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This is a
summary of a chart we were given by CV Finance Department showing 15 years of Redevelopment in the southwest redevelopment area. Almost 60% of all the tax increment
(the increases in property tax from the
day the area became a redevelopment area)
went to schools, the county and low and moderate
affordable housing fund. THE WAY THE MONEY IS DIVIDED UP IS DIFFERENT IN THE SOUTHWEST IS DIFFERENT THAN IN OTHER REDEVELOPMENT AREAS. ONLY 40% GOES TO REDEVELOPMENT AGENCY IN SOUTHWEST. IN REST OF AREAS 60% GOES TO THE AGENCY.
As you can see from this summary the $6,086,017 left after
dividing up the tax increment with the
county and schools was mostly spent on
staff. The only infrastructure expenditures
were $248,891 for Palomar Street widening
and $500,000 for Main Street widening.
They actually ended up owing the city over
2 million dollars.
is the amount of property taxes being paid in the redevelopment area before it became a redevelopment
area this never changes. The increase in
2004-05 is the addition of more land to
the redevelopment area-not an increase in tax revenue. The orange shows the increases caused by redevelopment
activity (taking properties by eminent
domain and building new things taxed at
higher value or normal increases caused by re-evaluation upon sale or upgrade of a property). All of orange went
to redevelopment agency and NOT
to General Fund. It could not be spent by
law on General Fund expenses such as maintenance, fire, police, libraries, etc.
It is important to remember that by state
law 55% of taxes collected outside of redevelopment areas go to schools. It is
important to note that the 64% listed as public improvements and other
redevelopment actual goes mainly to administrative expenses and debt service.
Very little actually goes to public improvements. By law Redevelopment
agencies must incur debt in order to collect tax increment. This debt involves
huge expenses. The 16% going to schools and other public agencies shortchanges
the county, special districts and libraries among others.
This was included in our property tax
bill in 2005. It shows that 8.4% of all property taxes collected that year was
diverted to redevelopment agencies in San Diego County from libraries, special
districts, schools, county and cities. Redevelopment-The Unknown Government
predicts 64% of all property taxes in the state will be diverted to
Redevelopment Agencies by 2040 if this law is not reformed.
This cartoon shows how this diversion
enriches favored developers, bond brokers, attorneys, and consultants at the
expense of police, fire, libraries, and schools.
Another cartoon illustration the
diversion of tax revenues as tax increment. In order to declare an area
blighted a consultant must be hired to write a report as well as an attorney.
The Bond brokers charge large commissions to finance redevelopment bonds (and
refinance them). Chula Vista is still paying on bonds issued in the 70’s for
bayfront property, because they have been refinanced instead of being repaid.
This shows the actual and projected
increase in tax increment funds for the redevelopment agency in Chula Vista.
This pie chart came from a presentation
by Eric Crockett at the SWCVCA meeting in June of 2007. The percents were
calculated and added to the slide. After the Low-Moderate Housing Fund got its
share (a little lower than 20% because of an advance the year before) and the
schools got theirs 34.9% of the money was spent on Administration (salaries
and supplies) and 53% was spent on debt service. This left 12.5% or $1,500,000
for redevelopment activities which included more supplies and loans. The
$400,000 to Goodrich is a payment on a deal reached in 1991 that involved
taking the Ramos property to the north of Goodrich by eminent domain and
Goodrich giving up its south campus to the port. The property to the south was
only cleared in 2007 and the Ramos property to the north still has not been
handed over to Goodrich. Staff thinks this might happen this year or next.
This is how tax increment money is spent
state wide. Our agency spent more for administration and debt service
payments. Note that only 2% state wide goes to housing subsidies while state
law requires 20% off the top go to a low/moderate housing fund. What happens
to the rest of the money?
This graph as well as the previous one
and all the cartoons come from Redevelopment-The Unknown Government They
check state records to get their data. Their projections are based upon the
current trend and could be changed by changes in state law.
As the current lawsuit in national City
shows there is a difference of opinion as to what “blight” is. Essentially it
is based upon a report written by a consultant hired by a redevelopment agency
to prove an area meets the state criteria, which includes things such as below
market rents and low property taxes.
Some of the Otay Valley areas considered
“blighted” are undeveloped land with high habitat value. The same is true for
some of the Bayfront land, which includes the Sweetwater National Wildlife
Refuge and the J Street Marsh among other valuable natural resources. Some of
the land currently zoned agricultural and open space active recreation in our
General Plan by the KOA at the end of Second Avenue is also declared blighted.
Some of the residential areas include well kept older homes. Obviously
“blight” is a matter of opinion and liberally used to advance redevelopment
Another popular “redevelopment use” for
tax increment is business subsidies to favored developers. The best current
example is the Gateway project at 3rd and H. Gaylord will likely exceed this subsidy by millions if
they end up on our bayfront.
This is another slide shown to us by the
director of Redevelopment Eric Crockett. We have added the percentages. Staff
and supplies eat up 39% of the money and 8.6% go to loan payments this year.
This is the money that is supposed to provide housing for our low and moderate
income population. Moderate income people make 120% of the median income in
San Diego County. Low income people make 80% of median income. Very low income
people make 50% or less of median income. This year the median income is $69,400 for a family of
four. $62,450 for a family of three. $55,500 for a family of two and $48,600
for a family of one.
There are dedicated housing units in the
city which rent to people in these income categories. Unfortunately they all
have waiting lists and some of them are still too expensive for people on
fixed incomes or with minimum wage jobs.
This development does not have a sliding
scale for rents. If this is more than a third of your net income you can only
rent here if you have Section 8 to pay the difference. It was partially funded
with state farm workers grant, but they never bothered to find the required
number of agricultural workers, because they did not want to subsidize their
rents as required by the grant? Or just?
The trick here is that the recently
amended General Plan changes the zoning on several blocks of residential
property to industrial. Fortunately Proposition C makes eminent domain illegal
in Chula Vista and our new city manager-David Garcia-says the city intends to
respect the will of the 74% of the voters who approved it.
Where the Palomar Trolley Center now is
used to be a tomato field, house, church and business. There was a trailer
repair business there. The only one in the area. Eminent Domain took these
properties and caused the forced eviction of the previous owners. One wonders
why this important successful small business could not have been incorporated
into the center some how, but this is not how redevelopment has worked in
Chula Vista in the past.
The favoring of large corporate big box
stores over small businesses is unfortunately typical of redevelopment
agencies. As one small businessman said to me, “they speak the same language.”
Greed and profits, the heck with residents and small businessmen???
Erik Crockett objected to my
interpretation of this slide as the areas to which he wished to see
redevelopment expanded. The fact is he has talked about the need to expand the
area of redevelopment. He has expressed the opinion the areas are too small to
be successful. He did participate in the 2004 expansion with the added areas
when he first came to work in Chula Vista. We need to be very alert to keep
our homes out of redevelopment areas. It makes me personally mad and worried
that the southwest project area actually takes a narrow detour to include the
block on which I live. Our block is all single family homes built in the late
60’s. if redevelopment were to expand through the entire project area the city
would loose a great deal of money through the diversion of tax increment
created by the normal buying and selling of homes in residential areas.
Residential requires a lot of services from cities-about 14% more than what
the entire amount of property tax pays for. If all this residential were put
in redevelopment the city would be in even deeper financial difficulty and
have even more trouble providing services-maintenance, fire, police,
libraries. Some of the gray area isn’t even in Chula Vista. When Chula Vista
was studying adding the “added areas” to redevelopment they actually included
some of these areas that are in San Diego. There was enough protest that they
backed off from that.
This shows part of the planned
reorganization. Community Development will no longer exist. Instead a new
department called Redevelopment Housing will exist. With two exceptions all
the staff from Community Development will be moved to new
Redevelopment/Housing Department. This new department concerns me, because the
goals of Housing Department should be different than the goals of
Redevelopment. I am concerned that more of the 20% set aside is going to be
spent on staff and less on housing. I am also concerned that the policy is to
not rehab or build low/moderate income housing outside of redevelopment areas
because redevelopment only gets half credit. The goal of Housing should be to
provide more housing NOT to make Redevelopment look better. The Redevelopment
Agency is required to provide 15% of all housing built as low/moderate
housing. Our inclusionary ordinance only requires 10%. The agency must use its
own funds to make up the difference.