Posted by Interested, a member of the Menlo-Atherton High School community, on Mar 19, 2011 at 4:15 pm
Redevelopment Authorities combine all the worst features of government intervention. They take taxpayer money, seize property by eminent domain, and support projects and developers with political "juice."
Inevitably, these activities punish the poor (whose "blighted" neighborhoods are destroyed, and favor the rich (who develop and own the new properties).
Posted by Paul Collacchi, a resident of another community, on Mar 20, 2011 at 9:45 am
It's not clear that Jennifer has really made her case. It may be there, but she hasn't made it. Here are some facts that need to be negotiated and then Ms. Bestor must do the research and make the actual calculations.
-Menlo Park, the city, only gets $.12 on every property tax dollar paid, the rest goes to a variety of public entities, School Districts, and The County, which gets the lion's share.
-Property tax valuations are severely limited by Prop 13, particular commercial properties which rarely turn over, or whose owners can use partnership loopholes to transfer ownership without increasing tax bases.
-RDA's allow cities to claim most of every "incremental" tax dollar paid, but the basis is still limited by Prop 13 (or is it?). If so, then school districts stand to only lose maximally .88 of 1% per year, and really that's not true either, because the County gets the biggest chunk of the remaining $.88 not allocated to the city.
-School districts can and do assess parcel taxes independently, but must convince voters to support those taxes. Shouldn't it be the case that what schools could not obtain through property taxes they could obtain through parcel taxes, and, were there higher property taxes, there would also be LOWER parcel taxes. (My property taxes in Menlo Park have increased considerably more than the max allowed by Prop 13 because of School District parcel tax increases.) Arguably, losing "automatic" property tax increases and forcing schools to obtain voter approval through parcel taxes is slightly more efficient, anway, but Ms. Bestor has not made the case that Menlo Park school districts failed to recoup lost property tax revenues in the form of parcel tax revenues.
-Many RDA properties would otherwise pay taxes to "RWC" school districts not Menlo Park school distrcits, that's part of what the Menlo Gateway debate was all about. Yes, these districts are schools for sure, but it's not clear that Menlo Park school districts are losing out to the RDA, as the editorial implies.
-Yes, the system is messed up, but not because of RDA's per se. It's well known, and even Howard Jarvis has said so, that the (unintended) commercial property benefits and loopholes are a negative consequence of Prop 13 that are inefficient and unintended.
Count me among those who see many otherwise unusual behaviors by public entities and players (including my own chronic resistance to non-sales tax producing office buildings) that are a direct consequence of Prop 13.
Prop 13 is the local equivalent of Medicare. It's the elephant in the living room of fiscal decision-making that no-one wants to deal with. Fix prop 13, and many bizarre city behaviors will eventually disappear. Until then, non-property owners are subsidizing city services that go to property-related costs, and residential property owners are subsidizing services for commercial property owners.
Posted by Jennifer Bestor, a resident of the Menlo Park: Allied Arts/Stanford Park neighborhood, on Mar 20, 2011 at 12:07 pm Jennifer Bestor is a member (registered user) of Almanac Online
Paul, thanks for your thoughtful questions.
First of all, I agree with you completely that Prop 13 caused unusual behaviors by local and state governments, along with a series of subsidies (e.g., residential to commercial) that make no sense. A thoughtful revision of the state’s tax structure that protects older homeowners without creating a wildly uneven playing field for businesses and young families would curb lots of bizarre tax-driven behavior.
Second, please look at the diagram attached to the article. A picture is supposed to be worth a thousand words – but it’s worthless if no one looks at it! You will see the exact proportions of tax that would go to each entity (including the City) if the RDA did not exist, based on the specific TRA (tax-rate area) allocations for each affected area applied to the parcels in that TRA. Included are only the twenty-nine TRAs for the RDA, namely 08-003, -007, -009, … -108. Each TRA allocates a slightly different percentage to the City, around 10% in the RDA area. It is lower than the Menlo Park average you cite because an unusually high percentage (32%+) is allocated to the elementary school district for these TRAs.
Third, yes, the assessment basis within the RDA is limited by the same Prop 13 rules as elsewhere. This contributes to the difficulty in evaluating whether the RDA, in fact, has added extra value. Rapid turnover in a failing neighborhood can easily created higher total assessed value today than in an improving neighborhood where owners choose to hang onto property longer.
As an aside to ‘Interested,’ the core TRA for Belle Haven is 08-092, which shows somewhat higher appreciation than the rest of residential Menlo – which would make it appear that the $175M investment is improving the area – however, the percentage of homeowner-occupied single-family residences has dropped from 64% to 49% since 1985. This drop is seen throughout California, but is proportionally twice what is seen in Menlo Park as a whole.
Fourth, Paul, yes, school districts can obtain via parcel taxes what they lose in property tax. But that is what started me down this analytical path. We have (as you note) large parcel taxes here in Menlo Park. And we pay high state taxes, of which something like 40% goes to “education.” And, for those of us who didn’t own our current homes 25+ years ago, we pay relatively high property taxes, of which (nominally) 17% goes to the schools (in my TRA – 08-001 – where your old house is, it’s 31%). We also contribute heavily to the school PTOs and the Educational Foundation. We pay and pay and pay for our schools – but still can’t seem to stick our local noses above the national average!
Why? That was what started me, a few years ago, analyzing commercial vs. residential property shifts. Then, when Brown was elected, he went after RDAs. ?!! If anyone understands the post-Prop 13 revenue landscape, it has to be Jerry Brown. So I looked at ours. And this is what I found.
Furthermore, while my chart shows the Menlo RDA effects on all the underlying districts (Redwood City, Ravenswood, Sequoia and MPCSD), what you won’t see are the effects from all the other RDAs on them – Sequoia, for example, has six others in their district. Ravenswood has three. Redwood City two. I would love to include the full data for each, but am still waiting to hear from the RDA authorities on their pass-backs. (The staff in Menlo Park has been very responsive.)
I hope I am making some progress convincing you, Paul, that RDAs – conceived in the tax environment of 1981 – are having a direct negative effect thirty years later on our school children. Worse yet, they are contributing to state spending that is uncontrollable without punishing even more school children.
Posted by Paul Collacchi, a resident of another community, on Mar 25, 2011 at 11:25 am
You don't have to do any work to convince me its time to close down the RDA. I helped oversee it for eight years and it became clear then that although the RDA can generate additional monies for improving the infrastructure of a sub-community, which *is* important, the RDA is really limited in its ability to address the soul of the sub-community.
Unfortunately, saying we should terminate the RDA and actually terminating it are difficult, in part because, I think the RDA has issued bonds whose security ratings and payment is dependent on the tax increment structure now in place.
But here's your deeper issues as I read it: "We pay and pay and pay for our schools – but still can’t seem to stick our local noses above the national average!"
In my view, getting "bang for each buck" is really a completely different issue than "recapturing every last buck".
You can count me as someone who supports shutting down the RDA (over time if necessary), and no, not if it suggests defaulting on or reneging on outstanding liabilities, but I think the City should create an exit strategy and execute on it, even if it takes 30 years (the lifetime of the existing) bonds.
I am not into school policy and never have been. So your deeper question of how to get schools to perform is way out my comfort zone, but I'm sure I personally would not hold out the hope that recapturing every last lost school revenue from the RDA would impact the ability of a school system to deliver efficiently on those revenues. Yes, it might given them more resources on which to deliver inefficiently, but ... that is not really the issue.
Run for office. I did. Local office is still an office in which individuals can get elected solely on constituent funding without resource to special interest funding. You can make an impact, at least for the time in which you are in office.