california

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Curbed SF recently posted an interesting story on Mint Condition Homes, a redevelopment company that buys and renovates severely distressed, foreclosed properties in Oakland, CA:

We recently came across Mint Condition Homesa redevelopment company buying up distressed, bank-owned properties, and turning them into adorable, affordable housing over in Oakland. Yes, all these homes fit into our Under 500k Club, but you’re getting a lovingly-rehabbed, green-designed house instead of a lot of the crazy stuff we sometimes feature, likethe loft last week that required you to kick out a roommate. Yes, we often yearn for the more affordable life across the Bay, and these cute digs are having us thinking about changing to a 510.

Here is an example of their work:

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A piece in the City Journal by Steven Greenhut argues that California’s RDAs are corrupt and frequently cause harm instead of removing blight:

In theory, RDAs spearhead blight removal. In fact, they divert billions of dollars from traditional services, such as schools, parks, and firefighting; use eminent domain to seize property for favored developers; and run up California’s debt to pay those developers to construct projects of dubious public value, such as stadiums and big-box stores. Most Californians have long been unaware that these agencies exist. As the activist group Municipal Officials for Redevelopment Reform puts it, RDAs constitute an “unknown government” that “consumes 12 percent of all property taxes statewide,” is “supported by a powerful Sacramento lobby,” and is “backed by an army of lawyers, consultants, bond brokers and land developers.”

Read the full piece here: California’s Secret Government

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A piece by the San Jose Mercury News claims, “Lost in the high-stakes battle over Gov. Jerry Brown’s proposal to eliminate the state’s redevelopment agencies is the fate of affordable housing.” The article points to San Jose as a poster-child for the use of redevelopment funds to construct affordable housing:

“San Jose has really been one of four poster children for what you can do with redevelopment funds that create housing,” said Christine Minnehan, longtime legislative advocate for the Western Center on Law and Poverty, a Los Angeles-based nonprofit that lobbies on behalf of the poor. The other three cities that have “stepped up to the plate,” she said, are San Francisco, Sacramento and Los Angeles.

At the city-level, critics of affordable housing programs maintain that the cash-strapped municipality simply cannot afford to offer the millions in housing incentives to developers:

“I think we should take a break. We’ve done more than our fair share” providing affordable housing, said Oliverio, who has asked the San Jose city auditor to tally up how much in taxes the city has forsaken since 1988 as a trade-off for building affordable housing.

Read the full article here: Brown’s plan to eliminate redevelopment agencies could kill affordable housing program

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The San Diego Source reports that Chula Vista has approved more than $190 million in redevelopment funds ahead of Governor Brown’s planned elimination of redevelopment funding.  Chula Vista joins Long Beach and several other municipalities that have approved the allocation of funds in an attempt to utilize RDA money before the source dries up:

The City Council voted Tuesday to commit redevelopment funds toward the Bayfront Master Plan, Main Street Master Plan and the Third Avenue Streetscape Plan. The Council also approved a loan to the Housing Authority to purchase property for future affordable housing projects in redevelopment area zones.

“This has everything to do with Governor Brown’s proposal,” said Eric Crockett, redevelopment director for the city of Chula Vista.

Read the full story here:  Chula Vista OKs $190M for redevelopment projects

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An interesting blog post from Berkley City and Regional Planning associate professor, Karen Chapple, focuses on the opportunity presented by the axing of RDAs:

Without redevelopment, planners lose a key tool to revitalize cities by targeting investment to disadvantaged neighborhoods, creating jobs and building affordable housing. Yet, eliminating the policy also creates an opportunity for California to think much bigger about how to revitalize our cities.

Of particular interest to the affordable housing community, are her thoughts on affordable housing:

Affordable housing advocates have marched on Sacramento to save the program.  But it’s not clear that redevelopment – which sets aside 20% of its funding for affordable housing – is the best way to deliver affordable housing.  Local redevelopment agencies with little initiative to build affordable units have sat on billions of dollars of funding, and a larger share of money is being spent on planning and administration than actual construction of new units.

Later in the piece, in a section about how the demise of redevelopment can become a positive,  she makes the following recommendation:

More affordable housing. The affordable housing industry is in crisis and must continue to receive its 20% share of tax increment.  But only agencies with affordable housing as their core mission – such as the city and county housing authorities – will manage the funding effectively.  The state should condition the funding, and related infrastructure funding, on cities building their fair share of affordable housing under the Regional Housing Needs Assessment program, in order to create a real incentive for compliance.  Entrusting affordable housing funding to the regional councils of government (like the Association of Bay Area Governments), as proposed by State Senator Mark DeSaulnier, is an effective way to ensure that more of this housing gets built.

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A January 14th article in the San Francisco Chronicle entitled “Redevelopment cut imperils S.F. affordable housing” adds to the nearly daily commentary on Governor Brown’s proposed budgets. The article points to the potential harm to, “more than 1,400 affordable housing units at 11 redevelopment sites in the city, including Hunters Point Naval Shipyard, Alice Griffith housing complex and in the Visitacion Valley and South of Market neighborhoods.”

The article prompted a response from noted conservative author, Thomas Sowell, criticizing the language of crisis surrounding the redevelopment:

The idea of “affordable housing” in San Francisco is a joke– a very bad joke. This same newspaper, just a few years ago, mentioned a graduate student looking for a place to rent in San Francisco, who was “visiting one exorbitantly priced hovel after another.”

Massive government intervention has made San Francisco one of the most expensive housing markets in the country. Creating token amounts of taxpayer-subsidized “affordable housing” does not undo the over-all damage that politicians have done by their severe restrictions on building.

Read the full piece here: Budget Crisis Rhetoric: Part II

More articles and editorials will surely follow as the debate over the redevelopment cuts continues to heat-up.

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The City Council will meet tomorrow to try to allocate $1.2 billion in redevelopment agency funds before the state dissolves RDAs as part of the fiscal reforms contained in Governor Brown’s proposed budget.  The move comes just days after a similar move by the Los Angeles redevelopment agency board to commit $930 million in RDA funds before the state-cuts go into effect.

The Long Beach City Council hopes to encumber $856 million in tax revenue for neighborhood revitalization and an additional $138.5 million in state-mandated housing set-asides.  The Los Angeles spending plan is still awaiting city council approval. It is likely that more cities (their are roughly 400 million redevelopment agencies in the state) join Long Beach and LA as municipalities attempt to allocate future redevelopment agency funds out of state jurisdiction.

Read More:

L.A. redevelopment agency hastily OKs spending plan
Long Beach tries to circumvent state redevelopment take-away

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In his budget introduction, the Governor noted 1.7 billion in cuts to Redevelopment Agencies. Other major changes noted in the summary of Governor Brown’s proposed budget:

• Housing Bonds—A decrease of $99 million in 2011‐12 to reflect a one‐time pause in the issuance of state bonds for new loans and grants for housing projects. This does not affect projects that are already underway.

• One‐Time Local Assistance—A decrease of $106.8 million in 2011‐12 due to one‐time funding for loans and grants, including a one‐time $38.3 million federal grant for Community Development Block Grant Disaster Assistance.

• Community Development Block Grant Funding — A shift of $1.1 million from state operations to local assistance in the federal Community Development Block Grant program to reflect a finding by federal regulators that the department was not fully matching the federal funds to support the program. While the funds will be available for local assistance, the state will not be able to provide the same level of service to local government grantees, which may result in providing grants to fewer jurisdictions in order to align state costs to the federal funding available for state operations.

View the budget proposal in detail here:  2011-12 California Budget

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California Governor Jerry Brown is scheduled to introduce his January budget proposal this morning. The budget-announcement could have serious implications for state level affordable housing programs as the Governor seeks to tackle California’s massive budget deficit. A San Mateo Daily Journal article highlights the potential cuts to local Redevelopment Agencies.  RDAs typically aid in the development of affordable housing through housing set-asides.

When: Monday, January 10, 2011 at 11:00 a.m.

Where: California State Capitol, Governor’s Press Room, Room 1190, Sacramento

Who:
Governor Jerry Brown
Department of Finance Director Ana Matosantos

Web Stream: The news conference will be streamed live at www.calchannel.com.

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