The redevelopment funding crunch is not only hitting massive projects, but scores of affordable housing developments and business improvement projects.
Under state law, redevelopment agencies must set aside 20 percent of their capital funds for affordable housing. That’s not only a significant amount of money, but it often is the first capital to go into a project.
In the city of Los Angeles, redevelopment officials say seven affordable housing projects are already threatened.
In Long Beach, almost all funding for affordable housing for the next year is on the chopping block as the city’s Redevelopment Agency searches for ways to make its required $34 million payment to the state.
One local affordable housing developer, Linc Housing Corp., has opted not to pursue several projects and has seen other projects placed on indefinite hold.
“We’ve been forced to watch as affordable housing projects that we could have preserved with redevelopment money have gone to market-rate housing companies,” said Hunter Johnson, president of the Long Beach non-profit.
Johnson pointed to one project in South Gate where Linc initially entered the bidding process but withdrew once it became clear that the South Gate Redevelopment Agency would not be able to contribute funding.
Business improvement projects also could go by the wayside, halting business expansions and limiting cities’ ability to attract businesses.
For example, in Whittier, the Redevelopment Agency must fork over $2.9 million to the state next year. Redevelopment Manager Tomas Duran said that would not leave enough money to fund loans for a facade improvement program that would spruce up commercial storefronts.
Sacramento’s demand for money could also impact a 72-acre industrial zone in North Hollywood that houses about 150 small businesses, including some light manufacturing companies. The city of L.A.’s CRA can’t allow businesses there to expand until the agency pays $1 million for sewer hook-ups and $6 million for other infrastructure work.
“If we have to divert this money to the state, this site will remain underutilized for years to come,” said Chris Essel, CRA chief executive.
The protracted dispute over redevelopment agencies has also impacted the city of L.A.’s ability to retain businesses. Deputy Mayor Matt Karatz, Mayor Antonio Villaraigosa’s new jobs czar, told the Business Journal last month that one employer would like to expand within a redevelopment zone, but because of the redevelopment agency funding scramble, the city may not be able to offer enough incentives.
“We risk losing that business to another city or state because it’s pencils down at the CRA,” he said.
