State Lawmakers Announce Effort to Recreate Redevelopment Housing and Infrastructure Agencies

Friday, March 16, 2018

New Agencies Prioritize Funding for Affordable Housing and Will Be Subject to Strict Requirements to Avoid Potential Abuses

SACRAMENTO, CA – A coalition of state legislators today announced new legislation to allow localities to establish redevelopment housing and infrastructure agencies (RHIAs) to fund affordable housing and infrastructure projects in California.  The bill, AB 3037, would be the most far-reaching effort to reinvent redevelopment agencies (RDAs) that were eliminated in 2011. At the time of their elimination, RDAs were required to spend $1 billion to fund affordable housing.

Since that time, California’s housing crisis has reached an unprecedented level, and homelessness has risen by 14 percent.  The state has passed some new affordable housing financing measures and tax increment funding tools, but none of them are as robust as RDAs were.

We are in the midst of the worst housing crisis California has ever seen, and we lost $1 billion of annual investment in affordable housing when redevelopment went away,” said Assemblymember David Chiu (D-San Francisco).  “AB 3037 is about making a serious and lasting commitment to fund affordable housing and ensuring Californians who are struggling can afford to live in our state.”

The end of redevelopment was an enormous setback for cities like San Diego. It left local jurisdictions without a powerful community development tool that provided more affordable housing, infrastructure improvements, and local jobs,” said Assemblymember Todd Gloria (D-San Diego). “I believe this is a tool we must bring back if we truly want to fix California’s affordable housing crisis.

In the past, redevelopment agencies were entities created by cities that allowed those cities to use tax increment financing to fund affordable housing and infrastructure projects.  They were originally created decades ago as a way to address blight and fund massive “urban renewal” initiatives, but RDAs eventually became a key source of financing for affordable housing developments.  Due to budget constraints during the Great Recession the Governor and Legislature scaled back these programs, and the RDAs were ultimately dissolved.

Under AB 3037, RHIAs will have some of the same goals of funding affordable housing and infrastructure projects as RDAs, but AB 3037 establishes requirements to ensure funds spent are targeted and closely monitored. 

The process of dissolving RDAs exposed egregious and often bizarre abuses of how the agencies spent the funding.  To ensure funding generated through RHIAs is not vulnerable to the same types of frivolous uses, AB 3037 puts a number of safeguards in place, including strong anti-displacement policies, detailed record-keeping requirements, independent annual audits, and harsh financial penalties for record-keeping or audit violations.

Unlike the previous system, AB 3037 will allow counties as well as cities to create RHIAs.  RHIAs will have to be approved by the Department of Finance and undergo a review by the Strategic Growth Council to ensure any plans are in line with California’s greenhouse gas reduction goals.  RHIAs will be required to set aside 30 percent of funding for the creation, improvement, and rehabilitation of affordable housing.  The amount that state would invest in RHIAs will be capped.

AB 3037 is joint-authored by Assemblymembers Richard Bloom (D-Santa Monica), Tom Daly (D-Anaheim), Chris Holden (D-Pasadena), Eduardo Garcia (D-Coachella), Todd Gloria (D-San Diego) Jacqui Irwin (D-Thousand Oaks), Kevin Mullin (D-San Mateo), and Miguel Santiago (D-Los Angeles). Assemblymember Phil Ting (D-San Francisco) is a co-author.

 

Assembly Voices for Redevelopment Housing and Infrastructure Agencies

 

“The on-going and severe lack of affordable housing in California demands further action. Restoring local governments’ ability to access a tool like redevelopment, something that was available to them for more than 50 years and was the single greatest source of funding for affordable housing, should be an easy call for the Legislature and Governor Brown.” -- Assembly Speaker pro Tempore Kevin Mullin (D-San Mateo)

“As Mayor of Thousand Oaks, I saw how redevelopment agencies directly benefitted local communities.  From 2000 to 2010, we received an annual average of $19.24 million to build affordable housing and spur economic development.  I’m proud to be part of the conversation to ensure we create RHIA’s in a way that supports local priorities while making sure funds are used responsibly.” -- Assemblymember Jacqui Irwin (D-Thousand Oaks)

“I’m proud to be joining my colleagues in this important conversation about development in California and the best ways to encourage local economic growth. In the midst of our existing homelessness and affordable housing crises, AB 3037 is an critical step towards encouraging local governments to give a human face to those directly affected by revitalization efforts. California needs more than just sales and property tax revenue; AB 3037 is a chance for us to think about ‘community’ once again.” --Assemblymember Miguel Santiago (D-Los Angeles)

“Since the dissolution of redevelopment agencies, cities across California have been in search for alternative resources to finance and spur critical growth. The opportunity to create Redevelopment Housing and Infrastructure Financing Agencies will add just such a tool into their arsenals. This measure will help equip our communities with new avenues to build affordable housing and enhance overall prosperity.” --Assemblymember Eduardo Garcia (D-Coachella)

 “The state gave cities an innovative and effective tool with the creation of the redevelopment agencies, and it was a mistake to take them away. Now, as we face an unprecedented housing shortage, we need to give this tool back to cities, so they can address problems with the funding and flexibility necessary to house our community and revitalize our neighborhoods.” --Assemblymember Chris Holden (D-Pasadena)