New Law Likely Makes PUSD’s Measure CC Unneeded

A new law amending the State’s existing redevelopment law may make the Pasadena Unified School District’s $7.1 million Measure CC Parcel Tax unnecessary after ballots have already been mailed to voters.  Under California Assembly Trailer Bill ABX4-26 enacted last week, redevelopment agencies are now required to divert their funds set aside for affordable housing to local schools.

The City of Huntington Beach recently had to cut $1.9 million out of its affordable housing fund for K-12 education.  The shift in redevelopment funds to “educational revenue augmentation funds” is mandatory. The shift partly places responsibility for funding any gap in the state budget for education onto cities by taking a portion of their property taxes for schools.

Existing Redevelopment law requires cities to set aside 20% of their tax increment funds for affordable housing.  Tax Increment Funds are the added  property taxes generated from new redevelopment projects.  Pasadena has $29.7 million in annual tax increment funds and 20% of that would be $5.94 million. According to the City of Pasadena’s website, it has $10,234,320 in its redevelopment affordable housing fund as of 2009-10.

However, the precise amount of city redevelopment funds that can be diverted to public schools in Pasadena is uncertain, as the City Council has apparently not acted on this new law. Curiously, Pasadena Mayor Bill Bogaard did not disclose the prospect of this new law in his recent advocacy for Measure CC before the City Council nor in automated telephone calls this past week to Pasadena residents pitching a YES vote on Measure CC.

Cities that fail to divert their affordable housing funds to schools face a “death penalty” that would suspend their operations.  In return for diverting redevelopment funds to local schools cities will be allowed to increase their affordable housing set aside from 20% to 25% and will be allowed one extra year on the life of each local redevelopment project area.

Reportedly the new state budget legislation adopted by the Legislature and signed by the Governor last week provides for what is being called a “dramatic” take of $2.05 billion of redevelopment funds statewide for public schools ($1.7 billion retroactively for the 2009-10 fiscal year [this year] and $350 million for 2010-11).

This new law is probably why the State Association of School Boards and the California Legislative Analysts Office (LAO) both recently stated that statewide K-12 school funds would likely be increased by 2% for next year.  This contradicts many local school district’s hysteric warnings of dire 20% cuts in local school funds, including PUSD.

There is no provision in PUSD’s Measure CC that if PUSD is fully funded by the State budget (under Prop 98) or by the diversion of redevelopment funds under ABX4-26 for the upcoming school year that they will cancel the parcel tax or rebate homeowners.  Thus, a YES vote on Measure CC may oddly result in a $7.1 million “windfall” to PUSD while many homeowners are pending foreclosure or pre-foreclosure.

Sources:

http://www.ccnlaw.com/publications/publication.cfm?id=447