Agency Financing - How Tax Increment Works

One of the major revenue sources for the Agency is tax increment. At the time a redevelopment project area is formed, the then current assessed value of the project area is determined ("base year"). As redevelopment activities become successful, development and property transfers occur thereby increasing the project's assessed values. The project area then generates a higher level of property taxes as a result of the assessed value growth from development. Under redevelopment, a portion of the growth in property tax revenues resulting from assessed value growth is allocated to the redevelopment agency to fund its program.

Twenty percent (20%) of annual tax increment revenues received by the Agency are deposited into a separate Housing Fund which must be used by the Agency to increase, improve and preserve the City's supply of affordable housing for persons of low and moderate income. The Agency may spend monies from the Housing Fund either within a project area or subject to findings of benefit, outside a project area.

In addition to the twenty percent (20%) Housing Fund deposit, the Agency also apportions approximately sixty-four percent (65%) of annual tax increment revenues generated in the San Fernando Road Corridor Redevelopment Project Area to certain affected taxing entities pursuant to tax sharing agreements entered into at the time of the project area adoption.

The apportionment formulas incorporated into the respective tax sharing agreements were intended to alleviate any fiscal detriment to the affected taxing entity as a result of the project area adoption. The San Fernando Road Corridor Redevelopment Project Area has tax sharing agreements with the County of Los Angeles, the Glendale Unified School District, and the County Office of Education.

The remaining tax increment revenues allocated to the Agency may be used for its general redevelopment programs, including funding the acquisition of property, construction of public improvements, and other similar program elements.