Redevelopment debate full of bum choices

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At the Potrero Hill Democratic Club’s debate about Gov. Jerry Brown’s proposal to ax local redevelopment agencies to balance the state’s $26 billion deficit, folks attempted to evaluate if redevelopment agencies are essential for job creation and community revitalization, if reform, not total destruction, is possible, and if bum choices are all we have to look forward to.

The Chronicle’s Marisa Lagos, who moderated the debate, noted that redevelopment agencies were created over 60 years ago to create economic development opportunities by borrowing against future tax increases that agencies think they can create.

 “That’s a fancy way to say ‘borrow against future taxes,’” Lagos joked, pointing to the Candlestick Point/Hunters Point Shipyard project as an example of an ongoing project, and the Yerba Buena project as an example of a completed success.

 “The Governor is arguing that when the state is cutting schools and other essential services, this is not the best use of tax dollars,” Lagos stated.

 Panelist Olson Lee, deputy executive director of San Francisco’s Redevelopment Agency, pointed to affordable housing as evidence of the agency’s positive impact.

 “I think Redevelopment is important because of the good things it has done,” Lee said, pointing to 11,000 units of affordable housing that the agency helped build in the city.

 Panelist Carroll Wills, the communications director for the California Professional Firefighters, said “many wonderful projects” have occurred under Redevelopment. But he pointed to what he called “a decade of tricks and games,” on the part of Redevelopment agencies as one reason why the state is in a fiscal crisis that threatens firefighters’ jobs.

 “Concrete does not trump core services,” Wills said, arguing that it’s not clear that many affordable housing projects would not have been built without redevelopment aid

Arc Ecology's Saul Bloom accused Gov. Brown of “short-circuiting” what could have been an important statewide discussion about redevelopment reform, with his bombshell suggestion in January to eliminate redevelopment agencies entirely

 “I’m sympathetic to the argument that Redevelopment takes money away from core services,” Bloom said. “But what do we do to replace it? And is economic development versus core services a false choice?”

Lee pointed to Mission Bay as further evidence of Redevelopment’s success.

“It was considered a brown field, and through development, it’s much different,” Lee said, noting that 20 percent of tax increment financing goes to the General Fund to pay for redevelopment infrastructure. “Clearly the university would not have been there. It was an opportunity to place UC there and generate economic opportunities.”

 Wills argued that Redevelopment Agencies are a luxury we can no longer afford, even as he acknowledged being unfamiliar with local redevelopment projects.

“At best, redevelopment moves around the pieces,” Wills said. “It doesn’t increase economic development and it doesn’t necessarily pay for itself.”

Bloom noted that developments like Mission Bay are dependent on large institutions, like the University of California, which can’t be forced to implement city laws like local hire.

And he said he found it “disappointing” that there wasn’t much more of a dialogue around the plans to redevelop Candlestick Point and the Shipyard, despite the fact that the city held hundreds of meetings over the past decade.

“It was more a case of, Here’s our idea, tell us what you think of it,’” Bloom said. “Perhaps if we had invited the nation’s largest industrial developer, instead of the nation’s second largest home developer, we would have had a different dialogue.”

 Lee replied that the Shipyard has been under discussion for 15 years.

“It’s a very large project, the largest in the Western United States,” Lee said. “It’s a brownfield, though I know Espanola will say it’s a Superfund site,” he continued, as Bayview elder Espanola Jackson bristled under her hat, and the audience wondered if Lee meant that the US E.P.A. somehow got it all wrong.

Lee further shocked audience members by saying Treasure Island was not a redevelopment project (leading Bloom to clarify that Treasure Island is under the jurisdiction of the local Treasure Island Development Authority, if not the SF Agency).

“People felt they wanted economic development at the shipyard,” Lee continued, noting that the neighborhood suffered after the Navy withdrew from the shipyard in the 1970s. But he did not mention that major bones of contention around the redevelopment proposal, centered on plans to build 10,000 mostly market-rate condos, a bridge over an environmentally sensitive slough, the taking of a chunk of the community’s only major park, and no proof that thousands of promised jobs will materialize.

Wills noted that most local redevelopment commissions are peopled by the members of each municipality’s city council, a situation he believes leads to a lack of accountability. But members of the audience, including this reporter, noted that San Francisco’s Redevelopment Agency consists entirely of mayoral appointees, who, unlike elected officials, can’t easily be voted off the proverbial island.

It was at this point that panelist Calvin Welch, a longtime housing activist, showed up at the debate, apologizing for being late, but blaming his tardiness on being on a phone call with Sen. Mark Leno to discuss Brown’s redevelopment proposal.

And from there, the conversation veered towards discussions of what could happen to existing redevelopment projects if Brown goes through with his elimination threat.

 Lee noted that if projects simply had a disposition and development Aagreement (DDA), but Redevelopment was no longer there, there would be no project financing. “The devil’s in the details,” Lee said. “Because if you don’t have bonds, what’s the point of having an agreement.”

 Wills opined that Gov. Brown’s proposal has “a vehicle to roll back the bum’s rush” of projects that local municipalities have been trying to push across the finish line, ever since Brown dropped his Redevelopment elimination bomb in January.

 Welch went off on a historical riff about how the San Francisco Redevelopment Agency (SFRA) was met with controversy and outrage until 1988, when Art Agnos was elected mayor, and brokered a deal under which SFRA could do tax increment financing, provided the majority of funds were used for affordable housing.

“It became a finance agency to build infrastructure and affordable housing,” Welch said, noting that attempts to build out Mission Bay around commercial offices and high rises failed, until the Agency used tif to redevelop the site.

 “But mark my words, Lennar is going to come out of this just fine,” Welch added, reminding me of a recent comment that former Lennar executive Emile Haddad reportedly made that suggests Haddad believes the California housing market is poised for a rebound.

(The article outlined how Haddad sold 12,000 acres in California for a $277 million profit at the housing market's peak four years ago, reacquired it at half the price in 2009, and is now saying it’s time to build in his new role as CEO of FivePoint Communities Inc., which is developing four new master-planned communities with a combined 45,000 residences at Newhall Ranch north of L.A., the El Toro Marine Corps Air Station in Orange County, the Candlestick Point/Hunters Point shipyard and Treasure Island  in San Francisco, with investors including Lennar, Michael S. Dell’s MSD Capital LP, Ross Perot Jr.'s Hillwood Development Co. and Rockpoint Group LLC. "I don't want the party to show up and I'm not dressed," Haddad, 52, reportedly said in a recent interview. "When the market says 'I'm here,' we'll be one of the few that can deliver inventory." 

(The Haddad article, which appears to be a non-bylined reprint from Bloomberg News, also claimed that Hunters Point sales are set to begin by late 2012 with prices starting at $525,000, as the Navy continues its cleanup of the 700-acre site. And that the plan now calls for as many as 12,000 homes, 3 million square feet (of commercial space and a new stadium for the 49ers. And that 7,000 homes may eventually be built on Treasure Island and adjoining Yerba Buena Island, under terms of a final development agreement that may go before the San Francisco Board of Supervisors for approval in May, with units averaging  $800,000 and reaching up to $2 million, according to Lennar V.P Kofi Bonner.)

And during the Potrero Hill Dems debate, Bloom noted that the Treasure Island plan is being “sped up” and that the Board is expected to vote on the plan as soon as possible. “But since these plans were not bonded before January [when Gov. Brown took office], what’s the point of speeding up the process?” Bloom asked.

“We’re basically seeing a brick wall,” Welch interjected. “There are virtually no funds for permanent affordable housing in San Francisco.But Jerry Brown is not going to commit financial hari kari. Every major developer of market rate housing will come out just fine, because of state actions, not because of a local vote. Deals are going to be made. It’s the question of affordable housing that’s our challenge. You’re gonna be stuck with public housing, as it is, unless there’s affordable housing financing.”

 Wills claimed that Prop. 22, which voters approved last November, “created a mechanism so rigid,” that the state’s only option was to eliminate redevelopment. “Basic services are dying on the vine,” he said. “We can’t afford to give developers subsidies.”

 Lee noted that SFRA built thousands of affordable units over the years that saved the city thousands in terms of core services it would otherwise have to provide. “Affordable housing is so basic, you can’t do things we take for granted if you are living under a freeway,” he said.

 Bloom suggested Redevelopment could do a better job of economic development, including the creation of permanent and sustainable jobs, like his proposal to create maritime uses at the Shipyard—something not entertained under the city’s Shipyard plan.

 Welch connected the dots between the taxpayer revolt that led to Prop. 13’s passage and the current fiscal woes of municipalities unable to raise taxes on commercial development. “That’s a killer,” he said, noting that housing costs more to build and maintain than it generates property taxes, especially if it’s family housing. ‘It’s those damn kids,” he joked.

Welch noted that Gov. Brown used redevelopment money to enable market rate development in downtown Oakland when he was mayor of Oakland—and claimed that Brown equated affordable housing with crime, at the time.

“We love Brown better than Meg Whitman, but it’s 2011 and we face bum choices.”

Community advocate Sharen Hewitt, who heads the C.L.A.E.R. project, asked if the panel thought San Francisco could be a “demonstration model” for using Redevelopment funds to build 50 percent affordable housing.

Welch said conversations have “already happened” between Mayor Ed Lee and Gov. Jerry Brown that have led him to believe that, “all of San Francisco’s redevelopment projects will be made whole, affordable housing will be protected and Brown will be committed to a San Francisco model.”

"It’s like the film Casablanca, when people are shocked to find out that gambling is going on in a casino,” Welch said. “People are shocked to find out that capital talks in a capitalist system.”

 Espanola Jackson asked Welch what will happen to the shipyard development, in face of a lawsuit that POWER brought that’s due to be heard March 24.

"The shipyard plan has a political function,” Welch said, noting that it was the result of a citywide vote in 2008. ‘We opposed it, but we lost. The structure of that deal flows from the vote.”

 City College Board member Chris Jackson expressed frustration that the Redevelopment conversation had devolved into a housing conversation.

“Mission Bay is all about biotech, but who works at UCSF?” Jackson said, noting that Redevelopment, as a state-funded agency, does not have to agree to the city’s newly approved local hire law.

Welch acknowledged that there has never been a study to determine the tipping point required to lift the Bayview out of poverty.

Lee admitted that Redevelopment’s focus has been housing, “because San Francisco is such an unaffordable city.” But he claimed that SFRA had a “much more aggressive program on local hire than the city, for many years.” Noting that SFRA has tried to attract restaurants and food establishments to Third Street, over the years, Lee said, “It hasn’t been something we’ve been particularly successful at.”

Welch opined that the “skills and abilities of the San Francisco community are far greater at stopping projects and protecting neighborhood character, but we can’t figure out how community-based organizations can employ their own people.”

 And then it was time to go back out into the cold March wind and try to wrap our minds about the true meaning of “bum choices” in 2011.