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Understanding Redevelopment

 

   What is redevelopment?

 

 

 

 Yerba Buena Gardens, SFMOMA 

Yerba Buena Gardens, SFMOMA

Introduction

Redevelopment is a process specifically designed to help local governments in revitalizing their communities.  It encourages new development, jobs, and generates tax revenues in declining urban areas by developing partnerships between public and private entities.  Authorized by the State of California, the San Francisco Redevelopment Agency acts as the City’s real estate developer in an effort to spur economic growth.  By using its unique powers to focus public investment in the City’s blighted areas, the Agency helps attract and guide private investment to improve living and working conditions and increase revenues to the City and County of San Francisco by enlarging the tax base.  


Legal Framework

The California Health and Safety Code provides the basis for redevelopment activities (Starting at Section 33000, also known as the Community Redevelopment Law or CRL). Section 33037 of the CRL states that the basic goal of redevelopment is the removal of blight.  Two indices of blight be met before redevelopment powers can be used: physical blight and economic blight.

Examples of physical blight Include:

  • High vacancy rates in existing commercial space;
  • Inability to develop vacant lots or irregularly shaped lots;
  • Unsafe building conditions;
  • Aging, deteriorating, and poorly-maintained buildings, sometimes interspersed with well maintained buildings;
  • Poor structure quality, such as susceptibility to flooding and earthquakes, that requires significant improvements to buildings in order to safely occupy them;
  • Graffiti;
  • Inadequate infrastructure to support development (i.e. utilities, storm drainage, sewers, street lighting, confusing and inefficient street systems).

Examples of Economic Blight:

  • High business vacancy, low leases and high turnover rates;
  • Depreciated or stagnant property values and other evidence of disinvestments;
  • Hazardous waste and other negative environmental conditions;
  • High incidences of criminal activity, sometimes equated with an over concentration of bars, liquor stores or adult stores, and high unemployment;
  • Lack of neighborhood business to serve the community, such as banks, pharmacies or grocery stores and;
  • Residential overcrowding. 

In order to determine whether an area is suitable for redevelopment the Redevelopment Agency must address whether or not these two indices of blight are met.  The Agency presents these findings in a “redevelopment plan” for the proposed area that is then presented to the Board of Supervisors.  The Board has the authority to pass legislation permitting the use of redevelopment in a given area. 


How it Works

Once the legislation has been passed the Redevelopment Agency works with the community to formalize how the community will grow and helps to build the economic partnerships that will make it work. 

A Redevelopment Agency has seven main tools to assist in carrying out development within a community:
  • Receive and spend tax increment revenue;
  • Help improve public infrastructure and facilities;
  • Prepare sites for development;
  • Acquire property, resell property it has assembled, and/or participate in the redevelopment of property;
  • Encourage private development;
  • Regulate land use; and
  • Preserve, rehabilitate and produce affordable housing for low-and moderate-income families.  

The unique power of being able to use tax increment revenue allows redevelopment agencies to invest money into a community to encourage private business to do the same.  An agency collects this increase in revenue, or tax increment, from property taxes on the land they are redeveloping to repay the debt incurred in the project, and to reinvest these dollars in redevelopment activities within the project area.  Before the Agency begins work on a project, the San Francisco County Assessor designates the current assessed property tax value in what is called the “base year.”  Any increase in revenue above that amount becomes the tax increment. 

 MUNI Substation 

Western Addition, MUNI Substation

Once the project is completed, it begins to generate enough revenue to pay its own way and contribute to other areas of community improvement.  When a redevelopment project ends, the property taxes from the increase in property values return back into the city’s general fund.  This money, no longer needed to help improve infrastructure can now be used to improve the schools, roads, libraries, and increase public safety service to the community all while stopping the spread of deterioration and blight. 

**Text based on material taken from: California Redevelopment Association. The Community Guide to Redevelopment. Sacramento, CA: Sierra Office Supplies and Printing, 2002.**

 


Last updated: 12/20/2013 4:21:44 PM