How Redevelopment for Schools and Programs Works in California

With the financial crisis of 2008 gripping the state of California into 2011, much is being changed in the way the state allocates funding for schools and other programs. The changes likely will occur by 2012. As of 2011, the Governor of California proposes that the agencies in charge of redevelopment would be phased out of the planning process and instead cities may raise the necessary funding and taxes for any development projects in the neighborhoods designated for redevelopment.

2011 to 2012 California Redevelopment

Once a neighborhood has been designated as an area for redevelopment, the local area has a 40-year timeframe in which it qualifies to use development funding. The redevelopment agency will be phased out after 2012, but currently it is in charge of selling the bonds that will finance any projects proposed in the designated development area to investors.

Redevelopment is expected to raise home values, thus property taxes would increase, giving the state more money and reclaiming much of the initial investment in the redevelopment projects.

In the current system for 2011 to 2012, the redevelopment estimates for funding and payoffs is divided into three sections:

• 42% of funding pays off bondholders and debts.
• 33% pays for public health insurance costs and court trials.
• 25% is allocated to schools and local entities from the city to county level.

After 2012, the estimates given to for funding and payoff allocations remove an entire section and merges it into two remaining sections:

• 42% of funding pays off bondholders and debts.
• 58% is allocated to schools and local entities, but now allows the state to spend the money in other areas as well.

In the budget for previous fiscal years allocated for redistributing redevelopment funds and income, over one third was allocated to fund new redevelopment projects that included affordable homes. The new budget would offer a loose interpretation of where the funds are allocated; giving the state more leeway to make adjustments to where the funding is spent once the redevelopment has earned back its initial expenses.