California lawmakers move to reinstate, revamp local affordable housing program

California lawmakers have approved a bid to renew a program that pumped hundreds of millions of dollars a year into affordable housing and economic development that had been eliminated during the state’s budget crisis eight years ago. But it’s uncertain if Gov. Gavin Newsom will sign off on the plan.

Senate Bill 5 by Sen. Jim Beall (D-San Jose) would effectively revive the state’s redevelopment system, which for decades allowed cities and counties to sequester a portion of local property tax revenue so that the money could be used on downtrodden neighborhoods.

“We hope that it’ll create a dynamic that will facilitate us from where we are now with no ongoing program that funds affordable housing, community reinvestment,” Beall said in an interview after the bill cleared the state Senate Wednesday night. “We haven’t had it in eight years. Now we do have it.”

Under the measure, the state will financially subsidize low-income housing, transit-oriented development and neighborhood revitalization efforts. The plan calls for $200 million annually in state funding in the initial years, eventually growing to up to $2 billion a year.

Opponents of the plan have echoed arguments against the prior version of redevelopment, eliminated by then-Gov. Jerry Brown and legislators in 2011. Brown and lawmakers contended that the program was too expensive — diverting billions of dollars that otherwise would have gone to public schools, requiring state tax dollars to make up the difference — and was rife with abuse. A 2010 Times investigation found dozens of cities had spent hundreds of millions of dollars reserved for affordable housing on employee salaries, planning documents and developer subsidies, among other payments — without building a single new home.

Beall said that SB 5 addresses those past problems, in part by having greater state oversight of the spending.

But cost concerns have worried Newsom and key interest groups. The California Teachers Assn., the influential union, representing teachers, was against the bill out of worries it could harm the state budget. And when unveiling his initial budget proposal in January, Newsom said other state low-income housing efforts, such as those funded by bonds and the state’s cap-and-trade climate change program, were providing funding and the state should instead focus on beefing up earlier, less-aggressive efforts to replace the redevelopment system.

“I think we are doing even more than what we did in the last redevelopment budget,” he said at the time.

Newsom’s office did not immediately respond to a request for comment on SB 5, which was approved by the Assembly earlier this week. Beall said he has not received an indication of whether the governor approves.

“Hopefully we’ll get the governor to sign it,” he said.