Tax Increases Would Go to Schools : Santa Ana Considering Big Redevelopment Area

Santa Ana, in an attempt to improve its financially strapped school system, is quietly studying the possibility of creating a redevelopment area that could encompass most of the city, The Times has learned.

The project, which is still in an exploratory phase, would allow the city to funnel future increases in tax revenue to its school districts.

Virtually all properties outside the city’s present and planned redevelopment areas are being considered in the new plan, although some neighborhoods probably cannot be included because they are not blighted, according to a memo from Cynthia J. Nelson, executive director for Community Development.

Officials had not yet calculated how much extra money could be diverted to the city’s three school districts and one community college.

City Manager David N. Ream said the plan could pay for such facilities as gymnasiums and playgrounds. “It wouldn’t pay for new schools,” Ream said. “It just wouldn’t be enough.”

Many other cities, including Brea, San Juan Capistrano and Anaheim, have used part of the revenues from redevelopment to aid school districts. The Santa Ana plan differs because it could include such a large part of the city and because the entire increase in tax revenues would be turned over to the school districts.

Although redevelopment in Orange County has been controversial because cities may take over property, Ream stressed that Santa Ana would not condemn any commercial or residential properties to make way for the citywide redevelopment plans.

Memos from Nelson had discussed the possibility of exempting residential properties from condemnation as a way of gaining public support, but they did not mention commercial properties.

Apparently fearing the kind of public opposition that shot down redevelopment projects in Huntington Beach and Anaheim last year, Santa Ana officials had hoped to keep the sketchy plan under wraps for several more months.

In an Oct. 1, 1987, memo to Deputy City Manager Jan Perkins, Nelson listed as the first of several concerns that “no public announcements/actions regarding the new program should be made until the Bristol Corridor Redevelopment Project Area is created, which is estimated to occur in June, 1988.”

Present Redevelopments

The city already has five redevelopment areas--Downtown, South Main, Intercity, North Harbor and South Harbor--and has plans to form a sixth along Bristol Street this year.

Nelson did not return several phone calls to her office Wednesday.

Ream denied that the city tried to keep the plan secret. “There’s no mystery in the process,” Ream said. “I don’t see it as terribly politically sensitive. It was disseminated among a lot of people.”

Ream said the project, if it is found feasible, is still several years away from implementation. “We’re just brainstorming with the school districts. . . . It’s something we’ve been looking into on a non-priority basis.

“In order for the city to succeed long-term, the schools have to be successful. . . . If this is a way to raise money for the schools in our community, we’ll take a hard look at it.”

Schools’ Value to City

Mayor Dan Young said all he knew about the plan was that city staff members had been researching “how redevelopment can help school districts.” He said that a good school district is “vital to the city’s economic future . . . and we have to do whatever we can to help them.”

Councilman John Acosta blasted the idea.

“What I want to know is, why?” Acosta said. “Personally, I think it’s ludicrous to think that people are going to support that.”

Susan Tully, president of the Santa Ana Neighbors for Excellence, a citywide residents group, said she had heard rumors about the plan and was concerned.

“I’m wary, and I’d certainly like to know more about it,” she said.

Since early November, Nelson, her staff and the city Redevelopment Agency’s economic consultant, Katz Hollis, have been compiling data and surveying neighborhoods that might be included in the project.

Precedent Lacking

The field survey is expected to be completed next month and an “eligible area” marked off for further study by Katz Hollis, a Los Angeles-based firm, according to a Dec. 11 memo from Nelson. That memo also says that Katz Hollis was unaware of any precedent for such a program but did provide the city with information on “creative methods for determining blight.”

When a redevelopment area is created, property tax revenues are frozen at existing levels. As the property is upgraded--usually with the help of a bond issue--the increased taxes, called the “tax increment,” are diverted to the redevelopment agency to pay off its debt and finance other projects.

The citywide plan would work much the same way, Ream said, except that the tax increment would be funneled to the school districts to pay for projects they otherwise could not afford.

Officials of Rancho Santiago College and the Santa Ana, Tustin and Garden Grove unified school districts who met with Ream late last year to discuss the plan applauded the idea.

“The city (of Santa Ana) was just telling the schools that they were investigating the possibility of another way of raising money for education and for city infrastructure,” said Anthony J. Dalessi, an assistant superintendent in the Santa Ana Unified School District.

Dollars Not Mentioned

Santa Ana Unified, which serves most of the city, would likely get more of the money than other districts under the redevelopment plan, but no dollar amounts were mentioned in the meeting with Ream, Dalessi said.

With about 38,000 students, Santa Ana Unified is the most populous school district in Orange County and is also the most rapidly growing. It has increased by about 1,000 new students each year for the past 10 years, and the projections call for a continuation of that growth.

The school district is trying to house the huge growth of students by building 22 new schools in the next five years. Dalessi, however, noted that state funds for building new schools are exhausted, and even Gov. George Deukmejian’s proposed new $1.6 billion in added funds for school buildings will not cover all the statewide needs.

Times staff writer Bill Billiter contributed to this report.