Tax Allocation Bonds in California

Implementation of federally assisted urban renewal projects requires the local public agency to find some means of financing the local one-third share. California has created the tax allocation financing concept which permits limited use of property tax revenues to accomplish this. Such financing is usually accomplished through the sale of tax allocation bonds. This article describes these bonds and the manner in which the tax allocation process operates. The primary feature is that they are issued without voter approval. The article next reviews the 20 yr of California experience with this method and illustrates it with an analysis of the Park Center Project, a slum clearance project in downtown San Jose, Calif. The article concludes with a review of tax reform measures that may affect future use of the method in California and may require amendments to the California law.