Gov. Gray Davis’ recent proposal that redevelopment agencies
transfer low-income housing funds to help battle the state budget
deficit could put an additional damper on housing in San Benito
County, adding to the weight of the cease-and-desist order to the
City of Hollister in September.
Gov. Gray Davis’ recent proposal that redevelopment agencies transfer low-income housing funds to help battle the state budget deficit could put an additional damper on housing in San Benito County, adding to the weight of the cease-and-desist order to the City of Hollister in September.
“It’s pretty scary for us whether or not it (Davis’ proposal) happens,” said Bill Avera, program manager of the Hollister Redevel-opment Agency. “I’m disappointed that they’re looking at that as a solution. They’re proposing $500 million of a $21 billion deficit. It would probably put a really small dent in the deficit.”
The governor’s proposal states that “Community Redevelopment Agencies be required to immediately transfer any balances in the Low and Moderate Income Housing Funds that were unencumbered on Dec. 1, 2002 to the State Controller for deposit into the general fund.”
The transfer would put an estimated $500 million into the state general fund.
Although some low-income programs have already been delayed because of the cease-and-desist order, programs such as the Vista Meadows 72-unit senior apartment complex, for which the RDA has allocated $2.7 million, would be delayed further, if not indefinitely.
“My concern is that the governor’s proposals are short-sighted because of the fact that if you want to retain or attract new businesses you have to have affordable housing in the community,” said Brian Abbott, executive director of the Community Services Development Corporation, which is partnering with the city for the Vista Meadow project.
“In our community with high rental costs it’s hard to attract businesses,” Abbott said.
With less affordable housing for their employees, businesses might be inclined to move to different states and California would lose out on payroll, property and sales tax revenues, Abbott said, which would create long-term problems.
City officials are unsure of what the governor means by “unencumbered funds,” but Avera speculated that $3.7 million of the RDA’s $5.5 million could be considered “unencumbered” – although plans to spend the money have already been outlined.
If the state does take about $3.7 million it would take many years for the city to make back the money, Avera said.
“If we’re only receiving $700,000 to $800,000 for housing programs a year, it’s going to take a while to have enough money to basically do these projects again,” Avera said.
Hollister city manager George Lewis wonders if unencumbered funds might mean the $30 million in bonds that the city will soon sell will eventually have to be paid back.
“It’s interesting that the governor talks about balancing the budget but is looking at local agencies rather than state agencies to cut the state budget,” Lewis said. “The part that’s bothersome is when he takes away housing for those who can’t afford housing. It’s sad when much of the budget-cut proposals affects the poor.”
Davis also plans to address the overall policy of RDAs throughout the state in the 2003-2004 budget.
The Hollister RDA also has plans for redevelopment of the Lotto Del Rio 20-unit affordable apartment complex, which, along with the Vista Meadows complex, would be the first new affordable apartment units build in Hollister since the early 1990s, Abbott said.
The overall effect of the proposed cuts could mean more homeless people in Hollister, which has no homeless shelters.
“Residents will leave because they can’t afford housing and it will increase the number of homeless,” Abbott said. “It also exasperates the problem of overcrowded housing.”
The RDA receives state property tax revenues for various city and county projects including affordable housing, public infrastructure and commercial rehabilitation.
In January, the Council passed an amendment to the Hollister RDA, increasing its cumulative tax revenue limit to $650 million and its bonded indebtedness to $75 million. An additional $130 million was allocated towards affordable housing.
