2005 California Government Code Sections 56810-56812 Article 2. Property Tax Exchange

56810.  (a) (1) If the proposal includes the incorporation of a
city, as defined in Section 56043, the commission shall determine the
amount of property tax revenue to be exchanged by the affected local
agency pursuant to this section and Section 56815.
   (2) If the proposal includes the formation of a district, as
defined in Section 2215 of the Revenue and Taxation Code, the
commission shall determine the amount of property tax to be exchanged
by the affected local agency pursuant to this section.
   (b) The commission shall notify the county auditor of the proposal
and the services which the new jurisdiction proposes to assume
within the area, and identify for the auditor the existing service
providers within the area subject to the proposal.
   (c) If the proposal would not transfer all of an affected agency's
service responsibilities to the proposed city or district, the
commission and the county auditor shall do all of the following:
   (1) The county auditor shall determine the proportion that the
amount of property tax revenue derived by each affected local agency
pursuant to subdivision (b) of Section 93 of the Revenue and Taxation
Code bears to the total amount of revenue from all sources,
available for general purposes, received by each affected local
agency in the prior fiscal year.  For purposes of making this
determination and the determination required by paragraph (3), "total
amount of revenue from all sources available for general purposes"
means the total amount of revenue which an affected local agency may
use on a discretionary basis for any purpose and does not include any
of the following:
   (A) Revenue which, by statute, is required to be used for a
specific purpose.
   (B) Revenue from fees, charges, or assessments which are levied to
specifically offset the cost of particular services and do not
exceed the cost reasonably borne in providing these services.
   (C) Revenue received from the federal government which is required
to be used for a specific purpose.
   (2) The commission shall determine, based on information submitted
by each affected local agency, an amount equal to the total net cost
to each affected local agency during the prior fiscal year of
providing those services which the new jurisdiction will assume
within the area subject to the proposal.  For purposes of this
paragraph, "total net cost" means the total direct and indirect costs
that were funded by general purpose revenues of the affected local
agency and excludes any portion of the total cost that was funded by
any revenues of that agency that are specified in subparagraphs (A),
(B), and (C) of paragraph (1).
   (3) The commission shall multiply the amount determined pursuant
to paragraph (2) for each affected local agency by the corresponding
proportion determined pursuant to paragraph (1) to derive the amount
of property tax revenue used to provide services by each affected
local agency during the prior fiscal year within the area subject to
the proposal.  The county auditor shall adjust the amount described
in the previous sentence by the annual tax increment according to the
procedures set forth in Chapter 6 (commencing with Section 95) of
Part 0.5 of Division 1 of the Revenue and Taxation Code, to the
fiscal year in which the new city or district receives its initial
allocation of property taxes.
   (4) For purposes of this subdivision, in any county in which,
prior to the adoption of Article XIIIA of the California
Constitution, and continuing thereafter, a separate fund or funds
were established consisting of revenues derived from the
unincorporated area of the county and from which fund or funds
services rendered in the unincorporated area have been paid, the
amount of property tax revenues derived pursuant to paragraph (3),
may, at the discretion of the commission, be transferred to the
proposed city over a period not to exceed 12 fiscal years following
its incorporation.  In determining whether the transfer of the amount
of property tax revenues determined pursuant to paragraph (3) shall
occur entirely within the fiscal year immediately following the
incorporation of the proposed city or shall be phased in over a
period not to exceed 12 full fiscal years following the
incorporation, the commission shall consider each of the following:
   (A) The total amount of revenue from all sources available to the
proposed city.
   (B) The fiscal impact of the proposed transfer on the transferring
agency.
   (C) Any other relevant facts which interested parties to the
exchange may present to the commission in written form.
   The decision of the commission shall be supported by written
findings setting forth the basis for its decision.
   (d) If the proposal would transfer all of an affected agency's
service responsibilities to the proposed city or district, the
commission shall request the auditor to determine the property tax
revenue generated for the affected service providers by tax rate
area, or portion thereof, and transmit that information to the
commission.
   (e) The executive officer shall notify the auditor of the amount
determined pursuant to paragraph (3) of subdivision (c) or
subdivision (d), as the case may be, and, where applicable, the
period of time within which and the procedure by which the transfer
of property tax revenues will be effected pursuant to paragraph (4)
of subdivision (c), at the time the executive officer records a
certificate of completion pursuant to Section 57203 for any proposal
described in subdivision (a), and the auditor shall transfer that
amount to the new jurisdiction.
   (f) The amendments to this section enacted during the 1985-86
Regular Session of the Legislature shall apply to any proposal
described in subdivision (a) for which a certificate of completion is
recorded with the county recorder on or after January 1, 1987.
   (g) For purposes of this section, "prior fiscal year" means the
most recent fiscal year for which data on actual direct and indirect
costs and revenues needed to perform the calculations required by
this section are available preceding the issuance of the certificate
of filing.
   (h) An action brought by a city or district to contest any
determinations of the county auditor or the commission with regard to
the amount of property tax revenue to be exchanged by the affected
local agency pursuant to this section shall be commenced within three
years of the effective date of the city's incorporation or the
district's formation.  These actions may be brought by any city that
incorporated or by any district that formed on or after January 1,
1986.
   (i) This section applies to any city that incorporated or district
that formed on or after January 1, 1986.
   (j) The calculations and procedures specified in this section
shall be made prior to and shall be incorporated into the
calculations specified in Section 56815.
56811.  (a) If a proposal includes the formation of a new special
district, the commission shall determine the appropriations limit of
the district in accordance with Section 7902.7 and Article XIIIB of
the California Constitution.  The commission shall determine the
provisional appropriations limit of the district in the following
manner:
   (1) Estimate the amount of revenue anticipated to be received by
the district from the proceeds of taxes for the first full fiscal
year of operation.
   (2) Adjust the amount determined in paragraph (1) for the
estimated change in the cost of living and population in the next
full fiscal year of operation and any other changes that may be
required or permitted by Article XIIIB of the California
Constitution.
   (b) The governing body of the district shall determine the
proposed permanent appropriations limit of the district to be
submitted to the voters in the following manner:
   (1) Determine the amount of revenue actually received by the
district from the proceeds of taxes for the first full fiscal year of
operation.
   (2) Adjust the amount determined in paragraph (1) for the
estimated change in the cost of living and population in the next
full fiscal year of operation and any other changes that may be
required or permitted by Article XIIIB of the California
Constitution.
   (c) The permanent appropriations limit of the district shall be
set at the first district election that is held following the first
full fiscal year of operation and shall not be considered to be a
change in the appropriations limit of the city pursuant to Section 4
of Article XIIIB of the California Constitution.
56812.  (a) If a proposal includes the incorporation of a city, the
commission shall determine the provisional appropriations limit of
the city in accordance with Section 7902.7 and Article XIIIB of the
California Constitution.  The commission shall determine the
provisional appropriations limit of the city in the following manner:
   (1) Estimate the amount of revenue anticipated to be received by
the city from the proceeds of taxes for the first full fiscal year of
operation.
   (2) Adjust the amount determined in paragraph (1) for the
estimated change in the cost of living and population in the next
full fiscal year of operation and such other changes as may be
required or permitted by Article XIIIB of the California
Constitution.
   (b) The governing body of the city shall determine the proposed
permanent appropriations limit of the city to be submitted to the
voters in the following manner:
   (1) Determine the amount of revenue actually received by the city
from the proceeds of taxes for the first full fiscal year of
operation.
   (2) Adjust the amount determined in paragraph (1) for the
estimated change in the cost of living and population in the next
full fiscal year of operation and such other changes as may be
required or permitted by Article XIIIB of the California
Constitution.
   (c) The permanent appropriations limit of the city shall be set at
the first municipal election which is held following the first full
fiscal year of operation and shall not be considered to be a change
in the appropriations limit of the city pursuant to Section 4 of
Article XIIIB of the California Constitution.