Stop, Drop and Roll

11 December 2007 | Alameda City Council, Alameda Community Development Forum, Alameda Truthiness | John Knox White

Last Thursday, I mentioned a report card issued by Action Alameda on redevelopment in Alameda. 

Report cards are great organizing tools, done well, they can crystallize a set of complex information into a short, easy to read format.  Done well.

The key to a report card is that the letter grade, is shorthand for the lengthier critique that accompanies it. You can quickly see that the city receives a “B” on plays well with others, and then read about why they received this grade instead of an “A” or “C.” 

Which brings us to the Action Alameda Report Card on Redevelopment Funds. This 30 page report is actually a 1 page report with a one-page chart and a 28-page appendix of city and state documents. There are five categories that are graded and not one of them has any incisive back up. They all just get “F”s. There are some general overall comments about money redirected to redevelopment agencies could pay for service, infrastructure and community programs, but this isn’t even true.  (Like all good non-truths, it contains a kernel of truth, but the size of the claims aren’t backed up).

The report card grades five issues: The total assessed value of the redevelopment area, annual tax increment collected, administrative costs, debt amassed, new jobs created during the last filing period. You’ll be surprised to learn that all got “F”s. If you’re a regular reader, you won’t be surprised that there’s absolutely no explanation provided and that the grades are useless. 

A quick rundown of facts and thoughts.

Assessed Value: The report card lists how much the redevelopment area is assessed at— $1.2 billion—and gives it an “F.” Presumably because it’s an impressively big number, but without context, explanation or anything, we have no idea why $1.2 billion is a bad amount. The appendix of the report (page 22) shows that the number is actually more like $1.3 billion. More importantly, it shows that when the redevelopment area was formed it was worth a paltry $300 million. So $1 billion of the $1.3 billion is in increased value. So maybe the large number isn’t what gets the city’s redevelopment an “F.” 

Perhaps the argument is that redevelopment has not been responsible for the quadrupling in value. This is a discussion that can be had, but the report card doesn’t address it. We have no idea what “F” means. But for the sake or argument, one could ask would the value of this land be the same if it hadn’t been redeveloped? Included in this assessed value is Marina Village, and Bayport (the completed first phase), as well as independence plaza and others. Without roads and infrastructure at Bayport, would their be homes and a school there now? If there weren’t, would the value of the area be the same?

Tax increment collected: Again, no explanation as to why it gets an “F.” Given past writings, one would be safe to assume that there were only two possible grades “A” which is given for no redevelopment, and “F” meaning there is redevelopment. But again, we’ll assume that this grade is meaningful and that it critiques the use of tax increment funds. 

First off, as covered here in the past, the money collected as “tax increment” for redevelopment does not come directly out of the city and school’s share of property taxes. Some of it does, but a very small percentage. Some folks argue that redevelopment keeps property taxes in Alameda, to be spent on Alameda projects instead of heading off to the state to be used unequally on education that benefits other schools, prisons, etc.

Pass-through agreements make sure that schools continue to get their share, as do other local entities, so the overall effect on schools, services, etc. is very small. (But one giving an “F” to the amount collected would rather focus on large, scary looking numbers that are meaningless in the vacuum they are presented in). 

Administrative Costs: listed in the report card as $3-4 million and given an “F.” We don’t know if that’s compared to other redevelopment agencies, private sector corporations, etc. But again, I posit that it’s an “F” because it’s redevelopment. Period. So what are these costs? City Staff is about $1.2million (that’s about 10 employees I bet, once healthcare and benefits are added in, it could be closer to 8). These are the employees working on Alameda Landing, Alameda Point, etc. It’s hard for me to see the department as overstaffed.

The $3-4 million also includes support for WABA, PSBA and GABA, the city’s parking study, chamber of commerce workshops, North Park Street Strategic Plan, payments for the State revenue augmentation shift over the past two years, utilities, etc. 

Again, if the grade actually explained why it’s an “F” we could agree or disagree. But it doesn’t. so we have no idea what it means, so it’s silly.

Debt Amassed: This is where the report card veers into crazy town. The report give redevelopment an “F” for $285 million in amassed debt. But that’s not how much debt has been amassed. The number is $83 million. The $285 million is the amount of payments when made over 30 years. 

Like a mortgage, redevelopment bonds essentially allow an entity to borrow money for a project now, and pay it off over time with interest. Anyone who’s taken out a mortgage knows that the debt you have on your home is the amount of your mortgage (for fun let’s choose $500,000). But over time, you’ll pay 3+times that (over $1.5 million). But nobody refers to the $1.5 million as the debt on the house. Bonds are the same.

Bonds are how large projects in the US get funded, without them, highways, schools, etc. wouldn’t be built. This is an arguable process, there may be fairer, or better, ways of doing business. Some, like the libertarians at the Reason Foundation, think that privatization is the way to go. I’m guessing that’s what Action Alameda thinks should happen, given their free-market bent towards redevelopment.

So one can argue about whether this is the right financing mechanism. One can also argue whether issuing $83 million in bonds to produce the projects that have been produced is worth it. The report card doesn’t do either. 

Lastly, Job Created: The state reporting requirements for the form (page 19) are very strict. If you look at it, you’ll notice that only two cities in all of Alameda and Contra Costa Counties reported “jobs created” during the reporting period.

This is because they can’t count any of the construction jobs in creating projects, so all the home builders and construction workers at Bayport, Bridgeside, Park Street Streetscape, Webster Street renaissance, Ruby Bridges, etc. go uncounted. 

Further, the report card rates a small timeframe for redevelopment in Alameda, a time when many projects were under construction or being planned, but not when any came on line. This month, the redevelopment agency will report 153 new permanent jobs created for half a year at Bridgeside with more reported next year. Jobs are being created at the Alameda Theater. This report card, while trumpeting the total “debt” of the redevelopment agency doesn’t report the total number of jobs created in places like Marina Village. It also doesn’t acknowledge that projects like waterfront esplanades and bay trail extensions don’t create jobs, but do add to our community.

The Action Alameda Report Card gets an “F”: And here’s why: 

The report card is written (either through a lack of understanding, or through an intent to mislead) in order to make a worst case scenario about redevelopment in Alameda. It uses numbers from different timeframes in order to cherry-pick information that jumps off the page, but adds zero explanation that might give readers some idea of the concerns it purports to raise.

If you were to read the report card, you would think that the redevelopment agency has amassed $285 million dollars in debt, is stealing money from schools and policeman and has created zero jobs with that money. None of this is true. 

The report card doesn’t even attempt to look at what effect redevelopment has had on the economy of Alameda, something that is absolutely necessary in any critique of it. It’s possible (and I haven’t done the research) that enough value has been added due to redevelopment support to offset the minor redistribution of tax increment dollars from the city coffers. In fact, that’s the argument that pro-redevelopment folks make. Perhaps someone will put together a meaningful report that includes this information.

There are certainly issues to be informed and possibly concerned about redevelopment, but these concerns should be based on knowledge and information, not innuendo and gut reaction. Action Alameda’s report card adds nothing to the conversation.