News

Guest opinion: Blight no longer makes right

By Jennifer Bestor

Three weeks ago the California Supreme Court abruptly stopped the redevelopment merry-go-round. While Menlo Park city officials bid unhappy adieu to a subterranean revenue stream that allowed them to address challenges in east Menlo Park, I personally am relieved that one of the tight random twists in the Gordian knot of California public finance has been cut.

For 30 years Menlo Park's redevelopment agency has consumed the lion's share of property tax revenue from Belle Haven and Willow Road -- now over $10 million a year.

Borrowing against that tax stream further leveraged the agency's ability to fund yesterday's blight-reduction initiatives out of tomorrow's tax dollars. Currently, over $63 million of Menlo redevelopment debt is outstanding, with debt-service commitments that will consume over $5 million annually for another 20 years.

Among the expenditures was $2 million for the city's gang and drug-related programs, along with other blight-fighting activities. And $3 million of the tax stream made it through to local agencies -- overwhelmingly to the county and the Menlo Park Fire Protection District, which wisely gave up only half their allotted revenues to redevelopment.

Fewer dollars flowed to our schools -- nominally the largest beneficiaries of local property taxes. Schools had blithely assumed back in 1981 that the state would generously top up any shortfall to their coffers. Needless to say, that backfill quickly emptied the state's purse.

So, while local city governments loudly rue the dissolution of their redevelopment agencies, the county's school districts see a glimmer of hope. For 20 more years, education will not get anything near what it's given up, but, from dissolving the Menlo Park agency alone, Sequoia Union High School District may see another $240,000 a year and Menlo Park City School District another $70,000.

Dissolving South San Francisco's redevelopment agency -- with its $40 million a year in property tax revenue -- should release more than $10 million a year directly into that economically disadvantaged district. And everything that strengthens education elsewhere now directly benefits Menlo Park -- a child who doesn't have to move into our crowded school system for a good education is one fewer to fund out of our fixed pot -- and comes with a parent who does not have to add a long commute to the region's congestion and pollution.

While some local districts like Ravenswood and Redwood City won't benefit as directly (their increased property tax revenue will simply decrease the state's obligation), anything that stabilizes the state's financial situation helps them avoid further cuts and disruptions. Additionally, more local funding coming straight to them, rather than through the weak reed of Sacramento, means less borrowing to deal with the now-annual state payment deferrals.

A significant one-time cash transfer to all underlying local services should also result from distribution of the remaining assets of the agency. In Menlo Park, $17.7 million in cash remains from the last round of borrowing. The new law divides it up based on the underlying tax allocations for district properties.

Unless redevelopment lobbyists claw this back via threatened legislative action, the city of Menlo Park will receive around $1.5 million; Sequoia High School District, $2.2 million; Menlo Park City School District, $750,000; the county, $2 million to $3 million; the fire district, $1.5 million; and so forth.

Are there clouds on the horizon? Of course. One-time windfalls are an invitation to every special interest. I would hope that local school districts fund one or two meaningful initiatives with lasting impact.

Also, the former rob-Peter-to-pay-Paul nature of redevelopment funding for east Menlo Park's special needs shouldn't obscure the importance of addressing them. Our city, acting as our redevelopment agency, has tried hard to do good things for the "blighted" area. This change offers the opportunity to engage all Menlo residents openly in understanding and paying for these local high-impact programs.

Jennifer Bestor writes occasionally about city and school district finances.

Comments

Posted by Jim Knapp, a resident of Menlo Park: other
on Jan 18, 2012 at 9:13 am

Poorly written article. Redevelopment was the states most significant point of political corruption; millions of dollars in NO-BID contracts going to insider fat-cat developers in exchange for campain contributions. Its called campain fund money laundering. Good riddence to Redevelopment.


Posted by Joe, a resident of Menlo Park: other
on Jan 18, 2012 at 12:23 pm

When you call an article poorly written, I wouldn't use "words" like "campain" (2x) or "riddence."


Posted by Harry, a resident of Menlo Park: Belle Haven
on Jan 18, 2012 at 12:27 pm

Since the homeowners who live in blighted areas are paying the tax surcharges that fund redevelopment agencies, it would seem that those residents should have been included in the discussion of how the money is allocated.

In Menlo Park, redevelopment money to code enforcement was cut, while millions were spent on Gateway Apartments along with many BMR homes. We now have an excess of 143 such homes in Belle Haven. Yet, there is no money to keep the lights on for 1 hour per month so the neighborhood association can meet at the community center.

Police substation? Cameras? Nada. Maybe Menlo Park should do the right thing and return that $1.5M to the people from whom those taxes were collected.


Posted by Stu, a resident of Menlo Park: Linfield Oaks
on Jan 18, 2012 at 1:40 pm

It's time for the Menlo Park school district to step up to the plate and absorb the Belle Haven school. This is one of the key steps to improve the economics east of 101 once and for all.


Posted by Not a tax surcharge, a resident of Menlo Park: other
on Jan 18, 2012 at 6:24 pm

Harry, property owners in redev't. areas haven't been paying any property tax "surcharge" to fund redevelopment. Putting properties in a redevelopment area did not change the tax rate; it just redirected any tax growth derived from an increase in property value to redevelopment agencies instead of to the jurisdictions that would have otherwise received that property tax increment.

The redevelopment activities over time may (or may not) have increased the property value and thus increased property tax bills accordingly, but no additional taxes were levied by virtue of a property's inclusion in a redevelopment area.

Nothing in the present dissolution of redevelopment agencies changes the property tax rates either. It's just that now those taxes will flow to the local agencies (city, county, school district, other special districts) that would have received them in the absence of redevelopment agencies.

Refunding money to property owners wouldn't have made any sense at all. You don't get to demand a property tax refund just because you don't like the way the local agency has spent the money.


Posted by Aquamarine , a resident of another community
on Jan 18, 2012 at 11:18 pm

[Post removed. Please discuss the topic, and avoid characterizing other posters.]


If you were a member and logged in you could track comments from this story.

Post a comment

Posting an item on Town Square is simple and requires no registration. Just complete this form and hit "submit" and your topic will appear online. Please be respectful and truthful in your postings so Town Square will continue to be a thoughtful gathering place for sharing community information and opinion. All postings are subject to our TERMS OF USE, and may be deleted if deemed inappropriate by our staff.

We prefer that you use your real name, but you may use any "member" name you wish.

Name: *

Select your neighborhood or school community: * Not sure?

Comment: *

Verification code: *
Enter the verification code exactly as shown, using capital and lowercase letters, in the multi-colored box.

*Required Fields

Touring the Southern California “Ivies:” Pomona and Cal Tech
By John Raftrey and Lori McCormick | 5 comments | 3,127 views

Couples: Parallel Play or Interactive Play?
By Chandrama Anderson | 0 comments | 1,383 views

Just say no
By Jessica T | 6 comments | 1,319 views

Getting High in Menlo Park
By Paul Bendix | 3 comments | 840 views

As They Head Back To School, Arm Them With This
By Erin Glanville | 4 comments | 308 views