Tax Money From City of Bell : Montebello Eyes Redevelopment Windfall

When the City of Bell recently amended its redevelopment plan, the Montebello Unified School District jumped at the chance to share in future revenues from development in the area.

“Now is the hour,” said Wesley Anderson, school district director of facilities.

Anderson was referring to a little-known provision of redevelopment law that allows school districts to reap the benefits of redevelopment when a new project is started or when an old one is amended.

The district, faced with overcrowded schools, claimed that the merger of two industrial projects with Bell’s downtown commercial corridor cause a “fiscal detriment” to the district. The district covers a small portion of Bell that contains no residents and consists solely of industrial businesses, commonly referred to as Cheli I and Cheli II redevelopment projects.

Share of the Taxes

Bell, anxious to move ahead with redevelopment, agreed to cut the district in on a share of the tax increment generated from the industrial area near Eastern Avenue and Bandini Boulevard. The agreement, which will give Montebello about 11% of the tax increment from the redevelopment area known as Cheli I and 5.5% from Cheli II, was approved by the district last week.

Under state law, when an area is designated for redevelopment, all revenues received by taxing agencies--including school districts--are frozen. The additional taxes raised as a result of the new development is called the tax increment. Unless there is some other agreement, as in the case with the Bell district, the tax increment remains with the redevelopment agency.

The district will not begin to see its share of the tax increment for at least 10 years, since a $12-million bond debt has to be paid first. If no further development occurs in the area, the district would then begin receiving about $71,500 a year.

Hopes Are High

Although the amount is relatively small, the agreement has sharpened the hopes of district officials who could tap other cities, like Montebello and Commerce, for a share of their redevelopment pie.

The Montebello district is not alone.

Scrambling to find funds to build schools and refurbish old ones to alleviate overcrowding, several school districts in the Southeast and Long Beach areas are now looking to community redevelopment agencies as a source of additional funding, arguing that new development affects them with an increase in population and traffic.

The search for new money has heightened in recent few years as state funds for school construction and other costly maintenance projects dwindled. Since Proposition 13 was passed in 1978, school districts have had to apply to the state for funds to build new schools. School officials say it is a tedious process that could take five years or more.

Much-Needed Boost

While not hailed as a complete solution to budget woes, school officials say that agreements with redevelopment agencies can certainly give overcrowded school districts the boost they need for additional facilities. If nothing else, it can help them come up with the 10% matching funds a district must have to receive state funds for new schools.

Projections next year show that the Montebello district will need 13 additional classrooms at 11 different sites. “It’s hard to upgrade the community if the schools are falling apart,” Anderson said.

While cities have generally responded sympathetically to the plight of financially strapped schools, they have not exactly rushed to divide redevelopment money. City officials have long maintained that redevelopment does not affect schools--which are the responsibility of school districts anyway.

School districts are getting help in changing that view from Don Wickert, a redevelopment consultant and USC professor. He helped write a pamphlet for school districts, giving them pointers on how to approach redevelopment agencies.

“Industrial development ultimately brings in residents. Those people have to go somewhere,” Wickert said.

A 1984 study by the Los Angeles County Office of Education, which published the pamphlet last year, found that out of 1,029 school districts surveyed, about 35 had reached an agreement with a community redevelopment agency.

Ways to Negotiate

School districts have two ways of negotiating with redevelopment agencies. They can ask agencies that have existing redevelopment projects to share revenues with school districts, but the agencies are under no obligation to do so, Wickert said.

However, if a new project is started or an old one amended, the district can say it will be affected by the development and request some type of remedy, such as sharing tax revenues. If agencies refuse, the district can sue.

The Los Angeles Unified School District, which is facing a severe space crunch in Southeast area schools, signed agreements with Bell and Los Angeles earlier this year that will bring up to $111 million to schools in Bell and Los Angeles over a 40-year period.

“They’re there to redevelop, refurbish and make communities better. Our position has been . . . that schools are a major part of the community,” said Dominic Shambra, a coordinator in the district’s Priority Housing Office.

The Long Beach Unified School District is also looking to take part in that city’s downtown redevelopment plan by sharing a portion of tax-increment revenues, said Mary Anne Mays, deputy director of facilities funding.

Determining the Impact

“We are anticipating being able to participate with the redevelopment agency,” she said, noting that the two agencies have not discussed terms of participation. “We are working with their representatives to identify the potential impact” on Long Beach schools, she said.

Other cities, such as South Gate and Maywood, are also involved in negotiations with the Los Angeles Unified District for similar agreements.

The agreement between Bell and the Los Angeles district will bring the district $11 million over 30 years in exchange for the right to buy a parcel of land the district now owns on Atlantic Avenue. The parcel, originally slated for a new elementary school, is needed for the city’s redevelopment effort. The district is negotiating for another parcel at Randolph and Flora avenues as a new site for the school.

“We will help them with their development and at same time build our school,” Shambra said.

$15 Million Expected

The agreement with the Los Angeles Community Redevelopment Agency will bring in $15 million in the first five years and up to $100 million over 40 years. The money from Los Angeles will be used for schools in Chinatown and the Central City business district and downtown areas.

School officials say they hope redevelopment money will accelerate the years-long process of obtaining state funds for new schools.

“I felt the district could not solely depend on that particular source,” said Los Angeles Unified board member Larry Gonzalez, who authored a resolution last year directing district staff to look elsewhere for funding of new schools and rehabilitation of old ones.

“Schools are part and parcel of redevelopment,” said Gonzalez, who pushed to develop a partnership with the Los Angeles and Bell redevelopment agencies. “We began to look at ways to creatively deal with overcrowding in redevelopment areas of the city.”

Other Alternatives

Other alternatives the district is looking at include pushing legislation to use lottery money for new schools and working with the private sector to build schools in exchange for choice district-owned property.

“We can’t put our eggs in one basket any longer,” Gonzalez said.

He said the agreements show that city governments are recognizing they have a responsibility in the education of residents.

However, taxing agencies are not all that anxious to give up money to schools.

“There were reservations at the onset. We continued to meet and work with them and came up with an agreement,” Shambra said.

One of the main reasons why the Bell redevelopment agency decided to share funds is because it was going to be used only in Bell schools, said Mayor Pro Tem Jay B. Price.

“Our schools down here have been more or less shortchanged for years,” Price said, noting that the money will help build a new school and refurbish existing ones. “Our schools will benefit directly.”

Not All Redevelopment

Price, however, stopped short of saying redevelopment agencies have an obligation to help schools facing housing problems.

“CRAs were not deliberately set up for that purpose. This is only a spinoff thing to help both the school district and the city,” Price said, but “I have no objection to school districts participating.”

David Meyer, Bell’s community development director, called the agreement with the Montebello district “an altruistic gesture.” However, he also noted that the redevelopment agency also feared a lawsuit that could have delayed the projects for years.

The Cheli I project currently brings about $650,000 a year to Bell, while the Cheli II project brings in just $64 a year. Although the Montebello district’s share is about $71,500, that figure could rise as development occurs. The area being eyed the most for redevelopment is the Cheli II project area, most of which is an old Air Force depot now owned by the government. The land can be declared surplus and sold for development, but Meyer said the government recently announced it will not do so in the near future.

“It won’t bring any big dollars right now. If something big happens in either two projects, the district could get sizable dollars,” said Wickert, who worked as a consultant for both Montebello and Los Angeles Unified.

“What we’re doing now is we reserved our place in line for the money,” said Stephen L. Phillips, business manager.