Almanac

Viewpoint - March 23, 2011

Editorial: Scramble for city's redevelopment funds

With the future of redevelopment agencies hanging by a thread in Sacramento, a new concern has been raised about the distribution of the property taxes generated by Menlo Park's Las Pulgas RDA, which benefits parts of Belle Haven and a sliver of property on Willow Road west of the freeway.

Cities all over the state are rushing to protect and defend their RDAs, and Menlo Park is no different. The agencies are threatened by Gov. Jerry Brown, who wants to strip whatever unencumbered funds are available from RDAs to help balance the state budget this year and then pay for schools in subsequent years.

And even if the Legislature votes to take away RDA funds, it is almost certain that cities will sue to stop it, which could tie up the funds in court for years. (By Almanac press time Monday, the Legislature had not endorsed Gov. Brown's takeover of RDAs.)

On the local level, Menlo Park resident Jennifer Bestor, whose children attend central Menlo Park schools, argued in an Almanac Guest Opinion last week that the Las Pulgas district takes away $1.8 million a year that otherwise would go to local elementary and high schools. Instead, schools receive just a fraction of the total revenue that comes to the RDA ($10,000 for Menlo Park City School District and $150,000 for the Sequoia Union High School District).

As basic-aid school districts, Sequoia and Menlo Park City are primarily funded by local property taxes, so dollars lost to the RDA come right out of the school district's pocket, Ms. Bestor says, adding that the loss comes at a time when the districts are seeing significantly more students, but no corresponding funding increase. For example, the Menlo Park district is in the midst of rebuilding its Hillview middle school campus to accommodate a huge enrollment increase, and the district has made room for more students at its other campuses.

Not surprisingly, the city has a different point of view, as seen in the Guest Opinion by City Manager Glen Rojas on the adjoining page. He says that property values today would not be where they are without the improvements made possible by redevelopment funds. Improvements slowly began to add value to the tax rolls when the district was created in 1981, and reached today's much higher levels after many capital improvements were made.

For 2010-11, the city expects the incremental taxes over 1981 to be $10.6 million, of which almost half is committed to debt service on bonds issued for projects in the district. When all other obligations are paid, income of only about $1 million will remain that could be designated to support the schools.

In the Almanac's Town Square Forum, a Belle Haven resident notes that without redevelopment funds, Belle Haven would not have a community center, a full soccer field or a swimming pool. Projects such as these are enhancing the quality of life in eastern Menlo Park, and would not have been possible without the RDA funds, the poster said.

History has shown that RDA projects have returned good value to Menlo Park, a record that supports the district's continuation as is, at least for now. If Gov. Brown's RDA-busting plan is approved, there is no doubt that it will be more difficult to pay for improvements in the eastern part of the city, and it remains to be seen if schools will benefit from the state takeover a year later, as promised by Gov. Brown.

Over the last 10 years Menlo Park schools have benefited tremendously from the run-up of real estate values, and can easily get by without the revenues lost to the Menlo Park RDA. It should also be noted that Belle Haven and East Palo Alto elementary students attend schools in the state-supported Ravenswood Elementary School District, which receives far less per pupil than west side schools, including Menlo Atherton and Woodside.

In future years, perhaps Menlo Park's Pulgas district can opt to share more of its tax income with schools and other special districts. And more privately funded development could take place around the new Facebook headquarters and the Menlo Gateway project, which could lessen the need to generate capital projects from the Pulgas revenue and open the door to the city sharing a much larger portion with local school districts.

Comments

Posted by Jennifer Bestor, a resident of Menlo Park: Allied Arts/Stanford Park
on Mar 22, 2011 at 6:41 pm

Jennifer Bestor is a registered user.

I deeply appreciate the Almanac's willingness to provide a forum to discuss this major aspect of our local fiscal revenue stream. There is far too much heat – and too little light – shone on the Gordian knot of California finance.

And I agree with your conclusion – that Menlo Park's thirty-year-old RDA can now opt to share more with the underlying schools and special districts, and it can focus on encouraging privately funded development rather than looking for new places to spend future revenues.

That said, I am a little puzzled.

Did I say that the RDA was a waste of money? No. What I said was that it was a convoluted funding mechanism predicated on the state's willingness – 20+ years ago – to backfill the schools.

Are you arguing that, if the RDA were magically dissolved today, you would expect the superintendents of the Menlo Park City and Sequoia Union High School Districts to sign away 85%+ of their underlying revenue in those areas to fund redevelopment? I hope not. Who would even think that was their decision to make?

We would all expect redevelopment funding to go to the voters exactly the way that school bond funding, recreation bond funding, and other tax funding has to. The Council would make its case and the voters would decide.

Given that the funding mechanism is my point, I am reluctant to be dragged into a debate on the value of the RDA – obviously you feel that redevelopment is too important to leave to the voters. OK, we'll have to disagree on that.

I am, however, fascinated that you feel the Menlo Park schools have benefited so tremendously from real-estate value run-up that they don't miss the $450,000+ (MPCSD) or $1.5M (Sequoia Union HSD). If this was the case, why did you support the recent parcel tax? It sure seems to me that this community has had to dig deep to try to keep per-pupil spending level. Especially when new RDA residential properties come on board and we get the kids while they gets the tax. (Cf. Heritage Court.)

Maybe you could start by supporting your claim that Menlo Park spends more than Ravenswood on per-pupil education? The only public audited source I know, Ed-data from the California Department of Education, shows MPCSD spending $11,680 per ADA vs. $13,884 by Ravenswood. (Though now I see that you compared an elementary district with a high school district – have you decided that the traditional expense model should be reversed? – but, in any case, the figure for M-A and Woodside [Sequoia Union HSD] is $13,067. And that is also the high school district for Ravenswood and Redwood City.)

Then you restate Glen Rojas's assertion that the underlying property values in the RDA would be "nowhere near" where they are today without the RDA. You state that history has shown that RDA projects have returned good value.

Can you support that with any actual data?

I've spent a lot of time looking at the underlying TRA data and, every time I think I can prove something, I hit another snag. I thought that, if I proved the Sun campus was solely a result of the RDA, I could relax but, then, what will it be like in twenty years? Thriving corporate campus or post-Facebook ghost town? (Remember, under the current system, the very first time Menlo school kids and taxpayers see discernable incremental tax revenue from the RDA is 2031. Meanwhile, we're carrying 90% of the load for both Belle Haven and that slice of the Willows.)

Back in the Fifties, when RDAs were conceived – as small areas over shorter time frames (10 - 25, not 50 years) under a tax structure that taxed actual market values (not a mix of heritage and market prices) – the justification of future revenues made sense. Now well, please back up your assertion.

And, finally, while I'm not sure I agree with Peter Carpenter about restricting online comment to named individuals, I was disappointed that you would elevate an unnamed, unregistered individual's online comments to prima facie evidence of the RDA's success. You were quick to identify me as a presumed interested school party -- a current parent -- so it seems unfair that we have no idea if that person is, in fact, a resident of Belle Haven, or perhaps an owner of multiple properties there, or an employee of the redevelopment district (or its housing arm) – or maybe even owner of a tutoring service, benefiting daily from the schools' shortcomings. Or perhaps just bloviating.

It will be interesting to see what others think! Though you are in a bit of a Catch-22 ... if everyone agrees on the value of the RDA, then why couldn't it go to the voters?


Posted by henry fox, a resident of Menlo Park: The Willows
on Mar 23, 2011 at 5:24 pm

Jennifer, Thanks for being so well informed and articulate. We wish the Alamanac Editor could do as well. He is becoming irrelevant.

The lack of response to your letters and editorial is, I believe, due in part to the complicated nature of the subject matter. Yes, Belle Haven benefitted from the RDA, but my bet (and we will never know the outcome) is that Belle Haven could have benefitted more if there were no RDA at all. Belle Haven is arguably the most well situated piece of land on the Peninsula.

Will the proposal to eliminate the RDA ever become part of the governor's ballot? Will there be a ballot at all? Don't know. But that does not prevent Menlo Park from local action. What action? How?

Here's one idea. We start a citizen-run task force. A task force that is not staff dominated. A task force that has no vested bureaucracy. And we figure out the services we want and how to achieve them—right here in Menlo Park. (The Your City/ Your Budget process in circa 2006 was designed by staff to get voters to support a Utility Users Tax—offering no options but to pay more.)

Are you up for something like that? Other ideas?
Whatever, thanks. Henry


Posted by Roxie Rorapaugh, a resident of Menlo Park: University Heights
on Mar 24, 2011 at 1:27 am

To Henry,
Your idea is fantastic and I would love to be a part of it. I agree with you 100% that the issue is very complicated, which is why fewer people respond than one might expect to an article like Jennifer's. We CAN do something, a group setting to talk about the issues, figure out what should be done about the RDA, whether it stays or goes is so needed. The plan of having us and not staff dominate is also very wise, staff unfortunately have too much invested in status quo which might cloud their judgement. Maybe the meetings could be in the Belle Haven Community Center.

Also, I agree with you that the editor of the Almanac is becomming irrelevent--I'm glad someone came out and said it. He published Jennifer's great piece, but his editorial the following week is so flawed!! Jennifer, your points are right on and I agree that his editorial was confused and came from a strange place.

I hope this RDA citizens group can start. My email address is rrorapaugh@att.net, I would love to be of any help I can.


Posted by Jennifer Bestor, a resident of Menlo Park: Allied Arts/Stanford Park
on Mar 24, 2011 at 1:25 pm

Jennifer Bestor is a registered user.

Hello, Henry and Roxie!

Thank you for your kind encouragement. I just spent two days researching my response to Glen's Guest Opinion and posting it, then saw your comments here.

1) I would enjoy getting together to chat about the RDA, though have no idea whether forming a citizen's committee makes sense. We could meet at the BH Community Center (if someone would reserve a room) or the Starbucks on Willow (or one of the restaurants). Perhaps you could suggest some times, Roxie, and we can agree on one for anyone who's interested in coming. I would, however, like to keep the topic just the RDA ... any more and the analysis will paralyze me.

2) May I defend the editor? Most of my friends had the same, equally confused, response to my piece. I really appreciate the fact that the Almanac IS willing to publish information like this -- it can't sell many papers. (Or, in this day and age, lead to many click-thrus. I did notice that they've added click-on ads for Waldorf schools as well as Amici's on these pages ... maybe the few people who read it will be moved to consider private schools AND pizza tonight.) My parents were friends with the editor of our local paper when I was growing up. He had a newsroom the size of a small army, plus a captive subscriber (and advertiser) base -- and was a fixture at all the local society parties. My impression is that things are a bit different now. The editor was also having to deal with the aftermath of the intern's story on school technology in PV ... I suspect he wished both schoolkids AND their parents (i.e. me) to perdition at that point.

3) Roxie and I met at the February 8th Council session, when we both wandered in, driven by a sense of uneasiness about the speed, tone and import of the Council's reaction to the RDA situation. I could see that two of the Council members (who didn't know me) thought I was nuts when I raised the question about who was paying for RDAs; two others (who do) thought I was being unusually obtuse and irritating ... This whole subject is one where the City and Council did the wrong thing for the right reasons (vis a vis the interests of the citizens of MP in 1981) and probably did it again last month ... I really feel it is a case of moral hazard where we are increasingly hoist with our own petard and need to think just a little about how to shake the gunpowder out.

4) Funny you should remember 'Your City/Your Decision' -- I did, too. I looked to see if the RDA money was included. No sign of it (though a number of Belle Haven-related expense items were there). Since they went out within a year for expanded new bond financing, there must have been a growing tax increment at that point ... ?!


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