessed value from either of the
21 following:
22 (1) An electric generation facility that was constructed
23 pursuant to a certificate of public convenience and necessity
24 issued by the California Public Utilities Commission to the
25 company that presently owns the facility.
26 (2) An electric generation facility that is owned by a company
27 that is a state assessee for reasons other than its ownership of the
28 generation facility or its ownership of pipelines,flumes, canals,
29 ditches, or aqueducts lying within two or more counties.
30 SEC. 2. Section 721.5 is added to the Revenue and Taxation
31 Code, to read:
32 721.5. (a) (1) Notwithstanding Section 721 or any other
33 provision of law to the contrary, the board shall annually assess
34 every electric generation facility with a generating capacity of 50
35 megawatts or more that is owned or operated by an electrical
36 corporation, as defined in subdivisions (a)and(b)
37 of Section 218 of the Public Utilities Code.
38 (2) For purposes of paragraph (1), "electric generation
39 facility" does not include a qualifying small power production
40 facility or a qualifying cogeneration facility within the meaning of
95
AB 81 —4-
1 Sections 201 and 210 of Title 11 of the Public Utility Regulatory
2 Policies Act of 1978(16 U.S.C. Secs. 796(17), (18) and 824a-3),
3 and the regulations adopted for those sections under that act by the
4 Federal Energy Regulatory Commission (18 C.F.R.
5 292.101-292.602).
6 (b) This section shall be construed to supersede any regulation,
7 in existence as of the effective date of this section, that is contrary
8 to this section.
9 SEC. 3. This act shall not be construed to affect the manner
10 in which property to which this act applies is assessed by the State
11 Board of Equalization.
12 SEC. 4. Notwithstanding Section 17610 of the Government
13 Code, if the Commission on State Mandates determines that this
14 act contains costs mandated by the state, reimbursement to local
15 agencies and school districts for those costs shall be made
16 pursuant to Part 7(commencing with Section 17500) of Division
17 4 of Title 2 of the Government Code. If the statewide cost of the
18 claim for reimbursement does not exceed one million dollars
19 ($1,000,000), reimbursement shall be made from the State
20 Mandates Claims Fund.
O
95
AB 81 Assembly bill - Bill Analysis Page 1 of 5
AB 81
Page 1
ASSEMBLY THIRD READING
AB 81 (Migden)
As Amended June 5, 2001
Majority vote
REVENUE AND TAXATION 6-1 APPROPRIATIONS 13-5
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IAyes: ICorbett, Alquist, Aroner, IAyes: IMigden, Alquist, Aroner, I
I ICedillo, Koretz, Matthews I (Steinberg, Corbett, I
I I I (Correa, Goldberg, Papan, I
I I I IPavley, Simitian, I
I I I ILongville, Wesson, I
I I I (Wiggins I
I I I I I
I-----+--------------------------+-----+--------------------------I
INays: IHarman INays: IBates, Dickerson, I
I I I IDaucher, Maldonado, I
I I I (Robert Pacheco I
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SUMMARY: Shifts responsibility for assessing electric
generation facilities with a generating capacity of 50 megawatts
(MWs) or more from local assessors to the state Board of
Equalization (BOE) . Specifically, this bill .
1) Provides that notwithstanding any law or regulation to the
contrary, BOE shall annually assess every electric generation
facility that is owned and operated by an electrical
corporation and that has a generating capacity of 50 MWs or
more.
2) Defines electrical corporation by reference to a specified
section of the Public Utilities Code. Under that definition,
an electrical corporation includes every corporation or person
owning, controlling, operating, or managing any electric plant
for compensation within this state, except where electricity
is generated on or by the producer through private property
solely for its own use, or the use of its tenants and not for
sale or transmission to others.
3)Specifically exempts qualifying facilities (QFs) from the
definition of an electric generation facility.
4)Applies different property tax revenue allocation formulas to
AB 81
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AB 81 Assembly Bill - Bill Analysis Page 2 of 5
different types of electric generation facilities, as follows:
a) Revenues derived from state-assessment of investor-owned
utilities are to be allocated using formulas applied to
state-assessed property;
b) Revenues derived from state-assessment of electric
generation facilities owned by companies that are state
assessees for reasons other than their ownership of the
generation facilities or their ownership of pipelines,
flumes, canals, ditches, or aqueducts lying within multiple
counties are to be allocated using formulas applied to
state-assessed property; and,
c) Revenues derived from state-assessment of other electric
generation facilities are allocated as though the
facilities were locally-assessed.
5)Becomes operative on January 1, 2002, if chaptered during
2001.
EXISTING LAW
1) Pursuant to Article XIII, Section 19, authorizes BOE to
annually assess companies transmitting or selling gas or
electricity.
2) Provides for key differences between state and local property
tax assessment.
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I I State-Assessed I County-Assessed I
--------------+----------------------------+--------------------- I
IValuation (Annually reassessed at fair (Subject to the I
(Method Imarket value (provisions of I
I I IProposition 13 (fair I
I I Imarket value at I
I I [acquisition, I
I I Ifactored upward by I
I I Ino more than 2% I
1 1 (annually) 1
I--------------+----------------------------+---------------------I
IRevenue (Revenues are allocated to IRevenues are I
IAllocation lall jurisdictions in the (allocated to all I
I Icounty Ijurisdictions in the I
AB 81
Page 3
I I Itax rate area where I
I I Ithe property is I
I I Ilocated I
I --------------+----------------------------+--------------------- I
(Value Setting ]Board members (County assessor I
I-------------`+- ---------------------------+---------------------I
(Appeal of (Board members ILocal assessment I
(Value I (appeals board I
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. AB 81 Assembly Bill - Bill Analysis Page 3 of 5
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(Court Review (Trial de novo (Review of I
I I ladministrative I
I I Irecord I
I I I I
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3)Exempts power plants owned by municipal utilities from
property taxation, as long as the plants are owned by the
utilities and are within the boundaries of the owning
municipalities. Power plants outside the boundaries of the
municipalities are taxable.
FISCAL EFFECT A revenue estimate for this bill from BOE was
not available at the time this analysis was prepared. However,
the Assembly Revenue and Taxation Committee staff did have
access to a revenue estimate prepared by BOE staff in 1998 when
BOE was attempting to decide which jurisdiction or jurisdictions
should have the responsibility for assessing electric generation
facilities in the post-deregulation era. According to BOE, "any
estimate of the overall effect of any of the proposals would be
highly speculative, since 1) the short-term and long-term
effects could differ considerably, 2) much will depend on the
economics of deregulation, and 3) the effects can be expected to
vary among properties?. Electric generating facilities are
among the more difficult properties to appraise. There may be
only one correct market value in theory, but in practice two
different assessing entities can be expected to differ in their
opinions of value. Therefore, a 'market value' assessment on
the state-assessed roll could be either higher or lower than on
a county-assessed roll, but the differences should not be
large. "
COMMENTS
1) Prior to passage of electricity deregulation legislation, AB
1890 (Brulte) , Chapter 854, Statutes of 1996, electric
AB 81
Page 4
generation, distribution, and transmission facilities were
owned and operated by public utilities, and these facilities
were subject to BOE assessment pursuant to Article XIII,
Section 19 of the California Constitution. Shortly after AB
1890 was chaptered, and in recognition of the fact that the
limited number of existing, vertically integrated utilities
would .be split into multiple companies filling specific niches
in the electric generating industry, BOE solicited
recommendations from its staff regarding appropriate changes
to the responsibilities for assessing electric generating
facilities.
In 1998, BOE staff recommended that BOE continue to exercise its
constitutional assessment jurisdiction over companies owning
generation facilities with a capacity of 50 MWs or more and
selling electricity for public use. BOE staff recommended
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AB 81 Assembly Bill - Bill Analysis Page 4 of 5
that generation facilities below the 50 MW cap and certain
other companies selling less than 50% of their generated power
for transport through the statewide grid should continue to be
assessed at the local level. The 50 MW cap reflects the
threshold for state site certification by the California
Energy Resources Conservation and Development Commission
(Energy Commission) pursuant to the Warren-Alquist State
Energy Resources Conservation Development Act.
Other interested parties differed with BOE staff's
recommendations and supported a variety of different
approaches.
2)After a formal public comment period and public hearing, BOE
adopted Rule 905 in September, 1999. Under the provisions of
Rule 905, which became operative on November 27, 1999, BOE
self-restricted its assessment jurisdiction to public
utilities. County assessors were given assessment
jurisdiction over any power plant built by a private company
and any plant sold by a public utility to a private company
after adoption of the rule. Thus, under current practice,
only public utilities are state-assessed. Local assessors
have assessment jurisdiction over all other power plants,
including QFs and cogeneration plants.
3)This bill is intended to hold local governments harmless with
respect to the property tax revenue allocations they receive.
Thus, although the responsibility for assessing many electric
generation facilities will shift from local assessors to BOE,
AB 81
Page 5
the revenues derived from the facilities will be allocated as
though the facilities were locally-assessed. Similarly,
facilities that have always been state-assessed will continue
to be state-assessed (e.g. , investor-owned utilities) , and
facilities that have always been locally-assessed will
continue to be locally-assessed (e.g. , QFs) .
4)The current version of this bill would provide for state
assessment of cogeneration facilities with capacities of 50
MWs or more and allocation of the revenues from these
facilities as though the facilities were locally-assessed.
The original BOE staff recommendation provided for local
assessment of cogeneration facilities that sold less than 50%
of the electricity they produced.
Analysis Prepared by Eileen Roush / REV. & TAX. / (916)
319-2098
FN: 0001568
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