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Editorial

First, affordable housing

Those who hope to save community redevelopment agencies should remember their prime function.

March 27, 2011

Ever since Gov. Jerry Brown proposed patching one of the huge holes in California's budget by eliminating community redevelopment agencies, supporters of those agencies and their mission have been scrambling to save them or, failing that, to save the essence of them. That's a worthy campaign, because the redevelopment system, despite its flaws and susceptibility to abuse, does provide a useful tool for revitalizing blighted areas, creating jobs and supplying much-needed support for affordable housing.

In their efforts to save the idea, however, some advocates are moving in the wrong direction. One such well-intentioned but troubling proposal is being offered by the California Redevelopment Assn., an advocate for the agencies, with the support of the League of California Cities. Under the association's plan, the agencies would remain in place but would be offered the opportunity to voluntarily set aside the money they normally would have contributed this year to affordable housing and instead dedicate it to California schools (alternatively, the agencies could give up as much as 10% of their non-housing money for 10 years). In all, the association estimates that this would raise $2.7billion over the next 10 years, relieving the state general fund of that burden, including nearly $1 billion to help close the current budget gap.

The problem with the proposal is that it attempts to rescue redevelopment agencies by allowing them not to do the most important thing they do: provide money for affordable housing. What would be left are the less-defensible aspects of their mission. Redevelopment agencies in effect underwrite commercial development by allowing developers whose projects are approved for blighted areas to keep the extra taxes generated by those projects. That can help turn around neighborhoods — residents of the Staples area downtown or of North Hollywood can testify to progress in those communities — but the beneficiaries also can be controversial. Rich developers are behind many big projects, and the taxes that go back into the projects thus sometimes seem to subsidize people who don't need it, many with political clout and records of campaign contributions.

Redevelopment is in need of reform, and the prospect of eliminating the current system is making its backers suddenly open to the idea. To that end, legislators should consider new rules, which the association is backing, on how redevelopment money is spent and how that spending is monitored. They should also address the question of who gets to manage redevelopment money, and they might consider new limits on how much — and for how long — tax increment money is bottled up in projects. And they should protect affordable housing.

The last is particularly important, because to justify their continued place as tools of economic progress, redevelopment agencies need to serve a social purpose not easily addressed by the free market. Paying for affordable housing, which otherwise is almost impossible for the market to support, is precisely such a purpose. It should not be tossed overboard to keep redevelopment afloat.

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