Jerry Brown wants to eliminate Redevelopment

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Eliminating Redevelopment: a mixed blessing
Fred Blackwell (left) is Redevelopment's executive director. Francee Covington (right) was appointed to the Redevelopment Commission by Mayor Newsom

Calitics reveals today that newly sworn-in Gov. Jerry Brown told the Sacramento Bee that he’s proposing to eliminate local redevelopment agencies as part of a set of austerity measures that he is proposing in a purported effort to shock folks into approving new revenues

Brown’s shocking proposal got me calling tenants rights activist Calvin Welch and Arc Ecology executive director Saul Bloom, who both have strong and well- informed views on what’s up with local redevelopment agencies and how they could be improved. And interestingly neither Bloom nor Welch was in favor of eliminating redevelopment.

Welch, who hadn’t yet had time to read the article when I called him, actually laughed when I outlined Brown's basic idea, which admittedly is big on shock value and thin on explanations, at least at this point.
‘That would be very interesting, but the devil’s in the details.” Welch observed, noting that voters just approved Prop. 22 in Nov. 2010 to prevent the state from taking city redevelopment money to balance the budget in Sacramento. (Unfortunately, Prop. 22's passage still doesn’t protect San Francisco from having its budget raided by the state, since it's defined as both a city and a county.)

“That’s an astounding idea,” Welch added, trying to wrap his mind around Brown’s out-of-the-blue proposal. “Because in San Francisco, there are redevelopment areas, including Bayview Hunters Point, Mission Bay and the Transbay Terminal, that have already been authorized for another 25-30 years.”

“Perhaps the language would be ‘no new redevelopment’ but I don’t know how you would do that,” Welch added, noting that Brown has not only been governor before, but was also mayor of Oakland. (During his term as mayor, Brown was credited with starting the revitalization of Oakland but was also accused of being more interested in downtown redevelopment and economic growth than political ideology.)

Welch noted that San Francisco was fortunate in being able to reshape its Redevelopment financing arrangements in 1990 under then mayor Art Agnos.

“It was probably the most progressive and long standing reform of Art Agnos’ administration—and no one understands it,” Welch said. As Welch tells it, when Agnos came into office, he inherited a city that had been bankrupted by a decade of mayor Dianne Feinstein’s business-friendly policies, much like how San Francisco has been milked in the past decade by Newsom’s business-friendly policies.

“Redevelopment doesn’t pay its way in the post Prop. 13 world,” Welch stated. “Under Mayor Gavin Newsom, we’ve had the most market rate housing produced and the biggest deficits in what was a real estate collapse, as part of the collapse of the economic markets. And under Mayor Feinstein’s 10-year rule, we saw massive amounts of commercial office space built that never paid its way, leaving Agnos with a $103 million deficit.”

Welch notes that Agnos also inherited a huge homeless crisis (something Welch says Feinstein was in denial over) and that Agnos sought to reform Redevelopment in large part as a way to address the city’s growing lack of affordable housing. “Art basically said, let’s take a look at tax increment financing,” Welch said, referring to a tax financing arrangement, under which a municipality can a) do an assessed value of an area before redevelopment takes place, b) estimate what that same area’s local taxes would be after redevelopment, and c) borrow money against the incremental difference between a) and b).

“Art said, ‘I want to do that and I want to use the hundreds of millions of dollars available through redevelopment for affordable housing,'” Welch recalled. He noted that Agnos succeeded in his mission by shifting the San Francisco Redevelopment Agency’s mission from ‘urban renewal’ (which had negative connotations following the displacement of African American and other low-income communities from the Fillmore in the 1960s) to ‘community development,’ making Redevelopment subject to the same budgetary process as other departments, and insisting that 20 percent of tax increment financing dollars be devoted to affordable housing.
“But we said, ‘no, 50 percent has to be devoted to affordable housing and Art agreed, and that’s been the case since 1990,” Welch recalled. “And since then our Redevelopment Agency has been the principal source of affordable housing revenue in San Francisco.”

So, in another words, the San Francisco Redevelopment Agency is pretty much alone in the state, in terms of devoting half its tax increment financing revenues to affordable housing. But by the same token, San Francisco's Redevelopment Agency is pretty much alone in the state in terms of not being governed directly by a city council or a county Board of Supervisors. Instead, it’s governed by a Commission, whose members are appointed solely by the mayor . And therein lies the problem, Welch says.
‘It would only take six votes on the Board of Supervisors, or eight votes to override a mayoral veto, to change that,” Welch observed.

But to date there haven’t been eight votes to do that, even with a progressive Board.
Welch believes the problem is that supervisors, who currently each only have two legislative aides, fear swampage from Redevelopment responsibilities.
"To contemplate taking over a multibillion dollar agencies and taking on the likes of Catellus with only two staffers, well it’s a recipe for disaster,” Welch said, acknowledging that additional reforms, including splitting appointments on the Redevelopment Commission between the mayor and the Board, or allowing the Board to hire additional legislative staff to work on redevelopment issues, could solve the problem.

Bloom, who recently sued after the Redevelopment Commission threw his non-profit under the bus, said his non-profit’s recent experience perfectly illustrates why and how Redevelopment should be reformed, rather than completely eliminated.
“Redevelopment is a process that has been much abused, so it’s easy to say, let’s get rid of it, but I’m not there, ”Bloom said, noting that his beef has been with the way his non-profit was treated by Redevelopment Commissioners, rather than Redevelopment staff.
“But I do believe there needs to be a modification of the process, in which redevelopment is put in the hands of an entity that is answerable to the public.”

Bloom believes this modification could be achieved by making the Board of Supervisors the governing body of the Redevelopment Agency, which is already the case in almost all municipalities in California.
“Give that role to the Board of Supervisors because you can fire your supervisor,” Bloom said, noting that currently there are no limits on how long individuals, who are appointed by the mayor, can serve on the Redevelopment Commission. ‘If you give that role to the supervisors, they will be able to utilize more staff to become better Board members. So, this is an opportunity to increase people’s participation in the process.”

Meanwhile, it's possible that Brown's threat to eliminate Redevelopment will be like the time Warren Buffett, who'd just been announced as then newly elected Gov. Arnold Schwarzenegger's financial adviser, caused a brou-haha when he threatened to reform that even holier of cows, Prop. 13.

 

Comments

If Redevelopment were eliminated in the city.

Posted by Lucretia Snapples on Jan. 04, 2011 @ 8:16 pm

A long term solution to restoring financial solvency to schools and local agencies would be the termination of the California redevelopment agencies. The majority of redevelopment funding is the diversion of tax revenues from school programs. I have been following the redevelopment process for 25 years and base my opinion on that. If anyone has any doubts do your research.

Posted by Guest on Jan. 05, 2011 @ 8:06 am

While Lucretia may be right that 99 percent of San Franciscans wouldn't notice if Redevelopment were eliminated, that doesn't necessarily mean it should be.

99 percent of San Franciscans probably aren't tracking on how many folks used a homeless shelter, or live in SROs, or visited the ER, in the past year.

The questions, to my mind, about Redevelopment agencies are these: who are the winners and the losers, under their present configuration? Who would stand to win or lose f they were eliminated? And could they be reformed so as to better serve their surrounding communities?

Posted by sarah on Jan. 05, 2011 @ 11:04 am

I have been following Redevelopment for a while as well. And I disagree with both statement made above. 99% of SF residents would be affected by the lost of Redevelopment in San Francisco. The whole of Mission Bay is redevelopment. The so called Arts Complex of Yerba Buena is redevelopment not to mention the Embarcadero. Those are built out done projects. Well not Mission Bay. The work is still being done there. The Hunters Point Shipyard is a 30 plus year project that has not even started. If you pull Redevelopment who takes over the management of the project. Oh we just stop the development and let it sit? Also Redevelopment in San Francisco like many other places generated revenue to the City accounts. And with the mandated pays to the schools Redevelopments the only agencies funding the schools. The last round of give backs that the State took form Redevelopment went to the schools so if you eliminate the projects where will the tax revenue come from to fund the schools? Not by raising your taxes in California. Is there room for reform? Yes. Shutting down the Agencies is short term fire walking with asbestos shoes. Soon you are going to get burned. Also look around people many of the large projects in SF for the last 10 years has been Redevelopment: Westfield, the South Beach Marina, the St. Regis Hotel, and the Transbay Terminal redo (however this is a joint effort). Jobs, jobs, and more tax revenue for the City.

Posted by Lundi on Jan. 05, 2011 @ 2:08 pm

Redevelopment should be killed, and if it is ever reconstituted, then its governance would most likely need to be formally devolved from the Board of Supervisors back to the Mayor.

Like most state agencies administered by City and County government, Redevelopment is a gigantic cash prize used to solidify political support by the dispensation of patronage.

It treats San Francisco, with the most desirable real estate in the world, as if it were a toxic waste dump where developers needed incentives to develop economically marginal projects. In reality in San Francisco, redevelopment just bumps up developer profit and puts the taxpayers on the hook for infrastructure that developers don't want to pay for.

Can anyone seriously state that the Bloomingdales project, retail frontage facing throngs of pedestrians and massive transit infrastructure required $27m in subsidy to develop? Let's get real.

Does anyone think that Mission Bay represents a desirable vision of San Francisco's future?

-marc

Posted by marcos on Jan. 05, 2011 @ 2:24 pm

Marcos, you make some excellent points. The question then becomes, how can cities do a better job of doing what redevelopment is supposed to do? And definitely any reform that would make the process more transparent and accountable would be a major step forward.

Posted by sarah on Jan. 05, 2011 @ 2:41 pm

Redevelopment is a grab bag of utilities, some good, some bad, but all bundled together.

We need for economic development to be decoupled with the kind of land use authoritarianism that redevelopment entails. And we need for the corruption surrounding land use to be tackled.

Since none of that is going to happen, since progressive land use and housing activists are coopted through dependence on city funding, we will continue to see the hand wringing typical of this publication, continue to see ineffective activists kept on payrolls and even given increasing more "responsible" i.e. sellout positions, and see current San Franciscans asked to pay more and do with less in order to finance some of these schemes that are lucrative for everyone but us.

Eliminating one more tool for wealth transfer from the common wealth towards the politically connected and already rich is one blunt instrument way of achieving some of this.

Tax increment financing would do well to die a quick death. The ability of the City to use the other redevelopment tools, such as capitalizing businesses like municipal banks, could easily be achieved by charter amendments.

-marc

Posted by marcos on Jan. 05, 2011 @ 3:06 pm

From the sound of Brown's comments today, his idea of "eliminating" redevelopment is sounding more and more like passing the financial responsibility back to individual cities and counties. But surely this could result in rich cities and counties being able to invest in their communities, while poorer municipalities slip further into the financial doldrums?

Posted by sarah on Jan. 05, 2011 @ 4:04 pm

Tax Increment Financing subsidizes economic development by impounding new tax revenues which would otherwise go to general fund and directing them to infrastructure projects in the redevelopment area.

I'm not familiar with instances in California where economic incentives were otherwise lacking and redevelopment and TIF was used to bootstrap successful "redevelopment." Do you know of one?

And by successful "redevelopment," I don't mean public subsidy directed to the right pockets, whether billions to Lennar or crumbs to Arc Ecology so that the latter gives "community support" cover for the former.

Did you ever notice how the Redevelopment Commission has the best dressed audience of all commissions, Planning included? Did you ever wonder why?

-marc

Posted by marcos on Jan. 05, 2011 @ 6:46 pm

Great Job Jerry!!! Three Million of Tax payor money was given away for the cost of a dollar in the city of Poway to help a Toyota dealership that exposed employees to Toxic mold and has many of them on State disability after allowing them to work in a previously closed building. www.moldtruth.wordpress.com

Posted by GuestMoldtruth on Jan. 10, 2011 @ 9:10 am