Redevelopment dust settles - what's next for affordable housing?
January 4, 2012 1:16 p.m.
Susan Tinsky, Exec. Director of the SD Housing Federation
Catherine Rodman, director Affordable Housing Advocates
ST. JOHN: You're listening to KPBS Midday Edition. I'm Alison St. John. Finding an affordable place to live in San Diego is a challenge. More and more people are being priced out of the market, which is why it's so important to keep building affordable housing. There are laws defining how much affordable housing must be built whenever a developer builds a new project. And 20% of redevelopment money is supposed to go to affordable housing. So the question is, is that all gone now? The redevelopment agencies have been officially eliminated by the state Supreme Court. With us to talk about this aspect of this important decision, we have Catherine Rodman, director of affordable housing advocates. Thanks for being with us.
RODMAN: Thank you.
ST. JOHN: She's actually sued several San Diego Cities for not using enough of their funds on affordable housing. And we also have Susan tin ski, who works with developers to put together affordable housing projects. Thanks very much for joining us.
TINSKY: Thank you Allison.
ST. JOHN: Susan, you work with developers to make it possible for them to build affordable housing. What portion of the money they use comes from redevelopment dollars?
TINSKY: Redevelopment funding has been important in two ways. From the funding perspective, it's the second largest source of affordable housing in the State of California.
ST. JOHN: After?
TINSKY: After the federal government.
ST. JOHN: Okay.
TINSKY: It is actually the single -- the largest single source of affordable housing funding. Federal funding comes in many different pots and buckets. In the sense of a single source, redevelopment is the largest in the State of California. The second piece though is the requirement to construct affordable housing. This is it a man date on all redevelopment agencies. And so that mandate is also very significant.
ST. JOHN: And the man date is -- am I right in saying 20%?
TINSKY: . The mandate is that 20% of the revenues collected by redevelopment agencies need to be spent on affordable housing. But there's also a requirement that all of the housing in a redevelopment project area, 15% must be affordable.
ST. JOHN: So what do you think about this decision? What was your reaction when you heard it a couple days before the new year?
TINSKY: Yeah, the ruling is really a significant blow for anyone in California who is struggling to pay their rent, who is living in unsafe or crowded conditions right now, it really is a significant blow to those folks as well as folks that are trying to provide affordable housing in the community.
ST. JOHN: Now, Cathy, you appear to have -- you're both attorneys, I believe.
ST. JOHN: But Cathy, you have a different perspective on what the decision taken by the state Supreme Court actually means.
SULLIVAN: I don't think it's as dire as all that, are at least not for the near term. It is a definite blow to those who have relied on this source of money to develop affordable housing and to communities that need it. But we filed an amicus brief in the Supreme Court case, and I flew up and watched the oral argument.
ST. JOHN: Oh, really.
SULLIVAN: It was just a momentous decision. And I read the opinion eagerly, because it is very well written and well founded. I was not surprised at the decision having attended the argument.
ST. JOHN: By the way, you can read that argument on our KPBS website on the Midday Edition page. It's there. And it is, I must say, I found it very educational.
SULLIVAN: Very educational. I am involved in this field, but I learned new things about proposition 13 and the impact of it. But what happened heir is really redevelopment agencies and cities fought too hard to keep too much. They fought very hard, every city on their website had save our city last year before the November election when they fought for the passage of prop 22. And that disabled the state from having the agencies share with them the money to help fund our schools.
ST. JOHN: Prop 22 was the one which said the state cannot steal, or at least that's the way some people interpreted it. Cannot take money from local governments.
SULLIVAN: Right. And you've got to look at who took it first. Agencies, there are many more of them. There's an unlimited number of agencies with an unlimited financial scope, and geographic scope. They get over $5†billion a year. And this is money that other local entities, the county, school districts, hospital, water districts need to provide basic services to the communities. So it's hard to take from someone when they didn't take initially. And so I think if redevelopment had been started on a much more modest scale, then it wouldn't have been the subject of this challenge. What happened is first the agencies were asked to share, they were resentful of that understandably, sought to get protection from prop 22, and passed, and disabled the city -- the state from asking them to share. So the state had no option but to pull the plug on them because they needed these revenues for things that they are required to fund.
ST. JOHN: And as we talked about with Vladimir Kogan yesterday, the state actually bailed out the local governments after prop 13. So you could argue that, hey, they bailed you out in the first place. They're not stealing it. They just can't afford to do that anymore.
SULLIVAN: Right. They're required to provide this funding for schools, and they can't allow agencies to keep taking such a disproportionate share. Then what happened is the agencies and the league of cities sued to invalidate these laws. If they just made their piece with them, there would have still been the sharing that has been going on. So they really shot themselves in 1†foot with prudent person 22, and then shot themselves in the other with this litigation. But I don't think the result will be as dire in the short term because our amicus brief argues that when AB26, are the dissolution bill is applied, agencies will need to not only pay housing funds back for all the money they've borrowed for them over the year, and that is recognized, but they'll also have to create the affordable housing that they have yet to create. There are along term obligations they've yet to fulfill, and we believe they should continue to get the housing funds as long as they have those obligations.
ST. JOHN: So you're sort of saying that redevelopment agencies should have their commitments grandfathered in, in some ways. And you can't just cut them off at the knees.
SULLIVAN: Correct. And the law supports that. The federal and state constitution don't allow for impairment of contracts. And laws like statutes that have created the replacement inclusionary, the targeting and land banking that redevelopment law allows are all 4 to 10-year commitments, and so you can't just disable someone from fulfilling their contractual obligations. And I believe the Court recognizes that in their opinion.
ST. JOHN: But doesn't that just mean that all the commitments they've made for the last four to 10†years, maybe there's an argument they could keep going. But that still begs the question of where you're going to get the money in the longer term. Susan?
TINSKY: Yeah, actually we're certainly support identify of the direction that Catherine is going. We believe this would take a legislative fix to clarify what the outstanding obligations are with the debt and contracts that result from Catherine's amicus arguments really are. So that's going to take a little bit longer. Probably a legislative fix, maybe even litigation.
ST. JOHN: Surprise, surprise.
TINSKY: So really our concern is, in the immediate sense, we have an opportunity here to put our heads together and work together to look at a new source for affordable housing funding, whether that is reforming and rethinking what redevelopment is, or if it is identifying a unique source for affordable housing. But at the end of the day, you know, Catherine's comment about needing to fund other essential services is very valid. But what's more essential than a roof over someone's head?
ST. JOHN: Uh-huh.
TINSKY: Food, water, shelter. And I would argue that we shouldn't be at odds with education at this point because those missions are really complimentary to one another. So it's an unfortunately reality that we've been -- affordable housing has become the collateral damage, and really pitting redevelopment against schools and education and other public policy priorities.
ST. JOHN: Well, it sort of looks like some of the redevelopment agencies are not in any hurry to disband. There's an article in the UT San Diego by Craig Gustav son saying that CCDC, the downtown redevelopment agency doesn't show any signs of leaving their offices and walking out. Is that because they're staying around to see how the litigation that you're talking about, Cathy, will play out, and how much of their commitments they will continue to be able to move ahead with?
SULLIVAN: I'm not sure. I think they'd be the best source to ask. But I can only imagine that they are so entrenched that it will be difficult for them to move. And I think some comments I read also reported that they are contracted by the city -- the city contracts with them to do development downtown. Whether or not they are acting as the redevelopment agency or some other group, they're outsourcing something that may be what their next iteration, their next life looks like.
ST. JOHN: They may find another way of keeping the salaries you but with a different mission.
SULLIVAN: I'm sure they will fight. There are so many cities on their staff has been very heavily dependent on redevelopment money. I'm sure many cities will look to see what they can do to keep that money coming.
ST. JOHN: Well, there's another aspect to this, which again was brought up in one of the other Midday Edition discussions that we have had, some of the agencies have not spent federal community development block grants correctly. And those millions of dollars that were incorrectly spent may have to be paid back, and may contribute to affordable housing, is that accurate?
SULLIVAN: I believe so. I'm not as familiar with the audit and all that that went on about the problem. But the federal dollars that Susan mentioned and that you're mentioning, one specific pot of them, they've existed for a long time, and they continue to exist. What happened when redevelopment came along and grew in San Diego and elsewhere is that CDBG, and other moneys that cities have received from the federal government, were then rededicated to other projects other than affordable housing. And I think now is a time to look and say what other sources, what federal sources that the housing fund supplanted can come back and serve the need of providing affordable housing.
ST. JOHN: Life we leave that topic, Susan, do you see that as a glimmer of hope for the developers you're working with?
TINSKY: I think at the end of the day, the demand for affordable housing outstrips all of the existing resources.
ST. JOHN: Ah.
TINSKY: Including redevelopment that we have today on the our fingertips. So really what we have today needs to be augmented. But you take away redevelopment, and we're in a world of hurt. In the region, we're projecting just in the next decade that we need 64,000†units of affordable housing. 40% of our population in this region is low-income.
ST. JOHN: Yes.
TINSKY: So the need is really great. And so even if some of the CDBG resources could be repaid back for -- and used for affordable housing purposes, again it's just a drop in the bucket. So we really need to know putting our heads down and thinking about how do we really create a sustainable and ongoing source for affordable housing for all the folks that are in need?
ST. JOHN: So where does the legislature stand on this? Presumably they did not intend to wipe out affordable housing. So I mean, this is one of the questions. They need the money for other things like schools. The state cannot afford to be backfilling anymore. What are the avenues that legislators might take?
SULLIVAN: I can't imagine. The state's $25†million in debt. This might make it $23†billion in debt. I don't think they've got any other pots of money or any other rabbit that they can pull out of a hat. Our local, state, and federal economy are in dire straits, and I agree with Susan that affordable housing is a fundamental right. It's one of the most essential things for human beings to have, to live in safety and dignity. It's absolutely important. What I'm hoping is that the stream of money that should come to the successor agencies, the cities after the redevelopment agencies are dissolved, that that money continues for the near term so that historic unmet obligations are fulfilled, and that should bring thousands more units into the county, the region, and likewise across the state. And that during that time, for example, San Diego has our housing element cycle coming up, the 2013 to 2020-cycle, that cities take a hard look and really beef up their regulatory programs. Inclusionary house, density bonus, mixed use projects, successor units can all be used to provide housing. Cities can donate land. And there's a lot of other things they can do without this fund or by redirecting other funds.
ST. JOHN: You're talking about the fact that there might be some money for the next few years from existing commitments. And you're talking about the dire need for more money for affordable housing. Are either of you going up to Sacramento to lobby, and do you have any ideas of what arguments you could make and where that money might come from?
TINSKY: We have been working for quite some time, strategizing on a permanent source of affordable housing outside redevelopment. We've been working on this strategy, in addition to spending a lot of time last year in Sacramento to look at how redevelopment funds are being used. Affordable housing outside of redevelopment revenues in the state. We've been subsisting to bond measure revenues. Prop 46, and prop one upon C. And we're at the tail end of those. We were actually seeking an alternate source for those revenues, prior to the governor eliminating redevelopment funds. And now we're worse off because we're at the tail end of both. Given that, are we're spending a lot of time in Sacramento both on this issue as well as replacing the proceeds from prop one C, and prop 46.
ST. JOHN: Well, it's a bit of a mystery, isn't it? We'll have to see what happens. I'd like to thank you both very much for coming in. Thanks for being with us, Susan.
TINSKY: Thank you very much, Allison.
ST. JOHN: And Catherine Rodman, thank you Cathy.
SULLIVAN: Thank you.