Building Industry Association
of San Diego

Governor Jerry Brown follows through with plans to end redevelopment agencies

Governor Jerry Brown unveiled state legislation that, if adopted, would mean the end of redevelopment agencies across California. While the issue has been hotly debated for weeks, no one had actually seen any formal language from the Governor’s office until now.

The 27 page bill declares that since redevelopment agencies were created by state statue they can be eliminated by statue. The result would transfer over $1 billion in taxes generated in local redevelopment areas to Sacramento to go toward closing the state’s $26 billion budget deficit.

In a move to secure redevelopment dollars for San Diego, Mayor Jerry Sanders has proposed a nearly $4 billion laundry list of projects for the city council to adopt before the state dissolves redevelopment agencies. The council will consider the mayor’s proposal on Monday.

The Oceanside City Council voted to eliminate its inclusionary zoning mandate saying the current program is ineffective, punitive and impedes job creation.  The twenty-year-old mandate  requires builders to either include low income housing in their projects or pay what Councilman Jerry Kern and others called a ‘housing tax’ in excess of $10,000 for every home built.  That cost is ultimately paid by new home buyers and can exceed $40 thousand when financed over the life of a 30-year mortgage.

The BIA and other home building representatives testified that the housing tax makes  potential projects economically infeasible forcing them to delay construction and preventing job creation.  A majority of the council agreed pointing out that construction activity in Oceanside is at historic lows and unemployment remains in double digits.

The council cited the fact that the program has produce only 240 homes in 20 years which Kern called seriously flawed and inefficient.

The motion, which passed on a 3 – 1 vote with Councilmember Sanchez voting no, will end the current program and replace it with a series of incentives and regulatory reforms designed to make low income housing more economically feasible to build.  The BIA will join with other stakeholders to develop the new affordable housing incentive program.

Sanders Pushes for $4 Billion in Redevelopment Projects

In an effort to prevent the state from raiding taxes generated from local redevelopment agencies, Mayor Jerry Sanders will ask the city council on Monday to approve an ambitious project list of almost $4 billion before the state gets its hands on it.

Governor Jerry Brown wants to end redevelopment agencies statewide and use the money to help close the state’s $26 billion budget gap. Brown said he would honor existing redevelopment project obligation which prompted Sanders and a host of other cities to fast track project lists while the state still debates  how to end the redevelopment agencies.

Sanders’ plan would allocate more than $1 billion to upgrade public infrastructure such as street and sidewalk improvements. Nealy $2 billion would be used to build affordable housing .  Millions more would be spend on fire stations and emergency response.

The council will consider the Mayor’s project list when it convenes on Monday.

State Budget Subcommittee Hears Plan to Take Local Redevelopment Funds

Governor Jerry Brown’s plan to close the state’s budget deficit by eliminating redevelopment agencies (RDAs) statewide took center stage today in Sacramento.  A standing room only crowd gathered to watch the state Budget Subcommittee get its first look at the proposal that will take billions from local governments as the state pursues funds to close a $25 billion budget shortfall.

Mayors from across the state are outraged that billions in locally generated tax dollars will be sent to Sacramento. The move is seen by political insiders as payback for the passage of Proposition 22 in November that prohibits the state from taking tax increment dollars from local governments.  By eliminating redevelopment areas altogether the state will get the money by default.  Locally generated taxes in redevelopment areas are used for local  infrastructure improvements and affordable housing but the state has been raiding RDA funds for years and now just want to eliminate them once and for all.

In San Diego, RDAs have generated tens of thousands of jobs and billions in private investment while creating thousands of affordable housing units and infrastructure improvements.  Housing advocates fear that if Brown’s plan is successful it spells the end of a major funding source for affordable housing.

In a move that stunned local affordable housing producers, Governor Jerry Brown halted bond funding for all affordable housing programs including the Multifamily Housing Program, Homeless Youth, and the CalHome Development Project Loan Program.  The move effectively shuts down most future affordable housing projects that use the bond programs to fund a portion of their projects.

In a memo from Cathy Creswell, Acting Director of the Department of Housing and Community Development the ‘pause’ is necessary to allow the Administration to evaluate its priorities and capacity for bond spending in the coming year.  The move comes on the heals of Brown’s announcement to eliminate Redevelopment Agencies statewide and transfer billions of dollars from local governments to Sacramento as the state struggles to close a $25 billion budget deficit.

Mayors and housing advocates are up in arms over the attack on local redevelopment agencies that have created thousands of local jobs and billions in private investment in San Diego alone.  It is also seen as retribution for Proposition 22 which passed in November that prohibits the state from raiding local funds to balance its books in Sacramento.  The Governor believes that the state has the power to eliminate redevelopment agencies thereby directing the money to the state. Mayors of nearly every major city in California and the League of Cities are demanding that the Governor keep his hands off of local money.

Faced with a special election cost of nearly $3 million the San Diego City Council voted 7-1 to rescind their previous override of Mayor Jerry Sanders’ veto of the supercenter ordinance.  The ordinance would subject Walmart supercenters to an extra layer of regulatory requirements that the city’s Independent Auditor said could lead to a de facto ban of such stores.

The repeal comes after Walmart and a coalition of business advocacy groups turned in enough signatures to force the council to either repeal the ordinance outright or hold a special election within 11 months.  Over 50,000  signatures were turned in to the City Clerk’s office which forced a council reconsideration.

The council had little appetite for a special election considering the multi-million dollar cost to the city and the high probability that the voters would reject an anti-Walmart ordinance.  Local union leaders pushed through the ordinance targeting the non-union Walmart at breakneck speed by getting the council to circumvent  traditional committee review and holding emergency meetings all in an effort to get it passed before the new city council was seated in early December.