No Super Bowl for Fremont
By Matt Artz
Saturday, February 6th, 2010 at 10:19 am in Uncategorized.
UPDATE: Ivy says she said super mall, not Super Bowl. I thought I heard Bowl, but I might just have Super Bowl on the brain. Hard to believe it’s already been almost 20 years since this happened.
I don’t know Fremont School Board Member Ivy Wu, so I couldn’t tell if she was serious when she asked this question at a joint school board-city council meeting about what could be done with the NUMMI plant after it closes in two months:
“Like if you had a Super Bowl or something, that would be totally different from the existing use?” she asked.
Wu and board member Lily Mei both asked about how Fremont Schools would fare under Fremont’s plan to raise a lot more money for redevelopment projects. The Argus ran an op-ed recently saying that the proposal would cost schools millions.
But the school district’s top money man Bill Stephens says that’s not the case, and the district supports the redevelopment proposal.
I’m still trying to figure out how it all works.
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February 6th, 2010 at 12:21 pm
I believe I said super mall, not Super Bowl.
February 6th, 2010 at 3:46 pm
Mmmm….I wonder how many bowling lanes would fit in the main plant. Then it really would be the Super Bowl. Oh wait, the NFL owns that name.
February 6th, 2010 at 3:49 pm
Since schools are not dependent on property taxes any more, redevelopment has little impact on schools, primarily on bonded indebtedness. The redevelopment process permits the agency to adjust the tax increment take for redevelopment to permit a pass through to minimize or eliminate the impact on schools.
Before prop 13, schools were funded from property taxes as the primary means of funding of all local government. Because of 13, and because such a disparity between various districts, the state took the property taxes formerly going to schools and disbursed school funds on an average daily attendance basis. Therefore, tax increment for redevelopment doesn’t impact schools.
That is a pretty simplified explanation as I understand the process.
February 6th, 2010 at 4:30 pm
Hi, Matt, please help to get more information about how this redevelopment fund limit change might help/hurt the city/schools. Thanks.
“My Word: Setting aside Fremont redevelopment money hurts city, schools”: http://www.insidebayarea.com/argus/localnews/ci_14223501
“Redevelopment Agency”: http://community.fremontcitizensnetwork.org/forum/topics/redevelopment-agency
“Redevelopment: The unknown government”: http://www.coalitionforredevelopmentreform.org/references/morrreport.php
February 6th, 2010 at 10:53 pm
“Hi, Matt, please help to get more information about how this redevelopment fund limit change might help/hurt ……”
Wishful thinking
February 7th, 2010 at 8:10 am
So, who’s right? Gus and Charlotte Allen (from Bryan H’s link) seem to contradict each other.
February 7th, 2010 at 2:26 pm
Gus used to be right but he isn’t any longer. In the past, when the economy was booming, the state of California could afford to backfill the money schools lost to redevelopment. But the state’s General Fund, drained by the recession and by the approximately $2.5 Billion dollars lost every year school budgets to redevelopment statewide that it must backfill, can no longer provide the Average Daily Attendance support Gus and our city officials are counting on. In the past two years the state has cut over $13M from FUSD’s Average Daily Attendance (backfill) funding, and more cuts are coming this year. City officials continue to believe that the good old days are with us still, and that the state of California can continue to make up school budget shortfalls created by the diversion of property tax dollars to redevelopment. But times have changed, and counting on a nearly bankrupt state general fund to make up school budget shortfalls for the next 32 years (the time span of the new redevelopment amendment) is the kind of financial planning that created our nation’s current unhappy fiscal situation.
February 7th, 2010 at 2:29 pm
Oops, I meant to say “But the state’s General Fund, drained by the recession and by the approximately $2.5B dollars lost every year from school budgets to redevelopment statewide that it must backfill, can no longer provide the ADA support Gus and our city officials are counting on.”
February 7th, 2010 at 2:30 pm
“This is, in fact, the sports industry’s dirty little secret: New stadiums don’t make money. While teams are quick to paint new buildings as cash cows, in the vast majority of cases, the new revenues from a stadium or arena simply aren’t enough to pay for all of the land and construction costs without subsidies. Teams don’t want new stadiums because they make money; they want new stadiums because of the public subsidies that come with them.”
http://www.goodjobsny.org/demause-testimony-corrected.pdf
February 7th, 2010 at 2:34 pm
Interesting to note that no one, including Gus, is arguing about the $7 Million dollars annually that the new redevelopment agreement will cost Fremont’s General Fund. When the City Council throws up their hands and says that there’s nothing they can do about the terrible condition of Fremont’s roads, they’re not exactly telling the truth. They could refuse to raise the cap on the Redevelopment Area. You can do a lot of road repair for $7 Million a year.
February 7th, 2010 at 5:05 pm
I love the “Gus used to be right” proving that at one time inm my life, I was, in fact, right.
Though, on this one, I am right. Schools are no longer recipients of property tax dollars after prop 13. All property tax receipts beyond that utilized by cities, counties, and other agencies, accrue to the state. And, then, the state subvenes funds from their annual general fund budget to school districts across the state on an ADA formula. Districts in redevelopment areas get the same (with some weird exceptions not related to rd) as districts without rd.
Now, the state is short of funds across the board from all sources and is spending too much across the board, so one of the things cut is ADA. Does this relate to the loss of property tax increment due to rd? To an extent, but not directly related to Fremont’s rd. If we took no tax increment and the state took the amount they might be entitled to under the formula, that money would be put in the pool of money an allocated across the entire state. It would be a minor blip in FUSD funding.
Now, on to the philosophy of redevelopment. The term blight is used as the starting point for redevelopment. There is a very legal definition of blight in the state law, but it is based on land not being used up to its potential because of run down buildings, disjointed ownerships, contaminated land, access problems, etc. Once you demonstrate the blight and establish a redevelopment district, you can cure the blight using bonds guaranteed by the increase in taxes paid because you improved the property, the tax increment which no longer goes to the various taxing agencies including the state. So no one actually loses tax money, they just don’t get the new money until the cost of the bonds is paid off. But, if the property hadn’t been upgraded, there wouldn’t have been any new money at all. It is an investment in the future.
RD works well to improve blight. Fremont had four RD areas, later combined into one. Irvington focused on 5 corners, where the current shopping center with Safeway was a ramshackle assortment of buildings including an adult book store, Mac’s Garage, Doc Porter’s vet hospital, and a karate studio which actually spanned the flood control channel. Everything you see there now, including the park, street improvements, the shopping center (where we consolidated the ownership and then sold the land back to the owners to create the center) and now the RR overcrossing were the fruits of RD.
Niles was created at the same time, without the ability to generate as much tax increment as Irvington. there, we focused on upgrading what was there with streetscape improvements, facade improvements to the buildings, and the plaza. There is more, but I can’t recall all of it, but Niles is a success.
The third rd area in Fremont is the industrial area west of the Nimitz. It was blighted because there was limited access across the freeway, with two lane bridges at Stevenson, Durham (now Auto Mall), Fremont Blvd., Mission, and Dixon Landing. We established RD there and a Bridge Benefit Area where each property was assessed a fee to contribute to the overcrossings. The affect of RD on that area is dramatic. In 1983, when we started, the assessed value of the property was in the area of $25 million. 20 years later, the assessed value was greater than $2 billion.
Based on this success, we then established the Centerville RD area, which had not been done before because of low tax increment potential. At that time, we combined all four RD areas into one, allowing the huge increment from the industrial area to be used in all four districts. Centerville continues to be problemattical. IMHO, this is the only area where it became political. In the other four, things were pretty cut and dried, the community was together, and the goals were clear. Centerville has been a problem from the start.
Are there abuses in RD? Damn right. Milpitas, right next door, has their whole city in a RD district. Other cities throughout the state have done the same. Oakland has a never ending RD in their downtown, with the legislature periodically extending the life of their RD agency. But, they continue to build public buildings, federal, state, University of California, etc. which don’t pay any taxes at all, let along tax increment to pay for the improvements.
Last word. The only way you can collect tax increment from RD is to pay off indedebtedness. If we did no more rd projects in Fremont, no money would accrue to the taxing agencies until the bonds were paid off. And, necessary or desired improvements like the Irvington BART station, a final resolution to the Centerville RD project, any plans for a 680-880 connector, and more would just go on the shelf until some other source of funds become available, if ever.
Redevelopment is a useful tool for addressing blight. It can be abused, but I don’t believe Fremont has abused it. The results of the effort on redevelopment are visible and telling. And no one has lost any money from redevelopment, they just haven’t yet begun to reap the incremental benefit of the improvements, which will come when the bonds are paid off.
February 8th, 2010 at 6:35 am
Obviously Gus, you had no interest in the Super Bowl. Or were you multi-tasking on a laptop in front of a big screen? Couldn’t have been a text message from Starbucks.
February 8th, 2010 at 7:53 am
Gus,
stop Freied dumb and bob waslewser from moving the a’ss to Fremont.
February 8th, 2010 at 8:40 am
There is a “fake” Skumar posting here. By the sound of the posts it sounds like FremontAs. As the real Skumar my next post will solve the following word jumble “iceclymlnaoo”
February 9th, 2010 at 10:23 am
As I understand it, Mr. Stephens from FUSD bases his contention that raising the redevelopment cap would not cost the schools millions upon the assumption that the state will be able and willing to continue to back-fill the ADA minimum per-student requirement that the schools require to stay in operation. This is a very optimistic view, given the current state of California’s finances.
Prudent people plan for the worst case scenario and are pleasantly surprised if things go better than expected. Eternal optimists expect that conditions will stay the same or get better. Which way do you think school financing and the state budget are headed?
February 9th, 2010 at 12:29 pm
Niles – - –
Isn’t it more likely that Stephens is considering the possibility for some kind of economic “deal” which offsets this prospective loss and to be included in an eventual negotiation with the A’s ? I’m betting this diversion of dollars issue – if it stands up to scrutiny – could be offset with a nice little check from Lou and the A’s to Fremont Schools . . . .
Unless someones got a good reason to think otherwise this issue (tax dollars diverted from our schools)feels like a straw man that burns pretty readily once we get down to brass tacks of negotations – if they ever occur.
In the final analysis – this will be an opportunity for FUSD to negotiate a little coin in exchange for what I speculate is an eventual nod of support.
I wonder if there’s anything we can “negotiate” on behalf of students and their families who will have a need to traverse the ensuing log jam of vehicular traffic on game days ?
February 13th, 2010 at 7:50 am
Matt Artz -
Todays’ coverage re Redevelopment future was (from everything I’ve come to understand on this matter) a balanced and concise explanation of an otherwise complicated and contentious issue.
Good work !
Thank you.
February 13th, 2010 at 3:46 pm
Matt’s article seems to overlook two facts that we’re currently dealing with:
What if property values don’t go up?, and
What if property tax losses can’t be back-filled by the State?
Some years are boom and some are bust – we’re currently in a series of busts.
In addition, are the residents aware that the decisions of the Redevelopment Agency (the City Council wearing different hats) can be me made unilaterally and without restriction? The Redevelopment Agency can grant loans, issue bonds and create a debt burden against the city without any voter approval whatsoever. Do you trust them that much? With $1.5 BILLION dollars?
Also, were you aware that 25% of Mr. Diaz’ salary is paid by the Redevelopment Fund. Can you say “conflict of interest”?
February 13th, 2010 at 4:51 pm
RE #17, Box is right. Matt did a good job of dealing with a very complicated issue. I have served with councilmembers (nameless, I am sworn to secrecy) who never got it. A good test of a candidate is to ask them to explain tax increment financing is explainable terms in 10 minutes.
RE #18, Lou asks some good questions. A couple of answers.
First off, the idea of redevelopment is to invest in an area so that the property values in that area increase. The increase (tax increment) go to pay off the costs of the improvements. In general, if we didn’t make the investment in the first place, there would be no new taxes and the blighted area would remain blighted.
Now to the questions – What if the property taxes don’t go up? I don’t know what happens if there is no tax increment because I haven’t seen where that has happened. I do know that the city general fund is not on the hook for the bond repayments.
What if the tax losses can’t be back-filled by the state? That is a much bigger problem than a local problem. There are many redevelopment agencies in the state’s 480 cities, so inability to backfill for education would be the result of a major state problem, beyond what they have now by a long way.
Face it, even if all rd agencies quit spending today, the increment would still be required to pay off bonds for a long time. The reality is that, without the ability to convert blight to useful, economicly viable property, there is no tax increment to worry about. It is an investment in the future.
So far, our history of redevelopment is good, with the exception of the Centerville project. There is a plan, which has had public input, and a program in the Capital Improvement Plan, which also has had public input. There is an annual budget for rd, which has public hearings, and each project is approved in public. It is pretty transparent, so long as you pay attention. Jefferson said, “The price of democracy is eternal vigilance.”
As to Diaz’s salary, I think it is a legal way to free up money for the general fund. If he didn’t get part of his pay from redevelopment, he wouldn’t get any less and it would all be charged against the general fund, where we need every penny. In Oakland, the councilmembers used to make $60K a year, with half coming from the general fund and half from the redevelopment agency. They probably make more now, but I’m sure the same cost sharing is in effect.
February 13th, 2010 at 4:53 pm
I thought Matt presented your second point pretty clearly, Lou – specifically when he quotes Charlotte Allen as saying “..with the state bleeding cash, it wont be able to continue backfilling money for schools.”
February 14th, 2010 at 8:04 am
Matt – off topic idea – but I know that a while ago you were asking about input re the kinds of coverage readers would like to see.
Your friend Daniel Borenstein’s been doing some really good (focussed and sustained) work on the whole pension issue. The spiking techniques he so clearly describes are not limited to Contra Costa. . . . I speculate the lethargy he is encountering by city management towards the mitigation of these kinds of practices is equally as widespread.
How about contacting your co-hort and getting a little direction, advice, help on how you could tear into this same topic in the tri-city area ?
February 14th, 2010 at 8:25 am
Matt, I second what Bbox has requested. In these hard times the pension issue has the potential to explode!
February 14th, 2010 at 9:23 am
fair request