March 24, 2011

"It's precious"

In January, Gov. Brown announced his intention to get rid of redevelopment agencies as part of his plan to balance the state budget. Brown planned (and still plans) to dissolve the agencies, pay off their debt, and redirect local property tax back to schools, safety services and other local entities that have been "robbed" by the redevelopment agencies.

Fears that the goose-that-lays-golden-eggs will soon be gone has redevelopment agencies taking actions to horde their assets and commit to spending future assets. In less than 3 months, California redevelopment agencies have issued over $770 million in new bonds, and committed billions to new development projects. Meanwhile, 19,000 California teachers got pink slips last week. The number of laid off teachers could grow higher. Much higher.

California's deficit is $26.6 billion dollars. Brown wants to make up the deficit, half with cuts and half with extensions of the temporary taxes that were enacted under Schwarzenegger, but he needs the votes of 4 GOP state legislators to get the tax extensions on the ballot. He is unlikely to get their votes. They keep expanding what they want for those votes. I think the GOP legislators are just messing with Brown. I don't think they have any intention of negotiating in good faith or voting to put the extensions on the ballot so people can choose between them or more cuts. They just want to see him fail, and if that means thousands of teachers lose their job, so be it.

Brown also needs to dissolve redevelopment agencies to get the budget balanced. What does redevelopment have to do with teacher's pink slips? Redevelopment grabs property taxes that normally would go to schools. The state has been giving extra money to schools to make up for the loss, but they can no longer afford to do that.

The chart below is from the County of San Diego's website and it shows how property taxes will be apportioned in FY 2010-2011. Click on the graph to make it larger.

Redevelopment agencies are taking $400 million of local property taxes in San Diego county. That is 10.7% of all property taxes in the county. That is a bit less than the statewide average of 12%. The percentage of property taxes that has been going to redevelopment agencies is increasing steadily. In 1970, only 2% of all property tax in California went to redevelopment agencies. By 1980, the percentage doubled to 4%. By 1995, it doubled again to 8%. And now we are at 12% statewide. It is possible that redevelopment could consume more than half of all property taxes, even more. The bonds that the redevelopment agencies sell have to be paid back with future property taxes.

After redevelopment agencies are dissolved, Brown plans to use some of the money to pay off their debt. The rest of the money will be distributed among the other local agencies. Eventually, after the debt is paid off, all of our local property taxes would be distributed to provide local services. If the money that is diverted to redevelopment agencies were proportionately redistributed to all other entities, here is what the distribution would look like for FY 2010-2011:

Schools would receive 5.3% more of the county's property taxes, in the 2010-2011 FY just in San Diego county. The school's share of that diverted $400 million is almost $200 million this year.

Poway's redevelopment agency took almost $40 million in diverted property tax last year. Almost half of that would have gone to the school district if Poway did not have a redevelopment agency. And while Poway does have an agreement with the school district to spend money on the performing arts center and some joint use sports fields, the amount of money Poway redevelopment agency has given the school district is NOWHERE near $19 million a year. That $19 million could be used for teacher's salaries instead of the $5 million or so that went for artificial grass and bond payments on the performing arts center.

Redevelopment agencies are taking money from more than schools; they are also taking from libraries, the county, special districts and the cities' own general funds. General fund money is what pays for police and fire and city workerbees. The City of San Diego just approved $4.1 billion in redevelopment spending, and that doesn't even include an estimated $800 million they want to spend for a new Charger's stadium. But San Diego also plans to cut back on city services because their general fund is hurting pretty bad. They can't even man all of their fire stations. The choice is clear. We can use our tax money for schools and safety services and local needs or we can use it to fund development projects, like stadiums, shopping centers and luxury golf courses.

It is kind of surprising that school districts and teacher's unions, and other city worker's unions and safety services unions haven't said "Boo!" while cities have gone on this gluttonous rampage, selling bonds and grabbing assets and moving them around to keep them from being used by the state to pay off the redevelopment agency's debts. Why so silent?Poway didn't run out and sell bonds, but they did have a special meeting last Friday at 7:30 A.M. They transferred 75 properties owned by their redevelopment agency to the city and to a new entity they created, a housing authority.

No kidding, a public housing authority?

Yes, Poway created a public housing authority. The same Poway that has supported legislation to allow cities like Poway to pay some other city to build our low income housing. The same Poway that tried to get Sandag to let Poway pay National City to build our fair share of low income apartments in the last housing distribution cycle. The same Poway that sold all of their mobile home parks because they wanted OUT of the affordable housing business. The same Poway that built retaining walls instead of using 20% of their redevelopment money to build low income apartments and got sued by the Legal Aid Society and lost. The same Poway that makes an annual declaration that they need an exemption to state law that requires them to allow granny flats to increase the supply of affordable housing. That same Poway decided they had to have a housing authority to replace the slums of Poway.

In order to create the Housing Authority, Poway first they had to declare by resolution, that there was a need for an authority to function in Poway. According to the California health and safety code 34242 and 34243

The governing body may adopt a resolution declaring that there is need for a housing authority if it finds either of the following:
(a) That insanitary or unsafe inhabited dwelling accommodations exist in the county or city.

(b) That there is a shortage of safe or sanitary dwelling accommodations in such county or city available to persons of low income at rentals they can afford.

In determining whether dwelling accommodations are unsafe or insanitary the governing body may take into consideration:

(a) The degree of overcrowding.
(b) The percentage of land coverage.
(c) The light, air, space, and access available to the inhabitants of such dwelling accommodations.
(d) The size and arrangement of the rooms.
(e) The sanitary facilities.
(f) The extent to which conditions exist in such buildings which endanger life or property by fire or other causes.

When Poway created their redevelopment agency in 1983, the council made a finding that 8200 acres of mostly undeveloped land was so badly blighted, that private enterprise alone could not successfully make a go of any development on it. The city used a program that was meant to help poor, urban communities spiffy themselves up while providing housing and jobs for poor people. Here we are, twenty eight years later and the city has done such a bang up job of creating housing and jobs for poor people that they now need to create a housing authority so poor people don't have to live in slum-like conditions.

To be fair, nobody in the city has really pretended that this housing authority is anything more than a greedy grab for as big a chunk of the taxpayer's pie as they think they can get. The dishonesty is in blaming the state for "stealing" local money. In fact, the real choice is about what our local property taxes should be used for. Should it be used for safety services, local municipal services,libraries and schools? Or should it be used for development projects that enrich the likes of the Spanoses, Moores and Waltons?