Local Government
Commentary: SB 5 is a Wrong-headed Re-make of Redevelopment Law

Commentary: SB 5 is a Wrong-headed Re-make of Redevelopment Law

By Timothy Coyle.

For years, housing advocates have been lamenting the demise of redevelopment authority that occurred earlier this decade.  To be sure, redevelopment was a lot of things to a lot of people. To local governments, it was the freedom to independently finance a host of community improvements and spur economic development.  To housing advocates, it was a needed, steady source of funds for affordable housing construction and rehabilitation. To hundreds of small businesses throughout the state it was a means to start new enterprises.

Regrettably, Sacramento’s green-eyeshade-types didn’t see it that way.  Because of a defect in Proposition 98 (in truth, it was not a defect at all) – passed in 1988 as the ultimate funding mechanism for public schools – state bean-counters began to view redevelopment as a fiscal loser.  Indeed, they saw its later, formal disappearance, in 2012 and beyond, as a real victory.

But, supporters of redevelopment – anguished by its defeat – survived.  Even some lawmakers who voted to kill the program years ago, expressed disappointment and regret.  Ever since, various special interests – including California homebuilders (CBIA) and local governments – have been working on a plan to restore redevelopment.

It’s not SB 5, though – the Legislature’s latest, much-heralded redevelopment fix.

SB 5, which sits in the Assembly Committee on Appropriations, is an awful bill.  It doesn’t resemble at all the original, admittedly imperfect redevelopment law which it purports to replace.  It’s a half-hearted, bureaucratic and Sacramento-centric piece of legislation that, while supported by a host of housing advocates and some local communities, fails to have the homebuilders on board.

It’s hard to believe how any business organization could support SB 5.  It takes what was a successful local economic development and affordable housing tool and turns it into a prescriptive, heavy-handed top-down state program.  For example, the bill requires that before locals can use the redevelopment financing, they first must submit a plan to the state that, among other things, includes:

  • A description of the proposed project or projects to be completed – including a complete fiscal analysis – and the funding amount necessary for each year;
  • A strategy for outreach to and retention of women, minority, disadvantaged youth, formerly incarcerated and other underrepresented subgroups;
  • A prohibition against the development of single-family, for-sale housing;
  • A requirement that no eviction has been made on any proposed housing project site within the last 10 years;
  • An assessment of the estimated cost of providing services or facilities for each project included in the plan and the estimated revenue available to provide those services or facilities; and
  • A prohibition against the demolition of certain housing, including housing that is subject to any form of rent or price control or an historic structure.

SB 5 preserves local permit caps, building moratoria, down-zoning, affordability mandates and limits lower-income populations.   Further, the bill requires payment of union-scale prevailing wages, prohibits using any funding to support market-rate housing, upholds development restrictions pursuant to climate-change policies and, many would argue, repeals the now-infamous Palmer case, which protects rental property developers from local inclusionary zoning.

And, the bill creates a new committee of state bureaucrats with the authority to disapprove a locality’s redevelopment plan and force it and, by extension, project sponsors to start all over again.

But, worst of all, by failing to resolve the inherent constitutional defect, established by the passage of Proposition 98 decades ago, SB 5 makes redevelopment a budget item – subjecting the program to annual appropriations.  And, the bill defeats the manifest purpose of redevelopment: to turn poor-performing local assets into productive, tax-generating ones.

By doing this, SB 5 simply establishes another state program that gives Sacramento veto power over local decision-making.  It doesn’t ride to California’s rescue from the worst housing situation ever, as true redevelopment reform should, and the bill continues to pit local economic development and affordable housing against public schools.  It’s a mess.

How something this bad has lasted so long is baffling.  Friend or foe of redevelopment, how could anyone support it?

Originally posted at Fox and Hounds.

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