In what has been billed a significant victory for the Jerry Brown administration, the California Supreme Court ruled on Thursday that the state could eliminate redevelopment agencies, thus paving the way for the state to divert money from local redevelopment agencies in an effort to balance the current budget.
“That power,” the court went on, “includes the authority to create entities, such as redevelopment agencies, to carry out the state’s ends and the corollary power to dissolve those same entities when the Legislature deems it necessary and proper. Proposition 22, while it amended the state Constitution to impose new limits on the Legislature’s fiscal powers, neither explicitly nor implicitly rescinded the Legislature’s power to dissolve redevelopment agencies.”
On the other hand, the court ruled that AB 27, “the measure conditioning further redevelopment agency operations on additional payments by an agency’s community sponsors to state funds benefiting schools and special districts” was invalid, as it violated Proposition 22 which “expressly forbids the Legislature from requiring such payments.”
They therefore rejected arguments “that the payments are valid because technically voluntary cannot be reconciled with the fact that the payments are a requirement of continued operation” and ruled AB 27 “invalid in its entirety.”
Much of the reaction focused on the first portion of the ruling that allowed for the elimination of redevelopment.
Governor Jerry Brown in a statement Thursday applauded the ruling stating, “Today’s ruling by the California Supreme Court validates a key component of the state budget and guarantees more than a billion dollars of ongoing funding for schools and public safety.”
Assembly Speaker John Pérez (D-Los Angeles) saw the court’s decision as mixed.
In statement he said, “Today’s action by the Supreme Court is a mixed result. The Supreme Court validated the Legislature’s action to eliminate existing redevelopment agencies, but we are disappointed that they blocked the creation of smaller, more targeted redevelopment agencies that fully funded affordable housing.”
He added: “With Republicans refusing to approve badly needed revenue increases, the Legislature’s action on RDAs became one of many necessary components to balance the $26 billion budget shortfall resulting from the Great Recession.”
“Despite the Court’s action blocking our creation of the smaller RDAs that protected affordable housing funding, we remain committed to finding affordable housing solutions and making smart economic development investments in our local communities,” the Speaker concluded.
Advocates for local government, including the League of California Cities, issued a call to reinstate redevelopment agencies.
“In the wake of today’s ruling by the California Supreme Court upholding the elimination of redevelopment agencies, the California Redevelopment Association (CRA) and League of California Cities (League) vowed to work with state legislators immediately to develop legislation to revive redevelopment in order to protect local communities, job creation and our economy,” began a lengthy statement from the League and the CRA.
“Without immediate legislative action to fix this adverse decision, this ruling is a tremendous blow to local job creation and economic advancement,” said California Redevelopment Association board president Julio Fuentes. “The legislative record is abundantly clear that legislators did not intend to abolish redevelopment.”
Some Democratic legislators like Senator Alex Padilla expressed support for such a measure: “Redevelopment creates jobs and economic activity vital to our state’s economic recovery. It was clearly not my desire, nor the intention of most of my colleagues, to abolish redevelopment when we voted on the state budget last year. I would like to see redevelopment restored so it can continue to be a vital tool to improve local communities and local economies. I look forward to working with my colleagues next year to make that happen.”
Assemblymember Luis Alejo added, “I’ve seen firsthand the benefits of redevelopment in my district. When I voted for the budget last June, I did so with the intent that redevelopment agencies in my district and throughout the state would continue to operate, continue to produce jobs and boost local economies. Today’s ruling essentially kills redevelopment and I plan to start off 2012 by collaborating with my colleagues to restore redevelopment. We need it in California.”
Chris McKenzie, Executive Director of the League of California Cities, said in a statement, “Redevelopment is indispensable to cities to spur economic development, create jobs and improve communities. We know legislators recognize that and we hope they’re willing to work with us to reinstate redevelopment. We want to work as partners with state lawmakers to revive this tool in an accountable manner.”
Assemblymember Mariko Yamada, who represents part of Yolo County and the eastern portion of Solano County, issued her own statement on Thursday, stating, “With today’s court ruling on RDA, we’ve turned the page on redevelopment as we once knew it. The State’s difficult choices under a continuing no-new-revenue environment forced us to prioritize and work to prevent further cuts to education, healthcare and public safety.”
She added, “Let us resume our discussions in the New Year and find ways to support communities that struggle with blight and the need for affordable housing.”
Brief Vanguard Analysis
The Vanguard will have much more on the impact of this decision in the coming days and weeks. However, many are declaring redevelopment dead.
Indeed, the high court in this state gave the state the power to end redevelopment while at the same time striking down the compromise version of it.
The impact of this will have far-reaching consequences. Last spring, the Davis City Council, in an effort to secure existing funds, pumped a huge amount of money into some questionable projects that need further vetting – the parking garage on 3rd and 4th and E and F, and the Hotel Conference Center which will require the relocation of the highly successful Caffe Italia.
There will be questions about the future of the pass-through agreement, which has prevented the county for the last 25 years or so from developing in Davis’ sphere of influence.
And then there is the ultimate question about whether the death of redevelopment will really free up funding for schools.
Early this year, Governor Brown was quoted in the Sacramento Bee saying, “We take from redevelopment and we put $1 billion into schools – that’s a good thing.”
Our schools are hurting and the impact of the cuts to education is really only now being understood. Higher education is feeling it as well, as students have taken to protest, and campus unrest is at levels not seen since the days of the Vietnam War.
And then there are those who will argue that redevelopment does not reduce blight, but instead lines the pocket of wealthy developers.
But the final point that needs to made is that it is entirely possible that this ruling will, in fact, not end redevelopment. After all, the compromise measure is what was approved by state legislators and they may have to go back to the drawing board to find a new compromise. We shall see.
For now, it appears that 2011 is ending the way it began, with questions about the future of redevelopment and what to do about it.
—David M. Greenwald reporting
The full opinion is available @ http://www.courtinfo.ca.gov/opinions/documents/S194861.PDF
[quote]And then there is the ultimate question about whether the death of redevelopment will really free up funding for schools.[/quote]
That is THE question… my guess is NOT…
One area which is going to lose its funding–though perhaps given the way the funds have been spent this is not such a bad thing–is locally funded low-income housing. In Davis–and I would guess by law everywhere in CA–twenty percent of the tax increment in our RDA went to low-income housing. That was nearly $3 million per year.
Because the Court shot down the compromise, Davis will no longer have to pay $3.5 million to the state. That was part of the deal, which is now gone.
As David points out, our RDA is flush with cash. The bonds which created much of that money will be paid back with the tax increment over the next 25 years.
Alas, the bottom line is that the end of the RDA will be a big net negative to the City of Davis. It will shift revenues from cities to the state.
@Rich: this would be a good place to link your article where you did an overview on the RDA impact on city finances. As I tried to look at it, it became difficult to assess the overall distribution of monies to:
— cities in Yolo County
— the county
— the school districts
— the special districts.
My impression is that the thing that holds it together without a loss of revenue to any one of those is that the state backfills the property tax increment revenues to the school districts, that would otherwise be lost to them. So state money is indirectly subsidizing the redevelopment districts.
But I recall your article was much more detailed.
Don, here is a link to the full column ([url]http://www.davisenterprise.com/opinion/opinion-columns/redevelopment-agency-is-good-for-davis/[/url]) I wrote on the topic. And here is a large excerpt which explains the basic financial facts: [quote] With the RDA, Davis keeps $7.58 million of the $14.07 million in property taxes paid within the agency’s boundaries. Without the RDA, Davis keeps just $2.61 million. That’s a difference of $4.97 million, this year.
With the RDA, the city controls 53.849 percent of the property tax paid inside the agency’s boundaries. Without the RDA, the city would retain just 18.585 percent of that money. That’s 2.9 times as much by having our redevelopment agency.
Of the $47.26 million in property taxes paid in Davis outside of our RDA, I asked Howard Newens, the Yolo County auditor-controller and treasurer-tax collector, where this money goes. Newens told me the following:
The Davis Joint Unified School District gets 36.478 percent and the Los Rios Community College District gets 4.526 percent. The city of Davis gets 18.585 percent and Yolo County — broken into parts for its general fund, the library, county roads and the accumulated capital outlay fund — gets 11.817 percent.
Smaller districts taking shares of the property taxes paid in Davis outside of downtown and South Davis are county schools, 3.026 percent; the Davis Cemetery District, 0.288 percent; the Sacramento-Yolo Mosquito and Vector Control District, 0.843 percent; the Yolo County Flood Control District, 0.614 percent; the Solano County Flood Control District, 0.014 percent; and the Yolo County Resources Conservation District, 0.007 percent.[/quote] …. continued below …
[quote] The final 23.804 percent is redirected to the state of California and back to the school districts by way of the Educational Revenue Augmentation Fund. The Legislature created the ERAF in 1992, during a recession, in order to fund the K-14 schools as mandated by 1988’s Proposition 98.
ERAF snatches property tax money that otherwise would go to the county, the city and the special districts. Where there is a redevelopment agency, the ERAF has a lot less money to steal.
Having an RDA in Davis does not shortchange the schools, because the state is required to backfill any of their lost funds. Yolo County and the library system get their full share of money by way of a pass-through agreement with Davis.
The Davis RDA also has pass-through deals with the smaller districts, including the cemetery and flood control districts, which make them whole.[/quote]
All in all, I’d say this is a good thing. Mostly, because of the many RDA projects that were flat-out boondoggles (such as Hanlees), sounded good but were failures (such as most every attempted affordable housing effort) over the years, were total waste of city time and effort (such as ZipCar), were unconscionable (such as millions of pass-through dollars to the county to keep the country from approving undesired development on our borders) or were city officials’ stilly efforts to play SimCity with tax monies (such the current moving of Caffe Italia to the old Tennis Club dump area.
Some Davis RDA money has gone to worthwhile causes. But, way too much has gone to things that wouldn’t pass the reasonableness test if they came through a general fund process. Every time we’ve heard the rationale, “But, it’s RDA money…” we can look back at a poor (or, at least, marginal) decisions from the city council and/or staff.
Plus, anything that can be understood and explained [u]only[/u] by Rich in the whole of northern California is so complicated as to invite misuse and errors. I weep not for the weakening of the RDA program and hope for its demise sooner rather than later.
[i]”All in all, I’d say this is a good thing.”[/i]
Not from the perspective of the City of Davis, though.
[i]”Mostly, because of the many RDA projects that were flat-out boondoggles (such as Hanlees) …”[/i]
FWIW, Hanlees has not yet received one dime. It may never. And if that deal ends up moving forward, it will be good for the City of Davis by increasing the sales tax base from marginal car sales. You might not like it still. But those are the facts.
[i]”… sounded good but were failures (such as most every attempted affordable housing effort) over the years …”[/i]
I generally agree. However, those “failures” only once ended up as money losers for the City–the DACHA fiasco, which I think was unique in many respects, not least of which the way Thompson and Watkins structured the project and then got a pliant council to agree to their deal, which the City and the residents could not live up to. Otherwise, the money poured into low-income projects–even if I believe it was unwisely spent in most cases–is money that Davis would never have had without the RDA and will never have in the future. As such, Davis is clearly worse off to lose that $2.5 million to $3 million every year, which at least was being spent in Davis.
[i]” … were total waste of city time and effort (such as ZipCar) …”[/i]
Zipcar is not RDA.
[i]”… were unconscionable (such as millions of pass-through dollars to the county to keep the country from approving undesired development on our borders) …”[/i]
With the death of the DRDA, the county will be no better and no worse off from a fiscal stand-point. The pass-through made the county whole. The pass-through will end and the county will still be whole.
I realize that Davis tried to use the pass-through as leverage against the county to prevent peripheral development. But it’s not clear that ever really stopped the county from doing anything it wanted to do.
In my view, if Davis does not want the county to impose peripheral development on our borders and the city thinks that is a real threat–I don’t think it is–the people of Davis (in conjunction with the people of the W-cities, Winters, Woodland and West Sac) should push a countywide measure which gives the incorporated cities a veto over any land use zoning changes or urban developments within a mile of their city limits.
[i]”… or were city officials’ silly efforts to play SimCity with tax monies (such the current moving of Caffe Italia to the old Tennis Club dump area.”[/i]
As far as I know, this loan also has not yet been made. I agree with you that this is not a good idea. Here, the City seems to be playing real estate investor more than anything else. I would have voted no on this project. I would have suggested that the owners of Caffe Italia move into one of the many available restaurant spaces in Davis. I fear their new location is a bad one. Yes, it is right by I-80. But it is actually pretty far from the Mace exit and I don’t see most Davis residents, other than those who live within a mile of it, driving out to that location.
All that said, I doubt the City will lose much (or even lose anything) from this project. When Caffe Italia goes bust, the City will own a piece of real estate that will have been improved and will likely sell for as much as the City paid for it plus any amount the City put into it.
All of the wailing about the details of where todays RDA revenue is going or not going due to the recent Court ruling is missing the first question- was creating the Davis RDA in 1978 (or there abbots) a good decision.
Maybe somewhere in the internet sphere or City Hall there is a map of the original RDA map created somewhere around 1978. However, a good description of this map is almost all of south Davis, Olive Drive, downtown and the area adjacent to 2nd Street in the current Mace Ranch subdivision.
All or at least 80% of this defined RDA area was undeveloped, i.e. raw land (the downtown was included so RDA funds could be spent their regardless of blight or no blight). The taxes (city, county, school) , consequently, were low.
However, the RDA process defined this mapped area as blighted (reference Olive Drive?). Again, however, 80% of the RDA was raw or undeveloped land. Very simply, it was not blighted. The Davis RDA was misapplied-it was a bad idea looking to use the RDA concept to create a ‘slush fund’.
After the RDA was created (about 1978), all subsequent development and improvement to properties in the RDA were credited to the RDA, not the City, County or Davis School District. That means the increased property taxes (difference between raw land and improved land) or the infamous ‘tax increment, went to the RDA to be spent on RDA capital improvements. No wonder the County and School District cried foul.
In my mind there should have been no RDA because there was absolutely no blight; instead the tax increment should have gone to the respective government entities. The City of Davis could have allocated the increased tax revenue to Parks, Police or the Fifty Street Road Diet. Various interest groups could have made their pleads/cases for increased budgets. The County would have more revenue for their budgets without fighting with Davis; the same for the District.
Another point. With the bifurcation of the tax increment revenue between City and the RDA, two mind sets were created for the same 5 elected people looking at the same pot of tax revenue. On one had the Council had less money to budget but the RDA had oodles of revenue. The RDA Directors were oblivious to their wealth gain to the detriment of the city, county and school. In other words, the RDA bought flat screen tv’s, water ski boats and vacation condominiums on their huge overtime pay checks while the City faction had their weekly hours reduced. The RDA doesn’t want to give up their tv’s, boats and condominiums. Guess what; the overtime pay is gone. (However, it seems the City has just gone to the loan sharks to borrow in order to sustain the current living standard).
In my mind, Davis had zero blight to eliminate in 1978. Therefore, the redirection of increased future property taxes was wrong. This poor experiment in “redevelopment” is almost exterminated with the recent legislation and court decision.
Do people (Council & RDA) realize the overtime check is gone?
….there not their….
007: [i]”was creating the Davis RDA [b]in 1978[/b] (or there abbots) a good decision?[/i]
Yes, for the City of Davis it was a good decision.
[i]” … there is a map of the original RDA map created somewhere around [b]1978.[/b] … After the RDA was created [b](about 1978)[/b] …”[/i]
The Davis RDA was created in 1987 ([url]http://www.davisenterprise.com/opinion/we-may-need-scale-back-our-wish-list/[/url]), not 1978. And here is a map of the Davis RDA:
[img]http://2.bp.blogspot.com/_-iCrgpX1jNM/TVA9wN3fJoI/AAAAAAAAAc0/4heVMVAXytA/s1600/Davis+RDA+Map.bmp[/img]
[i]”No wonder the County and School District cried foul.”[/i]
The pass-through agreement meant that the county got all of the money it would have received without the RDA. State law made sure the school district got all of its money. As such, neither of the complaints you make above is valid.
[i]” In other words, the RDA bought flat screen tv’s, water ski boats and vacation condominiums on their huge overtime pay checks while the City faction had their weekly hours reduced.”[/i]
Is that supposed to be metaphorical? Otherwise, it is false.
Further, the existence of the RDA never cost the City of Davis as a city any money. It got everything it would have had without the RDA and more.
You seem to not understand that the existence of the RDA gave Davis an addtional $5 million (as of this fiscal year), all of that money coming from two sources: the ERAF (which is effectively the state) and the state. The reason Gov. Brown wanted to get rid of the RDAs up and down California was largely because they transfer money from the state budget to local budgets. It makes it easier for him, especially in tough budgetary times.
[i]State law made sure the school district got all of its money.[/i]
What is the source of the money the state provides to the school district? You can’t take money from one revenue source and give it to another entity without someone losing out or making it whole from another revenue source. So the state taxpayers subsidize the RDA’s.
Rich, thanks for correcting my misconceptions. This raises some other questions. Why, after all this time, hasn’t the Hanlees agreement gone forward. Did the new construction (“redevelopment”) start yet? I thought it was a done deal long ago. Did the city sell bonds for the cash yet? What happens to the borrowed money or lost opportunity if the deal never is consummated?
Does it make sense to keep chasing vehicle sales tax revenues when the sales model is under drastic change (a little like book stores)? What’s happening with all the vacant RV/auto row properties we already have here? What are they generating?
All in all, why is it it in the our state’s interest for one city to pay a company to move from another northern California city? Why is it in anyone’s interest to pay a company to move here if it already plans to and it makes economic sense for them to do it already?
My problem with the “affordable housing” programs isn’t just that DACHA is big trouble and expense for the city, but that I’m still looking waiting for someone to point out ones that work, whether funded by RDA or forced upon developers. I’ve seen a lot of windfalls for early (sometimes questionable) purchasers, but how many have resulted in houses that are affordable today? At what public cost?
I agree with you about finding a political solution to the “don’t build on our border” worry. The county government is as much ours as anyones. What would have happened if Davis had decided to spent the $1-million a year pass-through on something else instead, say, redevelopment?[quote]“Developer funds deposited for environmental mitigation have come from, Mace Ranch II development agreement deposit and Wildhorse transportation and environmental mitigations. They have to be used for environment benefit and transportation.”[/quote]So said Stephen Souza in justifying ZipCar. So, you’re correct, but I don’t want to give up my point just for the sake of accuracy. Special funding mechanisms like RDA and CFD acts (designed to get around Prop. 13 limits?) encourage decision-makers to handle the money more cavalierly than they do with “teal” (general fund) dollars, in my opinion.
I also wonder how Caffe Italia can make it next to the car lots. How many of their very supportive UCD students and their families will make the move with them? This seems to be a critical part of some big scheme that hasn’t been well considered in public during a rush to earmark RDA money. I’d rather our city leadership would work together with UCD on such grand plans rather than seemingly competing.
By “all in all,” I guess I meant “in the big picture….” in my opinion. RDA ended up being just another piece of special interest legislation, supposedly directing tax money to a worthy goal, but “adjusted” over the years by lobbyists to meet other, less worthy objectives.
Maybe I missed something in earlier discussions, Don, but I have the impression that increases on the RDA district taxpayers are the source of RDA bond repayments. (Of course, Rich knows the answer to this.) But, how is everybody made whole everywhere? There must be losers somewhere in this room of horseshit. And, is it possible that the poor people stuck on Olive Drive and other parts of the RDA end up paying for improvements that mainly benefit others (like I-80 overpasses and Mace exit improvement).
Any, who is paying for the unseeable and unsightly water tank painting and fencing?! (Actually, I did see it–or a portion of it–when getting our apple pies for Thanksgiving.)
@ JustSaying: As I’ve said, my interpretation is that the money that would go to the school districts from the property taxes is made up by the state.
It is reasonable to say that RDA’s are a good deal for the cities that have them. Thus I understand why city council members oppose their dissolution.
It is reasonable to say that no other district or entity loses out, although it is worth noting that school districts favored, or did not oppose, the governor’s proposal a year ago.
It is not reasonable to say that they are a good deal for the state or for the taxpayers overall.
[quote]Alas, the bottom line is that the end of the RDA will be a big net negative to the City of Davis. It will shift revenues from cities to the state.[/quote]
Well said!
Rifkin….’Is that supposed to be metaphorical? Otherwise, it is false.’
It’s a metaphor that is apropos. The point I’m trying to make and you seem to be missing is the city diverted the general fund tax dollars to pay for flat screen tv’s and ski boats. Nothing complicated about that.
I have no argument for demolishing decrepit and maybe abandoned infrastructure, selling bonds to finance renewal projects that will generate higher taxes. But you agree our RDA was mostly undeveloped. So after development of the RDA areas, the increased property taxes went to a highly restricted RDA. So were’s the GF $ to maintain the parks, streets/bike paths and pay staff for parks/greenbelts, police and fire staff within the RDA area? It comes from the remaining city which typically didn’t have enough in the first place. Drive around the RDA area and look at all the stuff the city has to maintain. It’s staggering.
You say Davis got all the money it had coming (and then some). I say it’s a zero sum game and we robbed Paul to pay RDA especially when you add up the RDA debt costs and legal counsel costs for our mess ups-like failed housing projects
Here’s another metaphor for you. If GM’s or Ford’s revenue is drastically reduced, plants are shut and layoffs occur. But layoffs won’t occur in the RDA Department. Those personnel costs will be shifted to the general fund.
DON: [i]” So the state taxpayers subsidize the RDA’s.”[/i]
Yes. As I said, the loss of the RDA is bad for Davis as a city. It’s a value judgment as to whether it is good or bad overall.
[quote]So state money is indirectly subsidizing the redevelopment districts.–[b]Don Shor[/b][/quote]Of course the state is subsidizing cities through RDA’s, Don. That is the whole point. As I have written before, Prop. 13 has dramatically eroded the tax base for cities. Fiscally-based land use with overbuild regional freeway malls has also rewarded cities that engage in suburban sprawl and poor city planning at the expense of cities like Davis. Additionally, the state has taken away some of the taxes, such as equipment tax, which allowed cities to make any net new revenue at all from attracting high-tech industry.
The RDA’s ended up helping to bridge the deficit. It was a mechanism by which the State gave back (subsidized) some of the revenue that cities have lost through Prop. 13 and other tax breaks to business.
Our RDA funded much of the major infrastructure that connects South Davis with North Davis. Do you remember how unhappy citizens of South Davis were when they were isolated from the rest of Davis?
Now, we are trying to use it to attract about the only two businesses left that allow us to make any significant net revenue at all — our auto dealerships, without which we will be in far worse shape than we are now, and our hotels, which bring an order of magnitude more tax revenue than any other business.
JS: [i]”This raises some other questions. Why, after all this time, hasn’t the Hanlees agreement gone forward. Did the new construction (“redevelopment”) start yet? I thought it was a done deal long ago.”[/i]
Here is my understanding: Hanlees thought it needed around $2 million to rehab the older car sales lot it bought into a new VW lot and sales and service facility. They had $1 million of that from a combination of bank financing and their own cash; and the other $1 million was to be from the Davis RDA loan. However, when they finally got some general contractors in there to make bids, they were told that the old facility was in much worse shape than they had thought. They were told a new facility could be built for $4 million, but it was not worth it to rehab the old facility. That meant they had to come up with an additional $2 million of debt.
I don’t know what luck they have had with that. My guess is not so much. I also assume that Hanlees is just waiting, because of the poor economy. Once things pick up, car sales will follow. And with that, it will make sense to open the new dealership. If they pour $4 million into the new dealership now, I would guess it is unlikely they will be able to do the volume of sales they need to be profitable.
I also presume that once Hanlees decides to accept a construction bid, they will return to the Davis City Council for re-approval of the terms of their ersthwhile deal.
[i]”Did the city sell bonds for the cash yet? What happens to the borrowed money or lost opportunity if the deal never is consummated?”[/i]
AFAIK, the city never sold bonds for this cash. It was unspent money from the tax increment. All such funds are put in interest-bearing accounts. I am not sure what the percentage interest the city gets on that money. Probably it is not too much.
[i]”Does it make sense to keep chasing vehicle sales tax revenues when the sales model is under drastic change (a little like book stores)?”[/i]
I think it does. First, most people in Davis who buy cars will ultimately buy a car from one of the Davis-based dealers. That generates two forms of sales tax (and some property tax): we get our normal 1%, based on the fact that the dealer is in Davis; and we get the 0.5%, based on the Measure Q sales tax.
Second, although non-Davis residents do not pay the Measure Q tax, Davis benefits when they buy cars in Davis. Roughly half of all vehicle sales in Davis are to non-Davis residents.
Third, even when Davis residents buy a car out of town (or online), they must pay the Measure Q tax. This fact really sidesteps your question. I just thought it makes sense to note it here.
The principal thing to keep in mind with vehicle sales in Davis is that they make up a very large percentage of our total sales tax revenue base, being that we have no Arden Faire type malls and that groceries, which we have in spades, are untaxed.
[i]”What’s happening with all the vacant RV/auto row properties we already have here? What are they generating?”[/i]
The RV lot is open. It only closed for a short time. Obviously, the closed car lots (there are two, AFAIK) are making us no money. But when the economy picks up, one single car lot will (I am told by city staff) generate more in sales tax revenues to the City of Davis in a year than the entire downtown less Davis Ace. That is why we don’t want a children’s gymnastics program to crowd out the potential of a new car sales business.
[i]”Maybe I missed something in earlier discussions, Don, but I have the impression that increases on the RDA district taxpayers are the source of RDA bond repayments. (Of course, Rich knows the answer to this.)”[/i]
JS has this right. But that does not contradict Don’s point, which is that the existence of RDAs takes money from one pot (the state) and moves it to another (the city’s RDA).
It is the incremental property tax which feeds the RDA. But if the RDA does not exist, the state (in the case of Davis) would be taking about $5 million more of this. That number would not be so high but for ERAF, which began in the early 1990s ([url]http://www.californiacityfinance.com/ERAFfacts.pdf[/url]). It has been the method the state uses to rob all special districts (save RDAs) of their property tax funds. So our library districts and vector control districts and so on are far worse off due to ERAF.
When Don points out, correctly, that the RDA is shifting money away from the state and to cities with RDAs, he should also note that ERAF is doing the same thing in reverse. And as far as I know, the ERAF shift is far larger than the RDA shift.
[i]Any, who is paying for the unseeable and unsightly water tank painting and fencing?![/i]
That money, $75,000, comes from the Davis Municipal Arts Fund. The MAF is funded by the City every time we build a major public works project (such as constructing the water tank) or we build a new public park or publicly owned building or we do a major rehab on something like the city’s sewer pipes or we do a major road improvement project or we build the city’s new water works.
The funding formula for the MAF is 1% of the construction project’s budget, though the cost of architecture, engineering and planning is not included. The 1% is supposed to be based mainly on the cost of material input.
So, for example, if the City builds a new $15 million building, but $2 million of that cost was architecture, engineering and planning labor, the MAF would get 1% of the $13 million, or $130,000.
I should note that I am personally petitioning the City Council to redirect every year going forward 1/3rd of the MAF funds to the City’s Historical Fund, which has no money and no regular source of funding. Davis needs to do a historical survey of our properties which are more than 50 years old, but this will cost a good bit of money. We can get matching funds from the feds, if we put up half the money. We can also use some money in our Historical Funds to pay for upkeep on the historical properties the city owns, as a basis for low-interest loans to private owners of historical properties, and we could use some small amount of money for signage and other methods to promote Davis history to our residents and to visitors. (Just for example, we have a handful of signs identifying publicly owned city landmarks in the core area. But we have none for privately owned city landmarks and none for landmarks outside the core area. I would like to have the funds available to at the very least identify these historic assets in our city to residents and visitors.)
[i]And as far as I know, the ERAF shift is far larger than the RDA shift.[/i]
I wasn’t aware of that (assuming it’s true). I learn something new every time you write on this topic, Rich.
Just another part of why it would be so hard to unravel the current system, I guess.
I was under the impression that the special districts were a relatively small part of the RDA funding.
You almost have to make a flow chart to visualize the whole movement of these monies.
[i]”I learn something new every time you write on this topic, Rich. Just another part of why it would be so hard to unravel the current system, I guess.”[/i]
I learned that from information given to me by Howard Newens ([url]http://www.yolocounty.org/index.aspx?page=347[/url]), who is our very competent Auditor-Controller, Treasurer & Tax Collector. Mr. Newens also happens to be a Davis resident.
[img]http://www.yolocounty.org/Modules/ShowImage.aspx?imageid=359[/img] [i]Howard Newens, C.I.A., C.P.A., is the elected county auditor-controller and treasurer-tax collector. He started his career in public accounting and stepped into local government finance in 1979. He joined Yolo County in May 2000, was elected auditor-controller in 2002 and auditor-controller and treasurer-tax collector in 2006. [/i]
Rich: [i]That is why we don’t want a children’s gymnastics program to crowd out the potential of a new car sales business. [/i]
This is just another example of the ‘logic’ that keeps grocery store sites empty for years instead of allowing another use of the space. Davis needs viable, thriving businesses, not empty buildings and lots. We would be far better off with a large variety of strong stores and businesses producing jobs (and perhaps marginally less tax revenue) rather than continue to be dependent on one type of business.
As for Caffe Italia, they have a lease for several more years. If the property owners (and the City) want to redevelop the land now they will have to come to some agreement to terminate the lease early, most likely paying the restaurant to move. In my opinion a far better location for the restaurant is on one of the retail/restaurant pads incorporated into the Target property. The City will make far more money from building out the Target sites then they ever will from remodeling a derelict building in a bad location.
Finally, the relatively poor sales tax revenues from the downtown area is just another in a long list of reasons why this area needs to be redeveloped. Redevelop the downtown and we won’t be so dependent on chasing car sales.
Mr West makes a good point, and one that is off the mark. Car dealerships and restaurants thrive near freeway off-ramps… the point that Caffe Italia might thrive best on one of the Target “pads”… however, that could cost much more to build a new building, as opposed to re-modelling an existing site. The gymnastics site might be better housed at the former DISC site, maintaining a viable site, near the freeway, for a car dealership.
I don’t think the City is the one to build on the pads. It may take quite awhile for those pads to fill. Locating next to a big box store is not an easy sell; the pads near the Dixon WalMart took years. Though I’m sure it would be good for Rominger West if Second Street Crossing was to develop as planned, there certainly isn’t blight there. And the site under discussion for Cafe Italia not only constitutes blight, but is within the RDA area. So I’m sure RDA funds could be used to help Cafe Italia move to Chiles, but not out of the redevelopment district.
I would be curious what you mean, Mark, by “the area needs to be redeveloped” when you are talking about the downtown.
hpierce: [i]The gymnastics site might be better housed at the former DISC site, maintaining a viable site, near the freeway, for a car dealership. [/i]
I agree, the former Disc would be a good location for the gymnastics site, however I doubt that they would be able to afford to take the entire building, so unless the owner wants to divide up the space it isn’t going to happen.
I have no problem with keeping car dealerships in the space near the freeway, as long as there is a dealership able to move in within a reasonable amount of time. Keeping a building empty artificially for years in the hope of a desired tenant, when another viable tenant is available, is just stupid planning.
I wasn’t suggesting that the City pay to move Caffe Italia, or to build them a new building near Target. I was simply saying that I thought that was a better site for the restaurant and therefore they will have a better opportunity to continuing their thriving business. RDA money shouldn’t be used to build at Target, but in my opinion it shouldn’t be used to remodel a poor building, and then move a vibrant business into a location where they will have difficulty surviving. I think that is a bad investment.
Don: [i]Though I’m sure it would be good for Rominger West if Second Street Crossing was to develop as planned, there certainly isn’t blight there.[/i]
There is no doubt that it would help our company, but also Strelitzia, the new Chase Bank, and any other business in the area. It would help the residents in the area by offering more shopping opportunities close to home, and it would help the City as a whole by broadening our tax base and thereby diminishing our dependence on car sales, bars and hotels.
[i]I would be curious what you mean, Mark, by “the area needs to be redeveloped” when you are talking about the downtown.[/i]
Don, I think this is the wrong question. The more important question is how can anyone say that the downtown is [b]appropriately[/b] included in the redevelopment district and at the same time claim that it doesn’t need to be redeveloped?
We don’t need new sidewalks, a rebuilt Fifth street corridor and a parking structure. What we need is a vibrant, live/work/shop region downtown that is both self contained (you can find most anything you need), and a draw to visitors and residents alike. The new sidewalks, better street design and parking would all follow without the overly complicated (and frankly dishonest) funding mechanism.