For years, the 81-year-old Hoover Hotel in Uptown was considered an eyesore. But by 2001, thanks in part to redevelopment funding, the six-story stucco building had been fixed up and converted into an apartment complex serving low-income seniors.

But projects like this may be a thing of the past if Gov. Jerry Brown's proposal to eliminate redevelopment agencies is approved, say city officials and housing advocates.

"Redevelopment sets aside 20 percent (of its revenue) for affordable housing," said Whittier Councilman Owen Newcomer. "I don't know how you create affordable housing without that."

Brown has proposed eliminating redevelopment agencies and for one year taking much of the money and using it to offset state funds spent on trial courts and Medi-Cal.

Money set aside for low- and moderate-income housing would be shifted to local housing authorities.

In future years, instead of going to redevelopment agencies, property taxes would revert to counties, schools, special districts and cities.

"Those dollars are general purpose revenue," said H.D. Palmer, spokesman for the state Department of Finance. "It would be at their discretion if they wanted to use a portion of that for low-income housing."

But Paul Zimmerman, executive director of the Southern California Association of Non-Profit Housing, said Brown's proposal would take away $1 billion statewide now earmarked for affordable housing.

The end result won't be good, Zimmerman predicted.

"It's going to be meaner and uglier," he said.

"Southern California already is the homeless capital for the United States," he said. "You can figure that homelessness will increase because there will be fewer and fewer units for them."

That also will mean higher rents in general as the supply is reduced, he said.

Assemblyman Chris Norby, a longtime critic of redevelopment, disagrees.

"Housing has become more affordable in the last couple of years due to market forces," said Norby, R-Fullerton. "The amount of redevelopment housing is a tiny fraction of all the housing built in this state and so it'll have no impact."

Norby said the choice is between spending money on housing and shopping centers or fudging public education.

"Housing is important but food is important too," he said. "Government doesn't run farms. That's a responsibility of the marketplace."

But Hunter Johnson, president and chief executive officer of LINC Housing of Long Beach that rehabilitated the Hoover Hotel, said most affordable housing needs subsidies.

"The reality is that it doesn't cost any less to build the homes we build," Johnson said.

"We don't put granite countertops on ... but there's a basic cost in lumber, for plumbers and carpenters," Johnson said.

The end result is a cost that many people can't afford, he said. You reduce the selling or rental costs with subsidies - mostly from redevelopment agencies, he said.

It isn't just redevelopment dollars that provide the subsidies, but these are usually leveraged to bring in money from other sources, including county, state, federal and private dollars, Zimmerman said.

"If you take away the local dollars, there is no way to bring in those other dollars," he said. "So you're losing not only the $1 billion in redevelopment money but something approaching $4 billion to $6 billion in leveraged funds."

But many redevelopment agencies have large, unspent amounts of money in their housing funds, according to Brown's budget proposal.

Officials from local cities say they have been building new affordable housing.

"In the city of Pasadena, we've developed about 1,200 units of affordable housing units in the last 20 years or so," said William Huang, its housing director.

"We have another 200 units in the pipeline," Huang said. "If (redevelopment) dollars go away it will be almost impossible to develop new affordable housing projects."

Pasadena gets about $3 million annually in property tax that must be used for housing.

West Covina has two programs in which it provides home improvement loans to low-income residents, said Chris Chung, its director of community development.

It also has assisted with construction of some low-income senior citizen projects, including the 85-unit West Covina Senior Villa, Chung said.

In that case, the city put up $5.25 million for the $7.6 million project, he said.

The $8.6 million West Covina Senior Villas 2 also is under construction and the city used about $4.35 million in redevelopment money, he said.

In Alhambra, city officials are working on a 10-unit affordable housing project. But without redevelopment dollars, it wouldn't happen, said City Manager Julio Fuentes.

"Who's going to be responsible in the future for affordable housing because we'll be out of business?" Fuentes asked.

The state legislative analyst's office agrees on this issue.

"The administration's plan does not address many related issues, such as clarifying the future financial responsibility for low- and moderate-income housing (currently, a redevelopment program)," stated its report on the budget released last week.

City officials also criticize the idea of shifting money to housing authorities because many don't have such an agency.

"That may mean money would go to the Los Angeles County Housing Authority," La Mirada City Manager Tom Robinson said. "Does La Mirada money then go to the other side of the county?"