Property owners in older sections of Manteca are paying $4.6 million in property taxes each year that pays debt generated indirectly by previous city leaders.
It doesn’t go to the Manteca Unified School District that in normal circumstances would receive 51 percent as the schools’ cut of the $4.6 million.
Not a cent goes to San Joaquin County, Delta College, the South San Joaquin Irrigation District, and several smaller government entities such as the mosquito abatement district.
Instead, it goes to pay down debt incurred by prior City of Manteca leadership that formed and then oversaw the redevelopment agency to tackle blight, affordable housing, and economic stimulus.
The last RDA bond of $50.7 million was issued in 2005.
That issuance — along with others made several years prior that originally represented more than $80 million in additional debt — was refinanced in 2019 into a new 30-year bond. The lower rate freed up $510,000 annually for the school district and $175,000 plus yearly for the city.
The 2019 reissuance of debt left the RDA successor agency with $139.8 million in principal and interest to pay off.
That translates into $4.6 million a year.
Earlier this month, the current City Council overseeing the successor agency authorized the repayment schedule for the 2025-2026 fiscal year starting July 1, 2025.
When the last payment is made in 2050, just over $700,000 annually will flow into the city’s general fund to pay for day-to-day services such as police and fire services as well as street maintenance among other items.
The reminder of the $4.6 million paid annually by Manteca property taxpayers will be distributed based on proportional shares to other agencies that provide services.
At first glance, the RDA bonds — if they weren’t refinanced in 2019 — would have diverted $875,000 annually from the city’s general fund this year. The refinancing reduced that in 2020 to $700,000.
The RDA funded major projects that have boosted the overall city property tax receipts significantly beyond what would have happened without diverting property tax to fund projects.
The list of significant projects included:
*the Union Road interchange upgrade.
*creating the McKinley interchange.
*the original extension of Daniels Street and accompanying infrastructure that made the private sector investment in the Stadium Retail Center and Costco possible.
*the Big League Dreams sports complex.
*the second extension of Daniels to McKinley Avenue with accompanying infrastructure that allowed Manteca to sell city owned property that was developable to snare the 500-room Great Wolf indoor waterpark resort.
*more than 400 units of affordable housing.
There were also RDA loans to the private sector paid back with interest.
The 900-pound gorilla was a $7 million 15-year RDA loan paid back with interest some 10 years in advance that bridged a shortfall in private financing that turned 300 plus acres of blight between the shuttered Spreckels Sugar beet processing plant and a former cattle feed lot into the Spreckels Parks economic juggernaut.
RDAs were set up by the state as a local economic development tool designed to eliminate blight and create new jobs.
Twenty percent of what was generated from bond sales had to be spent on affordable housing endeavors.
How the RDA worked was simple.
After the base year was established any increase in property tax — whether it was an increase in value due to a sale, incremental increases up to 2 percent as allowed under Proposition 13, or taxes on the value of new improvements — went to the RDA.
That effectively flat-lined the dollar amount the 10 taxing agencies received for property taxed within the RDA boundary.
In the case of raw land developed within RDA boundaries, 100 percent of property taxes assessed on new construction went to the RDA.
The only thing the 10 taxing agencies got were taxes based on the land at the time it was not development.
That meant a $25 million distribution center built on land valued at $200,000 prior to construction would result in $250,000 a year in taxes going to the RDA and $2,000 a year split between the 10 local taxing agencies.
Redevelopment agencies statewide were dissolved by the state at the depth of the Great Recession in 2012 to primarily free up money for local school districts that in the case of Manteca receive 50 percent of all local property taxes.
That allowed the state then to reduce school funding and use that money they saved to avoid the layoff of state employees and reducing services as cities, counties, and school districts had to do to remain solvent during the Great Recession.
To contact Dennis Wyatt, email dwyatt@mantecabulletin.com
