Opinion

Redevelopment vs. Schools: The Guv’s Killer Argument

 

California’s new governor shocked many around the state when he laid out his proposal to eviscerate redevelopment agencies and prevent cities from starting new projects with them.

That brought out the fire in San Diego City Councilman Kevin Faulconer.

“It’s not San Diego’s job to bail out the state, which should tackle its own spending and runaway pension costs,” Faulconer wrote in a statement.

That’s some good, red-meat localism. It’s enough to make you want to secede. If only we could get Sacramento’s water…

Unfortunately for Faulconer — and all of the boosters seething at the governor — the governor has a potentially much more powerful way to frame this.

He is going right for our hearts: Are Faulconer and others ready to pit their projects against education?

The governor is.

Here’s how the Sacramento Bee quoted him talking about his proposal:

“We take from redevelopment and we put $1 billion into schools — that’s a good thing,” Brown said at a Sacramento breakfast celebrating Dr. Martin Luther King Jr. “We’ve got to make sure whatever we do, we give a chance to those who are coming along in the next generation. And that is a civil rights issue.”

Does that mean Faulconer opposes civil rights?

Eek! Call the Justice Department.

No, Faulconer and others will argue that education versus redevelopment is a false choice.

But is it? Doesn’t look like it.

Property owners pay property taxes. Those taxes all flow to the county, which divvies up the money to local agencies according to a formula the state provides. Remember, the money stays local. Yes, all of it.

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Local schools receive most of it — followed by the county, local cities, libraries and special districts.

Redevelopment is a (supposedly) temporary change to this formula. Local officials can declare an area blighted and secure it as a redevelopment zone. At that point, officials measure property value. From then on, any increase in property values — and the resulting increase in property taxes collected — can be kept in the neighborhood and used to subsidize construction projects.

The idea is that construction and improvement wouldn’t have occurred in the blighted neighborhood without this investment. That development creates a better neighborhood and higher property values and on and on and on. At some point, it is supposed to end.

There are a few problems with this. One is that sometimes property values just go up on their own because of the market. The resulting increase in property taxes just stays in the redevelopment area.

But if you own property outside of that redevelopment area, and your property values rise, your taxes go to fund the schools, cities and county that depend on it. And as those governments grow, they depend on property owners outside of redevelopment areas. They all get less than they would have but we all worry most about schools.

This is where the state comes in. Vladimir Kogan, our one-time correspondent turned academic, gave me a bit of a history lesson on how the state decided to oversee this process five decades ago when it began.

The state knew that education officials would not let a redevelopment agency abuse its powers. If officials abused the redevelopment process or it were unnecessary, education officials could sue to protect their cut of the property taxes.

So there were checks and balances.

“It was a brilliant idea. They said, ‘Instead of providing direct oversight, we’ll create fire alarms because if the other local governments see this being abused, they’ll file a lawsuit to stop it,’” Kogan said.

But then came Prop. 13. It lowered and capped property taxes. To appease people concerned about schools, it gave control of the formula to the state and the state promised to backfill schools for any property taxes that education lost to redevelopment.

With that, redevelopment lost its check and balance. Schools no longer had an incentive to watch redevelopment like a hawk.

That is, until now.

The governor would like to get those who care about schools to care about eliminating redevelopment agencies. Cities could keep paying off redevelopment debts in the same way they have, but no more new ones would be allowed.

This would send property taxes to the schools. With the schools getting their fair share of those funds, the state would be relieved of the duty to backfill them. However, the state, through Prop. 98, is still required to give a set portion of its budget to schools.

That would go on top.

Here’s how the nonpartisan Legislative Analyst’s Office described it:

The additional K-14 district property taxes would augment their existing state funding (not offset state education spending) and would be distributed to districts throughout the county based on enrollment.

We think this makes sense, as the state’s costs associated with redevelopment have grown markedly over the years even though there is no reliable evidence that the program improves overall economic performance in the state.

And that’s where the governor got his “eliminate redevelopment and send $1 billion to schools” argument.

It’s a pretty good one.

Kogan says teachers, parents and students should not open the champagne yet. The struggling state could still suspend Prop. 98 and underfund schools. But the funding would still be better than if that money weren’t available.

Local cities can argue, until they’re blue in the face, that the state should clean up its house and become more efficient before cutting out redevelopment. Projects like a new football stadium, new Convention Center and the myriad other dreams for downtown San Diego and other parts of the city are too important.

That is Faulconer’s point.

But Brown has now illustrated better than ever before that the money for these dreams comes from education more than anything. The state will continue to plow money into education but it’s time for downtown and other redevelopment areas to do their part.

And, in so many words, he’s telling San Diego leaders that if these construction projects are still so incredibly vital for a region’s economy, and they won’t happen without government money, then we should raise taxes to build them.

What Faulconer’s basically saying is that taxpayers would never vote to do that.

You can contact me directly at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it’s a blast!): twitter.com/vosdscott.

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Scott Lewis

Scott Lewis

I'm Scott Lewis, the CEO of Voice of San Diego. Please contact me if you'd like at scott.lewis@voiceofsandiego.org or 619.325.0527 and follow me on Twitter (it's a blast!): @vosdscott.

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20 comments
shawn fox
shawn fox subscriber

I'm not sure which part was worse, the retroactive pension benefit increases or the salary spiking issue which resulted from SB2465, or the fact that these bills were passed with bipartisan support. Where were the so called fiscal conservatives back then? The problem with fiscal conservatives in the republican party is that when the economy is good they could care less about spending. They helped us into this mess just as much as any democrat.

shawn1874
shawn1874

I'm not sure which part was worse, the retroactive pension benefit increases or the salary spiking issue which resulted from SB2465, or the fact that these bills were passed with bipartisan support. Where were the so called fiscal conservatives back then? The problem with fiscal conservatives in the republican party is that when the economy is good they could care less about spending. They helped us into this mess just as much as any democrat.

Bey-Ling Sha
Bey-Ling Sha subscriber

Thank you, Scott, for this helpful explanation!

Bey-Ling
Bey-Ling

Thank you, Scott, for this helpful explanation!

mike swanson
mike swanson subscriber

What the Falconer are you doing to your political career? Maybe Kevin kids go to private school.

underground1
underground1

What the Falconer are you doing to your political career? Maybe Kevin kids go to private school.

Catherine Hockmuth
Catherine Hockmuth subscriber

Thanks for this Scott. It really helps to clarify the details. Although I believe redevelopment has and can be beneficial to our communities, my instinct on the governor's proposal has been to see that this really comes down to a choice between redevelopment and education. If we have to cut our budgets, and evidently we do, then education should be our top priority. I can't see how anything else is responsible. Now, if we want to increase revenue to support the services and infrastructure we apparently want, that's another story. As long as schools are being forced to eliminate librarians (who's going to run the school library?) and other support staff who help schools function, then all the big buildings downtown are worthless. I do not support my City Councilman Kevin Falconer's resolution to preserve redevelopment at the expense of schools.

Catherine
Catherine

Thanks for this Scott. It really helps to clarify the details. Although I believe redevelopment has and can be beneficial to our communities, my instinct on the governor's proposal has been to see that this really comes down to a choice between redevelopment and education. If we have to cut our budgets, and evidently we do, then education should be our top priority. I can't see how anything else is responsible. Now, if we want to increase revenue to support the services and infrastructure we apparently want, that's another story. As long as schools are being forced to eliminate librarians (who's going to run the school library?) and other support staff who help schools function, then all the big buildings downtown are worthless. I do not support my City Councilman Kevin Falconer's resolution to preserve redevelopment at the expense of schools.

Gerald Hosenkamp
Gerald Hosenkamp subscriber

How about a bit of balance here? (1) The knee jerk reaction that the infusion of more money into the California Public schools is a good thing is getting old. We have been pumping money into the system for years and it is still failing. Perhaps the cause is something other than lack of money? (2) When I came to San Diego in 1971, the riot devastated downtown of my hometown didn't look so bad when compared with downtown San Diego. Redevelopment may not be perfect, but without it, San Diego might now be yet another American city with a rotting core. And if you think that market forces somehow will magically turn around blighted areas, you haven't traveled to many US cities.

GBH1
GBH1

How about a bit of balance here? (1) The knee jerk reaction that the infusion of more money into the California Public schools is a good thing is getting old. We have been pumping money into the system for years and it is still failing. Perhaps the cause is something other than lack of money? (2) When I came to San Diego in 1971, the riot devastated downtown of my hometown didn't look so bad when compared with downtown San Diego. Redevelopment may not be perfect, but without it, San Diego might now be yet another American city with a rotting core. And if you think that market forces somehow will magically turn around blighted areas, you haven't traveled to many US cities.

Dave Ignell
Dave Ignell subscriber

Wish the gov would quit lying and call this fight what it really is -- redevelopment vs. public employee union payrolls.

Dave Ignell
Dave Ignell

Wish the gov would quit lying and call this fight what it really is -- redevelopment vs. public employee union payrolls.

tammy chesser
tammy chesser subscriber

City Councilman Kevin Faulconer seems to be completely unaware of how bad our public education has become. To choose redevelopment over our children's education speaks a lot about his priorities. He has lost my vote on this one.

toctome
toctome

City Councilman Kevin Faulconer seems to be completely unaware of how bad our public education has become. To choose redevelopment over our children's education speaks a lot about his priorities. He has lost my vote on this one.

Mark Giffin
Mark Giffin subscribermember

Notice the silence of Brown on the states Pension problems. That ballooning debt gives new meaning to "Its for the children"

mgland
mgland

Notice the silence of Brown on the states Pension problems. That ballooning debt gives new meaning to "Its for the children"

Anna Tachco Jimenez
Anna Tachco Jimenez subscriber

I have been saying that from the beginning. If it's between a stadium and educating our children? I'm with education! We voted in Prop 98 to NOT underfund schools but because education is one of the few things in the budget not earmarked by something, we take from there. I, for one, would like to have educated people running this country when I retire!

annatj
annatj

I have been saying that from the beginning. If it's between a stadium and educating our children? I'm with education! We voted in Prop 98 to NOT underfund schools but because education is one of the few things in the budget not earmarked by something, we take from there. I, for one, would like to have educated people running this country when I retire!

Fred Logan
Fred Logan subscriber

Gov's on the mark with this one. Our Council should take the advice it so willing gives the State in this article. Straighten out your pension and other debt mess. But that might mean not giving money to developers. Redevolpment should never take priority over public safety and education. The benefits of redevolpment will always be debatable, but top notch fire, police, roads, & education is not.

FredL29
FredL29

Gov's on the mark with this one. Our Council should take the advice it so willing gives the State in this article. Straighten out your pension and other debt mess. But that might mean not giving money to developers. Redevolpment should never take priority over public safety and education. The benefits of redevolpment will always be debatable, but top notch fire, police, roads, & education is not.