Frequently Asked Questions about Redevelopment

1. What is Redevelopment?
Redevelopment is a process created to assist city and county government in eliminating blight from a designated area, and to achieve desired development, reconstruction and rehabilitation including but not limited to: residential, commercial, industrial, and retail.

2. What is a Redevelopment Agency?
California State law allows local governments to establish Redevelopment Agencies. A Redevelopment Agency is established to define and address areas within the City that require redevelopment, due to blight, lack of affordable housing, and/or economic distress within a given geographic area.

In the City of Hughson, as in most California cities, City Councilmembers also act as Boardmembers of the Redevelopment Agency. City Council meetings and Redevelopment Agency meetings are held concurrently. Some items on the agenda are under the jurisdiction of either the Council or the Agency. These items may be voted on by declaring the meeting open under the appropriate jurisdiction.

3. What activities are considered redevelopment?

Redevelopment includes:
• Affordable housing and homeownership opportunities
• Revived business districts
• Revitalization of rundown neighborhoods
• Crime reduction
• Improvement to streets, lighting, sewers and water lines
• Clean-up of contaminated property
• Community Centers
• Parks
• Libraries
• Fire and Police stations
• Neighborhood beautification, such as upgrading building facades and sidewalks

4. What is a Project Area?
A project area is the grouped properties within which actual redevelopment will take place. The project area must first go to public hearing (giving citizens who will be included in the project area a chance to express their views) after which the Redevelopment Agency acts on the adoption of the project area and becomes responsible for future projects.

5. What areas in Hughson are designated as redevelopment project areas?
The City of Hughson Redevelopment Agency has one redevelopment area. To see a map of Hughson’s Redevelopment Project area click here.

6. What is the benefit to being in a Redevelopment Project Area?
Redevelopment is one of the most effective ways to breathe new life into deteriorated areas plagued by social, physical, environmental or economic conditions that act as barriers to new investment by private enterprise. Through redevelopment, a project area will receive focused attention and financial investment to reverse deteriorating trends, create jobs, revitalize the business climate, rehabilitate and add to the housing stock, and gain active participation and investment by citizens which would not otherwise occur.

7. What is a Redevelopment Plan?
A redevelopment plan represents a process and a basic framework within which specific projects will be undertaken. The plan provides the Agency with powers to take certain actions such as to buy and sell land within the area covered by the plan (project area), improving dilapidated facilities, and to use tax increment financing.

8. How are projects funded in a redevelopment area?
Tax increment is the primary source of revenue that redevelopment agencies have to undertake redevelopment projects. It is based on the assumption that a revitalized project area will generate more property taxes than were being produced before redevelopment, due to the improvements and increased property values in the project area.

Normally, property taxes are apportioned to a number of different taxing entities, not just the City of Hughson. Typically the City of Hughson receives less than 20 percent of the property taxes on a home. The majority of the taxes go to the County and State of California.

When a redevelopment project area is adopted, the current assessed values of the property within the project area are designated as the base year value. The base year value continues to go to all the existing taxing entities. Tax increment comes from the increased assessed value of property, not from an increase in tax rate. Any increases in property value, as assessed because of change of ownership or new construction, will increase tax revenue generated by the property. This increase in tax revenue is the tax increment that goes to the Redevelopment Agency, instead of to the State and other taxing agencies. It is NOT a new tax. Existing taxes are not increased.

As an area improves, property values increase. In California, property taxes do not increase except when there is a change in ownership or with new construction on the property. As properties are sold and reassessed within a redevelopment project area, the difference between the original property taxes and the new property taxes are kept within the redevelopment project area and reinvested to continue to improve the area. This difference between the original property taxes and the taxes assessed to the new owner is referred to as the “tax increment.”

For example:
A house was purchased in 1985 for $100,000. Property taxes on the home were $1,000 per year. California law allows property taxes to increase by 2 percent per year. By the year 2006, the owner is paying $1,420 in property taxes.

The house is in an area that has now been declared a redevelopment area. The house is sold in 2006 for $385,000. The property tax assessed to the new owner is $3,850 per year. Because the house is in a redevelopment area, the difference between the property tax paid by the original owner ($1,420) and the taxes assessed to the new owner ($3,850) stay within the City of Hughson to improve the redevelopment area.

The difference between the taxes paid by the 1985 buyer and the 2006 buyer is referred to as the “tax increment.” In this example, over $2,000 – the tax increment - will now remain with the Redevelopment Agency of the City of Hughson to be reinvested in the redevelopment area. As noted above, the City would normally receive less than 20 percent of the increase in property taxes.

9. Will property taxes be raised?
It is important to note that higher taxes from the sale, development, or rehabilitation of property reflect a rise in property value and not an increase in tax rate. Until a property is improved or sold, assessed values and tax rates in redevelopment areas are restricted by Proposition 13 limitations.

10. How is redevelopment financed?
The most common method of financing projects within a redevelopment area is a tax allocation bond. These bonds, which are a loan of money to the Redevelopment Agency, are not a debt of the City, community, or the general taxpayer. Rather, they are repaid solely from tax increment revenue generated within the project area. In other words, increased tax revenues generated through redevelopment activities are invested back into the project area to stimulate more development, as well as to pay the costs involved in undertaking redevelopment.

11. How are these Tax Allocation Bonds Issued?
The Redevelopment Agency Board can approve the sale of these bonds. No public vote is required. The payback period for the bonds is dependent on the number of years left in each redevelopment project area—in some cases, the bonds could be paid back over 30 years or longer.

12. What can these bonds pay for?
These bonds can pay for any purpose allowable under redevelopment law including infrastructure, public facilities, land acquisition and affordable housing.

Workforce housing must be part of each redevelopment project area. The requirements are as follows:

20 percent of the tax increment in the redevelopment project area must be spent to increase and improve the supply of low- and moderate-income housing.
15 percent of the tax increment in the redevelopment project area must be affordable to low- or moderate-income persons.
Redevelopment must replace all affordable housing in the project area that is destroyed or taken out of the affordable housing market.

13. How do I know if I live in a redevelopment area?
The City of Hughson Redevelopment Agency has only one redevelopment area. Click here to view and/or print a map.

14. How do I know what projects are planned for a redevelopment area?
Each redevelopment area must have a plan with a set of goals and objectives for redevelopment. The redevelopment area must accomplish those goals within a specific time period, typically 30 years. Projects planned for a the redevelopment area will be listed on this web site. Current information is available directly from Redevelopment Agency staff by calling (209) 883-0811.