State to Audit Redevelopment Agencies

CA announced today that it will audit redevelopment agencies as part of the information gathering process leading to their elimination or preservation.

Regardless of the fate of these agencies, audits and greater accountability are good. End of story.

Should Redevelopment Agencies Get the Axe?

Gabriel Metcalf, of SPUR fame, has a good op-ed defending Redevelopment Agencies.

... it's worth pointing out that we are talking about eliminating the tool central cities use to attract growth that would otherwise go to the suburban periphery.

For me, best outcome of this attn to Redevelopment Agencies will be better oversight. A clipping of wings, not elimination.

Two commenters on this op-ed nicely articulated the pro and con argument for RAs:

Pro:

Dive in deeper to some of San Francisco's large redevelopment projects and you will see that the trade-off Brown is creating between redevelopment and public services is a false one. As part of the Mission Bay deal, private land is being donated to the San Francisco Unified School District for a new public school; funding and construction of a playground accompanying the new school is a required deal point; land and funding is being provided to the City to build a new local fire and police station; space was built to house the first new public library in San Francisco in 30 years. The Treasure Island deal has many of the same public services being supported in its redevelopment program. These are examples of how redevelopment can and should work, resulting in economic development AND needed public services.

Con:

"Used wisely..."

That's the problem Gabriel - they aren't used wisely. The LA Times documented the waste by redevelopment agencies. We've seen redevelopment here in Alameda fund boondogle parking garage projects.

 

The LAT did run an excellent two-part series about redevelopment abuses, and it had an awesome title: Arrested Redevelopment (Links: one and two). LAT also published financial records from city redevelopment agencies to toss some daylight on whether they were meeting their minimum requirements for affordable housing. Great stuff.

But as the first commenter showed, when done right, a redevelopment project will do more than hoard affordable housing monies or build skyscrapers on razed neighborhoods that formerly belonged to low-income people of color.

Proposition 26: Negative Fallout

Last fall, CA voters approved Proposition 26, an initiative that requires all new state taxes and fees be approved by a two-thirds majority by each house of the state legislature.

The November passage of Proposition 26 threatens a complicated 2010 gas-tax swap that reinstated California’s transit assistance program.

Since that deal involved an increase to the state’s excise tax, it must be re-enacted with a two-thirds majority of the Legislature, according to Jessica Digiambattista of the Legislative Analyst’s Office.

If the reauthorization is not approved, transit agencies will suffer. The San Francisco Municipal Transportation Agency could lose about $31.5 million and BART about $23 million. Caltrain could miss out on about $4.5 million and SamTrans some $4.6 million.

"[A] complicated gas-tax swap" is right. From what I can gather, it seems like the gas-tax swap reduced the overall funds available to public transit by replacing an out-and-out gas sales tax with an excise tax. Because of Proposition 26, that increase in excise tax must be retroactively approved by a 2/3s majority--irregardless of the fact that it was paid for by eliminating the sales tax. (To keep the gas-tax swap palatable, the overall package is revenue neutral, i.e., no net change in state $$ intake or outflow.)

Madness!

Here's a quick selection of explanatory bits from the Bay Area Metropolitan Planning Commission website. Hard to nushell this one, other than that it seems enabled by imaginative accounting, and is probably motivated by a desire to free up monies in the General Fund. (I also want to guard against the strong possibility that any summary by a non-expert will misrepresent the facts at hand, so I'll let them speak for themselves.)

Mechanics of the Tax Swap

The bills (AB 6 and AB 9) provide the General Fund with approximately $1.1 billion by shifting the cost of debt service on outstanding transportation bonds from the General Fund to various transportation funds. Relieving the General Fund of these interest obligations results in approximately $11 billion in General Fund savings over the next 10 years. 

The tax swap, contained in AB 6, affects four different taxes — the state portion of the sales tax on gasoline, the excise tax on gasoline, the state portion of the sales tax on diesel fuel, and the excise tax on diesel. Local sales taxes remain unchanged and will continue to include gasoline and diesel fuel. AB 6 contains the following key changes:

• Beginning July 1, 2010, eliminates the 6 percent statewide sales tax on gasoline, and with it, the funding source for Proposition 42 (the 2003 constitutional amendment that required most gasoline sales taxes to go to transportation) and “the spillover,” a funding formula dedicated to public transit.
• Raises the excise tax on gasoline by 17.3-cents on July 1, 2010, for a total excise tax of 35.3 cents per gallon. Starting March 1, 2011, and each March 1st thereafter, authorizes the State Board of Equalization (BOE) to estimate how much revenue would have been raised by the sales tax on gasoline and adjust the gasoline excise tax to raise an equivalent amount.
• Retains the existing sales tax on diesel fuel and raises it by another 1.75 percent on July 1, 2011 to generate about $120 million in additional funds for public transit, for a total of approximately $436 million in FY 2011-12.
• Offsets the diesel sales tax rate increase by lowering the diesel excise tax from 18 cents per gallon to 13.6 cents, effective July 1, 2011. Similar to the gasoline excise tax, the excise tax would be adjusted by the BOE on March 1st of each year to maintain revenue neutrality.

Public Transit Bears the Brunt of General Fund Savings

While the overall tax swap is revenue neutral by design (in order to allow for passage by a simple majority vote), public transit loses over $1 billion annually due to the elimination of the sales tax on gasoline, as discussed in greater detail below. AB 9 also appropriates $142 million in Public Transportation Account (PTA) funds to the General Fund to offset the cost of public transit bond debt service in FY 2009-10 and another $254 million for FY 2010-11.
 ...
AB 9 stipulates how the excise taxes on gasoline and diesel fuel — and the sales tax on diesel — will be distributed, and appropriates $400 million to the State Transit Assistance (STA) program, the only source of state support for public transit operations.

Raw. Deal. Why the gas-tax swap needs reauthorization when it was signed in March of 2010, and Prop 26 was passed in November of 2010, is beyond me.

Things You Don't (always) Think About

From a SJ Mercury op-ed about Caltrain's importance to Stanford. Caltrain is facing a $30 million budget shortfall next year.

Losing Caltrain service would cripple our regional transportation system and economy, limit mobility and employment options and require 2.5 additional highway lanes between the South Bay and San Francisco to keep the commute flowing at current levels, according to UC Berkeley professor of city and regional planning Elizabeth Deakin.

I think we can all agree that adding a minimum of 24 feet to several hundred miles of freeway (hundred: there are multiple freeways serving the 50 mile stretch between SF and SJ, 280 and 101 being foremost) would cost substantially more than $30 million. Just sayin.

Glad to see that Stanford is getting ink for leading the charge to find Caltrain funding.

Ascertainable Fact: Sprawl Neither Demanded nor Profitable

Not demanded:

(From the WSJ. Italics mine. Bolding mine. Underline mine.)

Much of this week’s National Association of Home Builders conference has dwelled on the housing needs of an aging baby boomer population. But their children actually represent an even larger demographic. An estimated 80 million people comprise the category known as “Gen Y,” youth born roughly between 1980 and the early 2000s. The boomers, meanwhile, boast 76 million. (And, uh, we're gonna outlive them.)

Gen Y housing preferences are the subject of at least two panels at this week’s convention. A key finding: They want to walk everywhere. Surveys show that 13% carpool to work, while 7% walk, said Melina Duggal, a principal with Orlando-based real estate adviser RCLCO. A whopping 88% want to be in an urban setting, but since cities themselves can be so expensive, places with shopping, dining and transit such as Bethesda and Arlington in the Washington suburbs will do just fine.

Count me in that 88%, obvi. I'm wracking my brain for a peer to (anonymously) trot out as a counterexample, but I can't.

Not Profitable:

Transportation for America breaks down a report indicating that these Gen-Y preferences (density, infill, transit-links, walkability) have big economic bonuses:

In Dallas, Texas, for instance, downtown retail sales rose 33 percent the year after the new light rail system began operation. Portland, Oregon attracted $3.5 billion in private investment after just $100 million in streetcar funding. In Sarasota, Florida, downtown development costs clocked in at just half the cost of new development in the suburbs and generated four times the revenue in tax receipts.

Denver, Colorado perhaps best exemplifies the market for new approaches to growth and transit. Home values for Denver residents within a half-mile radius of the Southeast light rail line increased by 18 percent just as home values in the remainder of Denver declined by 18 percent, between 2006 and 2008. Nationwide, one study found that every one-point increase in a home’s “walk score” — a measure of how accessible the area is by foot — corresponded with a $700 to $3,000 increase in property value.

Bike Advocacy in LA

The Los Angeles County Bike Coalition City of Lights program is spearheading bike education, safety, and advocacy projects on behalf of immigrants in Los Angeles--a largely car-free population. De-gentrifying the bike with outreach

Allison Mannos nails it--halfway thru the vid:

Toward More Reliable Financing for Mixed-Use Development?

Not out of the woods yet, but it appears momentum is growing to create a more reliable source of funding for mixed-use developments. An alphabet soup coalition of National Association of Home Builders (NAHB), Congress for the New Urbanism (CNU), and the National Town Builders Association (NTBA) is pushing for Fannie, Freddie, and HUD to guarantee mortgages for a more diverse, incl. mixed-use, portfolio of real estate. 

A Big Urban Victory – Mixed-Use and Fannie, Freddie and the FHA

The board of the National Association of Home Builders (NAHB) has approved a resolution that could have a dramatic impact on urban mixed-use, Main Streets and good development overall. In a partnership with the Congress for the New Urbanism (CNU) and the National Town Builders Association (NTBA), the resolution by NAHB supports reform of Fannie Mae, Freddie Mac and the Federal Housing Administration’s guidelines for mixed-use development.


Currently, Fannie, Freddie and the FHA will not guarantee a mortgage on a development or building that is more than 25% commercial space. The resolution would raise that limit to 45%. This is significant because historic Main Street districts and new infill development would be suddenly eligible for significant new investment opportunities.

Streetsblog Capitol Hill has more:

Urbanists have won an important victory in their campaign to reverse Fannie Mae and Freddie Mac’s bias against mixed-use development, enlisting the National Association of Home Builders to help push for a critical reform to Fannie Mae and Freddie Mac’s lending standards. The mortgage giants currently require that projects they finance be no more than 25 percent commercial (20 percent for Fannie and for multifamily HUD projects.)

The Congress for the New Urbanism has waged a battle against these mandates. “Every Main Street in America violates Fannie Mae’s and Freddie Mac’s rigid standards,” CNU President John Norquist has said.

According to CNU, Fannie and Freddie’s commercial-space maximums have had “a distorting effect on building types and development patterns,” especially disadvantaging low- to mid-rise buildings with retail on the first floor and apartments or condominiums above. “Before these regulations, low-mid rise mixed use buildings were common.”