It’s no secret that many of North County’s elected officials dislike the state’s mandates to spur housing production. 

They argue without subsidies from the state, it’s nearly impossible for local governments to produce the level of affordable housing that the state demands. 

Now they’ve settled on a new response: Bring back redevelopment agencies in some form. And according to one state lawmaker, there is some desire at the state level to revive them. 

At a recent panel about housing and state housing mandates, mayors from Oceanside, Encinitas, San Marcos, Carlsbad and Solana Beach reminisced about a previous era of housing production, one where cities could use property taxes to subsidize affordable housing and build public amenities — the era of redevelopment agencies. 

Redevelopment agencies, or RDAs, were local government programs created by the state to help fix rundown neighborhoods. Over time, they became a key tool in California’s affordable housing efforts, funding housing projects as well as parks, roads and other infrastructure. 

In 2012, Gov. Jerry Brown shut down redevelopment agencies statewide. Before their dissolution, these agencies made quite an impact, both positively and negatively.  

Here’s the story of redevelopment agencies, and what it could look like if they ever came back. 

The History of Redevelopment Agencies 

Redevelopment agencies date back to the 1940s when California lawmakers approved the Community Redevelopment Act of 1945, allowing cities and counties to create agencies to eliminate “blight” through new development and rehabilitation of residential and commercial areas. 

A board of directors made up of each city or county’s governing body, like a City Council, ran each redevelopment agency. 

In the early years, these agencies relied mostly on federal funds. That changed in 1952, when the state authorized a new local financing tool known as tax-increment financing, allowing cities to keep the increase in property taxes in a blighted area so it could keep investing in more development.  

Here’s how it worked: When a city established a redevelopment area, it froze the amount of property tax that schools, the county and other agencies were receiving. As property values increased due to new investment, the extra property tax revenue, called the “tax increment,” went directly to the redevelopment agency instead of being shared with other public entities. 

The agency then used that revenue to fund projects like parks, infrastructure improvements and affordable housing. 

In 1976, state lawmakers required that at least 20 percent of the tax increment revenue from redevelopment project areas be used to increase and preserve affordable housing, or housing for very low-, low- and moderate-income households. 

The Good … and The Bad 

To start a redevelopment area, cities had to declare the neighborhood “blighted,” meaning run-down, unsafe or suffering from poor infrastructure. 

In some cases, redevelopment agencies helped revive declining areas, attracting new businesses and cleaning up contaminated sites left behind by old industries, according to an analysis from the U.S. Department of Housing and Urban Development, or HUD. 

For example, in the city of Vista’s downtown, businesses began to close, and the area’s infrastructure deteriorated during a period of economic decline in the 1990s. Those former businesses left behind soil and ground water contamination. 

The city’s redevelopment agency spent more than $1 million to turn things around, cleaning up the contaminated areas and making improvements to the city’s Main Street, including creating a new park. 

“As a result of the project, the area added more than 40 new businesses and roughly 700 new jobs and encouraged more than $55 million in private investment in the project,” according to a HUD analysis. 

Redevelopment agencies also helped fund the construction of new affordable housing units. 

State Assemblymember David Alvarez, who was a San Diego City Councilmember when redevelopment agencies existed, told Voice of San Diego about some affordable housing projects in South County that were created with redevelopment dollars. 

“You know, affordable housing projects, they’re not profit makers,” Alvarez said. “And so, you have to find some subsidy somewhere in order to keep the rent low for people. That’s the whole point. And so that’s where redevelopment was used.” 

He listed several redevelopment projects in San Ysidro, South Crest, Barrio Logan and other typically underserved communities that benefited from the agencies. 

Redevelopment agencies also helped fund infrastructure improvements and build public amenities, like San Diego’s own Petco Park. Downtown San Diego’s former redevelopment agency, Centre City Development Corporation, paid $301 million of the ballpark’s $454 million construction cost, with the city owning 70 percent of the stadium.   

San Marcos Mayor Rebecca Jones, who was a City Councilmember when redevelopment agencies were still around, told Voice that redevelopment funds were also critical for affordable housing and infrastructure in San Marcos’ District 1.  

“We spent about $170 million in investments, not just for housing, but for infrastructure as well, so, putting in parks and roads and all of the really important infrastructure to continue to invest in the areas that were maybe considered blighted at the time or under invested in,” Jones said. 

However, some cities stretched the definition of “blighted.” For example, the city of Coronado declared the entire city area blighted including oceanfront properties and multimillion dollar homes.  

There were also plenty of examples of redevelopment agencies misusing their power to take private property through eminent domain, the government’s ability to seize land for public use. Cities could use that power under redevelopment to clear areas they considered “blighted” and turn them over to private developers. 

In Indio, for example, the city’s redevelopment agency planned to expand the Indio Fashion Mall and demolished about 90 homes, many in a predominantly Black and Latino neighborhood, along with several stores and a low-income housing complex. The deal with the developer later fell apart, and the mall was never expanded. 

Then there was the major scandal Voice uncovered in 2008 involving the Southeastern Economic Development Corporation, or SEDC — a city of San Diego redevelopment agency tasked with revitalizing underserved neighborhoods. For several years, the agency’s president had been quietly paying herself and her top deputy tens of thousands of dollars in bonuses and extra compensation without the knowledge of the City Council or the group’s board. 

That specific agency had also mismanaged projects, approved deals that unfairly benefited certain developers and underdelivered on affordable housing, Voice found. In one case, a development that was supposed to include 23 affordable homes ended up with just one, while investors flipped the rest for big profits. 

Jones acknowledged that some cities and agencies misused funds and took advantage of the system, but she said, that shouldn’t have led to the dissolution of the entire system. 

“With redevelopment agencies, the good far outweighed the bad, and with those bad actors, it would’ve made more sense, in my opinion, for a measured approach,” Jones said. “A measured approach would have been, for the redevelopment agencies that were not doing the right thing, to go in and restructure it so those agencies could face consequences and no longer continue.” 

There’s also been criticism that redevelopment agencies didn’t deliver on affordable housing. A federal analysis found that from 2001 to 2008, only 11 percent of the funds set aside for low- and moderate-income housing were actually used to build new homes. Of more than 430 agencies across the state, 101 spent at least $100,000 from their housing funds but didn’t build a single unit during that period, according to a HUD analysis.  

A New York Times review of state records found that from 2000 to 2008, more than 20 agencies produced fewer than one affordable unit for every $1 million spent. 

Another frequent criticism was that redevelopment agencies took money away from school districts. 

In 2011, Gov. Brown ordered the shutdown of all redevelopment agencies, mainly to redirect their funds toward closing the state’s massive budget deficit. The governor’s office also cited concerns about mismanagement within the system.  

“In response to the Governor’s proposal to dissolve RDAs in the state, the Legislative Analyst’s Office evaluated the performance of RDAs and found no evidence that RDAs improved overall economic development in California and found that the program shifted funds away from necessary services, such as education,” according to a HUD analysis. 

Could Redevelopment Agencies Ever Come Back? 

Despite the instances of misuse and abuse of the redevelopment system, the idea of bringing redevelopment agencies back in some form is not that unpopular. 

Assemblymember Alvarez told Voice that there are lawmakers at the state level who believe it to be a key component in creating more affordable housing and helping underserved areas. 

“I can tell you there are a lot of members in the legislature that come from local government that have identified redevelopment as an important tool,” Alvarez said. “So, I think there’s interest there.”  

Alvarez himself was one of the authors of Assembly Bill 1476, which failed, but attempted to create agencies that functioned very similarly to redevelopment agencies. 

“Unfortunately, given the budget situation at the state, we haven’t had a governor in the last two that’s interested in the redevelopment topic, and therefore, even if legislation makes it through the legislature, which it has, the governor has vetoed it in the past,” Alvarez continued. 

He added that he’s also seen interest from affordable housing developers to bring these agencies back in some form. 

“They are clamoring for some sort of financing mechanisms that helps them deploy more affordable housing given the cuts that have happened by the federal government and given the limited budget that the state provides,” Alvarez said. “Even though [the state] has provided funding, it’s not as robust as it was when redevelopment existed. So, from an affordable housing standpoint, this is the biggest tool that could be utilized for that, but we just haven’t been able to figure out how to make this work.” 

If these agencies do ever come back, Alvarez said, he thinks it would be important to identify communities that really need investment to make sure cities or counties don’t take advantage of the system. He also said any future form of redevelopment agencies should protect funding for schools, protect against displacement and protect people’s property rights by being “much more careful” with the use of eminent domain. 

When it comes to city leaders criticizing state housing mandates, Alvarez acknowledged that the redevelopment funding tool “was really critical.” But he also said cities should first look at what they’re doing in their own housing policies to make housing easier to build. 

“I don’t represent North County, so I don’t want to come across as an expert by any means, but the questions that I ask of my own cities are, ‘what are you doing on the policy front, on the planning, on the land use aspect?’” Alvarez said. “I do know that there are cities in the state of California that are not really doing their part to facilitate that. And so that’d be the first question to ask is, ‘have you facilitated, have you made it easy, or are you still putting up barriers?’ And if you have, then we can have a conversation about financing.” 

Still, as housing mandates continue to frustrate local officials, the idea of reviving redevelopment agencies, in one form or another, isn’t likely to go away anytime soon.