A letter from Action Alameda News publisher David Howard…
Governor Jerry Brown’s proposal to eliminate some 400+ redevelopment agencies across the state of California comes as the Alameda Unified School District reaches out to voters yet again for a parcel tax. Across the state, redevelopment agencies divert to development subsidies some $5 billion of local property taxes per year. (Source: State controller’s annual report on redevelopment agencies.)
Every time the Alameda Unified School District brings forth a parcel tax ballot measure, it blames the State of California for not fully funding schools. But, as Governor Brown has pointed out, the state-wide school funding problem starts with local redevelopment agencies diverting local property tax dollars away from schools. Contrary to popular misconception, local property tax dollars do not “go to the state” and get “apportioned back to local districts.” While revenue limit entitlements are set by complicated formulas determined by state law, in fact, each district’s revenue limit entitlement is filled first with local property taxes.
Any shortfall in property tax dollars is made up by the State of California, from revenue generated by income and sales taxes, up to the revenue limit entitlement. This current model, in effect, transfers wealth, through Sacramento, from non-redevelopment cities to redevelopment cities, as the State tries to make up for money lost to redevelopment agencies with funds from across the state. Increasingly, the State is being asked to make up revenue limit entitlements with money it does not have.
In Alameda, the problem is aggravated by the actions of certain local school board trustees, like the one that endorsed SunCal’s “Measure B” redevelopment plan for Alameda Point, which called for a $200 million property tax subsidy to SunCal, and another trustee that accepted a $5,000 political contribution from SunCal, while supposedly leading, as board president, the school board in negotiations with that same company for mitigation fees to be paid to the District as part of the Alameda Point redevelopment plan.
The City of Alameda’s redevelopment agency, the Community Improvement Commission of the City of Alameda, carries almost $300 million worth of redevelopment debt, which is paid back from property taxes diverted through the redevelopment mechanism, a.k.a. “tax increment financing.” The same agency receives as revenue some $15 million to $20 million each year in local property tax dollars. (Source: State Controller’s Annual Report on Redevelopment Agencies.) According to the Alameda County Tax Assessor’s Annual Report, 13 cents of every Alameda County tax dollar goes to redevelopment agencies.
The chart below show the breakdown of Alameda County property tax dollars between schools and redevelopment from fiscal year 2004-05 through fiscal year 2011-12. In FY 2006-07, schools in Alameda County received 47 cents of every local property tax dollar and redevelopment agencies received 9 cents. For 2011-12, schools will receive 41 cents of every dollar, and redevelopment agencies will receive 13 cents.
The Mercury News article quoted a redevelopment critic, a Pasadena lawyer named Christopher Sutton. According to the article:
Christopher Sutton, a Pasadena lawyer who has represented opponents of redevelopment projects, argues that what may have started as a good urban improvement idea has morphed into a growing monster. “What do you value more,” Sutton asked, “public education or subsidizing sports teams and developers?”
In Alameda, we know the answer to that question. The Alameda Unified School District clearly values subsidizing sports teams more than public education, as evidenced by the tax cap in Measure A, which would have the Oakland Raiders – their headquarters is on Bay Farm Island in Alameda – paying an effective tax rate of 8 cents/sq ft, compared to the average homeowner/parent, who would pay 32 cents/sq ft. Measure A would also lower the Raiders’ tax cap by 16% from $9,500/yr to $7,999/yr while increasing the parcel taxes on the median Alameda homeowner by 65% from $309/year to $512/year. (Source: Alameda Unified School District press release) A majority of Alameda City Council would seem too, to value subsidizing sports teams more than education, judging by their endorsement of Measure A, and continued use of the redevelopment mechanism within the city of Alameda.
Where does Proposition 13 fit in all of this? There is over $600 billion worth of land in California tied up in redevelopment projects and subject to the diversion of property taxes to redevelopment agencies. (Source: State Controller’s Annual Report on Redevelopment Agencies.) Any change or repeal of Proposition 13 will be a big financial boon to redevelopment agencies across the state, flooding their coffers with new tax money. Here’s a hint – look closely at who’s pushing for Proposition 13 reform. If there is to be any reform of Proposition 13, it must go hand-in-hand with redevelopment reform.
Fortunately, we have now in the Sacramento capitol building an administration that understands the problem clearly, and seems ready to face it head-on. Slowly bringing up the rear are the teachers’ unions. (Locally, myself and others have tried in the past to educate AUSD’s labor groups on the redevelopment problem, but they would hear none of it.) We should wish Governor Brown well in his attempt to eliminate, or at least wrestle into submission, the California redevelopment machine.