Redevelopment Resuscitation

Photo by CBS Napa via Creative Commons


Remember “redevelopment,” the state program that allowed local governments to set aside property taxes to fund housing and other development before it was killed in the state budget crunch of 2011? This year’s SB 5 has been dubbed “redevelopment 2.0,” which is accurate to a point. San Jose Democrat Sen. Jim Beall’s bill would allow local governments to set aside a portion of property taxes that would otherwise go to public schools and use to fund affordable housing, transit-oriented development and infill projects. To gain this new financial tool, locals would have to apply to a new state board, whose approvals would be limited to $200 million per year.


More money for housing wins lots of allies: affordable housing developers, labor unions, local governments and business groups.


Taking money away from schools buys a lot of enemies: the state’s school administrators, teacher unions and school boards. Also the Howard Jarvis Taxpayers Association, which generally opposes anything that smells of higher taxes, especially on property.


Affordable housing developers point to the demise of redevelopment as one cause of California’s current housing crisis. Beall’s bill doesn’t quite bring back the old program, but it’s a step in that direction — with a few more guard rails in place. 


Newsom is under pressure to go big on housing, but he has always been lukewarm on redevelopment. While many of his 2018 gubernatorial opponents championed resuscitation of the old program, he said he favored narrow programs that already exist. It may not have helped that signing the bill would have crossed the California Teachers Association, a political ally. In any case, Newsom vetoed SB 5 on Oct. 13, 2019, writing in a veto message that, while he plans to continue working on housing, the $2 billion annual fiscal impact of this bill was too big to authorize outside the budget process.