Howard Terminal Ballpark: Solutions to Oakland Accountant Len Raphael’s Questions

The first post on the Howard Terminal Ballpark Project Oakland TIF Revenue vs. Impact Fees for the affordable housing issue brought up a series of questions from Oakland-based accountant Len Raphael on Facebook. Below I list the questions and my answers:

Len Raphael: Zennie, thank you very much for explaining tax incentive financing and comparing it to the impact fee approach.

Some preliminary questions on the subject of “Muni real estate project for dummies”. Continue.

Question: What are the biggest differences between the old redevelopment districts that Jerry Brown killed and the TIFs that you think were created by Nancy Skinner’s legislation?

Answer: Well, thanks for your questions. First, it’s “tax hike finance”. Second, I never wrote that Governor Brown killed redevelopment districts; he campaigned for the end of the California Redevelopment Law himself in 2011. This includes redevelopment agencies, which then form the project areas in which tax increase funding is or can be used.

Third, I never wrote or said that California Senator Nancy Skinner created tax hike funding. You need to understand that tax increase funding is itself a formula that can be done anywhere in the world with property taxes, sales taxes, vehicle fees, etc. All you need is a legal authority and a community facility to ready to use it. TIF goes back decades, and in Oakland the Oakland Redevelopment Agency was founded in 1968 and John B. Williams was its first director. If you’re wondering who is standing at the entrance to BART 12th Street Oakland City Center Station, it’s John B. Williams, whose tour formed the basis for Oakland City Center today.

Ulinska's G1 OaklandJohn B. Williams (Photo by Ulinskas G1 Oakland)

Third, there are now at least four basic pieces of legislation that allow the use of TIF: SB628 Beale (from which the Enhanced Infrastructure Financing District concept emerged), SB 293 Skinner, which is specific to the Howard Terminal Ballpark Project, AB2. which enables the creation of “Community Revitalization and Investment Authorities” that allow the creation of project areas and the use of TIFs in them, very similar to the old California Revitalization Act and the latest called AB464, which allows TIF to be used within an expanded one Infrastructure Finance District specifically designed to support businesses.

Q: Basically, Impact Fees are paid by the developers (and possibly indirectly by market tenants), but TIFs are a shift in future property tax (you mentioned leasing and vehicles?) The City of Oakland directly for certain uses like low-income housing and transportation infrastructure pay? So impact fees are really a tax hike, but TIFs are redistributions of tax revenues?

Answer: That’s a good point of view, but it doesn’t give the full picture. Impact fees are intended to be used in situations where the economic development planner knows that development is required. Impact fees allow, yes, to present some sort of additional tax on development, ostensibly to generate uses that would normally not be provided, such as affordable housing.

In contrast, the use of TIF revenue is less of a shift in revenue out of the state of CA and Alameda Counties, OUSD, and the city of Oakland, but rather a concentration of them. I’m writing this because the state of CA and Alameda County, OUSD, and the City of Oakland can enter into agreements to build specific projects to aid the redevelopment effort. For example, Alameda County could seek funding for a hazardous household waste collection point in the TIF zone or elsewhere in Oakland (as SB 293 allows Skinner in accordance with a community plan).

Question: Could it be that the city staff didn’t review A’s projections for TIF tax revenue to see the risk to taxpayers if the A staff member goes off vacation before the TIF backed bonds not be repaid? Or there is a big earthquake, etc.

Answer: no. No self-respecting government should allow a private property developer to fund the revenue and tax hike process. That smells like Third World legal processes controlled by outsiders, but in California. The fact that the City of Oakland has not submitted its own TIF revenue calculations should be alarming to everyone. Business development experts in the city of Oakland are supposed to be driving the TIF revenue process – not the Oakland A’s.

Question: Clarify: Would the TIF only be intended for public infrastructure, but the stadium, retail trade, office space and rental apartments are paid for with private funds and risk?

Answer: This is how it works, Len:

Public Infrastructure – A is paying $ 350 million for the on-site Howard Terminal infrastructure from the $ 800 million bond issue paid for by TIF Revenues.

Stadium – A’s privately finance the ballpark.

Retail Stores – A’s and developer partners pay for retail, mixed use, privately funded.

Office space – A’s and developer partners pay for office, mixed use, privately financed.

Rental Apartments – A’s and developer partners pay for rental apartments, privately funded – TIF revenue is used as a grant to make a certain number of units affordable and extremely affordable.

Question: Where do “collective performance agreements” come into play? Are they just a variation on the impact fees?

Answer: The community service arrangements are the result of more than a year of meetings with various members of the Oakland community at the Howard Terminal. The problem is, the City of Oakland didn’t give us 1) a forecast target for TIF revenue, and 2) the City of Oakland didn’t break down the cost of community good so we could see what the TIF revenue is. secured bond issue can pay. In other words, if we can expect $ 800 million from a bond issue and $ 350 million to invest in infrastructure, how much of the remaining $ 450 million will be used in “Community Services” projects?

The TIF process calls for a bond issue which, once it is inception, is structured in such a way that Oakland Athletics would pay for it if the bond issue defaulted. That doesn’t mean the bond revenue stream is being built irresponsibly, hence my request for a two-to-one debt coverage ratio or at least $ 2 in revenue for every $ 1 of bond debt.

Question: More examples for TIFs, please. And how well they have gone so far.

Answer: There are thousands of examples of TIF being used locally as well as in California and America. In Oakland, TIF Revenue paid for the removal of crack homes in East Oakland. Oakland’s Redevelopment Agency funded the City of Oakland’s affordable housing budget, raising $ 111 million in 2011 alone and $ 109 million the year before. I argue that if Governor Brown left California’s redevelopment law alone, there wouldn’t be the huge homeless problem today; many agree with me, like Nate Miley, the Alameda County supervisor.

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