What Were They Thinking?

The election is just a week away. There are 2 seats on PUSD board up for grabs and 2 seats on the Poway Council. I thought the biggest issue this election season, especially for council candidates, would have been, "How will the end of redevelopment affect our budget?" A little less than a year ago, the California Supreme Court decided that Governor Brown and the legislature can dissolve redevelopment agencies and end that state program. The City of Poway had been diverting $40 million in property taxes from local schools, the county and our own general fund, to subsidize developers to clean up blight  and now they won't be able to do that anymore. Unfortunately, the full $40 million/yr in diverted property taxes won't be available for distribution for many years, as Poway's Redevelopment Agency has a large bonded indebtedness and other obligations that must be paid off first. So, the schools won't be made whole right away. And neither will the county or Poway's own general fund.

The council candidates haven't talked too much about how they would deal with the budget shortfall. Mostly, they seem to collectively shake their fists at Sacramento and whine. Two council candidates, Steve Vaus and Jeff Mangum were on the City's Citizen Budget Review Committee. That committee didn't even consider the impact the California Supreme Court's decision could have on Poway's budget during their budget review meetings. I guess they were afraid to plan for all possibilities. After the court decision was made public, the Budget Committee returned to make some adjustments and to add a little "We hate you, Sacramento" to their report.

I've heard very little budget on the campaign trail. This year's buzz is all about the "Billion Dollar" PUSD bonds. That may be due to political opportunism more than anything else. Jim Cunningham will likely be re-elected. Merrilee Boyack is not running again. There are 3 other candidates hoping to grab her seat: Steve Vaus, Jeff Mangum and Gary Vineyard. The school bond has become the "hot" issue between Steve Vaus and former school board member Jeff Mangum. Vaus contends that Mangum is responsible for the bond debacle and Mangum says he isn't because he wasn't on the PUSD board when the last issuance of Prop C bonds were approved.

Personally, I think Mangum should have stood with his fellow PUSD Board members and owned his role in the bonds. Yeah, yeah, I know...he left the board in 2010 and did not vote to issue the last Prop C bonds, but Mangum was very much a part of the whole sequence of events that led up to the bond issuance in 2011 for $105 million in bonds that would cost taxpayers a billion dollars to pay back over the next 40 yrs.

For both Prop U and Prop C bonds, the district first issued "bridge loans" and got started right away on the building projects. When the bridge loans came due, the district needed to issue Prop U or Prop C bonds to pay them back. The plan worked well for Prop U. The complication for issuing Prop C bonds was that the taxpayers were still paying off the Prop U bonds when the Prop C bonds would be issued. In order to keep the tax rate below the promised $55/$100,000AV, PUSD decided to use higher risk CAB(capital appreciation bonds) that wouldn't have to be paid off for 20 yrs or so, although they accrued interest during that time period.

When Prop C's bridge loan came due in 2011, PUSD had to pay them off. PUSD had planned for a best case scenario, with the real estate bubble growing for at least 7 more years. Unfortunately, the housing market collapsed and the bond market tightened up when the loan came due.  I don't know what Mangum could have done differently if he had still been on the board when the bridge loans became due. There were not a lot of choices. Bridge loans are a gamble, if conditions are not too good when they come due, the district still must issue bonds to pay them off.

There is some irony in that Steve Vaus is the most vocal critic of Mangum's role with regard to the bonds. Vaus's supporters have repeatedly said online comments, media interviews and at a school board meeting,  that Mangum should sit out the election for his role in the bonds. Yet, several of Vaus's supporters played key roles in getting Prop C passed. Sabrina Butler, who endorsed Vaus, ran the "Yes on C" campaign. Laura Tyne, was another "core" volunteer. She now says she was "fooled" by the board and that they withheld "details"about the bond, in particular, how much the bond would cost. In my opinion, that is a pretty lame whine because nobody knows what the interest rates will be for a  bond until they are issued. If Laura read Prop C before she tried to get everyone to vote for it, she might have noticed that we voted for bonds that could take up to 40 yrs. to repay after the last bond was issued at up to 12 % interest. PUSD didn't have to issue the bonds for many years, at least not until the bridge loans came due, and even then they could have (and did) stagger the issuance of the bonds for several years. If you repay back a loan over a 50 yr period, it will cost a lot in interest. Those terms were in Prop C and not hidden from the voters. What wasn't revealed was that PUSD planned to use CAB bonds, which accrue interest for many years before payments are made. But without using CAB bonds, there was no way PUSD could have issued the Prop C bonds and still have kept rates below $55/$100,000AV. That is why I questioned what the Yes on C committee was telling the voters in 2008. It certainly did not seem mathematically reasonable, and it wasn't.

PUSD did tell the San Diego Taxpayer's Association that they planned to use CAB bonds. And they told them that they expected assessed valuation to grow from 5-8% per year from 2008-2015. They gambled on that real estate bubble growing for 7 more years. I would expect that a group that is so devoted to taxpayer concerns would have questioned those "wildly optimistic" assessed valuation projections, but SDCTA didn't. SDCTA seems to frown upon spending taxpayer money on frivoulous things like teacher salaries or pensions, but they are pretty gung- ho about spending tax dollars on school construction projects. SDCTA gave PUSD an award for using that bridge loans scenario with Prop U. They endorsed Prop C, knowing that PUSD was going to use bridge loans and the riskier CAB bonds. What were they thinking? Perhaps of lining their pockets.

Here is where more irony comes in. Steve Vaus received the endorsement of the Lincoln Club of San Diego County and he got  $500 in cash and $300 in video services from them. They are a very conservative group, nominally non-partisan, and pro-development. There are several key members who are on both the SDCTA and the Lincoln Club. One name in particular pops out. April Boling.  Boling is an accountant who is often the treasurer for Republican campaign candidates and issues. April Boling was Vaus's campaign treasurer for the recall campaign against Betty Rexford. And April Boling was  the "contact person" (treasurer?) for the 527 campaign organizations ("citizen groups") who pushed for passage of both Prop U and Prop C.

So, yeah, Mangum may "lit the fuse" that led to the billion dollar bond deal, but there are quite a few members of Vaus's posse who were instrumental in pushing to get Prop C passed. Prop C was actually the rope to the sticks of billion dollar dynamite. Once that thing was lit, we were stuck.

There is a silver lining to the bond fiasco. PUSD had plans to get us voters to approve a parcel tax. Prop U and Prop C money can only be used for school buildings and some technology improvements. A parcel tax could be used to pay teacher's salaries. I'm not opposed to paying teachers a salary or  pensions. I am opposed to parcel taxes, in particular, to flat parcel taxes that charge each property the same amount. It seems unfairly burdensome that a small house on a tiny lot would pay the same parcel tax as an $8 million estate. Wikipedia has a list of parcel tax measures that have been on the ballot in other California cities.  They vary considerably, but some are for $300/yr and $400/yr per parcel.  They can be for a set number of years or they can continue indefinitely. Some parcel taxes are based on
square footage of the property or lot sizes. That seems much fairer and would be the only parcel tax I would consider voting for.

The billion dollar bond measure put the kabosh on talk about a PUSD parcel tax. But it may be back after things simmer down. I plan to vote for Prop 30, Governor Brown's sales tax + income tax measure to raise funds for schools. That measure is limited to a set number of years, and it is not an excessive amount of money for the purpose. If it doesn't pass, school funding will be cut, and you can bet that somebody will revive talk of a parcel tax. So, even if you are not inclined to vote for tax measures, you might consider this one a preventive measure and vote Yes on Prop 30.

Sometimes I really do not understand the thinking of the PUSD Board members. They don't seem too excited about Prop 30 or the end of redevelopment. I guess they figure the state owes them money and they have no concerns as to how the state is supposed to get that money. The board members seem pretty satisfied with saddling PUSD taxpayers with a billion dollars of debt that won't be paid off for generations, and they would have added a parcel tax on top of that, if they could have. So I found it kind of odd when I saw Brian Maienschein's campaign literature and on the front,  Linda Vanderveen, PUSD board member, claimed that the entire PUSD board "unanimously endorsed Brian." Do they know that Brian Maienschein signed a "no new taxes" pledge? Most of the funding for schools comes from state money.  I realize that Maienschein went to PUSD schools, and he is probably a nice guy and all, but, geez, what kind of message does it send when the Board unanimously endorses someone who signed a "no new taxes" pledge.

The "no new taxes" pledge is part of Grover Norquist's campaign to shrink government spending to the same level it was around the turn of the century (from 19th to 20th). In the early 1900s, most people did not finish grade school, much less graduate from high school or go to college. Is that what we want for our kids? For our country? For the generation that is going to have to pay off the school bonds? What is the PUSD Board thinking?

Fortunately, there is a challenger running for the PUSD Board. I am going to vote for Kimberley Beatty.  I've been impressed by her understanding of the bonds and support for school funding. Paying taxes to support the schools is not the problem. Paying a billion dollars to borrow a little over $100 million is a problem, but in order to avoid that situation, you have to at least ponder different possibilities when a deal is proposed. That takes critical thinking and sound reasoning, not an anti-tax pledge.

What Killed Redevelopment?

Alternately titled: It's the math, stupid!

It's official. All 400+ redevelopment agencies in California are dissolved as of today, February 1, 2012. A last minute court case to keep redevelopment alive fizzled. The pleas and threats from the redevelopment crowd did not convince the state legislature to keep redevelopment on life support for a few more months, so they could figure out a way around the eventual demise.

In the last few weeks, the pro-redevelopment faction tried their best to talk it up, point to their successes and to blame the state for "grabbing their money". If I could have $100 from every reporter or politician who claimed, in a news article, that redevelopment money was now going "to be sent to Sacramento", I think I could afford to buy some distressed ex-redevelopment property at fire sale prices. The real reason redevelopment had to end, wasn't, as Bob Emery said, because our "dysfunctional state government finds it necessary to dismantle an institution that works, and creates jobs, to try to stop the financial hemorrhaging of their own making." The real reasons redevelopment had to die is because of voter-passed propositions, the nature of exponential growth, and greed.

Redevelopment agencies first got their start in California in 1945. The whole idea was to give cities and counties a tool to tackle urban blight in the post war years. In 1952, new legislation allowed redevelopment agencies to finance projects with tax increment. Tax increment is the increase in property taxes from the tax value on the day a redevelopment agency is created. Suppose the property tax for a vacant parcel of land was $100 in 1983 when Poway created their redevelopment agency. Some time later, if someone built a million dollar home on that parcel, the new property tax would then be around $10,000/yr. When the owner of the parcel paid his/her $10,000 property tax to the county, the county would send $100 of their tax to the schools, cities and county and send the $9,900 tax increment($10,000-$100) to Poway's redevelopment agency. The school district would have gotten a little less than half of that $100.

There weren't very many redevelopment agencies in California until the voters passed Proposition 13 in 1978. Prop 13 put a lid on soaring property taxes in the state. After Prop 13, cities looked everywhere and anywhere for a new revenue stream. Tax increment money started to look very attractive.

Once cities jumped on the redevelopment bandwagon, the abuses began. Poway's redevelopment area was created in 1983. It was comprised of 8200 acres of so called "blighted" land, 75% of which was undeveloped. It doesn't take a math whiz to realize that the tax increment on vacant land is going to jump after something is built on it. Poway's redevelopment acreage wasn't urban and it wasn't blighted, but it did provide a revenue stream for the fledgling city.

Post Prop 13, redevelopment agencies popped up everywhere. As the tax increment started rolling in, the impact was noticeable, particularly for schools. Since most of the growth was in the redevelopment area, most of the new taxes went to the redevelopment agency. In Poway, new homes were built in Rancho Arbolitos, Old Coach, Bridlewood, and other areas within the redevelopment area. The students who moved into those homes went to PUSD schools, but most of the property taxes their parents paid went to the redevelopment agency. When the industrial park was built, those new property taxes also went to the redevelopment agency and the schools were left with many new students but no increase in revenue to pay for them. Although Poway was perhaps among the more brazen with the amount of acreage, particularly undeveloped acreage that they put in their redevelopment area, they were by no means the only redevelopment area to capitalize on diverting property taxes that would normally go to the schools.

By 1988, the schools were really feeling the pinch. The California voters passed Prop 98, which required that the state backfill the funds that redevelopment was taking from the schools. Talk about unfunded mandates! There was nothing in Prop 98 that explained where the state was supposed to get this money, save for a little bit of lottery funds. The backfill money to fund the schools came from the state's general fund , which is derived from things like income tax and sales tax revenue.

Last year, redevelopment agencies were diverting 15% of all property taxes in California. Here is where the exponential growth comes in. Don't bail, I promise I will make it easy. Look at the "graph". The thing to notice about the graph is that the red line starts slowly climbing uphill, then it seems to curve and shoot upwards. That graph is the classic exponential growth graph. This graph represents the growth of a population over time, but a graph of how much tax increment the redevelopment agencies diverted from the schools (and other local taxing entities) over time would look similar. It starts out slow, but once it gets rolling along, it zooms upward. Redevelopment agencies currently divert 15% of all the property taxes in the state. In Poway, it is 50%. Eventually, redevelopment agencies would consume almost all of the property taxes in the state. The system would collapse way before that, in fact, it is collapsing now. There is no way that the state could continue to backfill that kind of money. Where would the state get that kind of revenue? They can't print it. It is irresponsible for public officials to be so blind to the reality of how impossible it would be for the state to come up with the billions of dollars that redevelopment sucks up.

The state tried to be reasonable and demanded that redevelopment agencies give back to the schools some of the diverted tax increment. Here is where the greed comes in. The cities wanted no part of it. They wanted it all. The redevelopment agencies helped to fund Prop 22, a voter measure advertised as "keeping local money local". When they approved Prop 22 in 2010, most voters had no idea that Prop 22 meant that the redevelopment agencies would continue to take a larger and larger share of property taxes, leaving the schools dependent upon the state to replace larger and larger amounts of diverted funds.

The state really had no choice. They had to discontinue the redevelopment program because it was sucking up all of the property tax money. The only option was to allow the redevelopment agencies to continue if they voluntarily agreed to cough up $1.7 billion for schools. The California Redevelopment Agencies sued the state. The California Supreme Court decided that the state could discontinue the redevelopment program but that they could not ask the redevelopment agencies for voluntary payments that were really not voluntary. The voluntary payments violated Prop 22. In the end, it was the redevelopment agencies own proposition, Prop 22, and their greedy brinkmanship that did them in.

There are so-o-o-o-o many lessons to learn from this redevelopment saga. If and when somebody comes up with some new tools for cities to use to spur economic development, I certainly hope that we don't have to make the same mistakes all over again.The sad thing is that we the people are the city, we are the state, we are the school district. We pay taxes so we can provide for common services. The people who represent us on the city level failed to care that funding for our schools was impossible with Prop 22. They didn't care about us, they cared about getting the biggest share of revenue they could get. They were incapable of looking at the big picture. And they failed to understand the math.

Happy New Year

Happy 2012!

New year, same ol' shit????

Nope. Not this year. Because of a California Supreme Court decision, redevelopment agencies will cease to exist on February 1, 2012. That will mean some big, big changes for Poway and hundreds of other California cities. You can be sure I will have lots to say about it soon, but here is a little hint: It's all about the $$$$$$$$$$$$$. Every redevelopment agency was required to work up an EOP (enforceable obligation payment schedule) of all their bond debt, contracts and other obligations for payment. Poway's total on the Oct 1, 2010 document? It's $1,398,802,316.43. Almost 1.4 billion taxpayer dollars diverted from schools and core government services. In little ol' Poway. To clean up our urban blight. They are crying a river over losing that money stream.

(note: Poway revised their EOP after the supreme court decision. The new EOP (1/17/2012) total: $0.4 billion. That's a billion dollars less that they will be spending now that redevelopment agencies will cease to be. Half that billion dollars will go to our local schools. They other half will mostly go to the county and come back to the city's own general fund for core services.)

Unfortunately for Poway sewer customers, it is the same ol' shit for 2012. On December 20th, the council voted to reduce the sewer consumption charge by 7%. Note that the word is charge, not rate. Poway doesn't charge for sewer use by the unit, the way they do for water (and the way other cities do for both water and sewer). They use an archaic tiered fee structure. It is an adaption from the days when everyone just paid a flat sewer fee and no separate consumption fee. Now, we all pay a flat service fee AND a consumption fee, but the consumption fee in Poway is not a rate as it is in other cities. Poway, charges a consumption charge of $40.98 to sewer customers who use between 6-12 units. That means that the customer who uses 6 units pays twice as much per unit ($6.83) as the customer who uses 12 units ($3.41 per unit). Poway gives an even bigger price break to the biggest sewer users. Customers who use 50 units of sewer flow pay only $1.83/unit. Is that fair? Or even logical?

Poway can afford to cut the sewer rates because they have a big surplus in the sewer fund. They have been overcharging customers for years, and, in particular, overcharging smaller users. What's amazing is how the city continues to use the sewer slush fund for non-sewer related expenses. Last year they completed a sewer project on Oak Knoll Rd that was paid for with redevelopment funds. But since they needed $3 million dollars to move Toyota across the street and shoehorn a Lowes in Toyota's old location, they took $3 million from the sewer fund and put it into the redevelopment fund to "backfill" the Oak Knoll project and then they moved it into a fund to buy property for Toyota.

The sewer fund is also tapped to pay the bonds on the new city hall. Most of the water/sewer services are run out of the city's operations center building near Lake Poway. So why are water/sewer customers paying for city hall? I guess we have to pay for the administrative staff who dream up new ways to soak us unfairly. Some of the council members who voted to make the sewer customers pay for the new city hall are on septic systems and don't help pay for those bonds themselves.

Remember the old water/sewer building on Poway Rd., right across from the library? That building was paid for by water/sewer customers, too. After it was no longer needed for the water/sewer department use, it was "quit claimed" to the city. The water/sewer ratepayers paid for the building, but we got nothing for it. Now the city leases it out. Does the lease money end up in the sewer fund? Nope. If the city sells the old building, will the sewer customers see the assets returned to the fund that paid for the building? Not likely.

Redevelopment owes the sewer fund a big bunch of money too. In 1983, Poway sewer customers forked over $5.5 million to jump start the newly formed Poway Redevelopment Agency. How did the sewer fund have an extra $5.5 million in it to lend to redevelopment? If I remember correctly, our rates were hiked up to minimize the stress of potential future rate hikes. I am not sure we will ever get all of that money back from the soon-to-be-defunct redevelopment agency. Does that make you feel de-stressed or distressed?

But that isn't all. The lush sewer funds are being used to pay the legal bills for a 5-yr long saga of negligence, irresponsibility and retribution. I'm talking about the Tartre/Armstrong case. Five years ago, the city hired a company to clear some trees on a sewer easement. They oopsied. They were supposed to cut down a total of 25 mature trees on 9 properties, but they took out way more than that. Of the 41 trees they removed from the Armstrong's and the Tartre's backyards, only 1 was in the sewer easement. The city admitted that they messed up and said that they used a map with the easement marked incorrectly on it.

The Tartres and Armstrongs wanted the city or (West Coast Arborist), the company that the city hired, to replant mature trees, fix the creek that they damaged and leave them alone. They filed a claim with the city. The City retaliated by citing (resolution 08-004)the Tartres and Armstrong with some PMC (Poway Municipal Code) and FEMA violations on their property. The City claimed that their fences were in a special flood hazard area and that they had to remove them or get a special permit that required a $30,000 flood study. Instead of working to make things right, the City puffed up their chest and said, "You take what we offer or we will make your life hell." And then the City proceeded to make their lives hell.

After the City refused to fix their properties, the Tartres and Armstrongs filed a lawsuit over the property damages. In a tit for tat, the The City sued the Tartres and Armstrongs over the PMC and FEMA violations. It didn't matter if the Tartres and Armstrongs won their lawsuits or if the judge noted that the City's case "smacked of retaliation", the City was (and still is) hell bent on sending a message: "Cross us and we will make your life miserable." And why not? Those excess sewer funds were just sitting there waiting to be raided to pay for the City's bullying.

Five years of hell. And it is not over yet.

Here is a summary of where things stand.

There are two main cases:

1)Appellate Court Case No. D056319

underlying case 37-2008-0076297-CU-NP-CTL

This is the Tartres/Armstrongs suit against the city and their contractor West Coast Arborists for damages to their property, emotional distress, and civil rights violations.

In June, 2009, a jury decided that Poway had been negligent and awarded the Tartres and Armstrongs damages for negligence and emotional distress ($119,810 for the Tartres and $67,462 for the Armstrongs). In Dec, 2009, Judge Link denied the City's request to undo the jury's decision and awarded the Tartres and Armstrongs $479,000 for attorney fees and legal costs. The Tartres and Armstrong were also required to pay the legal fees for West Coast Arborist.

Neither side was totally satisfied with this result. The City of Poway is appealing the civil rights violation portion of the decision. If the City wins, they won't have to pay the $479,000 in attorney fees; if they lose they will owe an additional 10% interest. The Tartres and Armstrongs are claiming civil rights violations and also that the arborist the City hired was responsible, in part for a portion of the damages. If they win, they won't have to pay the arborist's fees. If they lose against the City, they may have to pay the City's attorney and legal fees. The Tartres and Armstrongs final brief is due on Jan 20th, then oral arguments will be heard. The court will decide the case between April and June of this year (2012).

2) Appellate Court Case No. D055225

underlying case: 37-2008-00081870-CU-WM-CTL

This is the Tartre/Armstrong Writ against the city council after the city hit them up with PMC (Poway Municipal Code) and FEMA violations.

This case is almost concluded.

Judge Lisa Foster ruled that Poway messed up, didn't follow their own municipal code, got the FEMA thingee wrong and that Poway needed to take back their resolution (#08-004), harrassing demanding that the Tartre and Armstrongs pay for an expensive flood study and get permits for their fence, which the city claims is in a FEMA floodplain. The judge made that ruling almost 4 months ago. The council still has taken no action to comply with one part of the court order, the requirement that the Poway City Council rescind resolution 08-004.

Hmmm, I remember another case when the City Council allowed some residents to build a private gate across a public road. One of the people who lived on the road sued, and won his case in court, at great expense to himself. The city took their sweet time complying with that court order too. They didn't rescind their approval of the gate and demand it's removal for weeks after the court's decision. Respect for the courts much? I don't think so.

The Tartres and Armstrongs have to drag the City's sorry ass back to court and let the judge slap them upside of the head to make them comply. Last week the judge ordered the City to comply with her order or explain themselves at yet another hearing on April 6, 2012. The City knows that they have lost, but they have one last opportunity to taunt their own residents. And why not? It's not their money that is paying for it.

The City is paying for their attorneys and legal fees out of the sewer slush funds. I don't know why. The cause of the problem was bad maps (so said the City) and a bad attitude (so said the judge). I'm not sure which city department is responsible for mapping expertise, but whichever one it is, I think that department and the City administration owe a reimbursement to the sewer fund. The City's attorney costs were $354, 461 (as of June, 2011) for the first case and $83,553.36 for the second case (as of Jan 3, 2012).

If I was a member of the Poway City Council or staff, you know what I would do? I'd make some new year resolutions. First, I'd make 2012 the year Poway gets its act together and charges fair sewer rates. And secondly, I'd make a huge attempt to reform what seems to be a retaliatory bullying habit. It's nasty. It's embarrassing. It benefits nobody except the lawyers. It makes the city look like it is poorly run. In fact, it makes it look like it is run by a crime family, rather than a government that works for its own people.

2012 is going to be a big year of changes. Is it too much to hope that the changes will make Poway a better place to live?

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.

Redevelopment: Going...Going...

Click on the map to enlarge it.

This is a map of Poway's Redevelopment Agency Area.

Most of the property taxes from the blue areas

goes to the redevelopment agency.

Remember Prop 22? It was a proposition on last November's ballot. The official title was the "Local Taxpayer, Public Safety, and Transportation Protection Act of 2010." Unofficially, it was referred to as the measure that would "tell the state to keep their hands off of our local tax money." Prop 22 was sponsored by the League of California Cities, of which Poway is a member. Poway's city manager, Penny Riley, was outspoken in support of the measure.

Prop 22 passed with over 60% voter approval. And why not? According to the official arguments in favor of Prop 22 in the voter guide, Prop 22 would keep the state from swiping money that was needed for for local police, fire and emergency services, libraries, road repairs and public transportation. Nowhere in the arguments for, or the rebuttal to arguments against Prop 22, did the proponents mention that Prop 22 would also prevent the state from taking back redevelopment funds.

Redevelopment is a state program that was set up 60 some years ago to wipe out urban blight and create affordable housing. Here's how it works: A city, like Poway, declares that an area is "blighted". Then they form a redevelopment area comprised of all the blighted properties.

Poway formed their redevelopment area in 1983. They identified 8200 acres within the city that were blighted, 75% of them were undeveloped land. At the time, Poway's redevelopment area was larger than San Diego's. One of the reasons Poway gave for such large swaths of undeveloped land being blighted was that they didn't have enough traffic signals on them.

Today, some of the most expensive real estate in Poway is located in the redevelopment area.

One of the reasons Poway wanted undeveloped land in their agency area is because Poway would get to keep any new property taxes that resulted from an increase of value to the land or from any developments built on that land. Instead of going to schools or to the state, that "tax increment" was and still is diverted to the redevelopment agency. For the fiscal year 2008-2009, Poway Redevelopment Agency got $38.9 million dollars in diverted property tax. There are over 400 redevelopment agencies in the state of California. The amount of property taxes diverted to redevelopment agencies is now 12 % of all the property taxes that are collected in the state.

Redevelopment agencies borrow lots of money to finance their blight-busting projects like car dealerships, Wal-Marts and other shopping centers, hotels and sports stadiums. They use the tax increment money to pay off the bonds and to pay the salaries of the city staff that double as redevelopment staff. The state has been forced to fund the schools because so much of the property tax has been diverted to these redevelopment agencies. Last year, the state just couldn't make ends meet, even with smoke and mirrors, so Arnold "stole" some redevelopment taxes to shore up the state coffers. That pissed off the cities and they retaliated by putting Prop 22 on the ballot.

In addition to approving Prop 22, the voters also elected Jerry Brown last November. The first thing Gov Brown did was make a new budget plan. In a surprise move, Brown announced that he planned to eliminate the 400+ redevelopment agencies and use the billions of dollars that redevelopment has been using (or abusing) to fund essential services, particularly for schools.

If you are a reader of my blog, you might remember that last year I sent a letter to Arnold (and every state legislator) suggesting some changes he might make to redevelopment agencies. I thought my ideas were pretty good, but dissolving the redevelopment agencies was something I never dreamed could happen. Brown's plan is way better than mine.

Brown may have been forced to go that route because Prop 22 doesn't give any wiggle room for wheeling and dealing with redevelopment agencies. The state can't take any redevelopment funds. Period. Just last week, the mayors of several cities got together and proposed a futile plan to try to save their redevelopment agencies. They want the state to sell $1.7 billion in new bonds and then the redevelopment agencies will chip in $200 million and 5 percent of their revenue each year to help pay off the bonds. That's a nonstarter because of the way they slipped redevelopment funds into Prop 22. It would take a public vote to undo it. Now Brown is forced to eliminate redevelopment agencies altogether. Sweet schadenfreude!

Brown's plan to shutter the redevelopment agencies isn't a done deal, but it is getting close to the finish line. The state and assembly budget committees are working on the final measure. Brown's plan for dissolving the redevelopment agencies was posted on the California Department of Finance's website yesterday (Feb 23).

In the meantime, cities have gone on a greedy multi-billion dollar spending spree, trying to beat Brown's March 1st deadline and lock up as much redevelopment cash and assets for their own jurisdictions. Recession, what recession? These guys will build a stadium and new town center in every city if you let them. But Brown is on to them. He plans to give the state a 3-year window to examine any redevelopment agency spending or activities from Jan 1st on. They better have followed all the rules and the proper procedures, dotted every "i" and crossed every "t", if they don't want to see their actions rescinded.

So, what does all this mean for Poway? If redevelopment agencies get axed, there will be big changes for Poway.

In FY 2009, income from regular property tax was $8.7 million v $37 million for redevelopment tax increment. 81% of Poway's property tax income was from redevelopment. Poway won't get that $37 million any more, although a portion of the tax increment (about 20%) will come back to the city's general fund as regular property tax. Ironically, redevelopment money cannot be used for fire, police and regular city services. But the portion of property tax that will come back to the general fund after Brown dissolves the redevelopment agencies can be used for those services.

According to the 2009/2010 Poway Redevelopment Agency Annual Report, the Poway Redevelopment Agency has $176 million in assets and $286 million in liabilities. Note: California cities are required to balance their budgets, but redevelopment agencies don't have to. In fact, they are required to go into debt. Brown's plan is to create a successor agency to the redevelopment agency that will pay off the debt in 3 yrs. I imagine that the successor agency will also sell off property and other assets to pay off the agency's debt.

Redevelopment supports about 9+ positions in the city. Redevelopment also sucks up city employees' time. Expect some staff cutbacks. With the staff freed up from planning shopping malls and moving car dealers around, maybe they can look into those lopsided sewer rates.

Poway redevelopment agency owns a lot of land that the city plans on using for affordable housing and/or commercial ventures, like the town center. On March 1 the city plans on forming a housing authority. After years of saying they want out of the affordable housing business, the city will now attempt to jump in in a very big way. Will it pass the Brown smell test? I don't know. Will the city be able to keep all of the land they bought by transferring it to the housing authority? I don't know.

If the city does form a housing authority, will it have to abide by state law that says affordable housing cannot be located in an area that is already over-saturated with such housing? Or will the housing authority be able to hide behind private developers to avoid that law?

What will happen to the agreement with Toyota? As a contractual agreement that was signed before Jan 1, it will likely be a valid agreement, but who will be the owner of the property that is leased to Toyota as the successor agency disposes of redevelopment property?

What about the Performing Arts Center? Is that still owned by the redevelopment agency? What will happen to agency owned property where there is a joint use?

Is McMillan still getting redevelopment tax increment? What happens with that deal?

Will the sewer fund ever get back all the money that was stolen from it and given to the redevelopment agency?

What will happen to all the bond sellers in Newport Beach without the billions they got from refinancing redevelopment debt?

The answers to these and many more questions are still unknown. Stay tuned in.

Prop C Part 3: Valley School Gets No Fortuitousness

Valley School Portable Classrooms

 Originally, I had only planned to write 2 posts on Prop C.  But  after I saw the Jan 19th pro-Prop C  opinion piece in the SDUT  I knew I was going to have to respond to the comments about Valley School.

Valley Elementary, with 650 students and 100 preschoolers, is a prime example of "before." Built in 1980, it is languishing without more repair money. Garden Road Elementary is a good example of "after," an aging school with 500 students that was fortuitously high on the priority list because it was built in 1961.

snip

At Valley Elementary, Principal Andrew Johnsen's students see not grass but sand bags in front of some rooms. There is no food preparation area so meal service makes the multipurpose room anything but. Fifteen tired modular buildings lack water (try teaching art class without water for cleanup) or modern heating and cooling systems. Third-grade teacher Marissa Ochoa made the county's top 10 list, despite a classroom where even a modest rain sends water streaming onto the shelving. Counselors are free of distractions when they give guidance -- they should be, they are housed in a windowless shed.

First of all, Valley School was  not built in 1980. It was built  in 1962, the same year as Poway High School, and a  year after Garden Rd.  But that didn't help Valley from being placed unfortuitously low on the district's priority list; at least 12 other schools, many less vintage than Valley, got their makeovers first.  

Second, Valley School did have a food preparation area in 1977. I know that because I was "room mother"  of my son's first grade class and I used Valley's ovens to bake cookies after the kids decorated them.  The ovens may have worked,  but the  heating system was already crapping out. Despite Mrs Parke's valiant efforts to warm her classroom with  space heaters, ever watchful that her young students didn't trip over them, 3 of the little ones succumbed to pneumonia that winter. Even back then, PUSD was notorious for deferring maintenance and letting things go to shit!

I am astonished that after passing a $198 million bond only 5 1/2 yrs ago, the district would have the gall to parade such  stunning examples of misappropriation and neglect in front of the media. I am particularly disgusted that the PUSD  school board would entertain the possibility of leasing Brent Wilkes' shiny blue, high tech building in the industrial park while kids were shivering in cold rooms with leaky roofs. How could they possibly choke down  food  at their  breakfast meetings with the superintendent, knowing that,  as they dined on the taxpayer's dime, counselors were meeting with Valley students in windowless sheds? 

My children were fortuitously in and out of Valley School before the mobile classroom era arrived. That whole  phenomenon started in the early 80s after some industry shill got the California legislature to require that all new school construction contain a hefty percentage of relocatable classrooms. Portables soon started popping up at existing school sites, the perfect, made-for-the-developer-solution to overcrowding.  At the time, the  Valley School community was still blissfully unaware of the changes that were on the horizon, changes that would begin when the Poway Redevelopment Agency, the biggest developer to ever ride  into town, was formed in 1983.

Redevelopment is a state program aimed at eliminating blight in urban areas. Poway's redevelopment area is huge- it's bigger than San Diego's.  Most of the land that Poway selected for their redevelopment area wasn't blighted or even urban, it was undeveloped vacant land.  That's because Poway would get to claim all of the property taxes on anything that got built in the redevelopment area. The only catch was that Poway was required to use 20% of that money for affordable housing.  

As you can imagine, other cities tried to get in on the redevelopment cash cow too. By 1990, redevelopment abuse was so out of control, that the  state passed a reform measure, AB1290. One of the stipulations of AB1290 was that redevelopment agencies had to give back some of the property tax they had siphoned off from other taxing entities like school districts and community college districts.  The money would "pass through" the redevelopment agencies and go directly to the school district- unless the school district and the agency had a pre-existing agreement. Before the new law was implemented, Poway  worked out just such an  agreement with PUSD whereby Poway would pay for the Poway Performing Arts Center, some multipurpose buildings and joint use sports fields and PUSD would forego the "pass-through". 

Instead of having a pot of money they could use  to mend Mrs. Ochoa's roof and fix countless other high priority problems that affect the safety and well being of our children, PUSD opted to let Poway Redevelopment Agency build sports fields and a Performing Arts Center.  

That's not the only bad decision PUSD and the Poway Redevelopment Agency colluded on. Every time the Poway Redevelopment Agency wanted to approve an affordable housing project, like Hillside Village or Parkview Terrace, they were required to ask PUSD if the project would have a negative impact on the schools. If PUSD found that there was a negative impact, the Poway Redevelopment Agency would have been required to mitigate that impact. 

Each and every time Poway asked, PUSD responded that there would be no negative impact; they gave Poway the green light to proceed.   Although I (and others) warned the city and PUSD about the impact to Valley School, our voices were ignored.

No school in Poway was more impacted by affordable housing construction than Valley. All of the first family housing projects were clustered near Valley School. As each project was finished, the ratio of Valley 's students who were poor increased. Today, almost half the Valley population receives free or reduced price lunches.  Yet Poway and PUSD worked out a strategy so that they could deny  that the overcrowding was  caused by affordable housing projects. 

Before Hillside was built, Poway hired a consultant, "Southwest Strategies" to try to make affordable housing more palatible to the community. In a Dec 15, 2004 memo,  Deborah Johnson (Poway Redevelopment Director) summarized a joint Poway-PUSD meeting that discussed a pamphlet that would eventually be produced by Southwest Strategies. 

POWAY UNIFIED SCHOOL DISTRICT- Staff met with the superintendent, deputy superintendent and the director of planning for Poway Unified. The group agreed to jointly author and publish a pamphlet with information about local elementary schools and affordable housing developments. The pamphlet will conclude that affordable housing developments do not negatively impact local schools.

In April, 2005,  John Collins (PUSD Deputy Superintendent) responded to Ed Carboneau's CPRA request for information about that meeting.

Please be advised that Poway Unified School District is unaware of the matter to which you are referring.

While we have discussed the proposed affordable housing developments with staff from the City, our only discussion regarding the potential impact on district schools was related to the number of students generated from these various developments.

A second memo (Dec 15, 2004) by Ingrid Alverde, Poway's manager of housing programs also claims that the joint meeting was held and that PUSD had agreed to co-operate on a brochure claiming that affordable housing developments do not negatively impact schools.

The group agreed to collabratively develop an informational flyer/brochure presenting information about the affordable housing developments and the neighboring schools, concluding that affordable housing developments do not negatively impact schools. The piece could be jointly published and shared as information to interested community groups and parents associations.

Poway and PUSD decided to bamboozle us with a little propaganda.  We were supposed to believe that those 15 substandard trailers at Valley were filled with kids who did NOT come from the affordable housing projects.  Ah...right. At this meeting, Poway and PUSD went one step further.   They  settled on a  new "student generation" figure of 0.3 students from each MFA (multiple family apartment). 

Get it? PUSD would allow Poway to figure the impact on the schools was only 0.3 student per MFA. That is less than 1/3 of a student from every 3 or 4 bedroom apartment.  By comparison, in 1992 PUSD had actually counted the number of students living in various apartment complexes. The pupil yield in the Garden Apartments in Los Penasquitos was 0.813 students per unit; in Poway Villas, it was 0.617 students per unit.  The overall average (which also included the Leisure Life and Village Apartment complex in PQ) was 0.505. 

Just like that, the student generation figure dropped from 0.505 students per MFA to 0.3 per MFA. PUSD officials have told me that they do not even have a way to verify if their current number (0.3) is accurate. So, just like that, 15 substandard trailers are now the taxpayers' problem and not the Poway Redevelopment Agency's problem.

I am voting  NO on Prop C.  I care about kids. I want PUSD to start telling the Poway Redevelopment Agency that the voters aren't going to put up with this anymore. If the redevelopment agency wants to build more shopping centers and affordable housing projects, then they are going to have to pay for the impact on our schools. The kids deserve it.