Redevelopment Agencies are Good for Developers

But divert tax dollars from schools, police, fire

Governor Jerry Brown has announced his intention to abolish redevelopment agencies statewide which divert about $6 billion annually (12% of property taxes statewide) from public services such as schools, police and fire protection. Details will be forthcoming.

The goal of redevelopment law, approved by voters in 1952, was to eliminate blight, promote economic development and provide affordable housing. The way it works is that, when a property is designated as a redevelopment area, a base year property tax is established and from then on tax increments, which normally would have gone to cities, counties and vital public services (school districts taking the biggest hit), are diverted, going instead to payment of long term bonds issued by the agencies to finance projects.

The City of Antioch’s Development Agency (ADA) was formed in June 1974 for the purpose of renovating designated areas within the City limits.

The city’s 2010-11 Operating Budget shows the following:
Estimated balance of ADA funds as of 6/30/11 $ 6,450,094
Projected Revenues $10,917,279
Projected Expenditures $10,642,483
Estimated Balance 6/30/12 $ 6,724,880

The City has four redevelopment project areas, encompassing 2082 acres (11.6% of city incorporated land).

Project Area #1 (1,024 acres) represents the city’s original redevelopment area, including much of the downtown and waterfront area, including the Marina, (Final debt service payment is scheduled to occur in September 2017).

Project Area #2 (130 acres) consists of the Delta Business Park, Costco Project and incentive program to keep auto dealers. (Final debt service payment is scheduled to occur in January 2014).

Project Area #3 is the 245 acre FKP Property (formerly Kerley Property) which lies along the route of the Southern Pacific Railroad from Hillcrest Ave on the west to Route 160 on the east. It is estimated that the property will be sold for development

Project Area #4 ((458 acres) represents all the property fronting the south side of Wilbur Avenue from Cavallo Rd to Highway 160. This is a joint project area with Contra Costa County and includes some unincorporated areas. (Project Area #4.1 is the amended portion of Project Area 4.)

Although established with good intent, RDAs have become a drain on public funds and a boon for developers who build the minimum of affordable housing, choosing instead to construct shopping malls, theatre complexes, hotels, convention centers, championship golf courses and ballparks.

According to a 1998 survey by the Public Policy Institute of California, half of the construction would have occurred anyway through the free market without redevelopment subsidies.

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