Ransoming Redevelopment?

Ransoming Redevelopment?

After months of pleading with the governor and the state legislature, California’s Redevelopment Agencies (CRAs) have just been spared complete dissolution, for now. But their status and their pending projects are now in limbo until the state’s cities decide whether to keep the agencies by paying what the agencies have called a “ransom” to the state.

In late June the legislature passed a bill, AB X1 26, which dissolves the state’s Redevelopment Agencies by October 1, and an attached bill, AB X1 27, which prevents dissolution if cities pay their prorated share of $1.7 billion by the end of the year and millions more in future years to allow the state close its budget shortfall. California Governor Brown is expected to sign both bills in the next few days.

According to CRA/LA, which is by far the largest redevelopment agency in the state, the bills would necessitate a payment by the city of LA of roughly $70 million by this January and an estimated $38 million in future years in order to preserve that agency. San Francisco’s payment would measure between $24 and $27 million, that city’s agency said. Riverside’s $19.6 million payment would be about 40 percent of its redevelopment revenue according the city’s development director Emilio Ramirez. 

“This is extortion sponsored by the legislature,” said CRA/LA spokesperson David Bloom, who said that the CRA/LA is now waiting for the city of LA to decide whether to keep the agency running. He hopes the vote will come before city council recesses in August, and said he feels good that the city will “continue with their strong support for a robust redevelopment presence in the city.”

Bloom emphasized that the redevelopment bills are a violation of Prop 22, a ballot measure passed last year that prevents the state from raiding local redevelopment funds. The California Redevelopment Association and the League of California Cities are readying a lawsuit challenging the constitutionality of the state’s actions.

“We’ll be prepared to go to court within a few days after the governor signs the legislation, said California Redevelopment Association Executive Director John Shirey, at a conference call on July 7. Shirey noted that the bills violated not just Prop 22 but “several other constitutional provisions,” and added that “there’s no way to predict” how long it would take to get a decision on the lawsuit.

Several cities, predicted Shirey, will not be able to pay their share of the $1.7 billion, and therefore their redevelopment agencies will “die.” Those in larger cities like LA appear to be more likely to survive. Gabriel Metcalf, Executive Director of San Francisco Planning and Urban Research (SPUR), said he had heard rumors that nine of the ten largest redevelopment agencies would be spared by their cities, with the exception of San Jose.

CRA/LA was able to get approval for what Bloom considers almost a year’s-worth of projects before the passage of the AB 26 and 27. But as the CRA/LA waits for a decision on its future about 20 of its upcoming projects—from improvements to the Nate Holden Performing Arts Center in Mid-City to the Downtown Streetcar to affordable housing projects throughout the city— are now on hold, a number that could reach into the hundreds by the end of the year, said Bloom.

San Francisco CRA director Fred Blackwell said in a videotaped statement that the city could lose “hundreds of affordable housing projects that are in the pipeline.” Other projects put on hold could include façade improvements along Sixth Street in South of Market and along Third Street in Bayview, as well as the Mid-Market project area and the revitalization of the Schlage Locks site in Visitacion Valley. That city’s massive Treasure Island project recently opted out of redevelopment financing, anticipating the fallout from the current limbo.

Prior to the passage of the legislation Governor Brown’s spokesperson Evan Westrup made clear that their was no wiggle room from the Governor on the issue of saving the agencies: “Given our challenging economic circumstances and our massive deficit the governor believes now is not the time to be subsidizing private developers while our public services are being bulldozed,” said Westrup.

He also made clear that it was too late for reform, an issue that the Redevelopment Association promoted prior to the vote, sponsoring several pieces of legislation to increate accountability and transparency in redevelopment. “We’ve been very supportive of reform,” added Bloom. “We heard the message and are continuing to be worthy of the trust that the city of LA has put in us.”

But SPUR’s Metcalf, while supportive of redevelopment, wants more reform than the generic “accountability and transparency” promises. “It’s a very expensive program with some incredible success stories, but with a huge number of unsuccessful stories,” he said. He suggested changes to redevelopment law that would make it easier to enact and more fairly distributed but would call for more careful selection of sites to guard from its “overuse.”

Still Metcalf supports keeping redevelopment, despite its shortfalls, largely because of its ability to redirect growth in struggling areas—he pointed to Downtown San Diego and Mission Bay in San Francisco as excellent examples—and because of its prevention of sprawling development outside of cities. “I think the governor’s solution is not the right one and is going to cause many more problems for the state than it solves. But I think something needed to happen,” he said.

But for now any efforts at reform have taken a back seat to the pursuit of survival. And the list of held projects continues to grow.