It’s been nearly a year since I last tackled this issue, and I had meant to do a lot more between then and now. But it’s complex, complicated stuff and I didn’t want to misrepresent it.
There appears to be a new push in town to try and tie the budget difficulties in Alameda’s Schools to redevelopment projects in Alameda. And the information that’s being used to make the case is just plain wrong.
Redevelopment agencies are funded by the increase in property tax collection based on the amount of property tax collected when the redevelopment zone was created, called the base. The difference is called tax increment. For example if the property tax collection in 1991 were $100,000 and in 2007 it was $500,000, the tax-increment (aka money for the redevelopment agency) would be $400,000.
The agents of misinformation would have you believe that the schools, etc. get none of it. But they would be wrong.
Since 1993 in California, schools and all taxing districts automatically receive taxes collected on the base plus 2% growth annually., redevelopment districts have been required to “pass-through” property sales tax dollars to agencies that would have received the tax increment, had redevelopment not occurred. Two All three of Alameda’s three redevelopment areas fall into this category (the APIP and Catellus Housing areas) and the WECIP as of 2004 when it was merged with the BWIP. However, the BWIP, the largest redevelopment area in Alameda, was formed beforehand, but also negotiated pass-through agreements with the schools, so that the schools receive more money from the tax increment, than they would have without redevelopment (though some of that has to be spent on affordable housing).
The schools (and other agencies) also get a 2% annual increase in tax revenue collection, regardless of the property value increase. Essentially, they get their Prop. 13 increase on the baseline amount.
In addition, the schools are funded by the state based on an ADA formula. If the the district were to see it’s tax receipts reduced due to redevelopment, state law requires that the state fill-in the difference, thereby keeping the funding for schools at the same level. Conversely, if AUSD saw their property tax revenue increase, the State would reduce its contributions to the school district proportionately.
AUSD gets 4.42% of collected property taxes (look at your property bill, it’s the %0.0496 amount listed). In Alameda’s redevelopment areas, AUSD receives:
BWIP: 11.2% of total tax increment
(40% of the affordable housing set-aside and 4% of the non-affordable housing set-aside)
APIP and Catellus/housing: 3.91% of total increment (4.9% of the non-affordable housing set-aside)
All combined: 9.46% of Total Tax increment (3.37% is non-affordable housing)
So a fair person might say, “It’s not fair to count money that has to be spent on affordable housing. That’s not a direct educational goal.” So in the end, in Fiscal Year 2005-06, Alameda’s three main redevelopment areas cost the schools less than $62,500 in direct funding. (remember: the state actually makes up the difference).
This is just about the schools. Funding for the county, etc. is a slightly different story. I’ll try and cover it another day.
UPDATED 4:30pm: updated for clarification and accuracy. All changes are marked.
Thanks for spelling all of this out; it’s certainly complicated enough! So, when you say “the state actually makes up the difference,” does that mean that the schools always receive exactly what they would have received if the redevelopment area hadn’t existed?
If this is the case, then what the redevelopment district does is shift $62,500 in school funding from local to state sources. Is that right?
Michael Kruger’s post is timed 11:00 pm and it’s just past 8 pm. ??
Michael. I am real bad at absorbing this stuff, but my understanding was that of the money AUSD did get from tax increments, $62,500 went to affordable housing, which I don’t understand at all. But essentially, as far as the state is concerned AUSD gets that money so it’s not back filled by the state, thus it is a net loss to the operating budget of AUSD. The state doesn’t get the money unless that’s part of the affordable housing thing of which I am entirely ignorant.
If I actually got that right, I want a gold star. If I’m wrong, I hope it warrants a D+ for the effort.
I have attempted to document what little I have come across regarding redevelopment and AUSD from BOE meetings. There was an agreement reached in 1991 between the city and AUSD when the redevelopment area was established. Not sure how much it clarifies what is explained above.
http://www.mikemcmahon.info/redevelopment.htm
In FY ’06-07, AUSD received ~$200,000 in passthrough that had nothing to do with affordable housing. This was approx. $62,500 less than what they would have received had there been no redevelopment and property values had grown at the same rate.
They also received ~$350,0 in funds for Affordable Housing, which is the money they have been looking at using to build teacher housing.
The total passthrough in FY ’06-07 was ~$550,000.
The Pass through agreement for the BWIP (only the bwip) gives the schools 40% of the redevelopment tax increment for affordable housing and 4% of the non-affordable housing tax increment.
[...] district should be receiving additional funds from the redevelopment tax increment spending (see: Redeveloping Our Schools Take 2) in order to close the budget gap that is currently being [...]
Not that it matters that much, but I am no less confused than last night. To make it worse, Michael’s comment to which I was responding now appears below my response. One thing I am sure of, my post above was written after 8 PM, not am.
Sorry Mark, I fixed the error in the timecode, then entered a comment, which messed up the order. In adjusting all the times for the comments on this post, I inadvertently put yours in as 8am. It’s fixed now.
My bad.