Politics & Government

Council Rejects Proposals to Give Redevelopment Money to Local School Districts

The vote was split 3-2.

Giving up redevelopment money to local school districts would be a "chicken's way out" of Gov. Jerry Brown's proposal to wipe out redevelopment agencies across California, City Councilwoman Laura Freese said Tuesday night.

Two other members of the City Council—acting as the board of directors for the Community Redevelopment Agency—agreed, voting 3-2 to not respond to a survey conducted by the California Association of Redevelopment Agencies asking if it would be willing to propose alternatives to Brown's plan.

The alternatives include making payments to local school districts, such as the or South Orange County Community College District, by:

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  • Voluntarily suspending funds set aside for affordable housing (20 percent of the tax revenues that redevelopment agencies collect) and making a onetime contribution of the same amount.
  • Voluntarily contributing up to 10 percent of non-housing revenues and making payments each year for up to 10 years. For each percentage point of revenues paid to schools, an additional year would be added to the life of the redevelopment agency.

"Everyone is trying to scramble to , but I don’t think this is the way," said Freese, who chairs San Juan's redevelopment agency. "I don’t in any way agree with getting rid of redevelopment and saying the schools are more important—they’re all important."

California law requires that the agencies spend 20 percent of their gross tax increment—one source of revenue for the agencies—on affordable-housing projects. The increments are the increase in property taxes within a redevelopment project area that result from the rise in the project area's assessed value that exceed the base year's value. Tax increments are projected to be about $8 million annually in the years to come in San Juan Capistrano.

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While redevelopment agencies generate revenues off the increased tax revenues, other agencies that typically receive a share of property taxes, such as school districts, do not. The redevelopment agency, if not killed off, is scheduled to expire in 2023.

In the past two years, the state has taken $1.1 million from San Juan Capistrano's redevelopment agency to balance its budget. In January, Gov. Brown unveiled his own budget plan, saying he'd like to kill  redevelopment agencies altogether, diverting up to $1.7 billion to state coffers.

Mayor Sam Allevato said Tuesday that he is "not prepared to offer up any more" redevelopment money to the state. that if either of the California Association of Redevelopment Agencies' alternatives were to be realized the state would actually give the money to local school districts.

Larry Kramer and John Taylor cast the dissenting votes; both were in favor of the first option.

"My concern is that if we don’t give [Brown] an alternative or some other option, he’s going to reach in and take all the redevelopment money away, ," Taylor said.

The entire council did come to an agreement Tuesday that it does not want to establish a housing authority that would absorb the redevelopment agency's low-income-housing funds if Brown is successful.

Its members said they didn't want to create more bureaucracy, especially in a small town that may not be equipped to administer a housing authority, like the ones in existence in Anaheim, Garden Grove and Santa Ana.

City Attorney Omar Sandoval proposed the idea, because if the redevelopment agency is eliminated, the $10 million currently set aside for affordable housing would be given to the county to administer.

The redevelopment agency uses its money to provide rental subsidies for 10 households each year. It also makes available $3,000 grants for people who need it in emergencies and up to $3,500 per household for security deposits and first and last months' rent. Recently, it loaned money—final payments for which were received last month—to Habitat for Humanity to build 18 houses for people with very low incomes, according to Cindy Russell, San Juan's chief financial officer. 

More coverage of Tuesday's City Council meeting:

City Plans Amnesty for Unlicensed Businesses


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