In accordance with California Redevelopment Law, the Agency obtains funding of its redevelopment projects through a financing method called "tax increment financing."
How Financing Works
How Repayment Works
Under this method, assessed values of properties within the Redevelopment Project Areas at the time the redevelopment plan was approved by City Council/San Francisco 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.
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.