April 28, 2011

How Homeowners in PQ, Carmel Mtn Rnch, Sabre Sprgs and RB Get Dinged for Poway's WalMart

Wal-Mart has proposed expanding the Poway store into a super-store. The DEIR (draft environmental impact report) is available online. I've only scanned it. But the parts I have read seem kind of ridiculous. For example, the report says that the noise from increased traffic will have no significant impact because people can't hear that when they are outside. Uh...right. And the diversion of sales from other retailers and groceries in the area? Wal-Mart doesn't see any significant impact from that either because they are only going to sell a small amount of food. So they say in the DEIR.

One area the Wal-Mart DEIR did not touch on is the impact to PUSD school funding. The biggest chunk of school funding comes from property tax. Because Wal-Mart is in Poway's redevelopment area, almost all of the property tax from Wal-Mart's current store and all of the new property tax from Wal-Mart's expansion will go to Poway's redevelopment agency. Almost none of that property tax goes to PUSD.

Compare that to the property tax on the adjacent parcel on the corner of Poway & Community Rd, the shopping center with Vons on it. That parcel is not in the Poway Redevelopment Agency area. About 40% of the property taxes from that parcel go to PUSD. When the residential, commercial and industrial property owners in Rancho Bernardo, Rancho Penasquitos, Carmel Mountain Ranch, Sabre Springs and 4S Ranch pay their property taxes, about 40% of their taxes goes to PUSD. When Wal-Mart and Costco (in Poway) and Home Depot (in Poway) and every industrial park owner pay their property tax, almost nothing goes to PUSD. When the home owners of Old Coach, Bridlewood and Rancho Arbolitos developments pay their property tax, almost nothing goes to PUSD.

PRA (Poway Redevelopment Agency) diverts about $39 million in property taxes every year. About $16 million of that would have gone to PUSD if PRA didn't exist. That amounts to almost $1700 for every student in a PUSD school located in Poway. So, who makes up for that $1700/student shortfall in funding? Partially, that funding is made up from property owners in RB, PQ, Carmel Mtn Ranch, Sabre Springs and 4S Ranch. In 2009, PUSD got about $97,252,000 from San Diego properties within the district and only $17,3000,000 from Poway properties. 85% of the property tax PUSD gets is from San Diego, 15% is from Poway. The rest of the funding is made up by the state.

One of the big ironies of this funding scheme is that PRA gives little (and big) gifts to PUSD. Gifts which enhance the Poway PUSD schools. Like the Performing Arts Center, multipurpose rooms and gyms and various other athletic facilities. PUSD does not get these "gifts" from the City of San Diego, because San Diego does not have a redevelopment area in PUSD boundaries. So, the non-Poway side of PUSD gets screwed twice. First, they pay a greater share of property tax funding to PUSD. And, their schools don't get gifted by any redevelopment agency.

Jerry Brown has proposed eliminating redevelopment agencies. It cannot happen too soon. Since his proposal was made in January, redevelopment agencies went out and spent about $800 billion. $800 billion with interest is at least $1.5 trillion dollars. That translates into almost $750 billion dollars robbed from school districts. In just the first 4 months of this year. How can the state make up that kind of money to the schools?

Brown needed Republican votes to pass an urgency measure to dissolve redevelopment agencies. He only got one. There is still a chance that a bill to end redevelopment will be passed as an urgency measure. But if the bill is passed by a simple majority, it may not go into effect until January 2012, although it could possibly be implemented sooner if it is part of the whole budget package.

Once the state ends the redevelopment program, the redevelopment agencies will cease to exist. They will be replaced with successor agencies. The successor agencies will be tasked with paying off the redevelopment debt. PRA has about $250 million in redevelopment debt. So, some of the property tax from Poway properties will be diverted to pay off that debt. The schools will likely not get their full share until that debt is paid off. It remains to be seen how much the state will subsidize PUSD and the other schools while that debt (which is still accruing) is being paid off.

Don't worry. PUSD has a plan. They have endorsed legislation that would lower the percent needed to pass a parcel tax from 66 2/3 % to 55%. A parcel tax is a tax that is uniform for every parcel in the district. That means the owner of a 2-bedroom condo with carport in RB will pay the exact same amount as a 10 bedroom Poway mansion with 6-car garage. The parcel tax can be used to pay for teacher salaries and operating expenses.

For years, PUSD has benefitted from redevelopment. They have gotten the state to make up the money they lost to PRA, while getting gifts bought with the money PRA diverted. It was almost too good to be true. Apparently they never stopped to think about what would happen when the state could no longer make up the millions and trillions of dollars that redevelopment agencies have diverted from schools. Or how much redevelopment debt is borrowed debt that encumbers future school funding. The state can't print money. If the burden becomes to big, the state cannot fill in the funding for the schools. We are already there and there are still billions and trillions to pay off. That means RB, PQ, Carmel Mtn Ranch and 4S Ranch are going to have to continue to pay a disproportionate share of PUSD school funding and they may end up paying an additional regressive parcel tax just so Poway Redevelopment Agency could keep the property tax from Wal-Mart, Home Depot and the north Poway mansions.

April 14, 2011

An Open Letter to PUSD School Board

Dear PUSD Board Members: Todd Gutschow, Penny Rantfle, Linda Vanderveen, Andy Patapaw, and Marc Davis,

Times are tough. Teachers and other non-teaching staff have taken pay cuts and furloughs. Programs have been cut. The classrooms are getting more crowded. As if this wasn't enough, the governor is planning to defer funds that are owed to the school district. You are planning to take out a loan to cover the costs until the deferred funds finally arrive.

I certainly can sympathize with School Board President Penny Ranftle when she complained that the new governor's budget "wasn't good enough". Certainly, the budget shortchanges schools and everything else. But what is Jerry Brown supposed to do? He can't print money like the feds.

The primary method of funding schools has been through property taxes. For the last 28 yrs or so, property taxes collected in Poway have been diverted from the schools. And yet, I have never heard Mrs. Rantfle or any other PUSD school board member complain about that.

Redevelopment is the program that diverts property taxes from the schools and local governments. Redevelopment is a state program that was meant to revitalize poor, blighted urban areas. The state allowed cities and counties to form a redevelopment agency to "clean up urban blight". The redevelopment agencies get to keep any new property taxes from new developments in the agency area. There are now about 420 redevelopment agencies in the state of California and they suck up 12% of all property taxes collected in the state.

In San Diego County, redevelopment agencies are diverting about $400 million in property taxes each year. About half of that would be going to the schools if there were no redevelopment agencies. San Diego County redevelopment agencies divert just under 11% of all property taxes, a little bit less than the statewide average. Poway's Redevelopment Agency manages to divert about 50% of all property taxes. How did Poway manage to do this? In 1983, when they formed their redevelopment agency, Poway put an astounding 8200 acres of mostly undeveloped land in their agency area. When developments like Old Coach Estates, Bridlewood, Rancho Arbolitos, and the entire Industrial Park were built, the new property taxes went to the Poway Redevelopment Agency instead of to schools and local services.* I estimated that the schools are currently losing about $19 million/yr from the diversion of property tax to Poway's Redevelopment Agency.

It is true that Poway uses some redevelopment money to spiffy up the schools. The Performing Arts Center, various sports fields, and multipurpose rooms have been built with redevelopment funds. Getting new athletic facilities is nice, but it isn't equivalent to PUSD getting $19 million/yr to spend as they see fit for academic programs like reading, mathematics, and science.

As part of his budget, Governor Jerry Brown plans to eliminate the redevelopment agencies and pay off their debts and return funding to the schools. Of course all of the cities with redevelopment agencies complained quite loudly. Not unexpected. They can borrow millions and billions of dollars every year without voter approval to build shopping centers, stadiums, golf courses, and car dealerships. They can pay it back over the next 25-40 years with all the property tax that they steal from the schools.

Perhaps you don't really understand the enormity of the brewing disaster. Do you remember that "doubling a penny"exercise? The first day you give someone a penny, the second day you give him 2 pennies, the third day you give him 4 pennies, the fourth day you give him 8 pennies, etc. In 30 days, you will have given him over $10 million dollars. That's a great exercise to explore the concept of exponential growth. Redevelopment agencies property tax grab is also growing exponentially. It isn't doubling every day like the pennies, but it is growing exponentially. In 1970, only 2% of all property taxes were diverted to redevelopment agencies, By 1980, the percentage doubled to 4%. By 1995, it doubled again to 8%. Currently, redevelopment agencies are grabbing 12% of all the property tax. That's unsustainable. No governor is going be able to make up an ever increasing diversion of property tax funds from the schools.

I haven't heard a single peep out of any PUSD official in support of Brown's plan to eliminate redevelopment agencies and return the property tax money to the schools and local government. I am wondering why the cat has got your tongues. I did notice that you all are supporting a lower threshold to get a parcel tax measure passed. Really? Parcel taxes are regressive. A parcel tax levies the same fee on a mansion with 6-car garage as it does on a 2-bedroom condo with carport. I would not be able to support a taxation system which diverts property taxes to help build car dealerships and shopping centers and then makes up the money with new taxes that affect the little guy way more than the richer folks.

If redevelopment agencies are axed, I would begrudgingly support a 5-yr extension of taxes that are set to expire. I don't like having to do that to make up for shoveling tax money to rich developers over the last couple of decades, but at least the tax extensions are only for 5 yrs (unlike a new parcel tax). The Republicans have refused to put the tax extensions on the ballot, unless their long list of demands were met. Have you seen this list? Some of the items would affect the teachers you employ. In particular, the Republicans want pension reforms that would affect current and future employees. They want to increase the health and pension costs that teachers pay and to decrease or delay pension benefits. They want voters to get to vote on any pension increases. (Uh, so they are for voters to decide pension issues, but not tax issues????) They want the pension based on the highest 5 yr average, and to be capped. They also want to reform teacher seniority rules allowing layoffs based on performance instead of seniority. Where does PUSD stand on these issues? Do they support them? Did anyone from the PUSD board lobby any legislator to get the tax extensions on the ballot with or without this list of demands being met?

I am pleased to hear that a local chapter of Service Employees International Union ( SEIU ) will be marching at a May 13th rally to "bring not just education but the government back to the people." Will anyone from the PUSD board be marching with them? It is kind of late, but at least it would be a start at advocating "for the kids".

Chris Cruse

* Property owners in these developments do pay for school bond issues. In this article I am not referring to bond issues that add additional tax to the regular 1% property tax bill.