THE CALIFORNIA REDEVELOPMENT ASSOCIATION’S ALTERNATIVE PROPOSAL FOR VOLUNTARY REDEVELOPMENT CONTRIBUTIONS TO SCHOOLS
CRA has crafted an alternative to the Governor’s proposed elimination of redevelopment agencies that provides significant funding to schools that could also help close the state’s budget deficit, avoids the unconstitutional provisions of the proposal that would lead to contentious and costly legal battles, and continues local redevelopment’s contributions to reviving the state’s economy and supporting hundreds of thousands of jobs. A summary of our proposal is as follows:
1) Local redevelopment agencies can voluntarily suspend their housing set-aside for FY 2011-12. An equivalent amount of funds must then be contributed to local school districts in project areas.
(a) In exchange for this contribution of funds for FY 2011-12 to local schools, the agency will be allowed to extend the project area’s life by TWO YEARS.
2) In addition, or alternatively, redevelopment agencies could voluntarily contribute up to 10 percent of their tax increment revenue stream to local school districts for 10 years, beginning in FY 2011-12.
(a) The tax increment revenue stream they could contribute would be calculated as a percentage of the gross tax increment minus the existing pass-through payments to local taxing entities.
(b) For each percentage of tax increment paid to schools, an additional year could be added to the project area life, up to a maximum of 10 years. For example, if five percent of tax increment was dedicated to schools, the project area life could be extended for five years.
The amount of money contributed to local schools, and thus the amount of money the state can save in its budget, is dependent on the participation of agencies. Agencies will have 60 days from the date of enactment of the legislation to decide whether or not to participate.