Brown proposes expanding districts sought for Point development

Brown proposes expanding districts sought for Point development

Michele Ellson

Governor Jerry Brown may help City Hall attain one of its key legislative objectives this year: Reclaiming the right to use property taxes to help finance the redevelopment of Alameda Point.

In a budget plan released Thursday, Brown began backtracking off his 2011 elimination of the state’s redevelopment program by offering to expand the use of existing special districts that allow cities to leverage future property taxes for military base reuse.

“This proposal will help ensure the new tools are available for key local priorities such as urban infill, transit‑oriented development, and the provision of affordable housing,” Brown’s budget proposal says, listing other items cities could use the districts for if the proposal is approved by lawmakers.

Specifically, Brown is proposing to expand the use of infrastructure financing districts, a seldom-used tool that has been in place since 1990. Under existing rules, cities and counties can put the districts in place to issue bonds – paid off with future property tax revenues – to fund highway, transit, water, sewer and flood control projects, libraries, parks and child care facilities. The districts can only be put in place after winning the assent of two-thirds of affected voters, and they cannot use taxes that would otherwise go to schools.

Brown is proposing changes that would allow the districts to be set up to fund the new uses with the approval of 55 percent of voters, along with any cities, counties or special districts that would lose property tax funds if a district is put in place.

Brown had nixed California’s redevelopment program to help close the state’s deepening deficits; his budget proposal projected that the elimination of redevelopment freed up more than $4 billion the state will use to help cover its school funding obligations through 2015. But the state has also faced more than 100 lawsuits over lawmakers’ decision to end the program and the state’s handling of the wind-down – lawsuits Brown said could put $3 billion “at risk.”

The redevelopment program also attracted criticism as cities used money diverted from schools, counties and special districts to help build shopping malls and other sales tax generators, instead of focusing the dollars on fighting blight and building affordable housing. But Brown said his proposal would protect money for schools and give the other entities a vote, while limiting how diverted taxes can be used.

The city official overseeing redevelopment efforts at the Point was cautiously optimistic about the proposal Thursday, saying city officials are examining it in further detail.

“In general, we are glad that the governor is opening the door to (expanding use of the districts), especially for military bases, and hope that this will help us redevelop Alameda Point,” Alameda Point Chief Operating Officer Jennifer Ott said.

About a third of Alameda was in a redevelopment area before the program was shut down, including Alameda Point and Alameda Landing, which is still seeing some benefits from the program. City leaders have approved one of two special taxing districts for Alameda Landing that will fund roads, parks, police and other services by charging the development’s property owners extra taxes to fund them.

City leaders eager to redevelop the Point – and to find money to cover the $650 million new roads, sewers and other infrastructure will cost – have been working with legislators on bills to expand the use of the districts to include former military bases. But Ott said it’s not yet clear how much money could be raised by a district set up under the new rules Brown is proposing.

A recent study of the budget impacts of developing Alameda Point showed that it would not cost the city additional money to provide services there – unless a financing district that consumes property taxes is set up. City policy requires Point development to be “fiscally neutral,” so setting up a special district could force the city to levy extra assessments – which Ott said would cut into the funding Alameda could raise for development.

“We will have to understand the economics of every project to determine whether it makes sense to use an (infrastructure financing district),” Ott said. “That said, we will be happy to have another tool in our toolbox.”