CADA out of time?

Blight-fighting Capitol Area Development Authority faces budget ax

It was one of those experiments out of the first Jerry Brown administration—perhaps a bit ahead of its time. Back in 1978, the Capitol Area Development Authority, or CADA, was formed to try to fix some of the damage done by 1960s redevelopment and the boom of state office buildings in Sacramento’s central city.

CADA’s mission was to create what today is called a mixed-use or “smart growth” neighborhood within the 42 blocks that it oversees. “It was really a very progressive thing at the time,” explained Jackie Whitelam, who is deputy executive director of CADA today.

And it worked. “We are a neighborhood builder. Those properties that survived the 1960s demolitions got turned over to CADA, in order to stabilize the neighborhood. And we’ve done it without getting any operational money from the state or the city,” said Whitelam.

Now, in response to the state’s grinding budget crisis, Gov. Brown has proposed selling off the properties under CADA’s care, and possibly dismantling the agency that helped revive Sacramento’s central city.

The sale is being encouraged by Sacramento Mayor Kevin Johnson, who says it would boost Sacramento’s property-tax revenues. But any real benefits to the city’s coffers are uncertain.

The move might also hurt efforts to build affordable housing and sideline one of the strongest forces for redevelopment downtown.

Today, CADA—a joint agency of the state and the city of Sacramento—is part developer and part landlord for several state-owned properties. It has 48 apartment buildings under management and 25 commercial buildings, including some recognizable properties like Simon’s and Vallejo’s restaurants.

Almost all of CADA’s budget comes from the rents the agency collects on property it manages, and from a portion of property taxes collected from property in the Capitol Area Plan redevelopment area—roughly from L to S streets, and from Fifth to 17th streets.

H.D. Palmer, the governor’s director of finance, says the proposal had been discussed with the Sacramento mayor’s office before it was unveiled in the governor’s “May revise” budget plan. And Johnson expressed strong support for the idea shortly thereafter. In a statement, the mayor said the proposal was “welcome and long overdue.”

“We need the increased revenue created by moving these properties out of state control and into the local property base. We need the increased jobs and the economic activity new uses can provide.”

The mayor added, “We need more residents downtown to create more vibrancy and density in our urban core.”

“But that’s just what CADA does now,” said Kay Knepprath, a central city advocate and long-time resident. Knepprath helped develop the property where Naked Lounge is located, across from Freemont Park. Knepprath said that before CADA, the state was a “terrible landlord” and the neighborhood was run-down. “Today it’s a very viable and attractive place to live,” she said.

Back in 2003, CADA got an estimate of the property it manages. Based on “current rents” at the time, the property was estimated at $34.4 million. If the affordable-housing units were instead allowed to rise to market-level rents, the property would be worth $52.2 million.

State redevelopment law requires that 25 percent of CADA’s residential units be kept affordable. It’s not clear what the sale would mean for the authority’s low-income renters.

“We have a lot of seniors who are concerned about what is going to happen,” said Paul Schmidt, CADA’s executive director.

Shamus Roller, executive director of the Sacramento Housing Alliance, said his organization is also concerned about the possible loss of affordable units now under CADA’s control. And he questioned the wisdom of selling off valuable real estate right now.

“You have to ask, why on Earth sell property at the bottom of the market?”

It’s also not clear that the sale of CADA’s property would be such a boon for the city. Leyne Milstein, with the Sacramento’s Finance Department, said the city has not yet estimated how much property tax would flow to the city if CADA’s property were to be sold off. But there’s a good chance that it would be nothing.

“If CADA still exists, the city would get zero dollars,” Milstein explained. That’s because the CADA property is in a redevelopment area, and CADA gets the portion of property taxes that would otherwise flow to the city every year. In order for the city to get that additional property-tax money, the redevelopment area would have to be eliminated as well. Brown has proposed eliminating redevelopment agencies throughout the state, but that proposal has stalled in the face of opposition from California mayors, including Johnson.