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Understanding Boomerang Funds: Distribution and Opportunities in Residual Property Taxes

Explore the concept of boomerang funds under California's Redevelopment Dissolution Laws. These funds are residual property tax distributions to local taxing entities, previously part of the redevelopment tax increment system. Learn about the various sources of boomerang funds, their potential uses, and the opportunities they present for funding affordable housing and economic development. This overview discusses the tranches of property distribution, timing of distributions, and the complexities involved in utilizing these funds for public benefit.

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Understanding Boomerang Funds: Distribution and Opportunities in Residual Property Taxes

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  1. Boomerang Funds: Residual property taxes distributions under the Redevelopment Dissolution LawsKaren TiedemannGoldfarb & Lipman1300 Clay Street, 11th FloorOakland, CA 94612510-836-6336ktiedemann@goldfarblipman.com goldfarb lipman attorneys

  2. Overview • What are “boomerang funds”? • How are boomerang funds distributed to taxing entities? • Exploring opportunities and restraints on use of boomerang funds • Open Dialogue

  3. What Are “Boomerang Funds” • Property taxes distributed to “affected taxing entities” under AB 1x 26 and AB 1484 that would formerly have been part of redevelopment “tax increment” system • Potential sources of boomerang funds: • July 12th True Up Payments (§34183.5); • Due Diligence Review Payments (§34179.6); • Land disposition under Long-Range Property Management Plan (§34191.3); and • Semiannual Residual Distributions from Redevelopment Property Tax Trust Fund (RPTTF) (§34183).

  4. LRPM Plan Land disposition • Four Tranches of Property Distribution under LRPM Plan: • Public Use • Project described in Redevelopment Plan • For Enforceable Obligation • For Liquidation but plan can direct use of sales proceeds for: • Enforceable obligations; • For project identified in approved redevelopment plan; or • Distribution to taxing entities

  5. Biannual RPTTF ROPS Distributions

  6. Timing of potential Distributions

  7. Hypothetical distribution of property taxes in City “a” • Distribution of $1,000,000: • $495k will go to School Districts • $295k will go to the County • $95k will go City • $95k will go to “Other Taxing Entities” • $20k will go to “County ERAF”

  8. Potential Opportunities • Local Efforts: • San Francisco Proposition C- Dedicated $50 million of residual distributions and unspent bond proceeds to fund affordable housing • City of Fremont dedicated portions of residual from Housing Fund Due Diligence Review it received to fund economic development and affordable housing activities • County of Los Angeles dedicated $11 million to affordable housing; exploring ways to invest $200 million of residual funds for economic development and affordable housing purposes • Regional/State Efforts: • No examples to date, but discussions on joint efforts

  9. Considerations/Restraints • Part of “general fund” revenues • Authority to spend on affordable housing is clear for cities/counties but other taxing entities • Subject to annual allocations and competition on general fund demands • Residual distributions are property taxes- • Issues arise in spending property taxes outside of jurisdiction • Residual distributions to school districts reduce State subvention • State realignment goals offsets amounts available to Counties • Bonding • Restrictions on multi-year pledge • Subject to general obligation bond 2/3 voter approval

  10. Discussion • Local focus and advocacy in short-term • Think about how the amounts and timing of potential residual distributions fit with affordable housing development processes and timelines • Underscores need for state-wide permanent source financing

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