CRA/RDA Funds Slashed: Cities in Despair

Today, we celebrate the ultimate demise of California Redevelopment Agencies. After a failed attempt to prevent the dissolution of RDAs in the state legislature and CA Supreme Court, the California Redevelopment Association and numerous California cities have submitted a letter to Gov. Jerry Brown in a final plea to extend the life of the agencies. They list a handful of important issues such as bond defaults, loss of taxpayer funds, potential litigation, abandoned projects, and more. But that February 1st deadline is already here, and cities are losing out on much more than just their redevelopment funds.

In 1969, California enacted its Housing Element Law, which requires localities to use census data to determine income levels, and subsequently, populations in need. From there, local councils were made to determine the need for affordable housing units within each city’s housing element. Historically, RDAs have been the backbone source of funding for cities to meet that affordable housing mandate. In fact, redevelopment agencies receive 12% of all property tax revenue in the state.

Here’s the clincher: if those affordable housing needs are not met, social service funds from the state to the city may be discontinued. In other words, by not fulfilling the mandate, cities miss out on other funding programs provided by the state. Here is a minimal, partial list:

  • Building Equity and Growth in Neighborhood fund: assists qualified residents with down payments
  • Home Investment Partnerships fund: capital for constriction of family homes
  • Community Block Grant: new construction, housing acquisition and programs
  • Infill Incentive Grant: supports infrastructure programs
  • Housing Related Parks Program: assists in rehabilitating parks near affordable housing communities
  • Local Housing and Trust fund: creates trust funds that support affordable housing
  • Work Force Housing Reward Program: provides capital for public works, parks, and infrastructure
  • Infrastructure State Revolving fund: affordable financing for infrastructure programs
  • Housing Enabled by Local Partnership Program: reduced rate loans
  • Residential Development Loan Program: reduced rate loans

Those funds mentioned above are the real reason why cities don’t want their RDAs dissolved. Cities have been arguing that the RDA shut down and consequential stripping of funds is devastating for populations in need, and will bring a halt to affordable housing programs. But we can see above that cities get an extra boost when they fulfill their mandate by using RDA funds; they don’t provide affordable housing out of the goodness of their little hearts—they’re out to get more money from the state! The fact that these additional funds and programs even exist in the state of California is far too much. And not all of those RDA funds are even used to fulfill that affordable housing mandate.

Proponents of RDAs argue vehemently that the reduction of RDA funds will obliterate affordable housing—even though in many cities, only a small portion of funds are headed for affordable housing requirements. According to the Community According to the Community Redevelopment Agency of the City of Santa Ana, only 20% of its massive $268.4 million redevelopment fund is directed towards affordable housing. In Yorba Linda, Housing and Redevelopment Manager Pam Stoke and Assistant City Attorney Bill Ihrke stated that $9.5 million is annually redirected to other services, such as the Placentia-Yorba Linda School District.  Placentia has used its funds to renovate parts of downtown and plans to use funds to restore buildings, build a pedestrian crossing, etc. Cities have used RDA funding for parks, schools, economic development, infrastructure, transportation, and more.

Since not 100% of current RDA funds are not dedicated to affordable housing, cities shouldn’t be whining about getting their funds taken away. Gov. Brown’s plan is to cut RDA funding and reroute that $5 billion back to social services for individual cities and localities, which is more or less what the cities need.

But city officials have wasted funds, too. According to state data, more than 120 cities spent over $700 million of their affordable housing funds between 2000 and 2008 without building a single new unit. That is a prime example of the abuse in RDA funding, since it is mostly unregulated. Cities and local councils mainly determine the allocation of money, and since most Californians are unaware of redevelopment or have little understanding of the process, the public does not hold localities accountable either.

The termination of RDAs will be a hard hit for many cities across the state, which not only lose out on the physical funds, but may also have to forfeit other funding programs given by the state. It’s hard to feel any compassion for their losses, though. Perhaps localities will finally cut down on expenditures, shrink down the sprawling bureaucratic system in place, and stop wasting taxpayer dollars—wishful thinking?

(Josephine Djuhana is Assistant Editor for the California Political Review.)