By Timothy L. Coyle.
In 2012, the Legislature and the Governor ended redevelopment. Citing concerns that local redevelopment agencies (RDAs) were earning too much money, that project areas were continuing to bound across the lines of “blighted, urban areas” – and because of the impact RDAs were allegedly having on the state’s general fund – redevelopment was done.
Despite its demonstrated contribution to increasing California’s housing supply, Governor Brown pushed the Legislature to eliminate more than 400 city and county redevelopment agencies across the state. Those RDAs were initially created to improve blighted urban neighborhoods. In the mid-70’s, a deal was struck with local communities that in exchange for redevelopment’s property-tax benefit they had to use a portion of their proceeds to build affordable housing – setting aside 20% of the revenues. RDAs, however, rarely met their end of the bargain and soon the unused housing account swelled to $1 billion per year.
Now, some lawmakers are discussing the idea of bringing back redevelopment agencies to fund new housing projects. Senator Toni Atkins of San Diego – and the next Senate-leader-in-waiting – has among other lawmakers expressed support for bringing them back. She’ll have to cut a deal with the Governor, though – which means successfully navigating passed his philosophically opposed Department of Finance.
Legislators like Atkins are, of course, acting out of desperation as California suffers from a severe housing shortage and need the money that RDAs are capable of generating. Given the checkered history of redevelopment, it’s a long shot. But, with a new formula for allocating the property-tax revenue – one that incentivizes the construction and rehabilitation of new housing – this renewed interest in the program could have meaningful political legs.
Lawmakers will need to get around some funky accounting first – the state counts the new money generated by redevelopment’s project areas as already pledged to existing services and K-14 education. This mindset represents a static view of economic growth – that it’s a zero-sum proposition. Moreover, this perspective gives away too much to Proposition 98, the long-ago-passed initiative that promised a portion of all new state revenues would go to schools.
But, legislators ought to be able to get around this obstacle, since the dollars generated by redevelopment are a direct result of the (notable) neighborhood improvements that it produces:
- The City of Emeryville’s industrial decline during the 1980s left the area with acres of contaminated land which led to the RDA’s clean-up efforts in the area and provided 400,000 square feet of new retail and entertainment space, creating approximately 940 new jobs and 375 new residential units above retail space in mixed-use buildings – 20 percent of which were made affordable to very low-income households.
- Vista Village, in the City of Vista, was in severe economic decline until the city’s RDA spent more than $1 million to clean up the areas during the last half of the 1990s. The redevelopment project, which also made improvements to the existing Main Street, added more than 40 new businesses and roughly 700 new jobs – encouraging more than $55 million in private investment.
- The City of Riverside’s RDA transformed the high-crime area of University Village into a mixed-use development that attracts University of California, Riverside students and community residents and generated more than $75 million in private investment, created 600 jobs and led to the construction of student residences and other affordable housing units.
- The City of Sacramento’s RDA helped transform the crime-ridden Franklin Villa apartments into the Phoenix Park Apartments, with 360 units of affordable rental units eventually provided.
- Construction has been completed on 102 single-family homes in the Vista del Rio housing complex in the cities of Bell Gardens and Commerce, with one-half of the units are affordable to low-and-moderate-income households.
The nearly 100,000 affordable housing units built last decade using redevelopment dollars, while falling well short of being enough to meet the annual need during that time, attest to the value RDAs have to increasing the state’s housing stock. That and the way they leverage other housing funds. Indeed, with matching funds from private development, California’s haphazard system of local affordability mandates – like inclusionary zoning – can end and be replaced with a legitimate production program.
It’s something worth fighting for and the timing’s right . . .