Will Bringing Back Redevelopment Create Additional Affordable Housing?

A bill that would revive redevelopment as a tool for local governments passed the state Legislature in the final days of the summer session on party-line votes.

Now the question is whether a so-far noncommittal Gov. Gavin Newsom will accept the claims that Senate Bill 5 by Sen. Jim Beall, D-San Jose, has enough safeguards to prevent redevelopment from going as astray as the version that Gov. Jerry Brown and the Legislature killed in 2011.

That version allowed local redevelopment agencies to divert a slice of property taxes to use on projects meant to spur the economies of “blighted” neighborhoods. If the projects boosted property tax revenue, the additional increment would go to the agencies for new projects. In 2010, some 400 redevelopment agencies diverted 12 percent of all California property taxes for their use.

‘Scams providing windfalls to cronies’

But by 2011, many investigations had found that redevelopment funds were routinely diverted to pay for City Hall salaries and that many of the projects that did get funding were those pitched by politically connected developers. Then-state Controller John Chiang said many redevelopment projects were “scams providing windfalls to political cronies.”

Many healthy businesses with prime locations had been declared “blighted” so cities could use eminent domain to seize them and hand them over to car dealerships or big-box stores which would generate the sales taxes that are a key source of revenue for city coffers.

And on top of these issues, the Legislative Analyst’s Office said there was “no reliable evidence” that redevelopment helped the economy. Instead, it attracted businesses that would have opened elsewhere without subsidies offered by local government – shuffling economic activity around, not spurring it.

New version would emphasize housing

In interviews and committee meetings, Beall has argued that a much-more focused version of redevelopment that gives at least half of diverted funds to subsidized low-income housing – up from the previous 20 percent – can help California with its housing shortage. The new program would also fund transit-oriented projects and play its old role of helping poor neighborhoods boost their economies. 

To prevent past problems with cronyism, a state oversight group would have to certify projects met basic standards before funding could be diverted.

The bill would initially allow $200 million in property taxes to be diverted annually with a phased-in upper limit of $2 billion a year. About $5 billion a year was being diverted when redevelopment was shelved by the state in 2011.

While running for governor in 2018, Newsom was supportive of reviving some form of redevelopment. But he included no funds for a new program in his initial state budget and has told reporters that his budget already includes record funding for affordable housing.

Meanwhile, while it didn’t get as many headlines as some other problems did, redevelopment’s record with creating affordable housing in California was also poor to mixed.

Old version often generated no new units

In 2010, the Los Angeles Times reported that, “At least 120 municipalities – nearly one in three with active redevelopment agencies – spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit … .  Nor did most of them add to the housing stock by rehabilitating existing units.”

Where did the money go? The Times cited many examples of redevelopment agencies buying property that was never subsequently developed.

It also found that “nearly three dozen cities, including Monterey Park and Pismo Beach, reported spending most of their affordable housing money over the decade on ‘planning and administration’ – but never built a single unit.”

Beall’s bill passed the Senate 29-9 and the Assembly 55-19.

This article was originally published by CalWatchdog.com

Comments

  1. Always found it interesting that wealthy cities like Santa Barbara had “redevelopment” money. e.g. they would zone out or refuse building permits and then say the area is blighted. (how special is that)

    Killing RDA’s was the smartest thing done in years and now the payola crowd wants it back.

    • Santa Barbara is not wealthy at all – it is actually a low income city with a bloated city government. Hope Ranch and Montecito are wealthy, very wealthy but they are in the county of Santa Barbara; not the city of Santa Barbara. Domestics who work on Hope Ranch and Montecito properties live in Santa Barbara. The city has a huge inventory of subsidized housing, much it for seniors. So at least 20% of its housing units are now dedicated to people with little to no disposible income. Downtown commercial district is littered with vacancies and vagrants. That is what “rich Santa Barbara” looks like today- pretty much like every gutted out Democrat run city in this country.

  2. Bring back Redevelopment is already happening in O.C. with high rise, high-density structures on every postage size spot they can find – overnight. I am living in L.A. and I was never asked about this!
    If all illegals go back where they came from and the homeless go back to their families, and the rest get placed in institutions and drug detox, who is in need of all these high rise high density structures? They will no doubt turn into a “Chicago-style Project” within five years.
    And this alone is forcing me to consider leaving the state, let alone all the other reasons. You cannot drive down any road/freeway without traffic or accident, have to wait on lines, and crime will no doubt climb and climb as these buildings are filled. Density changes human behavior. I want them all torn down, but they keep being built everywhere (!)

  3. “‘Scams providing windfalls to cronies”, “redevelopment funds were routinely diverted to pay for City Hall salaries and that many of the projects that did get funding were those pitched by politically connected developers” This is par for the course. More over-site, maybe by people outside of the city that can’t be “shampooed”.

  4. If someone buys it, housing is affordable. One more nonsense term that needs to be eliminated – “affordable housing”. Of course, all free market housing is affordable.

    Time to relabel this as hand-out housing, price-fixed housing, social engineered subsidized housing. But assuming we all agree what “affordable housing” is makes no sense.

    Tell the truth so society can buy into this public subsidized housing scheme, or not. I am not buying.

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