LA OFERTA - JULY 20, 2003

A citizen's guide to Redevelopment

- Pete Campbell

These days, you hear the San Jose Redevelopment Agency talking more and more about providing affordable housing. But has the creation of affordable housing always been a priority for the Redevelopment Agency (RDA), or have they shifted their emphasis to housing in an effort to protect their funding in these budget shrinking times?

It's interesting to note the evolution of the RDA's mission as describined by their own literature.

In the "Citizen's Guide to Redevelopment" published by the California Redevelopment Association (1994), one reads that, "Redevelopment is a process created to assist city and county government in eliminating blight from a designated area..."

"How does the law define a blighted area within a project area?"

A blighted area is characterized by conditions causing a reduction of proper use of the area to such an extent that it constitutes a serious physical or economic burden on the community which cannot reasonably be expected to be reversed or alleviated by private enterprise acting alonge. (page 7)

Critics of the RDA argue that by this definition there is little or no blight in San Jose, yet through the Strong Neighborhood Initiative (SNI) plan, nearly one-third of the City of San Jose is classified as a Redevelopment Area!

In 2002, the "Citizen Guide to Redevelopment" was transformed to "The Community Guide to Redevelopment." The definition of blight published in the 1994 Redevelopment guide is noticeably absent in the 2002 edition. The 2002 edition simply states that, "Redevelopment can only be used in areas that suffer from adverse physical and economic conditions defined in the law as "blight."

The 2002 edition of the Redevelopment guide also makes some rather bold statements and value judgements about Redevelopment that are noticeably absent in the previously published edition.

If Redevelopment can do all of those great things, who wouldn't want it? The San Jose city government sells the point further in the Spring/Summer edition of the "Inside San Jose" brochure.

"Despite recessionary challenges and no growth in projected tax revenues, the Redevelopment Agency remains committed to neighborhood improvements, affordable housing, economic stimulus and job creation."

While all of these things might be worthwhile societal goals, is the Redevelopment Agency the government institution best suited to bring them about? Might other government institutions be more efficient in realizing these goals? What abou tax incentives to the private sector? What about enforcing existing code enforcement laws to their letter?

Perhaps its appropraite that the "Citizen's Guide to Redevelopment" became the "Community Guide to Redevelopment." After all, much of the governmental action in San Jose is based on the perceived want and needs of the "community rather than the requirements of the law and expressed will of the people.

As in the case of the Tropicana Shopping Center, commercially successful businesses are declared blighted and displaced in the name of the "community" and for the greater good. In San Jose "community rights" are often placed before the rights of the individual. But where is it written in the Constitution that "communities" have rights?

How can a business be blighted if it is thriving? It would seem that in San Jose, as demonstrated through the Tropicana experience, the definition of blight is "that which is not sufficiently quaint." Or, "that which is not generating as much tax revenue as the city council would like."


"The Numbers"

San Jose has the largest redevelopment agency in the State of California. The San Jose RDA currently employs 130 people with an operating budget of $26 million.

According to RDA Finance Director David Baum, the Agency's total indebtedness stands at $1.9 billion. (Double this amount to obtain the total estimated cost including interest over the life of the bonds).

This year alone, $116.4 million will be paid to service the RDA's debt. This figure is a little over three times the amount the Agency has budgeted to spend on affordable housing next year. (FY 2003-04).

The primary source of funds for the San Jose Redevelopment Agency is tax increment revenue that is generated from redevelopment zones. In fiscal year 2001-2002, the RDA claimed that 38.1% of the $188,500,000 it received through tax increment was spent on housing. $37,774,936 of this amount was spent on affordable housing in the City of San Jose during FY 2001-2002. But that's not quite the whole story.

According to the RDA's annual report for FY 2001-02, the total revenue for the RDA that year was $280,879,047! (page 14).

If you accept the RDA's total revenues as a basis for analysis, the Agency's dedication to affordable housing takes on a whole new perspective. The percentage of RDA total revenue dedicated to affordable housing in FY 2001-02 was 13.45%.

According to the San Jose Department of Housing, 1,499 total units of affordable housing were completed in the City of San Jose during fiscal year 2001-02. Of these 1,499 units, 16 fell in the "moderate income" category. 728 units were for "low income" households, and 702 units went to "very low income" earners. Only 23 units were dedicated to "extremely low income" households.

Some see affordable housing as a means to social justice and equality, and the RDA as its best provider. But is the Agency affordable housing's best provider when less than 14% of its total revenues (2001-02) was dedicated to it?

Critics argue that a shift in emphasis to providing more affordable housing is a pure political play designed to ensure the survival of the Agency.