The agency that took over for the San Francisco Redevelopment Agency (SFRA), known as the Office of Community Infrastructure and Investment (OCII), has just proposed a state law that would allow it to use its former funding tools to develop nearly 6,000 new below-market-rate units in the city.
When the SFRA was dissolved in 2012 along with 400 other redevelopment agencies around the state, it left unfinished a plan to replace nearly 6,000 units that had been lost during its controversial "urban renewal" era in the 1960s and 70s. Technically, the unique powers of the agency to fund private development bonds using property tax-increment financing (essentially, debt that rides on the promise of future tax revenues) were taken away with the dissolution. The successor agency, the OCII, was only left to complete its unfinished redevelopment projects already underway in Mission Bay, Hunters Point, Candlestick Point, and the Transbay District.
As the Examiner reports, the OCII now wants to return to its original mission in order to supplement the mayor's initiative to build more affordable housing. Also, it's seeking the legal ability to do what it had set out to do beginning in the early 2000s, making good on a commitment to replace thousands of units that were demolished and never replaced in the early decades of the agency.
Between 1948 and 1976 the SFRA demolished 14,207 housing units in San Francisco under the auspices of "slum removal" and addressing urban "blight" — often taking property through eminent domain that was not "blighted" in the eyes of its owners or neighbors. In the ensuing decades and under different leadership, the agency set about using its tax-increment financing model to fund infrastructure projects and affordable housing construction, though by 2012 it had only built or begun to build 7,498 of the 14,207 units it had removed from the city's housing stock.
According to a summary proposal submitted to the state in December, the OCII says that the state's Department of Finance "did not allow [it] to continue its work on fulfilling the Replacement Housing Obligation." Therefore the OCII is asking the state to legally allow it to continue work to construct 5,842 outstanding units, which will be made available to low- and middle-income residents. As the Examiner notes, a similar piece of legislation was proposed by state Senator Mark Leno in 2014 and was vetoed by then Governor Jerry Brown, who was forcefully against redevelopment.
Under a new governor, they agency hopes to be able to provide a new bond mechanism in addition to the $600 million affordable housing bond to be floated by the city that voters just passed in November. It remains to be seen if state Senator Scott Wiener or another state legislator will take up the proposal and introduce it.
The only issue is that the state is legally required to step in in cases where property tax revenues slip and are no longer available to both repay tax-increment bonds and the other obligations including public schools and BART. As the OCII said in its proposal, "As bonds are issued and repayments made, a relatively small portion of property tax revenue that would have otherwise been allocated to the City and other tax entities (such as the school district, community college, BART) will be used to repay the debt... a fiscal impact on the State would only occur in the unlikely scenario where the property tax revenues available for the school district do not meet certain minimum levels and the State general fund would have to backfill the loss of those revenues."
We should know more in the coming weeks or months if this proposal moves forward.