Redevelopment Agencies Face Deadline on Housing Plans
Redevelopment agencies throughout Los Angeles and Ventura counties are scrambling to come up with housing plans by Dec. 31, as mandated by the California Legislature.
In fact, several hundred million dollars already set aside for housing hasn’t been spent. And many agencies are failing to set aside the funds they are obligated by law to spend on low- and moderate-income housing. That’s because Assembly Bill 1290 is forcing redevelopment agencies to come up with a solid plan by year-end to set aside and spend at least 20% of their “tax-increment income” on housing. This works by directing a portion of residential and commercial property taxes into a redevelopment area in an effort to eliminate blight and encourage development.
Regrettably, most of that money has gone for speculative commercial projects rather than residential projects, this at a time of great demand for low- and moderate-income housing.
About one-third of California’s roughly 330 redevelopment agencies have been doing an inadequate job on housing, conceded Bill Carlson, executive director of the California Redevelopment Assn. in Sacramento. “Many agencies have been paying more attention to commercial projects while housing gets shoved aside.” The use-it-or-lose-it provisions of AB 1290 will force many redevelopment agencies to set aside 20% of their tax-increment money and actually spend it on housing, Carlson said.
As of June 30, about $350 million statewide in housing money already set aside hasn’t been spent by California agencies, Carlson said. Housing advocates are hoping that AB 1290 will help generate more housing soon. “It will be a boon to low- and moderate-income housing. The money will go out the door faster,” Carlson said. “It will motivate those who have been sitting on their hands.” Agencies that don’t spend their housing money within a certain period of time will be basically blocked from engaging in any other redevelopment activities until they’ve met their housing requirements.
“Development agencies are hustling all of a sudden to get a housing plan together,” observed David Kroot, partner at the law firm of Goldfarb & Lipman in San Francisco, which represents about 60 redevelopment agencies in California--including the Los Angeles Community Redevelopment Agency. “There is something of a rush to get plans finished by December 31.” Cities and agencies that don’t have a housing implementation plan approved by that date may find themselves sued by citizens trying to stop other redevelopment projects.
State law requires a variety of housing projects. Agencies must produce a mix of housing for very-low-income residents (those who have 50% or less of median income for a particular area); low-income (80% of median income), and moderate-income (120% of median income). This can be done by providing grants or loans for rental projects or housing developments that dedicate certain units for low- and moderate-income renters and buyers. With just 2 1/2 months to go, only about 5% of Kroot’s clients have finalized their plans, he said.
But opposition from middle-class households to new low-income housing has kept many redevelopment agencies and cities from spending the money they have set aside for housing in special funds, said Patrick Richardson, project manager for the city of Ventura Redevelopment Agency. Some agencies have been collecting money and not spending it because of political opposition to introducing lower-income residents into wealthier neighborhoods, Richardson observed. Some cities have even tried to spend their required housing set-aside on projects outside of their city limits. And in upscale Hidden Hills, the city disbanded its redevelopment agency rather than build low- and moderate-income housing.
Because Ventura has three relatively small redevelopment areas, Richardson said, only about $100,000 a year in tax-increment income is set aside for housing. Most tax-increment money, in fact, goes to pay off the debt generated by projects undertaken in the 1970s and 1980s. In order to undertake larger projects, cities such as Ventura may bank several years worth of tax-increment income in order to undertake larger housing projects from time to time, Richardson said. The fact that a city or redevelopment agency has unspent tax-increment money doesn’t necessarily mean the city is dragging its feet in developing low- and moderate-income housing, he explained.
Ventura hasn’t yet finalized its housing plans for the next five years, Richardson said. The basic goal is to create about 500 new housing units downtown--about 20% of which would be set aside for low- and moderate-income renters. The units remain set aside for these renters with deed restrictions for a certain number of years.
Many people are opposed to low- and moderate-income housing because “it has an undeserved reputation for bringing in the riffraff,” said Toby Lieberman, project manager at Kosmont & Associates Inc., a real estate consulting company in Sherman Oaks. In fact, she said, “a lot of people who are considered low-income are just plain working people.” Families earning minimum wage just can afford the average San Fernando Valley rents of $550 for a one-bedroom apartment and $650 for a two-bedroom apartment.
Many cities and redevelopment agencies are also unfamiliar with housing projects. “There are a lot of redevelopment agencies that have never done any housing,” Lieberman said. “They started as suburbs and they don’t want to become ‘real cities.’ ”
There have been a lot of ways to skirt state housing requirements, Lieberman said. Not surprising, given that state regulatory law is basically “thousands of pages of regulatory mumbo-jumbo.” Now each redevelopment agency has to come up with a more solid plan for housing than before--and they have to execute the plan, she said. “It’s now becoming a matter of use it or lose it.”
