Public-Private Dev

An Introduction to Property Tax

Property taxes give state and local governments a dependable source of revenue to help pay for public schools, roads, parks, public safely, and government administration. Levied at every level of local government, from state to county to special districts, property taxes pay for public services. These taxes are often complex and not well understood.

Public schools are often the biggest line item for receiving funding from property taxes. Because the U.S. government contributes about 10 cents to every dollar spent on K-12 education, most of the money that pays for education comes from state and local governments. Thus, schools are highly dependent on the property wealth of a community.

In California, property tax is one of the largest taxes paid. Sometimes, Californians pay more in property taxes and charges than they do in state personal income taxes. Property tax is unpopular among taxpayers, partly because it varies between regions. Different assessments for similar properties seem unfair, and the tax may burden fixed-income property owners in high-growth areas.

RSG analyzes, projects, and explains property tax revenues for local government organizations to assist with budgeting, upholding the specifications in their tax sharing agreements, and presenting information to the public.

Written by Evanne Holloway, a Research Assistant at RSG

Affordable Housing at Its Best

Photo courtesy of http://www.amcalalegre.com/irvine-irvine/alegre-apartments-apartment-home/photos/

Photo courtesy of http://www.amcalalegre.com/irvine-irvine/alegre-apartments-apartment-home/photos/

Alegre Apartments, an example of successful affordable housing development, opened in June 2015 in northern Irvine. The award-winning affordable housing community developed by AMCAL in partnership with the City of Irvine and the Irvine Community Land Trust, won the Kennedy Commission of Orange County’s project of the year award for 2015.

The development achieved LEED Gold building certification with sustainability features. LEED for Homes is a national, voluntary, rating system administered by the U.S. Green Building Council (USGBC).

Alegre provides 103 spacious one- to four-bedroom apartments for low, very low, and extremely low income households. Amenities include a pool, kids’ water splash, barbecue area, tot lot, and a large, two-story clubhouse with offices, computer lab, media room, game room, and fitness center.

AMCAL has partnered with LifeSTEPS, Families Forward, the County of Orange and United Cerebral Palsy to provide social services. Alegre is the sixtieth residential community developed by AMCAL.

Without redevelopment property tax increment set aside for affordable housing and federal housing funds constantly threatened to be cut in Congress, financing such affordable housing projects is increasingly difficult. The HOME Investment Partnerships Program gives states and cities money to address local affordable housing needs, but Congress wants to slash funding.

RSG helped the Irvine Community Land Trust develop the Alegre Apartments by requesting and evaluating developers’ proposals, negotiating agreements, and providing additional guidance and insight. Contact RSG to help you develop your own version of the Alegre Apartments!

Written by Hitta Mosesman, a Principal at RSG

Top Priority Issues Identified at the League of California Cities Conference

On Monday, we told you about our attendance at the League of California Cities conference. As we live in a time of emails and social media, RSG truly enjoys face-to-face interaction with our existing clients, as well as staff and Councilmembers from other cities throughout the State.  We had many interesting and productive conversations with attendees about the important issues currently facing cities.

Many of these conversations were sparked by the unique game that we had at our booth. Using poker chips as voting tools, we had six jars representing six priority issues for many cities:
           •    Aging Infrastructure
           •    Affordable/Workforce Housing
           •    Sales Tax Generators
           •    Hotels
           •    Closing Budget Deficit
           •    Job Creation

We received over 100 votes over our two days at the exhibit hall.  And the winner was…….        

!!! Affordable/Workforce Housing !!!

Those who provided a business card at the conference will receive an infographic on Affordable/Workforce Housing that contains valuable data and research on the subject. We’ll delve a bit deeper into affordable/workforce housing solutions without tax increment financing in a post later this week.

At the booth, we also offered an infographic that summarizes the key points of both Senate Bill 107 (Redevelopment Dissolution Trailer Bill) and Assembly Bill 2 (Community Revitalization and Investment Areas that allow for tax increment financing). There was considerable interest from many conference attendees regarding both bills and how the new laws would affect their particular communities.  The infographics are shown here. 

All in all, the conference was a wonderful experience and gave RSG partners and staff the opportunity to connect with clients and others about the challenges and triumphs experienced by communities across the State.

For more information on any of the topics mentioned above, please contact Hitta Mosesman at hmosesman@webrsg.com

Written by Hitta Mosesman, a Principal at RSG.

RSG Attends League of California Cities Conference

Photo credit, League of California Cities

Photo credit, League of California Cities

Four RSG partners--Alexa Smittle, Tara Matthews, Hitta Mosesman, Jim Simon--and Associate, Suzy Kim (who operates our Berkeley office), attended the League of California Cities Conference in San Jose from September 30 to October 2. While there, we enjoyed learning what cities throughout California are doing to improve their communities.

Millbrae is attracting foreign investment by partnering with stakeholders in its diverse community. After identifying community needs and projects ready for investment, the city partnered with dignitaries and expats living in Millbrae, and the local Chinese Business Association, to conduct outreach. City staff learned that investors want to see a return on their investment within five years. These investors like to promote the use of technology developed in their home countries. Popular industries are manufacturing, green space, and technology. Millbrae is also updating its city codes and requirements to enable flexibility, such as permitting off-site parking for a popular Chinese restaurant.

Perris and Davis have implemented Healthy Community initiatives to promote physical and social health. Perris promoted a “Live Well Perris” campaign with several events such as walks and hikes with the mayor, free workouts in the park, a “biggest loser” challenge with more than 600 participants, and a “senior citizen prom.” Davis is building social health and capital by sponsoring neighborhood courts staffed by community volunteers. Low-level offenders can elect to go to a neighborhood court instead of a traditional court. The concept promotes mediation and community dialogue and identifies systemic problems, like alcoholism on the university campus that can be addressed through other programs.

Later this week, we’ll highlight the top community issues identified by conference attendees. Watch this space to find out what they are!

Written by Suzy Kim, an Associate at RSG.

Extending EB-5

A rendering of Miami's Panorama Tower, the  first project being funded via the Miami EB-5 regional center. Photo credit: Moshe Cosicher/AIA via The Wall Street Journal.

A rendering of Miami's Panorama Tower, the  first project being funded via the Miami EB-5 regional center. Photo credit: Moshe Cosicher/AIA via The Wall Street Journal.

On September 30 the U.S. Congress passed a government funding bill containing a short-term extension of the EB-5 Regional Center Program through December 11, 2015. In addition, the bill contains extensions for E-Verify, the Conrad-30 Waiver Program, and the Non-Minister Religious Worker Visa Program.

According to National Law Review, the EB-5 community had wondered what would happen after the EB-5 Regional Center program’s previously expected expiration on September 30. Meanwhile, Congress has been working toward an EB-5 reform package.

EB-5 is an important, albeit somewhat controversial and often misunderstood, source of real estate and economic development financing. Congress created the program in 1990 to attract investments from qualified foreign investors. They must demonstrate that at least 10 new jobs were created or saved as a result of the EB-5 investment, which must be a minimum of $1 million, or $500,000 if the funds are invested in certain high-unemployment or rural areas. In 1992, Congress designated EB-5 Regional Centers to pool EB-5 capital from multiple foreign investors for investment in USCIS-approved economic development projects within a defined geographic region. Today, 95 percent of all EB-5 capital is raised and invested by Regional Centers.

Regional Centers, which can be publicly owned, privately owned, or a public-private partnership, maximize job creation benefits by helping with the investment of capital in large-scale projects. They work with regional economic development agencies that use the funds to leverage additional capital. 

Now that the program has been extended until December, industry stakeholders need to present their ideas about implementing workable reforms and supporting job creation. The objective is to meet the expectations of investors, regional centers and job creating projects to enable participants to proceed in a stable, predictable manner.

Written by Jim Simon, a Principal at RSG

TAPping into Knowledge: Solving Land Use Issues as Part of a ULI Technical Advisory Panel

Photograph of drawing by Thomas Ventura, Gensler.

Photograph of drawing by Thomas Ventura, Gensler.

This past July, I participated in an Urban Land Institute (ULI) Technical Advisory Panel (TAP), in which ULI members volunteer their time to address challenging land use issues and give back to the community. 

TAPs are the advisory service program of ULI, in which professionals from fields related to land use -- architects, planners, financial analysts and others -- come together to research and analyze complex land use issues and make recommendations to solve them. We conduct a deep level of research and education and provide advice and recommendations to public agencies and charitable organizations.

In this case, we worked for Cal State Dominguez Hills and AEG to help them improve the land use, circulation, and development financing for their shared campus. The university leases land to AEG, which developed and operates world class athletic facilities including the StubHub Center. In implementing its master plan, the university is seeking guidance for site planning and land use recommendations to accommodate future planned uses of both the university and the StubHub Center; energize the campus, shared sports venues and AEG venues; and create a place that attracts additional students, athletes, and visitors.

The exercise is similar to RSG’s work in that a team of professionals works together to solve local land use issues. Nonetheless, TAPs are condensed into a much shorter time frame than the average RSG project.

Cal State Dominguez Hills and AEG will use our recommendations as part of their long-term campus planning process. It is gratifying to be part of the process.

Written by Dima Galkin, Senior Analyst at RSG.

Lowdown on Redevelopment Dissolution and Property Disposition

When the redevelopment system was dismantled in 2012, redevelopment leaders were afraid that the state Department of Finance (DOF) would force a fire-sale of redevelopment assets that could drive prices down and undermine cities’ ability to complete redevelopment projects. Now successor agencies are slowly putting real estate on the market, partly because both successor agencies and DOF are getting around to dealing with Long-Range Property Management Plans or LRPMPs – plans that delineate how to dispose of properties owned by former redevelopment agencies. 

Property sales must be approved both by the successor agency’s oversight board and by DOF.  Redevelopment agencies have been battling DOF over their ROPS, or Recognized Obligation Payment Schedules. By mid-June, 232 such plans had been approved, representing 60 percent of all successor agencies with property. A further 86 had been submitted to DOF. There is no central, publicly available resource to tell what is happening to ex-redevelopment properties overall. While much information is posted on the DOF Web site and successor agencies' sites, it is not organized to enable systematic search or review. 

Tara Matthews, one of our Partners, was featured in a recent California Planning and Development Report article about LRPMP property disposition.  As Tara said in the article, "The disposition process is confusing, cities are short-staffed, the typical brokerage companies don't understand the process and are hesitant to take it on, and developers don't know what options are available or how to initiate the conservation with cities." 

Tara is a positive thinker who loves to identify opportunities and come up with well-thought out solutions. Anyone looking to learn more about the potential opportunities in post-redevelopment real estate should talk to Tara at RSG.


Written by Andrew Gee, a Senior Associate at RSG.

Private Developers Unveil Proposals to Revamp Long Beach Civic Center

 

At a special study session of the Long Beach City Council on Tuesday, October 14, two developer teams finally unveiled their proposals for the redevelopment of the City’s 37-year-old Civic Center, which currently includes City Hall, a library, the 4.8-acre Lincoln Park, a shuttered state courthouse, and parking. It’s been a long time coming.

In 2005, seismic studies conducted in the wake of Hurricane Katrina revealed that City Hall was in danger of collapsing in the event of an earthquake with a similar magnitude as the 1994 Northridge quake. Naturally, this finding immediately prompted discussions among City officials regarding upgrading or replacing the Civic Center. About eight years later, in April 2013, the City issued a Request for Qualifications (RFQ) to solicit developers interested in constructing the new Civic Center. In October 2013, the City announced the three short-listed proposers and, in June 2014, received Request for Proposals (RFP) responses from two of the three, Long Beach CiviCore Alliance (LBCCA) and Plenary-Edgemoor Civic Partners (PECP).

Prior to beginning the RFP process, the City estimated that retrofitting the existing City Hall to address the seismic deficiencies would cost about $194 million. Rather than paying that hefty price to upgrade an inefficiently designed and somewhat functionally obsolescent 40-year old building, the City devised another alternative: identify a private developer who would design, build, and finance a brand-new Civic Center in exchange for 1) a maximum of $12.6 million in annual payments for 40 years from the City, which would rent the new public facilities and 2) the right to develop on the City’s unused portion of the 16-acre land. In its RFP, the City also expressed interest in the inclusion of a headquarters building for the Port of Long Beach in the new Civic Center and stipulated that Lincoln Park must be not only retained, but upgraded.

If successfully completed as described, the two developments proposed by LBCCA and PECP on October 14 would certainly transform the look and feel of the Civic Center area. Both proposals include an aesthetically and functionally modern City Hall, library, park, and port headquarters building, as well as a significant private mixed-use project comprising a hotel, residential units, and retail. LBCCA’s design also includes an “innovation village,” which is described as a hybrid between a technology incubator and an adult education facility that would be a collaborative effort with Long Beach City College and California State University Long Beach. Unlike the alternative of simply retrofitting City Hall for the purposes of withstanding a terrible natural disaster, the proposed developments could result in myriad benefits, including new jobs, new City revenue, new residential units, public facilities that better meet community needs, and potentially a more vibrant downtown. And the City would gain all this for no more than $12.6 million per year, which is the City’s estimated cost of operating and paying debt for the current Civic Center. However, the City would inherently take on some of the construction risk and also would forgo ownership of the public buildings and land until the end of the 40-year lease agreement.

What do you think about Long Beach’s proposed plan? What are your thoughts on public-private partnerships in general?

Written by Dominique Clark who is an Analyst at RSG.