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# Redevelopment Dollars are Gone but Problems Remain
July 30 2012
Written by John Wildermuth.
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ECONOMY - There really is no such thing as a free lunch, as California continues to prove.
When Gov. Jerry Brown won his battle to shut down California’s 400-plus local redevelopment agencies last year, it was hailed – most by the governor – as a glorious victory for the state, local governments and, not least, California schools.
By ending the agencies, Brown magically uncovered $1.7 billion in unallocated redevelopment funds that could be used to balance the state budget and free up other local tax money for schools.
But in tight economic times, public finance is at best a zero-sum game. Absent new taxes, if the state finds a way to get more money coming in, someone else farther down the government food chain is going to find their pockets getting picked.
And while the state gleefully collected any cash left over when those redevelopment agencies closed, California wasn’t nearly as eager to grab some of the local obligations that money paid for.
And those obligations didn’t disappear just because the money did.
Opponents of redevelopment like to sniff that the property tax money funneled into the local agencies was used by cities and counties as a slush fund to reward favored developers and build local monuments like stadiums, arenas and high-rises. And there’s no argument that plenty of cities (including LA) had rather fanciful definitions of what constituted “blight,” which was the key requirement before an area could be redeveloped.
But state law also required that at least 20 percent of redevelopment dollars go for low-cost housing and cities like San Francisco (and Los Angeles) have spent hundreds of millions in redevelopment money to build low- and moderate-income housing.
How expensive is San Francisco housing? Well, the average rent for a studio apartment in May was $2,075 a month. And people looking for a one-bedroom unit better have about $2,611-a-month in their pockets.
Needless to say, that doesn’t leave a lot of housing available for folks not making high-tech wages. And the demand for reasonably priced housing didn’t go away just because Brown grabbed the redevelopment money.
So earlier this week, San Francisco Mayor Ed Lee and the Board of Supervisors put together a November ballot measure to establish a $20 million to $50 million housing trust fund that will provide cash for building affordable housing. If voters approve, it will be funded with money from the city’s hotel tax and revenue from another ballot measure that will change the way the city collects its business tax.
That’s if it passes, a concern the governor is becoming increasingly familiar with.
California also is hitting up cities for tens of millions of dollars in property tax money that was paid to redevelopment agencies in December, just weeks before the shutdown. Many of the cities were told to send the state a multi-million-dollar check within days or face the loss of the sales tax money that finances most local budgets.
Again, the state budget wins and local government loses, which has always been the case when it’s the folks in Sacramento making the rules.
When times are tough, it’s the big dog that eats. And he’s never worried about who else may go hungry.
*(John Wildermuth is a longtime writer on California politics and a political commentator. This column was posted first at [foxandhoundsdaily.com](http://foxandhoundsdaily.com))* –cw
CityWatch
Vol 10 Issue 61
Pub: July 31, 2012
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