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Taxpayer says give CRA money back to City
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Sunday,
September 27, 2009
The city faced a $4.3 million deficit coming into budget negotiations because of the drop in property values in 2009.
The tax increment revenue for the CRA in 2008 was $5,949.939: CRA fianancials.
Taxpayers need to understand what tax increment revenue is. Tax increment financing is a unique tool available to cities and counties for redevelopment activities. It is used to leverage public funds to promote private sector activity in the targeted area.
The dollar value of all real property in the Community Redevelopment Area is determined as of a fixed date, also known as the “frozen value.”
Taxing authorities, which contribute to the tax increment, continue to receive property tax revenues based on the frozen value. These frozen value revenues are available for general government purposes. However, any tax revenues from increases in real property value, referred to as “increment,” are deposited into the Community Redevelopment Agency Trust Fund and dedicated to the redevelopment area.
Example:MCRA was created in 1996; the property tax in 1996 within the CRA boundries was, let's say, $1 million. In 2008, it's $2.5 million dollars, hence, $1 million goes to the city budget and $1.5 million goes to the CRA.
The problem is that the cost of police, firefighters, city workers and supplies all go up because of inflation, but the city continues to collect the same amount of money from the CRA area. So to compensate, the city increases tha taxes.
Problems:
Although generally sold to legislatures as a tool to redevelop blighted areas, some districts are drawn up where development would happen anyway, such as prime areas at the edges of cities. California has had to pass legislation designed to curb this abuse[citation needed].
The designation as blighted can allow governmental condemnation of property through eminent domain. The famous Kelo v. City of New London Supreme Court case, where homes were condemned for a private development, was about actions within a TIF district.
Normal inflationary increases in property values are captured with districts. Money that would have gone to the public coffers even without the financed improvements.
Districts are drawn too large, capturing value, again, that would have been increased anyway.
The process leads to favoritism for politically connected developers, lawyers, economic development directors and other implementers.
Funding often goes toward what have been traditionally private improvements -- from which developers profit. When the public "invests" in these improvements it is the developers that still receive the return.
Approval of districts can sometimes capture one entity's taxes without its official input, i.e. a school districts taxes will be frozen on action of a city.
What does this taxpayer think?
Money that goes to the CRA today should be going to fund the Margate City budget. If it did, we would not have a shortfall, taxpayers would not see their property taxes go up and public servents would not be arguing about who will get fired.
I say close the CRA for now, return the 21 million dollars that the CRA has to the city budget and do not raise taxes. If not, then at least consider suspending the CRA for three years and allow all the property tax money to be used for the city budget.
Then, when the economy starts turning around for real, we can re-visit the CRA.
- Taxpayer
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