San Diego officials in coming weeks will be strategizing on ways to maintain development momentum downtown and elsewhere in the city, without the help of the California redevelopment agency program abolished by the state last year.
The issue acquired added urgency when the San Diego County Grand Jury recently issued a 19-page report, calling on city leaders for a game plan to keep crucial future redevelopment needs funded, while also meeting debt obligations stemming from past projects.
Civic San Diego, the successor agency to the city’s dissolved redevelopment entity, is scheduled on May 15 to present alternatives to City Council’s Economic Development Committee, according to the agency’s president, Jeff Graham.
“We will provide an overview of the funding sources we are exploring to attempt to replace what was lost with the dissolution of redevelopment,” Graham said in an email.
Civic San Diego, a nonprofit corporation with an annual budget of just under $6 million, replaced the downtown-focused Centre City Development Corp. as well as most of the functions of the city’s Southeastern Economic Development Corp., with the latter now serving as a subsidiary agency.
Good Deal for Taxpayers
Officials were not commenting on the grand jury’s report prior to the city council discussion. The mayor’s office and city council have until July 29 to issue formal responses to the presiding judge of the San Diego County Superior Court, related to 12 recommendations made by the grand jury.
The grand jury report concluded that the local redevelopment agency was a good deal for taxpayers during its 54-year existence, achieving a ratio of $7 of private investment for every $1 of public funds spent on revitalization, eliminating blight and promoting economic growth, even during economic downturns.
Since the establishment of Centre City Development Corp in 1975, the report said, the local redevelopment agency spurred $12.3 billion in private development throughout downtown, matched by $1.78 billion in property tax increment funding. The redevelopment program is credited for key rejuvenation projects at Horton Plaza, the Gaslamp Quarter and East Village, which helped generate tax revenues to meet needs elsewhere in the city.
However, the program also left the city with a redevelopment debt of nearly $2.4 billion. Unsettled post-redevelopment issues include how the city will address long-term debt payments on completed projects like Petco Park, which is 70 percent owned by the city.
City officials have also said the abolishment of redevelopment has left in doubt how the city will participate in future projects, including planned new parks and a proposed new stadium for the San Diego Chargers.
The grand jury report said a strategy is needed to meet financial obligations already incurred to address downtown homelessness and increase the stock of affordable housing. The downtown area will also face continuing infrastructure challenges as its resident population expands from its current 35,000 to a projected 90,000 by 2030.
The grand jury said the state law ending redevelopment agencies established a “complex, multi-tiered approval process” in which the state Finance Department now approves or rejects individual debt obligations scheduled for payment, submitted every six months by successor agencies to the more than 400 entities that were abolished.
“The process is extremely time-consuming and potentially could continue for 40 years or more,” the grand jury said. It noted that the process has become contentious while creating uncertainty and difficulty for cities in planning budgets.
Identifying New Funding Sources
In response, the grand jury recommended that the mayor’s office, starting Sept. 30, advocate for San Diego’s interests in the state’s obligation approval process, with the help of private citizens and Civic San Diego. As a last resort, the report said, the city should be prepared to recommend legal action to require the state to pay items on the city’s submitted projects list.
The grand jury recommended that city council, by Dec. 31, direct Civic San Diego to form a “special working group that will give San Diego every competitive edge possible” in identifying new funding sources and applying for money needed to continue redevelopment throughout the city.
Among other recommendations, it also called for the mayor and city council, by Dec. 31, to make funds available for Civic San Diego to hire additional personnel with specialized knowledge and experience in identifying new funding sources, “and a track record of success in getting such funds awarded.” The grand jury also wants the city to adopt “a new revenue model” to provide ongoing support for continued redevelopment by Civic San Diego.
In the past, city officials have said long-term options for redevelopment might include infrastructure bond measures for affordable housing projects, and participation in the nationwide New Markets Tax Credit program, which gives federal income tax credits to individuals and corporations that make investments in projects overseen by qualified community development entities.