Anaheim officials are extending a hand to what they call a “missing middle” section of renters who struggle to afford housing in town, endorsing state-issued bonds to acquire existing apartments in the city and convert them to more affordable, even rent-controlled units. 

Officials’ strategy, however, could give some of the city’s public K-12 schools the short end of the stick for more than a decade, as the city plans to exempt its acquired buildings from property taxes which would normally go to agencies like the Anaheim Unified School District.

City Council members at Tuesday’s regular meeting unanimously agreed to take another building, the 256-unit 1818 Platinum Triangle Apartments located on South State College Boulevard — the fourth building acquisition under the city’s strategy.

That building’s tax exemptions alone could amount to $3.2 million in total lost revenue to some public schools across 15 years, according to city officials at that night’s meeting.

That doesn’t include lost tax revenue from the previous three properties the city has acquired, which will also be exempt.

Though such losses would only be temporary, argue those who say the city could do some refinancing down the road, sell the buildings in about 15 years and recoup its investments plus interest — making the school district and other affected agencies whole again.

Still, “today’s fifth grader won’t benefit from this because they will have finished school,” said Councilman Jose Moreno during Tuesday’s meeting.

Moreno’s comments came in response to fellow Councilman Trevor O’Neil, who in a working group partnered on the idea with the Waterford Property Company — which is sponsoring the building acquisition strategy — and called the efforts a “win” for everyone.

“Mr. O’Neil, it’s not a ‘win-win-win’ if we don’t think of schools as part of our community and other agencies,” Moreno said. 

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What followed was a brief debate over whether the current state of public school funding in California was sufficient to the extent Anaheim’s schools could withstand such a revenue loss. 

“That’s certainly a legitimate concern, that schools may be losing out on some of their funding,” O’Neil said Tuesday in response. “But I do want to point out that the Governor’s budget that was just adopted has record funding levels for K-12 education adding … an additional $25 billion for K-12 education throughout California.”

That’s not including “$24 billion in additional COVID funding provided by the federal government,” O’Neil added. “While schools may be losing a little bit from the property tax share, as I do the math, they are certainly funded to higher levels than they ever have been.”

Moreno shot back: 

“I don’t know why you have to do that. Your ignorance is profound when it comes to understanding government. If you understood anything about our schools you’d know they’ve been underfunded and we’re just catching up. We’re barely catching up to 2007-2008 levels, Mr. O’Neil. Maybe you weren’t aware of that, but there’s no need to get into this thing with other agencies.”

Moreno said he would support the efforts, which came about because of O’Neil and others, “because teachers are eligible for affordable housing … Our teachers are eligible for affordable housing — I mean that’s a statement unto itself why we need this project. Why I’m going to forego the consequence for the benefit overall.”

He then invited O’Neil to take a walking tour with him through Anaheim High School “so you can see exactly how public monies are used so you can determine if it’s really enough.”

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Moreno also wondered aloud during Tuesday’s meeting whether the city consulted with the schools on the lost tax revenue.

“Did we consult with them? What are their thoughts about this?” he said.

Deputy City Manager Greg Garcia replied: “I don’t believe we have consulted with them. The benefit is the windfall at the end, which is their property tax plus interest.”

Waterford representative Sean Rawson at Tuesday’s meeting said his company has been approached “by various school districts throughout the state, saying they’re in dire need for housing.”

Under the city’s agreement with Waterford, he said, housing would be prioritized for the local workforce: 

“Teachers are part of that local preference … We’ve got a number of teachers that work in Anaheim Unified that are tenants. And other employees at the school district.”

Annual rent increases at the 1818 Platinum Triangle Apartments would be capped at no more than 4%, which goes further than the statewide rent control law, Assembly Bill 1482, which has a rent increase ceiling of 10% annually.

Previously, the city supported the issuance of bonds to acquire and preserve “middle-income” housing units at 1781 South Campton Avenue (400 units), 1105 East Katella Avenue (386 units), and 255 North Anaheim Boulevard (231 units). 

Unlike other tax-foregoing agencies, like the school district, under the housing strategy, the City of Anaheim would backfill any of its own lost tax revenue almost immediately, through a yearly charge to Waterford, which would operate and maintain the acquired rental properties. 

Waterford would pay the city a “charge of $225,000 annually, which will escalate by 2% annually, and is anticipated to be used to replace the annual lost property tax with the remainder going to the Housing Authority to support affordable housing projects in Anaheim,” says a city staff report.

“In addition, the City is still eligible for the net sale proceeds which may be realized when the Project is sold,” it adds.

The city won’t be liable for the bonds issued to finance the fourth building purchase. 

The bonds will actually be issued by the California Statewide Communities Development Authority (CSCDA), a state joint powers authority aimed at providing local governments access to low-cost financing for community development and public benefit projects. 

Plus, ​​with Waterford managing the properties, Garcia during Tuesday’s meeting said “Our staff is not necessarily responsible for the monitoring and day to day responsibility of the building.”

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