California has, for the first time in a long time, passed a state budget ahead of the deadline. The governor also signed into effect two bills aimed at redevelopment. The first abolishes redevelopment agencies. The second allows them to resurrect themselves – provided they pay a significant payment to the state and agree to funnel more of their collected tax increment to schools and other districts.
The academic in me thinks that, with the exception of the part where these bills are poorly thought through, that the idea of ransoming off redevelopment activities is fairly interesting. The whole process sounds like the results of a brainstorming session wherein nobody had the authority or the gumption to say, wait wait wait, is this really what we want to do? What will be the long-term impacts?
Because that second question is the one that never seems to get asked in government decisions. Maybe it is a result of the political life-span which, while it may last for decades, is only assured until the next election (provided you don’t post any incriminating photos on twitter – which will probably end it even sooner). Yet any institution that makes policy without considering the long-term – and long-term in land use is decades – is essentially playing Russian Roulette with each new policy. Who knows which proposition, assembly, or senate bill will precipitate the collapse of local government or drive the state so far into debt that it has to declare bankruptcy. Because that is the game that we’ve been playing for a long time now. Proposition 13 anyone?
That is the academic in me. The public employee in me – the one who actually cares about providing housing opportunities for the people who need it in the places where it can do the most good, the one who got started in this career because she wanted to help fix cities, the one who sees potential in every vacant lot and building – that person is frustrated.
Lets just take one aspect of this ransom situation – the part where the ransom amount has been set according to tax increment numbers from the beginning of the recession – before record unemployment, foreclosure numbers soared, and prolonged property value decline undercut the property tax base. The price tag being asked of some communities – especially fast growth communities who did not have a chance to access their full tax increment potential before the great real-estate collapse – is akin asking a $5 million ransom for the return of the family pet. We love Fido and all, but seriously?
For other communities, though, the ransom is far more complicated. For cities that had projects in the works – projects that had been run through the Community Redevelopment Agency, because that is what the redevelopment agency was created to do, to run projects – the ransom includes both the cash payment, and the ability to continue with those projects. Redevelopment critics shrug and say “so they don’t get to build any more mermaid bars – big deal.” But not all redevelopment projects are economically motivated. At least they are not that kind of economically motivated.
Affordable housing projects in California (as well as most of the rest of the nation) are almost inherently linked to redevelopment. That is because the production of affordable housing does not pencil with enough profit to be attractive to regular developers. Subsidies are necessary to make affordable housing projects go, and redevelopment agencies have been the gatekeepers of those subsidies for decades. That is also what they were designed to do. That is why California Redevelopment Law has such as prominent affordable housing component written into the code.
The net effect is that the new laws passed June 29th don’t just hold redevelopment agencies ransom. They aren’t just stopping those economic development projects that have drawn so much public criticism. They have put affordable housing up for ransom as well. So for some cities, the thing being ransomed isn’t just the activities of the redevelopment agency, but the senior housing project that was about to sign a development agreement, or the large family project that was being planned to give low income kids access to better schools, or the transitional living facility for homeless veterans that was to be built on RDA owned property. All of those projects are up for ransom as well. Which means that the people that the new redevelopment laws end up directly impacting are the same people who can least afford the impact. I’m not talking about the deep-pocket developers who have been relying on redevelopment subsidies to make projects go, but the little old lady living on a fixed income who is no longer able to take care of her house, or who lost her house in a shady mortgage deal. The single-parent family struggling on a part-time income. The disabled veteran who just needs a chance to get back on his feet. Sound melodramatic? It is. But then it is also the reality of housing in America – housing that has spent far too many decades building inaccessable suburbs for a middle class that is on the threatened species list.
Eliminating redevelopment will help California’s budget woes in the short-term. But as the boomers age, the vets start coming home, and more families struggle with un- and under-employment, affordable housing demand is only going to go up. And cities have just lost their best tool for addressing that demand.
I wonder if anyone thought about that during their brainstorming session.
urbanhistori 