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General Finance Information

Financing Redevelopment Projects

In accordance with California Redevelopment Law, the Agency obtains funding of its redevelopment projects through a financing method called "tax increment financing." Under this method, assessed values of properties within the Redevelopment Project Areas at the time the redevelopment plan was approved by City Council/San Jose Redevelopment Board become the Base Year Value. Any increase in taxable values of properties in the redevelopment area in subsequent years over the Base Year Value becomes tax increment. Collections of tax increments are pledged to the payment of debt service on the obligations issued to finance redevelopment projects. Like other California redevelopment agencies, the Agency has no power to levy property taxes, thus relying exclusively from the collection of property tax increments.

The Merged Area Redevelopment Project (Merged Area) was formed in 1981 from the merger of existing Agency project areas. Other project areas have been subsequently established and added to the Merged Area. The merger of all Agency project areas facilitates debt financing of capital projects.

Property taxes on Base Year assessments go to schools, city, county, and other taxing entities. Under the California Community Redevelopment Law Reform of 1993 (AB 1290), schools, city, county and other taxing entities within the redevelopment areas receive a certain percentage above the Base Year amount, after the 20% low/moderate income housing set-aside.

20% Low/moderate Income Housing Set-aside

Redevelopment Law requires the Agency to set aside not less than 20% of all tax increment revenues into a low and moderate income housing fund to be used for the purpose of increasing, improving and/or preserving the supply of low and moderate income housing.

Redevelopment Project Areas

For more than three decades, the Agency has been revitalizing and enlivening the City’s downtown, neighborhoods, and industrial areas to meet the needs of a dynamic and diverse community. The Agency has twenty-one (21) ongoing redevelopment project areas, which are grouped into geographical areas:

  1. Downtown
  2. Neighborhood Business Districts
  3. Strong Neighborhoods
  4. Industrial

Only sixteen (16) project areas and one (1) Strong Neighborhoods Neighborhood are authorized to generate tax increment revenue.

Tax Increment Revenue Limitation

The Agency was required by Law in 1986 to adopt a resolution setting forth a limit on the amount of tax increment revenue it may receive with respect to Merged Area Redevelopment Project (Merged Area). Pursuant to Council/ Board Resolution No. 2598, the maximum amount of tax increment revenue that the Agency may receive from the Merged Area was established in the amount of $7.6 billion.

On April 7, 2009, the City Council/Agency Board approved amendments (Resolution No. 5901) to the Agency's Redevelopment Plans for the Merged Project Area increasing the tax increment limit from $7.6 billion to $15 billion and establishing a single limit of $7.6 billion for the bonded indebtedness that may be outstanding at any one time.

Limits on Tax Increment Spending

  • May not be used for City operating expenditures, such as public safety (police and fire protection)

  • Used only for Redevelopment purposes -
    (a) within Redevelopment Project Areas
    (b) on projects that meet redevelopment goals, such as blight elimination, etc.

  • 20% of tax increment dedicated to low/moderate income housing

  • Redevelopment activity in each of the tax increment generating project areas ends during the period 2012 through 2033

  • Bond issues have additional limitations

Types of Debt

The Agency issues tax allocation bonds, housing set-aside tax allocation bonds, revenue bonds, and refunding bonds. It may also incur any indebtedness (including variable rate debt) or enter into any interest rate swap agreement, cap, collar, floor, option or similar hedging agreement, installment sale obligation, lease obligation or other obligation having lien and charge upon the revenues in accordance with the debt indenture.

This web page and other web pages covering the Finance and Debt Related Information are maintained by the SJRA Finance Division. Information on this page is for general informational purposes only. It does not purport to include every item that may be of interest to users.

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