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Tax-Increment Financing at Alameda Point will Consume All Property Taxes

The “frozen base assessed value” for the Alameda Point Improvement Project – the tax-increment financing project area for Alameda Point – is $0.00. That is, zero. What this means is that after conveyance of the land to SunCal, all property taxes generated at Alameda Point will be “tax increment” and go the City’s local redevelopment agency, and none of those property taxes will go to the City’s General Fund, nor to the state nor to the county or the schools.

When a redevelopment project, like Alameda Point Improvement Project (APIP) is created, an aggregate base property value for all the land in the project is determined, based on the property tax assessment for the land. This is the “frozen base value” – all future property taxes applicable to this frozen base value get distributed to the City, county etc. as always. But as the property increases in value each year, the property taxes applicable to the increase in value, known as the “tax increment” are diverted from the City’s general fund and into the local redevelopment agency, the Community Improvement Commission of the City of Alameda, (CIC) to pay back bonds that were issued to subsidize the developer.

For APIP, the frozen base value is $0.00 (zero) because the land is federal government land, and the feds pay no property taxes. This figure is reported in the annual report for the CIC – here is an excerpt:

Froze Base Assessed Valuation of Alameda Point is Zero Dollars

Froze Base Assessed Valuation of Alameda Point is Zero Dollars

So, all property taxes generated within APIP will be tax-increment, and will diverted to the CIC! None of those property taxes will go to the schools, to the City’s general fund or to the state. Boosters of the SunCal plan say that a “Mello Roos” tax on the property there, through a Municipal Services District fee, will make up the difference to the general fund. But those additional fees will make residential property even more expensive, and less affordable.

Alameda Point should be developed in a way that doesn’t divert all of the property taxes away from our schools and public services and into developer subsidies.

4 comments to Tax-Increment Financing at Alameda Point will Consume All Property Taxes

  • barb

    The number of 189 million is projected as the amount that the city can finance with tax increment financing. Is that amount restricted due to the Gann limit? If the real cost of infrastructure is 700 plus million and we can only get 189 million or so with tax increment financing, where will the remainder of the 500 plus million come from?? I don’t have that much money, do you, or do we?

  • We believe the $189 million figure from the City – from Debbie Potter, whose salary is paid in part by SunCal – is a low-ball figure designed to make the project more palatable. Supposedly that number comes from a projection of property tax revenues at Alameda Point over the life of the APIP project area. (We will check if it has anything to do with the Gann limit, but I suspect not.)

    We have done our own projections based only on residential property taxes – we will share our spreadsheet with anyone who asks. To arrive at the $189 million figure, Ms. Potter has to assume that the average annual property tax increment contribution from each unit at Alameda Point is down around $1,400 per year. We think that number is absurdly low, because ALL property tax revenue at alameda point will be tax-increment, and $1,400 per year assumes an average home value of $140,000. (1% of $140K)

    When one uses more realistic figures instead of $1,400, such as $5,000 per home, the amount of tax-increment generated from the residential units alone becomes quite significant over 30 years, and can easily reach the $700 million figure. SunCal knows this, Debbie Potter knows this. SunCal will be back to the table for a bigger subsidy above the $189 million number.

    As to your question of who will pay the $500 million – so far, SunCal has said they will pay it, but that makes their project less profitable. And the City has refused to release their pro-forma business plan – we asked. So, SunCal SAYS they are going to make up the difference, but we doubt it – more likely, AFTER the november vote on Measure A, they will be back, cap-in-hand for a bigger subsidy closer to $700 million, which they will try to negotiate for the DDA which is due to be signed in mid-2010.

  • barb

    What?? A November Vote on Measure A???? Why would anyone put Measure A on the ballot in November to give SunCal a BAILOUT and add $100s of millions in SunCal profits? Especially if they are already going to be raking in enough to pay for the $500 million? All we will get in return will be increased traffic, pollution and global warming. Please don’t tell me that providing a few more homes to the ever increasing populace is really that necessary in this downwardly spiralling economy. Anyone who has tried to leave the west end of Alameda during the morning commute knows how inverted the thinking abilities of our traffic planners are. They’ve installed a light that triggers a stop for outwardly bound traffic on Constitution Way backing up to past Atlantic when even one car comes from behind the tube on Mariner Square Drive. Cars could usually turn right to exit quickly and easily without a light. Now multitudes of cars sit at the red, while nothing comes from Mariner Drive once the light is triggered. And if the rest of the drivers knew that they had to be courteous or face the backlash of nonthinking traffic planners, we would have been better off. What will happen to the traffic leaving from east of Wester when the 4500 homes have 1-2 cars leaving for work in the am?

  • SunCal is supposed to have ballot measure language finalized by April 30th, according to a milestone set by the City of Alameda. Then they would start collecting signatures in May, with a target for the November ballot. SunCal claims it will be very specific language tied to their project at Alameda Point, but it will include language to relax Measure A. HOMES is very clear that they want to change Measure A for all of Alameda, not just Alameda Point.

    SunCal, and City planners, are suggesting it will be a “referendum” of sorts on SunCal’s plans, but because the final agreement with SunCal won’t be signed until mid-2010, roughly 7 to 8 months after the November ballot, Alameda voters will not be able to truly consider what they are voting on.

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