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California City Redevelopment Money: Much of It Wasted

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An L.A. Times investigation finds rampant waste and crony dealings and not nearly enough affordable housing in California city redevelopment agencies allegedly dedicated to the latter goal.

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Among the details dug up by the Times is that:

At least 120 municipalities -- nearly one in three with active redevelopment agencies -- spent a combined $700 million in housing funds from 2000 to 2008 without constructing a single new unit, the newspaper's analysis of state data shows. Nor did most of them add to the housing stock by rehabilitating existing units.

The paper uncovered cities using redevelopment money to knock down housing and then never build anything on the site and spending over three times as much as prevailing market rates to help a connected developer keep some housing at below those market rates.

This is despite the fact that:

state law requires municipal redevelopment agencies to spend 20% of the approximately $5 billion in property taxes they collect each year on building and preserving homes for poor and moderate-income people.

But affordable housing is not politically popular, and The Times found that many projects face inexplicable delays. Others end up worsening blight and hurting the people they were supposed to help. Land ostensibly set aside for affordable housing was in some cases turned over to commercial developers, raising questions about whether cities ever intended to build the housing in the first place.

State officials do little to ensure that cities spend the money properly or report accurately on their activities. The Times found numerous discrepancies between what officials told reporters they had produced and what they told the state.....

Although redevelopment agencies are generally required to develop land for housing within five years of acquiring it, state records show that as of 2008, the agencies had been holding more than a quarter of their undeveloped land for periods longer than that. Nearly 15% had been held for more than a decade.

Why are local redevelopment agencies getting away with it? Because no one is even trying to stop them:

"There is no enforcement mechanism ... so if an agency isn't complying, there are few consequences," said Craig Castellanet, staff attorney with the California Affordable Housing Law Project. "If you give a report that you haven't produced any housing, and you were obligated to produce housing, the state doesn't come and require you to produce units."...

Before the Department of Housing and Community Development quit auditing housing activity three years ago, it had found dozens of violations in about 40 cities: cities that did not set aside the full amount of money they were supposed to, overstated the number of units built or used the money for inappropriate purposes.

These days, cities are required to make annual reports on their housing activities and financial status to the housing department and state controller. But there is little to ensure the information is correct or that agencies do what they are supposed to.

The overall picture the Times' account paints is of a system fed off taxes that's good for local officials and their connected friends, not necessarily for those needing low-income housing.

Image taken by Flickr user Topsy at Waygood. Used under user Creative Commons license.

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