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Thursday, May 30, 2024

Redevelopment Projects and Agencies in Jeopardy

Observers say the Dec. 29 California Supreme Court ruling, upholding state lawmakers’ dismantling of more than 400 redevelopment agencies, clouds the financing picture not only for a proposed downtown San Diego Chargers stadium, but likely dozens of other smaller-profile projects throughout the county.

“Everything is confused right now,” said Kim Kilkenny, executive board chairman of Centre City Development Corp., also known as CCDC, which oversees downtown redevelopment for the City of San Diego. “But my view is that projects where we have existing obligations are not going to be affected.”

Safe for now, he said, are downtown projects in which the city has committed funding through agreements with other parties. Those include a planned makeover of Horton Plaza, where the city is developing a new public square park with retailer Westfield Group; ongoing “quiet zone” improvements aimed at curbing train noise; and the conversion of a former office building into a homeless services center.

The future of CCDC itself is uncertain. While the state ruling means the City of San Diego’s general Redevelopment Agency would have to be dismantled starting in February, Kilkenny said it will be up to the “successor agency” — in this case, City Council — to decide whether to retain CCDC as the city’s designated downtown agent for project oversight.

What’s at stake long-term are public infrastructure projects countywide, related to parks, roads, sidewalks and other infrastructure, where redevelopment money is often used to spur ripple development by the private sector. In downtown San Diego, officials were once hoping to replicate the public-private effort that built Petco Park, home to baseball’s San Diego Padres, in developing a nearby Chargers stadium.

Planning for Worst Case Scenario

Chargers special counsel Mark Fabiani said the looming demise of redevelopment agencies had figured into the team’s stadium planning well before the December court ruling.

“We had assumed since last fall, when the governor and Legislature acted, that redevelopment money would be unavailable to us downtown,” Fabiani said in an email. “This is because it seemed clear that, one way or another, the state was going to get its hands on the redevelopment funds.

“Even if the Supreme Court ruled the other way, our operating assumption was that the state would find another way to restrict those funds — at the very least tying up redevelopment in confusion and court proceedings for quite some time,” he added.

The situation earlier led the Chargers to propose a combination downtown stadium and convention center expansion, which would not be solely dependent on redevelopment dollars. However, city officials have so far not formally supported the combo proposal, standing by plans for a stand-alone, $520 million convention center expansion, to be funded in part by increased hotel tax collections, subject to hoteliers’ approval of an assessment district.

San Diego Mayor Jerry Sanders is working with a city consultant, as well as the county and Chargers, to examine other possible funding mechanisms for a stadium.

Responding to the Supreme Court ruling, Sanders also said the city will “begin working immediately” with state legislators to pass new laws allowing for community reinvestment programs. He said redevelopment agencies have been “an incredibly effective tool” for eliminating blight, increasing the affordable housing supply and creating jobs.

“This is a sad day for San Diego,” Sanders said in a Dec. 29 statement. “Plain and simple, this money grab by the governor will have severe negative impacts on our neighborhoods and our economy for decades to come.”

Waterfront Improvements Proceeding

Port of San Diego spokesman John Gilmore said the redevelopment agency situation will not impact the first phase of improvements to the North Embarcadero waterfront district, where work formally began on Jan. 5.

However, redevelopment funding for future Embarcadero-related projects, which were to be done by the port district in partnership with the cities of San Diego, Chula Vista, National City, Imperial Beach and Coronado, may not be available and alternative funding would need to be secured.

Gilmore said there could be “financial holes to fill” for port-assisted developments, including portions of the convention center project, future phases of the Embarcadero improvements, a fire station planned for the Chula Vista bay front, and possibly other smaller projects in National City, Imperial Beach and Coronado.

Under language of the state law passed in 2011, redevelopment agencies during the next several months will undergo a potentially complex winding-down process. That will include transferring the debt and assets of the agencies to other government entities.


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