East Coast business prospects now eyeing Downtown San Diego, nervous clients with business before the City Council, development projects perhaps being put on hold , they’re all part of a big question mark looming over the city as it copes with its latest crisis , the guilty verdicts of two San Diego city councilmen.
On July 18, a federal jury found then-Deputy Mayor Michael Zucchet and City Councilman Ralph Inzunza guilty of wire fraud and extortion related to charges that they accepted money in an attempt to help a strip club lobbyist repeal the “no touch” provision of the city’s adult entertainment ordinance. Soon after, the councilmen tendered their resignations, leaving Inzunza’s 8th District and Zucchet’s 2nd District without representation as their legal counsel pursued the possibility of a new trial or an appeal.
“The minute the verdict happened, I was getting calls from clients asking what it meant,” said Craig Benedetto, a partner of Benedetto and Danon Public Relations, which represents several clients with business before the city. “It is having a ripple effect all across the city. A lot of people are sitting down with their consultant teams on how to move forward.”
Following the verdicts, City Councilwoman Toni Atkins was named mayor pro tem, pending a vote by the City Council this week on an interim pro tem. Only a few days before the verdicts, on July 15, Mayor Dick Murphy stepped down, plagued with crises that include a troubled pension system, a beleaguered pension board, several investigations into city finances and long overdue audits that have harmed the city’s credit rating. Eleven candidates are competing for Murphy’s job in a July 26 special election, expected to lead to a runoff in November.
This leaves some business interests skittish about the fate of their projects in the face of all this uncertainty.
“We only have six members on the council now, and we need five votes to pass anything, and, with most development projects, there is almost always a need for a unanimous vote to get anything passed,” said Benedetto, “and one council member is always against development projects.”
Add to that a City Council that might be reluctant to act on projects without an elected representative on board.
“For projects in districts two and eight, there are no elected representatives,” he said. “Often times, development projects are viewed from the lens of the council person in the representative district. Without that representation, people in the district are left holding the bag, and other City Council members might want to hold off on putting projects through. It could mean a five to six month delay for projects.”
But Peter J. Hall isn’t fretting too much. As president and chief operating officer for the Centre City Development Corp., a city-run nonprofit agency that coordinates redevelopment in the Downtown area, he’s used to being patient.
“Generally speaking, delays are not things that hurt us, other than the fact we are anxious to move along, if a developer is waiting for a project,” he said. “But we are working on projects that measure in years, not weeks. Regarding labor strikes, unavailability of materials, torrential rains, we’re used to it.
“You do the best you can to make sure things happen on a precise schedule, but these things happen. It’s not within our control, and we don’t go nuts when things slip or change. It’s part of the world we work in. I don’t mean to sound cavalier, we don’t dismiss it, but we don’t overreact either and say the sky is falling. The elected leadership will have to sort through this.”
But, Hall added, “Granted, we are a bit handicapped.”
For many developers, said Benedetto, “Time is money. A delay will cost a project money. Housing is expensive in San Diego already, and this potentially could make things more expensive. The business of the city is to move on.”
As president and chief executive officer of the San Diego Regional Economic Development Corp., Julie Meier Wright has had much to tackle in her quest to attract new business to San Diego. She said representatives of her agency, as well as the CCDC, are planning a trip back East next week to meet with business prospects interested in investing in Downtown San Diego.
“The city has so many things happening right now, it’s hard to point to any one thing as being the problem,” she said. “The mayor resigned, the pension board problems, the lack of certified audits, there are a whole range of things. We can’t stop doing what we’re doing because of these problems.
“I am a passionate believer in that you market all the time,” Wright added. “We have to be credible and thoughtful in portraying where the city is right now. We have tremendous fundamentals and critical mass, and some very exciting 21st century industries, phenomenal research institutes, shining attributes that get tarnished by these problems, but they are still there.”
Zucchet’s 2nd District includes Downtown, Point Loma, the beach communities and Old Town; while Inzunza’s 8th District includes Barrio Logan, Otay Mesa, San Ysidro and the Tijuana River Valley.
Greg Block, a spokesman for Corky McMillin Cos., said it’s too early to tell what impact Zucchet’s absence will have on the company’s major mixed-use project in Point Loma, Liberty Station.
“We have nothing coming before the council anytime soon,” he said. “But if things come up, we need someone to talk to with the city, and he was our person. It will be challenging to see who the next person will be and work through issues with them.
“I understand that the staff will still be there, and we have relations with them. Hopefully, they will still work closely with us. There is instability everywhere in the city right now. We are walking on eggshells, I guess.”
It’s not only major projects that are causing concern, but also the personal attention that can be given by a district representative on the City Council. Charles Langley, a public advocate with the Utility Consumers’ Action Network, a San Diego-based consumer watchdog, said the day Zucchet resigned, the manager of a major development across the street informed UCAN that he would no longer honor an agreement brokered by Zucchet’s staff to set aside a few parking spaces in front of UCAN’s building for people with disabilities.
“The power vacuum at City Hall has had an immediate impact on our organization,” said Langley.
Mitch Mitchell, the vice president of public policy and communications for the San Diego Regional Chamber of Commerce, is concerned about the long-term impact of the resignations.
“It has a definite impact on the two districts, because they have the most potential for significant change over the next five to seven years,” he said. “Downtown is exploding, and now we’re seeing the gentrification of District Eight. If the convictions are upheld, it’s important to find people who can keep everything moving in the proper direction.
“The proposed growth of Otay Mesa — can Otay Mesa become a distribution hub for maquiladoras, a site for manufacturing? Improving the border infrastructure. It will take vision and leadership,” he said. “It’s an interesting and sad time for the city of San Diego. We have to continue to remain focused and move forward as quickly as possible.”
Alejandra Mier y Teran, the executive director of the Otay Mesa Chamber of Commerce, said that, “It’s always challenging not having a representative at City Council. Our councilman has been an advocate of our efforts, and we assume that the seat will be empty until January 1. We’re not certain how the office will be staffed until then. We’re waiting to hear.”
Among the projects of concern, she said, is Otay Mesa’s community plan update, adding that, “it would be helpful to get our council person collaborating on this effort throughout the year.”
Another major issue, said Mier y Teran, is the completion of state Route 905, which will connect Interstates 5 and 805 to the Otay Mesa port of entry, the only commercial vehicle crossing serving San Diego and Tijuana, according to the San Diego Association of Governments, a regional association of 18 cities and the county government.
SR 905 would serve not only commercial border traffic, the agency added, but provide “the major access route to the largest planned and fastest growing industrial areas in the San Diego region.”
But the SR 905 project and the widening of 805 are going “full steam ahead,” according to Garry Bonelli, Sandag’s communications director, adding that Inzunza’s departure “wouldn’t have a direct impact on these major projects.” The same is generally true for Zucchet’s district, he said.
“We’re working in 20-year windows,” said Bonelli. “For either one of these districts to be shortchanged from Sandag’s perspective, I don’t see it happening.”