Legislators should resist any attempts to bring back redevelopment agencies into California’s governmental mix, and remember why they were abolished seven years ago.
When Governor Brown ended redevelopment in 2011, over $6 billion in annual property tax revenues were restored to public schools, and away from subsidizing auto dealers, malls and big box retailers.
Under the guise of eliminating loosely defined “urban blight” redevelopment agencies had become as a cash cow for politically-favored developers to seize private property through eminent domain and displace residents and small businesses.
Their failure lay strewn across California’s landscape; vacant auto dealers, empty big box retailers and derelict malls, victims of both overbuilding and internet sales. When they were finally shut down in 2011, redevelopment agencies left nearly $100 billion in indebtedness. Through “tax increment” financing, they were diverting 12% of all property tax revenues statewide into private land-grabs that enriched private developers at the expense of public education.
Brown’s varied experience in public life gives him a special perspective on redevelopment agencies’ broad impact. He’s been Secretary of State, Attorney General, a Los Angeles Community College Trustee and Mayor of Oakland. He knew the State could no longer sustain the enormous cost of redevelopment. It had become a corporate welfare scheme, and he restored these lost revenues to local services and public education. Representing the 72nd Assembly District at the time, I was happy to have been part of that effort, and am hopeful he will veto any attempts to restore past abuses.
Now, under the guise of ending homelessness, AB3037 by David Chiu (D-San Francisco) seeks to bring back redevelopment agencies, albeit in an ostensibly limited form.
AB 3037 hurts our schools, which is why the powerful California Teachers Association opposes it. Since the bulk of local property taxes are used to fund education, any diversion will cost our schools the ability to fund future needs. Bonding against future tax revenues will create huge new indebtedness, enriching Wall Street lenders.
AB 3037 appears to limit future projects to housing and infrastructure, yet risks repeating old abuses. Past redevelopment housing funds were spent on mixed-use projects, of which housing was a small component. Typically, the Brea Redevelopment Agency, spent $649,000 in housing funds for a largely retail development that included only eight loft apartments.
Redevelopment-subsidized housing projects often displace more people than they housed. When Anaheim redeveloped its Jeffrey-Lynne neighborhood, half the units were demolished, over 400 tenants evicted and remaining residents saw rents double. All at the cost of $54 million in property tax dollars. Redevelopment agencies were a cause—not a cure—for homelessness.
Less than one-tenth of one percent of all California’s housing stock has received any redevelopment assistance, and most of that has been for fixed-income seniors, not for the homeless.
Chiu promises up to $1 billion in new housing funds by borrowing against future tax revenues, but those are revenues our schools count on for future needs. Much of that $1 billion will be eaten up by interest payments. Increasing housing supply should be a state priority, but subsidizing it through expensive public borrowing is ineffective and costly.
There are better approaches. SB 1069 by Bob Wieckowski (D-Fremont) permits second housing units (“granny flats”) to be built in R-1 zones. SB 827 by Scott Wiener (D-San Francisco) allows greater housing densities near transit centers. Both bills will create far more affordable housing than top-down subsidies.
We need to create faster, clearer over-the-counter housing approval processes, without the endless hearings and litigation dominated by NIMBY activists opposing all development. We must also improve mental health and drug diversion services for those hardcore homeless.
If legislators want to directly subsidize new housing, there are plenty of existing programs to expand, rather than re-establishing a whole new level of government and tie-up decades of future tax revenues. AB 3037 will do nothing to help the homeless, but it could be the Trojan Horse that brings back all the past abuses of California’s notorious redevelopment agencies.
Chris Norby is a former Fullerton Mayor, State Legislator and author of Redevelopment: The Unknown Government.
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