California redevelopment agencies (RDAs), which play a significant role in developing affordable housing throughout the state, are targeted for elimination this year under Gov. Jerry Brown’s initial budget proposal that slashes spending by $12.5 billion.
The RDAs are required to devote 20 percent of their income to building low-income housing.
While Brown calls the spending plan “a tough budget for tough times,” others have criticized the move to eliminate the state’s approximately 400 RDAs by July 1.
“This budget proposal to eliminate redevelopment is more budget smoke and mirrors that will bring little financial gain for the state, but will cause widespread and significant economic pain in communities throughout California,” said John Shirey, executive director of the California Redevelopment Association. “It is another gimmick that will likely result in extensive litigation.”
Redevelopment is the largest funder of affordable homes in the state after the federal government, according to the association.
More than 98,000 units of affordable housing have been built or rehabilitated since 1993.
Redevelopment activities support 304,000 full-time and part-time jobs in a typical year, including 170,600 construction jobs, reports the association.
In place of RDAs, Brown’s plan calls for the law to be amended to provide for a 55 percent voter approval for limited tax increases and bonding against local revenues for developments such as the ones currently done by RDAs.
RDA balances reserved for affordable housing would be shifted to local housing authorities for low- and moderate-income housing.
Brown, who was elected in November, has also proposed a freeze on housing bonds. The housing bond program would face a $99 million decrease in 2011-12 to reflect a “one-time pause” in the issuance of state bonds for new loans and grants for housing. This would not affect projects under way, according to the proposal.
