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Tuesday, Sep 27, 2022

Mayor Says It’s Time for City to Get Down to Business

The San Diego Regional Chamber of Commerce on Nov. 16 , in a precedent-setting move , endorsed Mayor Jerry Sanders’ five-year plan to turn around the city’s financial crisis.

“It was a precedent-setting action, but this is a precedent-setting plan,” said Nikki Clay, chairwoman of the chamber’s board. “There was a sigh of relief that someone had finally done the difficult work.”

The plan, introduced by Sanders on Nov. 15 and covering fiscal years 2008 to 2012, presents a potent cocktail of job cuts , many vacancies , undetermined cuts of some city services, leveraging of city real estate and refinancing of Petco Park bonds, among other fixes, as well as the introduction of managed competition , allowing private enterprise to go after work normally performed by city workers.

While some of the city’s movers and shakers are anticipating much pain generated by the plan, they believe that the pain will bring gain to everyone’s bottom line.

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“I have said all along we made decisions that we are going to have to ultimately pay for,” said William Geppert, regional manager for Cox Communications in San Diego. “These are the kind of things we expected the business community should understand that it won’t be easy.”

But even with the savings from Sanders’ proposals, the city would face a projected deficit of $24.6 million in 2008 and $100 million each year thereafter. And deferred maintenance and capital needs , not counting those of water and wastewater , may be at least $800 million to $900 million.

On Nov. 15, Sanders promised no quick fixes.

“This is a work in progress,” he said. “The problem is so big, the solutions won’t be easy. It will require sacrifice. The city has tried to be all things to all people, and we’re not doing well.”

Better Message

Julie Meier Wright, president and chief executive officer of the San Diego Regional Economic Development Corp., which helps businesses expand and relocate here, figures that her job has just become a little easier.

“I look at the San Diego region as a product I sell for high-value investment,” she said by phone during a business trip to Fort Lauderdale, Fla. “If the product is flawed, it makes it harder to sell or it will cost you market share.”

She gave high marks to Sanders and his chief financial officer, Jay Goldstone, for their efforts, adding, “If the mayor and council are unified in stepping up to the plate, that is something somebody like me can talk about as yet another step in the right direction.”

Benjamin A. Haddad, a board member at the chamber, said he is impressed with the depth of understanding demonstrated by Goldstone and Sanders in outlining the problems.

“The size of the problem is daunting,” said Haddad, a consultant with SAIC Inc. and a partner in the local office of California Strategies. “The mayor has his work cut out for him, but we all do. The business community needs to be a full partner in resolving the city’s financial mess, and not just Monday morning quarterbacking. We need to get in the game and help the city resolve these issues.”

Clay said the plan could be viewed in two ways.

“When you eliminate vacant positions and do other cuts, you are going to have reduced services, which will impact business,” said Clay, a partner in the local government relations firm Carpi and Clay. “But with the city back in business and doing deferred maintenance and capital projects, those can be job creators for private business.”

Carl DeMaio, president of the Performance Institute, an area government think tank, has long fought for more accountability and efficiency from the city. But he cautioned the public not to be pessimistic by all of the work that lies ahead.

“This is very sobering,” he said. “There was a lot of bad news. It’s a mind-numbing hole we are in.”

Good Foundation

Sanders’ plan establishes a good foundation, said DeMaio, if the city adheres to a policy of “spending discipline.”

“It’s a good game plan, and the first time the city’s been able to quantify its debt,” he said. “We have to have the City Council’s cooperation in this financial recovery plan , no more smoke and mirrors.”

But if there is any backsliding, the Performance Institute will be ready, said DeMaio.

“I am very, very concerned the council will lack the will to do that job,” he said. “We may need to have some voter intervention, and we are not shy about turning to voters and seeking assistance when the council fails to act.”

Meanwhile, the city remains locked out of the bond market, pending completion of audits that date back to 2002. But Amy Doppelt, an analyst with Fitch Ratings’ San Francisco office, was heartened that San Diego is looking ahead.

“It’s great that they are doing a five-year plan,” she said. “They are taking a long-term view of what their financial needs are.”

When the audits finally are completed, Doppelt expects that the city will be found to be in “satisfactory condition.”

She noted the city’s strong economy, and a revenue structure that is “set up to take advantage of this strength.”

“We don’t see it in a crisis situation ,from a bondholder standpoint,” said Doppelt.


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