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|Governor Brown's Reasons to Eliminate Redevelopment|
And Why the City Opposes
- Governor says his proposal will shift redevelopment funds to core local services: For fiscal year 2011-12, $1.7 billion redevelopment funds will be diverted to the State's general fund for Medi-Cal and trial courts. $210 million leftover will be distributed to schools, cities, and counties according to their proportionate share of the current property tax.
- Redevelopment benefits revenues for local core services: CDC does not take away funds from the school districts or the City; it actually helps increase their revenues. Based on the current base property tax collection of 1% of assessed value, for every dollar collected from property tax the schools receive 47.21%, county and county districts receive 38.74%, the city receives 13.98% and other special districts get .06%. Of CDC's portion of tax increment revenues, through special tax sharing agreements, school districts, counties, and special districts receive an additional 15%, which goes directly back towards schools, counties and special districts. As CDC efforts increase property values and generate sales tax opportunities, schools and cities see a direct increase in their revenues that they wouldn't, had it not been for redevelopment and economic development.
- Local property owners will lose their tax dollars: The State is shifting West Covina resident's local property dollars from local control to the State's control. Currently, the CDC is directly funded by property taxes paid by local property owners, not by the State's General Fund. The proposal will give the State control of local monies, crippling local control of locally generated tax revenues.
- Proposal raids local tax dollars: First, it is important to note that redevelopment is funded from a small portion of the regular property taxes that are paid by local property owners. In November of 2010, California voters approved Prop. 22, which specifically protects local tax dollars from being taken by the State. The proposal is attempting to circumvent the voter initiative by eliminating RDA's, however, the result is the same. West Covina has taken the tough but necessary cuts to balance the City's budget within its own revenue sources; the State of California, however, is raiding local revenue sources to address its budget deficit.
- Governor says his proposal will provide revenues for core local services: Beginning 2012-13, the amounts remaining after payment of pre-existing RDA debts and contractual obligations will be distributed to cities, counties and K-14 schools.
- Elimination of agencies doesn't mean elimination of agencies debt: A tool redevelopment agencies use to finance projects is by selling bonds. As such, RDA's statewide have bond and contractual obligations that will need to be paid regardless if RDA's are eliminated. West Covina CDC's current debt obligations are 80% of the annual operating budget.
- The State won't receive immediate revenues: According to the Budget proposal, RDA debt statewide is expected to take twenty (20) years to retire; meaning the anticipated revenue of eliminating RDA's won't be fully felt by the State General Fund until at least twenty (20) years from July 2011. Elimination of CDC will be detrimental to future revenues for core local services, West Covina will be left without its only mechanism for economic growth at a critical time and will adversely impact the State's ability to recover.
- Redevelopment increases revenues for core local services: With the elimination of blight and the revitalization of underutilized areas, redevelopment is able to transform areas into tax generating uses, and increase the value of neighboring properties. The increase in sales and property taxes directly benefit the City's general fund and the local school districts.
- Governor says his proposal will use housing balances for housing: - Amounts in the RDA's balances reserved for low-moderate income housing would be shifted to local housing authorities.
- Elimination of redevelopment means elimination of housing: The proposed elimination of redevelopment will mean the elimination of affordable housing. Redevelopment agencies are required to allocate 20% of revenues into a housing set-aside fund specifically for providing affordable housing opportunities within the city. Annually, the CDC has approximately $4 million that is deposited into the housing set-aside funds specifically allocated to provide West Covina affordable housing opportunities as well as housing preservation programs.
- Loss of local tax dollars, Loss control of remaining housing funds: West Covina will lose control of our current housing set-aside monies, which can end up paying for projects in other communities and will lose the ability to provide and preserve affordable housing opportunities in our community.
- Governor says his proposal will change redevelopment funding: Provide improved options to fund local economic development with voter approval - "The budget proposes a new financing mechanism for economic development. Specifically, the Budget proposes that the Constitution be amended to provide for 55-percent voter approval for limited tax increases and bond against local revenues for development projects such as are currently done by RDA's.
- Residents already pay for redevelopment through their current property taxes: The property taxes property owners in West Covina already pay go directly towards funding CDC. If the Budget proposal is approved, residents will vote to be charged additional taxes for services already being received.
- Residents will have to pay additional taxes for future projects: What this means for residents is for any future project West Covina residents will have to vote to increase their local taxes to pay for projects. While residents will have the ability to vote for projects, this ultimately means residents will be voting to charge themselves additional taxes to pay for a service that they currently receive as part of their existing property taxes.