WATER DEMAND COMMITTEE
ITEM:		ACTION ITEM
2.	EXTENSION OF WATER USE CREDITS FOR REDEVELOPMENT AGENCY PROJECTS
Meeting Date:			August 13, 2012	Budgeted:	N/A
From:			David J. Stoldt,	Program/	N/A
			General Manager	Line Item No.:
Prepared By:			David J. Stoldt	Cost Estimate:	N/A
General Counsel Review: N/A
Committee Recommendation: N/A
CEQA Compliance: N/A

SUMMARY: District Rule 25.5 currently states that a Water Use Credit on a Redevelopment Project site may, in addition to the time limits and in the manner set forth above, have its expiration date extended for two (2) additional periods of sixty (60) months each, to afford any such Redevelopment Project a maximum period of two hundred forty (240) months to use that credit.

However, “Redevelopment Project” under District Rule 11 no longer has meaning, because the agency undertaking such project, per H&S Code 33010 no longer exists as a public body since February 1, 2012 pursuant to a California Supreme Court ruling. Hence, the District is not in a position to extend Water Use Credits for this purpose per District Rule 25.5.

RECOMMENDATION: Water Demand Committee should determine if it wants to modify its Rule 25.5 to more broadly incorporate redevelopment-style projects, even with the demise of redevelopment agencies under California law.

DISCUSSION: District Rule 25.5 states that a Water Use Credit on a Redevelopment Project site may, in addition to the time limits and in the manner set forth above, have its expiration date extended for two (2) additional periods of sixty (60) months each, to afford any such Redevelopment Project a maximum period of two hundred forty (240) months to use that credit.

Further, District Rule 11 defines “Redevelopment Project” to mean any undertaking in accord with the Community Redevelopment Law, found at California Health and Safety Code, section 33000, et seq. This term shall be given the same meaning as the term “Redevelopment Project” set forth in section 33010 of that Code, which states "Redevelopment project" means any undertaking of an agency pursuant to this part.

Two laws were passed by the Legislature June 28, 20911 to help close the state budget deficit by tapping the redevelopment funds held by redevelopment agencies. One, AB1X26, abolished redevelopment agencies as of October 1, 2011 and set up a mechanism to shift the redevelopment taxes back to the cities, counties, schools and others.

“34172. (a) (1) All redevelopment agencies and redevelopment agency components of community development agencies created under Part 1 (commencing with Section 33000), Part 1.5 (commencing with Section 34000), Part 1.6 (commencing with Section 34050), and Part

1.7 (commencing with Section 34100) that were in existence on the effective date of this part are hereby dissolved and shall no longer exist as a public body, corporate or politic.”

The second, AB1x27, allowed the agencies to continue but required them to opt in but only by paying pay the state $1.7 billion from their tax revenues this year and about $400 million annually in the future or about 10 percent of their tax receipts.

On December 29, 2011 the California Supreme Court ruled the first bill is constitutional, because the Legislature has the authority to create and abolish local governmental entities and thus the agencies do not have a "protected right to exist."

The Court also ruled the second law is unconstitutional, because the agencies do have a right under Proposition 22, passed last year, to retain local revenues.

The court gave local redevelopment agencies an extra four months to meet their obligations before going out of business. According to the decision, aspects of the bill that would have been effective October 1, 2011 date would instead, for example, be effective February 1, 2012 because they were delayed when the court accepted the case.

Hence, at this time “Redevelopment Project” under District Rule 11 no longer has meaning, because the agency undertaking such project, per H&S Code 33010 no longer exists as a public body. Hence, the District is not in a position to extend Water Use Credits for this purpose per District Rule 25.5

EXHIBIT

None

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