Existing Policy Tools Can Help Cities Can Prosper Without Redevelopment

 

For now, redevelopment in California is dead. But that hasn’t eliminated the need for public policy to support urban revitalization. Indeed, Gov. Jerry Brown still supports aggressive policies in this vein – for example, implementing the SB 375 regional planning law passed in 2008 as part of the climate change effort, and streamlining environmental review for infill projects.

So the question is not whether redevelopment will come back, but how and in what form. And the fact is that both the state government and California’s cities can take steps right now to encourage infill development and urban revitalization without going back to redevelopment.

The state has a bundle of tools and funds that could be packaged and organized better to help cities with infill development. The state has at least two pots of money that local governments use for planning – Proposition 84 funds and Caltrans planning grants – and this money could be pushed out the door faster, with a focus on redevelopment-style efforts. The same goes for the infill infrastructure funding and transit-oriented development housing money provided by Proposition 1C, which was passed in 2006. In addition, the state could also speed up implementation of SB 226, a law to create faster environmental review of infill projects that Gov. Brown signed earlier this year.

Individually, all of these reforms can help cities create valuable urban projects that promote the state’s policy goals. But they can be far more effective if they are coordinated. The Brown Administration should fast-track a package of strategies that will help move urban projects forward in the absence of redevelopment

Cities have options too – even with redevelopment gone. Four options look strong: land, sales-tax increment, bonus densities, and streamlined processing.

Land:

Redevelopment has always sought to “level the playing field” with suburban development, which is subsidized in other ways. Traditionally redevelopment agencies have subsidized land in order to make urban projects work. But there are ways to make land available cheaply.

All government agencies – cities, counties and school districts for example – own urban land. Nonprofit institutions located in urban areas – universities, hospitals and the like – also tend to be land-rich. These agencies and institutions don’t want to give away their land. But they can come to the redevelopment table as equity partners, committing their land at no cost to a redevelopment deal upfront in exchange for a back-end financial payoff.

Sales-Tax Increment

The redevelopment law only affects property tax. Some cities also have aggressively used tax-increment financing drawn from sales-tax generating projects – essentially, committing a portion of the future revenue stream to pay for infrastructure or subsidize development. Obviously, this method will work only if the project throws off sales tax. In the past, sales-tax-increment deals have been used to fund suburban-style shopping centers and auto dealerships. But this technique could assist urban projects with a retail component or an employment center that generates a lot of taxable business-to-business sales – an often-overlooked source of funding.

Bonus Densities

By offering higher densities in exchange for infrastructure and amenity funds, cities can make well-rounded urban projects worthwhile for developers. Transferring development rights is tricky, but can also help. The idea is this: Developers “buy and sell” existing rights to either wind up with a more advantageous zoning restriction or generate cash to pay for infrastructure and subsidize land costs. This technique has been used successfully in both downtown Los Angeles and downtown Seattle.

Streamlined Processing

Cities can also help by creating “specific plans” for whole urban neighborhoods, which frontloads the environmental and community review process so that individual developers can then construct projects more quickly at the back end.

Obviously, the state’s actions can help local efforts. For example, aggressive guidelines to streamline environmental review under SB 226 can help expedite local specific plans, while state planning grants can fund them. And surplus state land could be made available to cities to help make urban projects work.

Even if redevelopment is gone for good, California will need public policy to promote infill development and urban revitalization in the years ahead. The state needs to make sure those opportunities are available, but these opportunities must be packaged in a coordinated and strategic way. And California’s cities must get used to thinking more broadly about how to make redevelopment work.

This piece also appeared in the Feb. 4, 2012 Sacramento Bee.