______________________________________ 

______________________________________________________________________________ 

TO BE PUBLISHED IN THE OFFICIAL REPORTS
 

OFFICE OF THE ATTORNEY GENERAL
 State of California
 

DANIEL E. LUNGREN
 Attorney General
 

OPINION : 

: No. 93-209 

of : 

: JULY 14, 1993 

DANIEL E. LUNGREN : 

Attorney General : 

: 

GREGORY L. GONOT : 

Deputy Attorney General : 

: 

THE HONORABLE MARIAN BERGESON, MEMBER OF THE CALIFORNIA 

SENATE, has requested an opinion on the following question: 

When a redevelopment agency calculates the 20 percent "set-aside" for low-and

moderate-income housing, is the set-aside based upon the total tax increment revenues allocated to

the agency irrespective of any subsequent transfers made by the agency to other public entities? 

CONCLUSION 

When a redevelopment agency calculates the 20 percent "set-aside" for low-and

moderate-income housing, the set-aside is based upon the total tax increment revenues allocated to

the agency irrespective of any subsequent transfers made by the agency to other public entities. 

ANALYSIS 

Under the Community Redevelopment Law (Health & Saf. Code, §§ 33000-33855),1 

redevelopment agencies are formed in communities throughout California to bring about "(1) the

creation of physical, social, economic, and environmental conditions to remove and prevent the

recurrence of blight; (2) the creation of jobs and low-to-moderate income housing; and (3) the

attraction of private investment toward these ends. [Citation.]" (Marek v. Napa Community

Redevelopment Agency (1988) 46 Cal.3d 1070, 1082.) 

In carrying out these purposes, a redevelopment agency generally finances its projects

through the issuance of bonds and repays the indebtedness with property tax "increment" revenues

resulting from an increase in property values due to new construction in and revitalization of the 

1

All section references hereafter are to the Health and Safety Code. 

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project area. (See Bell Redevelopment Agency v. Woosley (1985) 169 Cal.App.3d 24, 27; 75

Ops.Cal.Atty.Gen. 324, 325-326 (1990).) 

The procedure of allocating property tax increment revenues to a redevelopment

agency was described by the Supreme Court in Redevelopment Agency of San Bernardino v. County

of San Bernardino (1978) 21 Cal.3d 255, 259, as follows: 

". . . [I]f, after a redevelopment project has been approved, the assessed

valuation of taxable property in the project increases, the taxes levied on such

property in the project area are divided between the taxing agency and the 

redevelopment agency. The taxing agency receives the same amount of money it

would have realized under the assessed valuation existing at the time the project was

approved, while the additional money resulting from the rise in assessed valuation

is placed in a special fund for repayment of indebtedness incurred in financing the

project." 

With respect to this property tax allocation procedure, we are asked to determine the

relationship between five statutory provisions of the Community Redevelopment Law: sections

33334.2, 33401, 33446, 33670, and 33676. Section 33334.2 requires that at least 20 percent of the

tax increment revenues allocated to a redevelopment agency under the terms of section 33670 are

to be used for the purposes of "increasing, improving, and preserving the community's supply of

low- and moderate-income housing . . . ." The question presented is whether this 20 percent "set- aside" requirement must be applied to the total amount of tax increment revenues generated from

a redevelopment project area even though some of such revenues (1) are subject to "pass-through

agreements" designed to "alleviate any financial burden or detriment caused to any taxing agency

by [the] redevelopment project" (§ 33401), (2) are slated for school building construction (§ 33446),

or (3) are actually allocated to other public entities (§ 33676). We conclude that the 20 percent setaside applies to all taxes allocated to a redevelopment agency irrespective of pass-through transfers

(§ 33401) or school construction funding (§ 33446), but not to tax increment revenues actually

allocated to other public entities (§ 33676). 

Subdivision (a) of section 33334.2 states in part: 

"Not less than 20 percent of all taxes which are allocated to the agency

pursuant to Section 33670 shall be used by the agency for the purposes of increasing,

improving, and preserving the community's supply of low- and moderate-income

housing . . . unless one of the following findings is made annually by resolution: 

"(1) That no need exists in the community to improve, increase, or preserve

the supply of low- and moderate-income housing . . . and that this finding is

consistent with the housing element of the community's general plan . . . . 

". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

"(2) That some stated percentage less than 20 percent of the taxes which are

allocated to the agency pursuant to Section 33670 is sufficient to meet the housing

needs of the community . . . and that this finding is consistent with the housing

element of the community's general plan . . . . 

". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

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"(3) That the community is making a substantial effort to meet its existing

and projected housing needs, including its share of the regional housing needs, with

respect to persons and families of low and moderate income, particularly very low

income households, as identified in the housing element of the community's general

plan . . . and that this effort, consisting of direct financial contributions of local funds

used to increase and improve the supply of housing affordable to persons and

families of low or moderate income and very low income households, is equivalent

in impact to the funds otherwise required to be set aside pursuant to this section . .

. ." 

Section 33334.2 plainly requires that "all" taxes allocated to a redevelopment agency pursuant to

section 33670 are to serve as the amount upon which the 20 percent set-aside is calculated.

Exceptions to the 20 percent set-aside requirement are set forth in section 33334.2, but they are

applicable only in limited circumstances. The statute contains no explicit or implicit exception for

funds transferred by a redevelopment agency to other public entities. 

Section 33670 provides: 

"Any redevelopment plan may contain a provision that taxes . . . levied upon

taxable property in a redevelopment project each year by or for the benefit of the

State of California, any city, county, city and county, district, or other public

corporation (hereinafter sometimes called "taxing agencies") . . . shall be divided as

follows: 

"(a) That portion of the taxes . . . levied each year by or for each of the

taxing agencies upon the . . . assessed value of the taxable property . . . as shown

upon the assessment roll . . . last equalized prior to the effective date of the ordinance

[approving the redevelopment plan], shall be allocated to and when collected shall

be paid to the respective taxing agencies . . . . 

"(b) Except as provided in subdivision (e), that portion of the levied taxes

each year in excess of that amount [identified in subdivision (a)] shall be allocated

to and when collected shall be paid into a special fund of the redevelopment agency . . . . 

". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 

"(e) That portion of the taxes in excess of the amount identified in 

subdivision (a) which are attributable to a tax rate levied by a taxing agency for the

purpose of producing revenues in an amount sufficient to make annual repayments

of the principal of, and the interest on, any bonded indebtedness for the acquisition

or improvement of real property shall be allocated to, and when collected shall be

paid into, the fund of that taxing agency. . . ." 

Under section 33670, the property taxes from the project area are allocated to the various taxing

agencies pursuant to subdivisions (a) and (e), and the redevelopment agency is allocated its

incremental share pursuant to subdivision (b). The redevelopment agency's share is paid into its 

"special fund." (§ 33675; Marek v. Napa Community Redevelopment Agency (1988) 46 Cal.3d 

1070, 1086.) 

The Community Redevelopment Law, however, allows tax increment funds to be

used by other public entities pursuant to three statutory provisions, sections 33401, 33446, and 

3. 93-209
 
 

33676. The first authorizes a redevelopment agency to make additional payments to a taxing agency

for the purpose of alleviating a financial burden or detriment caused to the taxing agency by the

redevelopment project. These payments are made under what are commonly referred to as "pass- through agreements." Specifically, section 33401, subdivision (b) provides in part: 

"The agency may also pay to any taxing agency with territory located within

a project area other than the community which has adopted the project, any amounts

of money which the agency has found are necessary and appropriate to alleviate any

financial burden or detriment caused to any taxing agency by a redevelopment

project. The payments to a taxing agency in any single year shall not exceed the

amount of property tax revenues which would have been received by that taxing

agency if all the property tax revenues from the project area had been allocated to all

the affected taxing agencies without regard to the division of taxes required by

Section 33670 . . . ." 

It is readily apparent that section 33401 does not alter the amount of tax increment

funds to be allocated to a redevelopment agency. The statute does not create a mechanism for 

allowing tax increment revenues to bypass a redevelopment agency; such revenues must still be

received by the redevelopment agency before they may be shared with or passed through to a taxing 

agency.2

 Section 33401 merely provides a means whereby revenues which have already undergone

a process of allocation and payment to a redevelopment agency may then be paid out to various

taxing agencies under specified conditions. We thus conclude that revenues which "pass through"

the redevelopment agency in this manner are part of the funds that are subject to the 20 percent setaside of section 33334.2. 

Section 33446 provides a second type of agreement involving the use of a

redevelopment agency's tax increment revenues for the benefit of another public entity. Section 

33446 states in part: 

"The governing board of any school district may enter into an agreement with

an agency under which the agency shall construct, or cause to be constructed, a

building or buildings to be used by the district upon a designated site within a project

area and, pursuant to such agreement, the district may lease such buildings and site.

Such agreement shall provide that the title to such building or buildings and site shall

vest in the district at the expiration of such lease, and may provide the means or

method by which the title to the building or buildings and the site shall vest in the

district prior to the expiration of such lease . . . ." 

Unlike the transfer of funds authorized by section 33401, a redevelopment agency's

use of funds pursuant to section 33446 is not a true "pass-through," but is instead an expenditure of

redevelopment agency funds for the benefit of a school district. These funds are directly expended

by the redevelopment agency on school construction and are never received by the school district.

Unquestionably the revenues involved in the expenditure have already been allocated to the

redevelopment agency under the terms of section 33670 and are therefore subject to the 20 percent

set-aside provision of section 33334.2. 

2

Section 33675 requires the tax increment revenues to be "allocated and paid to the

[redevelopment] agency by the county auditor." Although a pass-through agreement may provide

for a taxing agency to be paid directly by the county auditor, such an arrangement would only be

for the sake of convenience and would not affect the legal character of the funds. 

4. 93-209
 
 

The final Community Redevelopment Law provision under consideration here is

section 33676, subdivision (a). It reads in part: 

"Prior to the adoption by the legislative body of a redevelopment plan

providing for tax-increment financing pursuant to Section 33670 . . . any affected

taxing agency may elect, and every school and community college district shall elect,

to be allocated, in addition to the portion of taxes allocated to the affected taxing

agency pursuant to subdivision (a) of Section 33670, all or any portion of the tax

revenues allocated to the agency pursuant to subdivision (b) of Section 33670

attributable to one or more of the following: 

"(1) Increases in the rate of tax imposed for the benefit of the taxing

agency which levy occurs after the tax year in which the ordinance adopting the

redevelopment plan becomes effective. 

"(2) Increases in the assessed value of the taxable property . . . which are,

or otherwise would be, calculated annually pursuant to subdivision (f) of Section

110.1 of the Revenue and Taxation Code. 

"(3) If any agency pursuant to Section 33354.5 amends a redevelopment

plan which does not utilize tax increment financing to add tax increment financing,

and pursuant to subdivision (a) of Section 33670 uses the assessment roll last

equalized prior to the effective date of the ordinance originally adopting the

redevelopment plan, an affected taxing agency may elect to be allocated all or any

portion of the tax revenues allocated to the agency pursuant to subdivision (b) of

Section 33670 which the affected taxing agency would receive if the agency were to

use the assessment roll last equalized prior to the effective date of the ordinance

amending the redevelopment plan to add tax increment financing."3 

We believe that section 33676 has the effect of directly allocating to other public

entities certain portions of the tax revenues that would ordinarily be allocated to a redevelopment 

agency. Thus, it does not concern a "pass-through" of tax revenues from a redevelopment agency.

If the taxing agencies elect to receive the amounts to which they are statutorily entitled, those

revenues are never allocated to the redevelopment agency pursuant to section 33670. As the 20 

percent set-aside for low- and moderate-income housing under section 33334.2 is based on amounts

effectively allocated to the redevelopment agency by section 33670, that requirement cannot be said

to be applicable to revenues allocated to other public entities pursuant to 33676. We conclude that 

such funds, unlike those subject to pass-through agreements, do in fact bypass the redevelopment

agency through the allocation procedure. 

The foregoing analysis of the relationship between the five statutes in question follow

well established principles of statutory construction. "If a statute's language is clear, then the

Legislature is presumed to have meant what it said, and the plain meaning of the language governs."

(Kizer v. Hanna (1989) 48 Cal.3d 1, 8.) "It is a basic principle of statutory construction that where

the language is clear the courts may not insert qualifying provisions not included in the plain

language of the statute." (Crespin v. Kizer (1990) 226 Cal.App.3d 498, 511.) 

3

Subdivision (f) of section 110.1 of the Revenue and Taxation Code allows an increase in

assessed values based upon an inflation factor "not to exceed 2 percent for any given year." (Cal.

Const., art. XIII A, § 2, subd. (b).) 

5. 93-209
 
Our review of the pertinent California Redevelopment Law provisions does not

evince any ambiguity in the application of the 20 percent set-aside requirement contained in section

33334.2. The plain language of these statutes indicates that the 20 percent set-aside for low- and

moderate-income housing is to be based on the total amount of tax increment revenues allocated

under section 33670 -- without reduction for amounts paid by the redevelopment agency to taxing

agencies under the terms of section 33401 or spent by the redevelopment agency on school

construction pursuant to the provisions of section 33446. However, revenues allocated to taxing

agencies under the terms of section 33676 do bypass the redevelopment agency through the

allocation procedure and are therefore not subject to the 20 percent set-aside requirement. These 

conclusions are consistent with the emphasis that the Legislature has historically given to expanding

the supply of low- and moderate-income housing through redevelopment. (See, e.g., §§ 33071,

33334.3, 33334.6.) They are also consistent with the Legislature's specific use of exceptions where

it has desired to exclude certain tax revenues from the operation of a Community Redevelopment

Law provision. (See, e.g., § 33760, subds. (d), (e).) 

On occasion, the plain meaning of a statute has not been followed by the courts if the

application of the statutory terms would frustrate the manifest purposes of the legislation as a whole

or lead to absurd results. (Younger v. Superior Court (1978) 21 Cal.3d 102, 113-114; Del Mar v. 

Caspe (1990) 222 Cal.App.3d 1316, 1333.) However, because the expansion of affordable housing

is a declared purpose of the Community Redevelopment Law and applying the 20 percent set-aside

to all taxes allocated to a redevelopment agency would not by itself preclude the fulfillment of the

Legislature's other redevelopment purposes, we believe that the plain meaning of the statutes

relevant to the question presented must be followed. 

In summary, we conclude that when a redevelopment agency calculates the 20

percent set-aside for low- and moderate-income housing, the set-aside is based upon the total tax

increment revenues allocated to the agency -- irrespective of any subsequent transfers made by the

agency to other public entities. 

* * * * * 

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