San Diego business leaders agree there is no “silver bullet” to magically reverse the city’s misfortunes. Instead, a probable cure appears to be a mix of belt-tightening, streamlining and consolidating.
In his State of the City speech given earlier this month, Mayor Jerry Sanders pledged no new taxes, no bankruptcy proceedings and no unbalanced budget.
“I’m not sure that we heard where all the pain was going to be, but we know there is pain ahead,” said Scott Alevy, vice president of public policy for the San Diego Regional Chamber of Commerce.
Sanders’ plans for balancing the budget include consolidation of city services and reduction of the $13 million-plus spent to rent office space.
Next month, Sanders is expected to seek a developer for what could be an ambitious public/private venture: redeveloping the 5-acre, four-block Civic Center into a mixed-use complex, including a new City Hall.
“We want to find a developer with a track record for these types of partnerships,” said Jim Waring, deputy chief operating officer for land use and economic development. “We believe there are opportunities for private development on some portion of the land, such as offices, hotels or some combination of uses, that will generate value for the city.”
With leases expiring from 2012 to 2014, having a new structure by 2011 would be the goal, he said.
Construction would have to be completed in phases, with a new City Hall on lower floors and commercial office space on upper floors.
“At the end of the day, this project will save the city a lot of money directly and indirectly,” said Waring.
The city’s outside leases total 537,000 square feet, added Waring.
Is the plan likely to stir up as much controversy as the new $1.2 billion Navy Broadway Complex north waterfront project planned by the Manchester Financial Group?
“There are people who seem to be against everything, and I’m sure that there would be people against it,” said Waring. “At first blush, how can the city be considering something like this?”
But, he added, “If you believe the city has a future, you have to plan for it.”
When one looks at what the city pays in rent and deferred maintenance, private business would be doing the same, he said.
“I don’t think we have to have an iconic City Hall like Los Angeles, but a great city has certain things,” he said. “I honestly think a decent City Hall is one of them. This is a drafty, cramped old building, and underused.”
Carl DeMaio, president of the San Diego-based government reform think tank, is taking a wait-and-see approach.
“If it can be shown to be a cost-saver to taxpayers, then it’s a good idea and we should go for it,” he said. “But we will look closely at the numbers to make sure that this is not a Taj Mahal.”
Sharing The Pain
Is the mayor asking enough of San Diego businesses to find solutions to the city’s financial straits? Donald Cohen, executive director of the Center on Policy Initiatives, a local advocacy group, doesn’t think so.
“He’s not going to the business community saying, ‘You’re part of the solution, too. You will have to pay your fair share,’ ” said Cohen. “Businesses benefit from services, and our revenue sources are too low. We need more money.”
Compared to other big cities in the state, San Diego raises the least amount of general revenue per household compared to average household income, says CPI.
CPI has been pushing for new sources of funds, including raising the transient occupancy and real estate transfer taxes, as well as raising business license fees.
Those increases, along with the addition of adding a trash collection fee and utility users’ tax, could generate an additional $279 million a year in new money, says CPI.
According to Sanders’ five-year financial plan issued in November, the city projects a deficit of $25 million in fiscal 2008 and then $100 million in the following years.
The challenge for the coming year, he said, is to “bring everyone to the table. Don’t just pick on the workers. San Diego has got to be a place where everyone does their part.”
Business is more than willing to pitch in, said William K. Geppert, vice president and region manager of Cox Communications, and a board member of the San Diego Regional Economic Development Corp., which helps businesses expand and relocate here.
“The business community is certainly very concerned about the city’s financial well-being and health, and willing to participate and be involved in the solutions,” he said. “To what extent the business community needs to step up is not clear at this point.”
Geppert said that he approves of Sanders’ agenda for the coming year.
“There are no silver bullets that will make this all go away,” said Geppert of the city’s problems. “I think that the business community appreciates the depth and extent of the challenges he has.”
But some critics question why Sanders’ speech didn’t contain more specifics.
“People say, ‘Where were all the details, the action?’ ” said DeMaio. “(But) the mayor has asked for business re-engineering, and that means looking at every single process of the city, and how to do it differently.”
But, DeMaio added, “If he gives the same speech next year, he will have been a failure. In the next year, we need action.”
Alevy said the mayor’s comments were “more about what time it is, rather than how to make the watch. I think that we will find out, in a fairly short time, exactly how to make the watch.”