Anna Current, who lives in Jupiter, FL. is a Castle Coalition colleague whom I met at the 2006 National Castle Coalition (Institute for Justice) property rights conference in Arlington, VA. She raises a valid point in here editorial that is not unique to the state of Florida. In her report she refers to floating redevelopment debt without voter approval. Some years back we had a Brown Act violation by our Mission Viejo city council when newcomer John Paul Ledesma tried to promote voter approval of any redevelopment agency bonded indebtedness in our city. He was unsuccessful in obtaining any support and his proposal failed.
To make matters worse, funds diverted to pay off redevelopment debts and related fees remove vital revenues for regular general fund operations in Jupiter, or any other city engaging in creating bonded indebtedness. These siphoned off funds would be better spent to pay for schools, police and fire rather than a waterfront property redevelopment project. If you have confidence that the project pencils out why doesn’t the investor use his or her own resources as demonstrated by the Irvine Spectrum in Orange County, CA. The Spectrum is a huge success that did not receive any corporate welfare.
PS: While they call it redevelopment, many CRA projects do not entail redevelopment such as Indian Wells in that “poor” southern CA City with a magnificent Redevelopment Agency funded golf course.
Inlet Village resident concerned about CRA’s actions
Jupiter Courier Guest Columnist: Anna Current
Sunday, January 11, 2009
No one really likes confrontation, even those who say they do. But the truth is we do have to confront.
There is confusion about who is going to pay for Riverwalk and Jupiter Inlet Village. If you listen to the town, it will be paid by “overflow taxes,” after the municipal “tax bucket” is full.
However, the truth is that the Jupiter Town Council, acting as the governing body of the Community Redevelopment Agency, is siphoning off taxes from our total tax revenue into a different account. From that, they will contribute our tax dollars to developers for this leisure development and district. The diversion usually lasts for at least 15 years and might last for as many as 30 or 40 years.
The CRA also has unrestrained financial power, to the extent that they are planning to float tax increment bonds.
This maneuver is pulled off through an existing legal strategy whereby Jupiter taxpayers are prevented from approving the bond debt. As a result, they unknowingly become obligated should the project not produce increased taxes, not be completed or fail. Repayment is less assured, so lenders charge higher fees and interest, making this type of bond the most expensive way to borrow money.
When used to offset the high costs of redeveloping blighted sites in poor neighborhoods, this type of financing can be an effective economic development tool. However, citizens recognize that the waterfront properties along the Jupiter Inlet and Intracoastal Waterway are among the most affluent areas in Jupiter—producing high tax revenues needed for the general fund.
The first beneficiary of this bizarre power is the developer of Harbourside, in the Entertainment District, located at the foot of the Indiantown Road Bridge & US 1.
Of course, we assumed that the town council would never be a party in the current financial meltdown; however floating bonds and contributing taxes against the uncertainty of property tax revenues is disgusting and deserves censure by its citizens.
These subsidies disadvantage local, independent businesses, because they must shoulder a higher tax burden in areas where part of the city’s property tax revenue is being diverted from city services and used instead to pay off bonds that financed competing businesses.
Tax breaks for individual developers and monetary economic development incentives are never a good idea. These incentives are veiled by the town council to entice voters into believing they are getting something for nothing — they say it’s simply paid out of the “overflow.”
This spin prevents taxpayers from recognizing that our “tax bucket” has been raided to serve special interests at the expense of dollars desperately needed to run our government.
Our local government officials must be honest with taxpayers about the developer giveaways, costs, tax breaks and risks involved in this type of funding. The Town of Jupiter has never used this tactic before, and must not begin now by taking steps to obligate the taxpayers for unapproved bonds.
Taxpayers need to speak out against this back-breaker.
Anna Current is a Jupiter resident and executive director of the Coalition for Property Rights–Jupiter.
Larry:
The real facts are that these “Redevelopment Agencies/Operations” are nothing more than air cover for exploiting the citizen/taxpayers.
They purposefully lack transparency and violate all the basic tenants of sound control of activities. The very fact that competitive bidding is ignored just underscores one of the many problems with these agencies.
They become an indestructible state onto themselves. The special interest love them and they promote them for their own greedy self interest.
The legislature should outright eliminate them and give the present existing ones a 10 year sunset.
Jim
Jim is absolutely right when he suggests giving them a ten year deadline to sunset. I’ll bet most voters didn’t know that their little redevelopment project never went away. Many redevelopment agencies have been in existence since they first started and like the energizer bunny just keep going and going. The city never sees the increased tax revenue from the redevelopment area because the taxes go to the redevelopment agency the entire time – into infinity … and beyond.
To Jim, anonymous, and Juice readers.
For years former State Senator Tom Mc Clintock and O.C. Supervisor Chris Norby have been questioning the effectiveness of these redevelopment agencies. If redevelopment agencies really were successful in eliminating “blight”, they would now be scaling back their activites and reducing debt” which, as of 2007, was $81 billion dollars, twice the sum Arnold needs to cover our state expenses over the next 18 months.
These agencies have 30 years to create projects and 45 years to collect the “tax increment” and pay off all outstanding debt obligations.
Let me share some local history on the 856 acre Lake Forest Redevelopment project area. Their recent activity, known as the Arbor Project, commenced somewhere around 2002 with the project completed in 2006.
That project included major infrastructure improvements to El Toro Road and the business community on both sides of the street east of Interstate 5. What a great transformation.
Let’s see 2006 minus 2002 equals four years yet the typical redevelopment project areas are permitted to continue to function for 40 years after being established. If the revitalization is a success than why don’t we shut down these agencies?
Larry, you know the answer. We need to pay off the bonded indebtedness. You know, the money that normally would go to fund schools police, fire and special districts that go into the hands of bond brokers, consultants, attorney’s and land developers. Yes, the laws are a little tighter and we do have pass-thru agreements with local school districts and the affrodable housing set-aside, but the argument still can be made that the agencies refuse to shut down.
Folks. Before a project area is established the property assessment becomes a floor for taxing purposes. This is also known as the “base tax” role. Once a project area is created, only that floor revenue goes to fund normal government operations be it at the state or the county.
Beyond the floor the “redevelopment agency has the exclusive use of all increases in property tax revenues generated in its designated project areas” be it due to improvments or resale of properties in the zone at higher values.
Larry (and friend), I appreciate your explanation as there are so many aspects to this that it’s hard to complain about all of them in one comment.
I wonder if you also have information on the tax give-aways accomplished by the redevelopment areas which, in addition to the possibly 75 years of a salary, provide another incentive for the redevelopment area other than cleaning up blight.
My understanding is that some of these businesses that agree to relocate into a redevelopment area are provided an incentive of a lowered or forgiven tax rate for upwards of 45 years also. I’m guessing that’s a lot of money but I really don’t have the figures on any specific deals. Do you?
Anonymous #4.
Let me suggest that you consider attending one of our bi-annual conferences where you can meet victims, victors and attorney’s engaged in our effort to curb redevelopment abuses.
To your question on the corporate welfare side of the issue. Let me quote from our booklet, Redevelopment: The Unknown Government pages 14 & 15
“With redevelopment, cities have the power to directly subsidize commercial development through cash grants, tax rebates or free land. Spelled out in a Disposition and Development Agreement (DDA), a developer receives lucrative public funding for projects the agency favors. Some receive cash up front from the sale of bonds they will never have to repay. Others receive raw acreage or land already cleared of inconvenient small businesses and homes. They purchase the land at a substantial discount from the agency. Sometimes it is free.”
On page 15 it states “An Orange County Register study showed Costco receiving over $30 million in subsidies in Orange County alone, extrapolated to $300 million statewide. Wal-Mart has gotten over $1 billion in public handout nationwide, with an estimated $100 million in California.”
Larry, its definitely a subject that gets my blood boiling much like stories of employers abusing employees do. So, yeah, let me know when your conference is – I’ll go see how I can get involved. Thanks!
One year of Walmart subsidies would eliminate the budget problem in Sacramento and put CA’s public education funding back into the top ten nationally.
Anon #6.Thank you for your data request.
Our next property rights conferencesponsored by Municipal Officials for Redevelopment Reform, MORR, and Californians United for Redevelopment Education, CURE, will be held at the Long Beach Airport Marriott hotel on Sat April 24th. We are a non partisan statewide “grass roots” organization whose Mission is to expose and eliminate bogus declarations of blight.
Event details to follow as we get closer to the date.