USC Price School of Public Policy

USC Price Panel Addresses Redevelopment

USC Price Panel Addresses Community Redevelopment

By Matthew Kredell

Athenian Dean's Speaker Series event Panelists discuss the current state – and future uncertainties of – redevelopment at the Hollywood Roosevelt Hotel.
Photo by Tom Queally

The Athenian Society, the premier philanthropic support group of the USC Sol Price School of Public Policy, tackled one of the most pertinent policy issues facing the state of California — the recent elimination of redevelopment agencies (RDAs) – during a February panel discussion featuring leading public and private sector experts.

About 300 people attended the event at the Hollywood Roosevelt Hotel — the largest turnout in the four-year history of the society’s Dean’s Speaker Series.

California’s approximately 400 RDAs were dissolved on Feb. 1 after the California Supreme Court upheld legislation abolishing the agencies and invalidated a companion bill that would have given some agencies an opportunity to continue.

The panelists discussed the future of economic redevelopment, as well as the current confusion and ambiguities in managing the fallout from the decision.

Panelists From left: Jeff Schaffer, Julio Fuentes, Jerold Neuman, Renata Simril, Dean Jack Knott, Doug Guthrie and William Witte
Photo by Tom Queally

The speakers were Julio Fuentes MPA ’80, city manager of Alhambra; Doug Guthrie, interim CEO of the Housing Authority of the City of Los Angeles and general manager of the Los Angeles Housing Department (LAHD); Jerold Neuman, partner at the law firm Sheppard Mullin; Renata Simril MRED ’99, managing director in Jones Lang LaSalle’s public institutions practice; Jeff Schaffer ’85, clinical assistant professor at USC Price and vice president of Enterprise Community Partners; and William Witte, president of the real estate firm Related California.

USC Price dean Jack H. Knott, who moderated the event, noted in his introduction that the Hollywood Roosevelt itself is an emblem of redevelopment in Los Angeles, having been rescued from bankruptcy in 1989 and restored to its original character to once again become a prime destination in the city.

“Community redevelopment is an incredibly timely and important topic,” Knott said. “It’s also a topic relevant to our school in light of the recent $50 million endowment and naming gift we received from the Price Family Charitable Fund.

“Our school’s namesake, Sol Price, the business entrepreneur and philanthropist who founded Price Club, had a strong commitment to community redevelopment. His Price Family Charitable Foundation has worked to transform low-income areas, particularly in the City Heights area of San Diego. He stressed a comprehensive approach to community development that included affordable housing, retail, education, transportation, employment and health care – an approach that really encompasses all the areas of our school.”

Redevelopment began in 1945, using property tax money to partner with private companies and encourage development in blighted areas, places where the risk would be perceived as too high without assistance from the public sector.

Facing a $1.7 billion budget deficit, Gov. Jerry Brown pushed for the legislation to abolish the redevelopment agencies in order to have that property tax revenue instead go into the state’s general fund.

“I know, from a CRA standpoint, we never expected it to go that far,” said Fuentes, who also served as president of the California Redevelopment Association’s board of directors. “I don’t think [lawmakers] did either, and that’s why I think the legislation is so poorly written. Now we have to figure it out and make the best of it.”

Neuman explained that the powers and assets of the RDAs have been transferred to successor agencies, in most cases the cities in which the RDAs existed. Los Angeles opted out of becoming the successor agency but did assume responsibility for housing properties and assets, assigning them to Guthrie’s LAHD.

“We’re still at the point where we’re trying to figure out what the questions are, let alone trying to get to the answers,” Guthrie said.

With the tax money that would have gone to redevelopment now going to the state’s general fund, the state’s public schools and community colleges will benefit. It is required that 45 percent of the state budget be used for the schools.

Approximately 25 percent of the funds will trickle back to the cities, which could use the money for some new form of redevelopment.

“They now have the opportunity to decide if that 25 percent is going to balance our budget or are we going to think more strategically and maybe divert some of those resources into economic development functions to continue some program that would help catalyze investment in our areas,” Simril said.

Projects that were in process as of June 28, 2011, may be able to continue as enforceable obligations, but there is uncertainty as to what level of progress is needed to qualify. Neuman expects a lot of litigation over the state’s intrusion into existing contracts.

“The industry is taking a huge hit all at once, and I don’t think that is fully appreciated,” Witte said.

The panelists hope to see legislation passed by the state lawmakers that would support housing development without being subject to the ups and downs of the economy. Fuentes wants legislation that would allow agencies that were successful to retrieve their assets. Witte would like to see the proceeds from the sale of assets recycled back into redevelopment uses.

“Hopefully this draws new attention to the whole issue of affordable housing,” Guthrie said. “Now we’re generating discussion about finding a permanent source of financing at the state level. We’re starting to become creative in identifying other resources with a renewed interest in figuring out different ways to finance affordable housing.”