Rents May Rise Without Redevelopment, Builder Says

Removal of funding for low-income housing projects could increase demand for rental units, developer says.

A whole section of local government disappeared in February, and that could drive up the price for rental housing, according to one developer.

The South Orange County Economic Coalition met Friday morning in Aliso Viejo to discuss the elimination of redevelopment agencies and how it affects businesses and consumers.

When an estimated 400 California municipal redevelopment agencies were dissolved by the Legislature and a court decision Feb. 2, it trapped about $4 billion in city loans statewide, much of which cities may never recover.

About a fifth of that money would have been used as incentives to developers to build affordable housing units, said Sean Rawson, project manager for developer St. Anton Partners.

"The development climate has changed dramatically over the last six months," he said.

St. Anton specializes in mixed-income developments, and has relied on redevelopment money to help finance its projects.

Rawson predicts a wave of lawsuits against the state, like the one .

What that means for consumers is likely higher rent, Rawson said. The demand for rental homes, already strong, will increase without government incentives to build more, he said.

Every year, renters need 14,000 to 15,000 new homes in California. Over the last two years, developers have built about half that number, of which 5,000 were financed through redevelopment, he said.

That leaves renters scrambling for housing, Rawson said.

"Those people are still going to be forced to find other housing," he said, "whether that means roommate situations [or] household combining.”

St. Anton now has two projects affected by the redevelopment crunch, including a 150-unit project in Fullerton. Rawson counts his company as lucky, and said some developers have as many as 10 projects left in financial limbo.

The state requires local governments to provide affordable housing, but killing redevelopment agencies leaves them without a way to pay for them, said Michael Houston, a lawyer who advises both companies and governments in development and regulation.

He said the elimination of redelopment agencies has "significantly inhibited local governments” to provide state-mandated services.

Rawson said the state will probably fix its affordable housing funding policy, but it could take two to three years.

Peter Schelden July 28, 2012 at 08:14 PM
Thanks Tom! I'll add a link to that post in the side bar next to the story.
richard August 01, 2012 at 04:13 AM
That is all we need is for rents to go up. They are already high. http://jokeofthedayblog.blogspot.com
Frieda Wales August 01, 2012 at 05:30 AM
Irvine co is building a huge apartment complex on the old Raging Waters/Lion Country Safari site. I believe it is one of 2 they have planned. They did their "research" and found that rental units were in demand. The housing market is so strangled and dysfunctional right now that the benefits of owning are few and far between. There is a lack of affordable family housing though - which leads families to squeeze into small rental units made for 2 adults. If I were a betting man, I'd put my money into small to medium sized family oriented apartment complexes with 2, 3, and 4 bedroom units and family amenities. I once rented in a complex that touted it's "family play areas" that were little more than a slide and one other toy in sand, far away from the other "amenities".
ktlblk5 August 02, 2012 at 04:19 AM
Wondering question...when does 'development' stop, and 'quality of life' prevail? If we're getting another 3 billiones people by 2050, the planet still does not need to stack families in 2-bedroom plans or even 3-, with no proximate outdoor space for the tots to play, under a watchful eye. There should come a time that says, 'no more room at the inn', and you leave a planned space available in a planned fashion. IrvCo seems to want to do that, but heavenhep Calloff fornya, if we succumb to the crazies likein the San Fernanado valley that took wide street grid boulevards in docile singlefamily housing (w/yards), and to the tune of a mi$guided city council, allowed to permit and plow 10 to 12 unit condopartments where once a single 'home' sat. End result there, against a true sense of quality of life, has been crowded traffic and bigger density probs - what? all for a 'growth' tax base that allows another chick fill a to add a job or two in neighburrhoods that now seem cold and strangled?? Keep the space, grace the quality oflife, and say for some limits. Rents are only going to be pegged on whether somebody has a job or not, not how much you can squash people together before they boil in frogpot communities of the future...no?
Frieda Wales August 07, 2012 at 07:13 PM
Who would be responsible for protecting open space, public space, waterways? The developers want to get in, build, get out. They do not stick around for 20 years to see their mistakes and mis-steps.


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