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Infrastructure Financing Districts are the New Redevelopment

The use of tax increment financing to redevelop Alameda Point would have a negative impact on the city's finances, a study to be presented tonight says.

The use of tax increment financing to redevelop Alameda Point would have a negative impact on the city’s finances, a study to be presented tonight says.

The use of tax increment financing to develop Alameda Point would negatively impact the City of Alameda’s general fund, as property tax revenue would be diverted to fund upfront infrastructure costs. That’s according to a report under consideration by Alameda City Council tonight.

Governor Jerry Brown abolished tax increment financing through redevelopment agencies in California in 2011, however the mechanism lives on in California law in the form of Infrastructure Finance Districts (IFD).

The underlying tax increment financing mechanism of IFDs is fundamentally the same as “redevelopment” which Brown got rid of to return billions of dollars annually in property tax revenue to the California K-12 school system. Basically, debt is issued to fund infrastructure development such as utilities and roads, and the future property taxes from the property supported by the infrastructure are pledged to repay the debt.

The City of Alameda recently hired a lobbyist to work the halls of Sacramento to facilitate the use of tax increment financing to redevelop Alameda Point.

A League of California Cities article explains that IFD law has been on the books for over twenty years, but, unlike the abolished redevelopment law, requires two-thirds voter approval to create districts and issue debt.

Willdan Financial Services prepared the study to be reviewed tonight, to examine the fiscal impact on the city of redeveloping Alameda Point, based on a proposed development of 1,425 housing units and 5.5 million square feet of commercial development, including 300,000 square feet of retail space.

Without tax increment financing, the net overall impact of the redevelopment is expected to be neutral to positive on the city’s coffers.

With tax increment financing, the fiscal impact is expected to be negative, necessitating the levy of additional assessments on Alameda Point property owners, such as the Mello Roos taxes recently approved for Alameda Landing.

City Council meets tonight at 7:00 p.m. in Council Chambers at Alameda City Hall, at 2263 Santa Clara Avenue.

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