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DIVISION 24. COMMUNITY REDEVELOPMENT AND HOUSING

PART 1. COMMUNITY REDEVELOPMENT LAW

Chapter 6. Financial Provisions

Article 6. Taxation*

Section 33678

33678. Redevelopment tax-increment revenues not proceeds of taxes within meaning of Article XIII B. (a) This section implements and fulfills the intent of this article and of Article XIII B and Section 16 of Article XVI of the California Constitution. The allocation and payment to an agency of the portion of taxes specified in subdivision (b) of Section 33670 for the purpose of paying principal of, or interest on, loans, advances, or indebtedness incurred for redevelopment activity, as defined in subdivision (b) of this section, shall not be deemed the receipt by an agency of proceeds of taxes levied by or on behalf of the agency within the meaning or for the purposes of Article XIII B of the California Constitution, nor shall such portion of taxes be deemed receipt of proceeds of taxes by, or an appropriation subject to limitation of, any other public body within the meaning or for purposes of Article XIII B of the California Constitution or any statutory provision enacted in implementation of Article XIII B. The allocation and payment to an agency of this portion of taxes shall not be deemed the appropriation by a redevelopment agency of proceeds of taxes levied by or on behalf of a redevelopment agency within the meaning or for purposes of Article XIII B of the California Constitution.

(b) As used in this section, "redevelopment activity" means either of the following:

(1) Redevelopment meeting all of the following criteria:

(A) Is redevelopment as prescribed in Sections 33020 and 33021.

(B) Primarily benefits the project area.

(C) None of the funds are used for the purpose of paying for employee or contractual services of any local governmental agency unless these services are directly related to the purpose of Sections 33020 and 33021 and the powers established in this part.

(2) Payments authorized by Section 33607.5.

(c) Should any law hereafter enacted, without a vote of the electorate, confer taxing power upon an agency, the exercise of that power by the agency in any fiscal year shall be deemed a transfer of financial responsibility from the community to the agency for that fiscal year within the meaning of subdivision (a) of Section 3 of Article XIII B of the California Constitution.

History.—Added by Stats. 1980, Ch. 1342, in effect September 30, 1980. Stats. 1993, Ch. 942, in effect January 1, 1994, substituted "this" for "such" after "agency of" in the third sentence of subdivision (a); added "either of the following:" after "means" in subdivision (b); created paragraph (1) of subdivision (b) with the balance of former subdivision (b) and substituted "Redevelopment" for "redevelopment" before "meeting" therein; relettered former paragraphs (1), (2), and (3) of subdivision (b) as subparagraphs (A), (B), and (C), respectively; substituted "these" for "such" after "unless" in subparagraph (C) of subdivision (b); added paragraph (2) to subdivision (b); added subdivision letter (c) before the former second paragraph of subdivision (b) and substituted "that" for "such" twice therein.

Construction.—A sales and use tax ordinance adopted by a redevelopment agency did not violate Article XIII B of the Constitution because there was a transfer of financial responsibility to the agency within the meaning of Article XIII B, Section 3(a) and this section. Huntington Park Redevelopment Agency v. Martin, 38 Cal.3d 100. In enacting this section, the Legislature properly exercised its powers to resolve the constitutional ambiguity created by Article XIII B of the Constitution; and because the means chosen were not arbitrary, unreasonable, or repugnant to the literal language of Article XIII B, the Legislature's judgment that the receipt of tax increment revenues by redevelopment agencies does not constitute receipt of taxes or proceeds of taxes within the meaning of Article XIII B would not be disturbed. Brown v. Community Redevelopment Agency, 168 Cal.App.3d 1014. This section is a valid legislative interpretation and reconciliation of Article XVI, Section 16 of the Constitution and Article XIII B of the Constitution, which fails to mention its effect on the redevelopment process. In enacting this section, the Legislature intended to interpret the inter-relationship between said provisions and to dispel any ambiguity. Bell Community Redevelopment Agency v. Woosley, 169 Cal.App.3d 24. Under this section, which provides that tax increment financing is not deemed to be the "proceeds of taxes," the source of funds used by a redevelopment agency is exempt from the scope of Article XIIIB, Section 6 of the Constitution. Although Section 6 does not expressly discuss the source of funds used by an agency to fund a program, the historical and contextual context of the section demonstrates that it applies only to costs recovered solely from tax revenues. Redevelopment Agency v. Commission on State Mandates, 55 Cal.App.4th 976. This section is constitutionally valid. Article XIII B of the California Constitution is vague and uncertain with respect to tax increment financing, and the legislative clarification in this section is neither arbitrary and unreasonable, nor repugnant to the language of Article XIII B. City of El Monte v. Commission on State Mandates, 83 Cal.App.4th 266.

* Repealed and added by Stats. 1963, p. 3677, in effect September 20, 1963. Had the effect of renumbering the article and sections and repealed former Section 33954 relating to the operative date of the former article.