Will revived redevelopment program create additional affordable housing?

Oakland officials touted redevelopment as a valuable tool before it was scrapped in California in 2011. That same year, the Los Angeles Times reported Oakland routinely used redevelopment funds to pay City Hall and police salaries. Photo: Wikimedia Commons

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.

5 comments

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  1. Ulysses Uhaul
    Ulysses Uhaul 16 September, 2019, 13:50

    Are you delusional or joking……you need to add lots of schools, staff, food, maintenance labor and bldgs and land….nothing on the cheap….easier to build car dealers, pizza and nail shops and big box stores….bring in them local sales tax dollars like in the ole days. FOR there is no money in congregate housing at mid level let alone at any affordable level.

    In a nutshell….redevelopment or infill projects are known for massive abuse, spot designation for chronies’ desires, blatant graft, corruption, lots of losers for neighborhoods like traffic, noise, security nightmares while politicians, slimy attorneys and greedy developers and government workers to line their greasy pockets.

    And this homeless housing or treatment issue ain’t going away without lots of courageous autocratic leadership…these child mayors we have don’t have any guts, no military chain of command leadership skills, just penny loafers and sterling silver adorned leather belts and are sadly California public school semi- educated! And they are already asking/begging/sobbing to anyone/everyone for money to spend the way out.

    These articles really suck, but we gotta read them over and over before we are compelled to bend over-

    Billions and billions rivaling the bullet train will soon be wasted.

    Reply this comment
    • ricky smith
      ricky smith 17 September, 2019, 08:54

      Jeez, Uly…for once we fully agree!
      Now i’m feeling faint….Jeeves, quickly…my smelling salts..

      Reply this comment
      • Ulysses Uhaul
        Ulysses Uhaul 17 September, 2019, 14:29

        Yeah……even ole Uly has felt the painful economic sting of redevelopment…miserable memories of the worst of the worst local leadership in OC reminding one of modern day Mussolini’s in their full regalia……and unrelenting pocket lining.

        Forced Uly and Queeg to salvage a few bucks, whatever, off a couple “ten year frozen in value” …..by redevelopment designation….former fast appreciating in value trailer rental lots and relocate to a vile desert hell to start again.

        Reply this comment
  2. Standing Fast
    Standing Fast 16 September, 2019, 15:40

    First of all, Redevelopment is a Progressive-era program that gives government the power to use public money and eminent domain for private use–the same government program that brought us Kelo v. New London, the subject of the movie “Little Pink House”.

    Before California’s CRA’s were shut down in 2011, an action that shut their doors without repealing the laws that made them possible and created Successor Agencies to receive the property tax increments and pay off the humongous debt.

    Second of all, government housing projects are not the way to provide “affordable” housing for anybody, with or without redevelopment. Government housing projects come under the Federal Housing & Urban Development Department which actually has a set of laws governing them.

    Would you believe that to make it possible for developers to build low-cost housing without going bust, HUD says their building standards, which may be lower than the lowest in the nation, take precedence over State and local standards?

    Third, affordable housing is really substandard housing. Which is one of the things that qualifies as “blight” in Redevelopment Law. Even so, many of these junky buildings end up being sold as regular housing. Local officials don’t care, all they are looking for is more tax revenue.

    Progressives think this is the only way to get it, but it ends up being a series of boondoggles. Redevelopment is not good for the economy. It is not good for the public treasury. It is not good for business. It is not good for communities. It is not good for public officials. It is not good for the people they represent.

    Fourth, Redevelopment is a very bad thing. If anyone who says they believe in individual rights, limited government, economic liberty and the Rule of Law says they think Redevelopment is swell, please refer them to the State Controller’s Office and tell them to check out the SCO’s annual reports on Community Redevelopment Agencies. They are an education.

    In the past sixty years since America established Redevelopment as we know it today, state and local government officials have been indoctrinated by Progressive consultants, gurus of economics and public policy, into thinking that the American people are no longer the country’s greatest asset. Now they believe that real estate developers are our country’s greatest asset and we are its greatest liability.

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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