Bond Issues: Yes on 87

Proposition 87 is yet another plea for voters to help correct some highly technical language in the California Constitution.

This case involves financial windfalls for redevelopment agencies that can occur when cities or special districts float general-obligation bond issues for jails, sewers or other public works. Voters are asked to amend the Constitution so that the state Legislature can put an end to the wind-falls. We urge a Yes vote on Proposition 87.

To repay general-obligation bonds, property taxes usually are increased by enough to pay capital and interest over the life of the bonds, and the revenue is earmarked for that purpose. The idea is that property owners share, and share alike, the cost of a bridge or a new road from which they benefit.

Share alike, that is, except when the higher taxes to cover retirement of the bonds are imposed on office buildings, apartment houses and other improvements inside the boundaries of a redevelopment project area. In such cases, because of the wording of the Constitution on taxation of redevelopment agencies, the agencies get the money to use as they see fit. There is nothing nefarious about the windfall. Redevelopment agencies get back the money that they invest in projects to reshape cities from the natural increases in property taxes that occur because redevelopment improvements increase the value of property. The law simply failed to distinguish between a natural increase in revenue and one imposed to pay off bonds.

It has happened that cities have been forced to tax properties outside redevelopment areas at a higher rate than their fair share to make up for the loss of some funds to redevelopment agencies.

Proposition 87 simply authorizes the state Legislature to require that all revenue from such property-tax increases be pledged to pay off the bonds. Even the state’s redevelopment agency association, whose members would stand to lose something under the change, favors ending the accidental windfall. We recommend a Yes vote on Proposition 87.