Originally intended to benefit tax-supported organizations, redevelopment projects are now picking the pockets of Utah schoolchildren to the tune of about $10 million annually, school officials say.
Since 1979, when the tax money returned to redevelopment agencies was only $2.5 million statewide, the amount has escalated by 900 percent to more than $25 million in 1992, according to figures developed by a committee studying RDA issues. Schools and county governments are the biggest losers.What does $10 million represent to schools?
It would come close to replacing a junior high school building, would mend numerous roofs and repave scores of parking lots, hire about 370 teachers (more or less, based on a third-year teacher's average salary package of $27,000), purchase tons of textbooks and supplies or fund the bulk of the state's technology effort for one year.
Deputy State Superintendent Laurie Chivers said school officials have several complaints related to RDAs. Among them: the inability of school officials to have input in RDA planning; the siphoning of money that should be going to public education; and the length of the tax breaks given to RDA businesses.
"It concerns us that the RDAs aren't doing what they were intended to do," said Chivers. "We are concerned with the sweetheart deals that appear to go on, binding others to those deals."
Schools lose in two ways. A local property tax levy that is mandated to support the statewide basic school program is reduced, affecting all schools. State Office of Education figures show basic school program income has decreased by $3.5 million to $4.7 million annually for the past five years because of the RDAs. At the same time, as a district's assessed valuation dips, it proportionally loses part of the money its education levy would raise to be used at the district's discretion. Capital outlay, transportation and recreation funds are among those affected.
The size and nature of a school district dictate the RDA figures. Salt Lake District bears the lion's share of the losses - about 58 percent - because of the number of RDA projects within its boundaries.
The Salt Lake District loses $6.6 million annually in property taxes because of tax breaks given to RDA projects. "No other school district in the state has been more heavily impacted by RDAs," said district business administrator W. Gary Harmer.
The amount that the district loses to redevelopment is significantly more, for example, than the $4 million it will cost to rebuild Uintah Elementary School. It could also easily cover the almost $4 million that the district wants to boost the budgets of its inner-city schools to address the needs of at-risk children.
But Salt Lake does get a small portion of the RDA tax increment - $390,000 - returned because of special legislation passed several years ago. That law allows school districts to collect what the legislative auditor general calls "hardship payments."
The payment evolved at the time that city officials and legislators were seeking to lure the Delta Center to the city center and to improve the Salt Palace by making them RDA projects.
"At the time, the school district was not willing to give up that (property tax) revenue. We're struggling not only to maintain an adequate school program, but also with facilities and construction," he said.
After what Harmer calls "much arm twisting of the school district," the district agreed to a "hardship payment" of up to $390,000 annually in exchange for removing opposition to the projects. Additional payments to the district are based on a sliding scale for improvements made to the Salt Palace.
"It's better than a kick in the pants, but it's not anywhere near what we're giving up," the business administrator said of the "hardship" payment. The school district was stuck on "the horns of a dilemma," Harmer said. "We wanted to be supportive of the city in maintaining viability, but almost all growth was in the RDAs. The tax growth was going on in the form of incentives for developers instead of to the taxing entities, such as the school district."
He pointed out that RDAs receive benefits the district doesn't. If the district builds a new school, "we have to pay the developmental costs."
In 1992-93, Davis District estimated a total loss of $433,505. In 1991-92, Granite's loss was $275,468.
School districts heavily impacted by RDAs sometimes raise local property taxes to offset the loss, which shifts the tax burden to non-RDA businesses and individual property owners, said Larry Newton of the State Office of Education.
School officials recognize that the original intent of RDAs was to strengthen the local tax base over time.
"We're happy when we see an unused field going into development," said Jordan District business administrator C. Devon Sanderson.
But many school districts watch that prospective future advantage dwindle into tax losses that probably won't ever be recouped.
"The Ogden Mall really hurt us," said Ogden Superintendent James West. "And now, many of those stores are being boarded up, though they're still 15 to 16 years from any payoff for us." He figures his district has lost $14 million to RDA increments over the past 10 years.
"We recognize the possible advantages, too," said West. "We don't want it all to go away, we just want a voice in (RDA planning). We've never had it in the past."
He cited as a good example of RDA development the Morton company, which has "become a partner in our community, cooperating with the district in giving students job experience and bringing new employees that increase the district's share of state student funding. When everyone works together, it seems to work well."
Some types of businesses have more potential to generate a return to the schools over the long haul. But the bulk of RDA development (65 percent) has been to accommodate retail sales, Newton said. These businesses tend to create fewer jobs that pay lower wages and can have a shorter life span, Newton said.
Some retailers have become very astute at selecting an RDA site over one that would generate school taxes, West said. They will leave a viable site where business is good and where they are paying local taxes to re-locate in an RDA, where they get a tax break.
For instance, said West, two Ernst hardware stores in Ogden were closed when a third one opened at an RDA site on Riverdale Road.
That's a double-whammy for the local school district, which loses the tax money that was being generated at the original site, along with the tax money that goes to the RDA at the new site.
In addition, when a major store moves, the site it left may stagnate, creating blight rather than alleviating it.
"The RDAs shouldn't be only to benefit major corporations. We don't want them to hurt our small-business people, either," West said.
"The RDA businesses simply are not paying their way for kids."