Silicon Valley’s state Sen. Jim Beall (D-San Jose) has teamed up with North Bay counterpart Sen. Mike McGuire (D-Healdsburg) in the first big affordable-housing legislative foray of the 2018–19 Sacramento session.
The bill, SB 5, opens a window into a sort of Redevelopment 2.0, as it sets out to replace the controversial funding mechanism for affordable housing that was lost when the state dissolved its redevelopment agencies in 2012. Those agencies were the largest single source of funding for affordable housing in the state.
They were also a source of widespread abuse and were a major drag on the state budget, which led to their demise in 2012. There were more than 400 redevelopment agencies (RDAs) around the state at the time of their dissolution under Gov. Jerry Brown’s leadership, including the San Jose Redevelopment Agency. The city has one of the priciest real estate markets in the country—and the rents just keep going up.
Following the Great Recession, the Budget Act of 2011 eliminated the RDAs in order to protect funding for core public services at the local level—schools being high on that list. Numerous legislative attempts have been made since 2012 to revive, incrementally or in whole, redevelopment agencies, which were engaged in funding economic-development efforts and making improvements to low-income areas.
The problem, as Steven Greenhut reported in a 2017 piece at CalWatchdog.com, was that the RDAs, which were originally devised in the 1940s to fight urban blight in the state, were assailed by critics “for their use of eminent domain on behalf of private companies; for running up debt without a vote; for the subsidies they ladled out to developers; and for financing big-box stores and auto malls rather than helping inner cities spruce up.”
Greenhut noted that the RDAs have been slowly creeping back into California policy, given that the redevelopment industry, “the developers, lobbyists, city officials and low-income housing advocates, never really went away,” he wrote.
The legislators say their bill is focused on seniors, nurses, teachers, veterans and all low- and middle-income Californians, and it’s got the support of developers, lobbyists and low-income housing advocates (city officials can’t be far behind). Housing California, the AFL-CIO, the League of California Cities and the California Conference of Carpenters all sent letters in support of the McGuire-Beall bill.
Senate Bill 5 got some heavyweight wind in its sail from California voters as well, who overwhelmingly passed Proposition 1 this year, which put the affordable-housing crisis front and center as a statewide priority. Governor-elect Gavin Newsom signaled support for re-upping the RDAs in his campaign this year, and Beall’s office said SB 5 aligns with Newsom’s campaign priorities.
Redevelopment 2.0 emphasizes the affordable-housing component over economic development, which lawmakers say will be a hedge against the sorts of corruptions of the RDA model that led to big-box build-outs under the old redevelopment regime. And the bill includes a threshold requirement that at least 50 percent of funds sent to localities are used for the development of affordable housing.
Further and more politically dodgy additions to the bill are forthcoming, according to Beall’s office, Among them are provisions to establish and enforce the percentage of housing units that must be below market-rate in any given development that would utilize Redevelopment 2.0 funds.
Besides the affordable-housing emphasis, the lawmakers say their bill will also support transit-oriented development and build adaptive infrastructure to cope with sea-level rise. It would also provide rigorous state oversight and, according to a news release about the bill, “taxpayer protections to ensure that affordable housing construction occurs quickly and local governments are accountable for the expenditure of funds.”
One major difference between the political landscape in 2011 and today is the advent of the permanent fire season in California, with all the destruction and chaos that has entailed. The state watched thousands of homes and buildings go up in flames in the past couple of years, blazes that left places like Paradise and vast stretches of Napa in need of some major redevelopment of their own.
Does Redevelopment 2.0 grapple with the “new abnormal?” Beall spokesman Rodney Foo said that “while the bill does not specifically designate fire-stricken areas per se, it does provide funding of up to $2 billion that can definitely help cities rebuild.”
More importantly, he added: “the bill has a guarantee set-aside of 20 percent for rural communities, where there are many homeowners who were hit by wildfires.”
This article was originally published in San Jose Inside/Metro Silicon Valley’s sister publication, the Pacific Sun.