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.
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.