Roundtable: City Council District 1, Mayor's Race, SDG&E Vs. Ratepayers, Abandoned Property
September 21, 2012 12:46 p.m.
Katie Orr, KPBS News
Matthew Hall, U-T San Diego
Andrew Keatts, San Diego Daily Transcript
Related Story: Roundtable: City Council District 1, Mayor's Race, SDG&E vs. Ratepayers, Abandoned Property
SAUER: It's Friday, September 21st. I'm Mark Sauer, and my guests are Katie Orr, Matt hall, columnist for UT San Diego, and Andrew Keats with the San Diego daily transcript. Now, most voters are focused on the battle for mayor between Republican Carl DeMaio and Democrat Bob Filner, but there's still one City Council seat in contention. Tell us about the district 1 race and why it's so important.
ORR: Well, this is the only council seat that has yet to be decided in San Diego. Right now, there are eight seats that are decided. Come next year, San Diego has added a new district to the city. So instead of the previous eight council seats that we have had, we will have nine. As it stands, there are four Democrats who will be serving and four Republicans who will be serving.
SAUER: And those races are wrapped up.
ORR: Yeah, those are wrapped up. And council district 1 is the only one that is still undecided. So it comes down to incumbent sherry Leitner who is a Democrat, or challenger ray Ellis, who is a Republican. It's important because whichever one of them wins, that could be the way that the City Council will lean politically.
SAUER: And it's technically a nonpartisan situation. But everyone knows you're going to have 5 of one party and 4 of the other.
>> Exactly. It is technically nonpartisan, and both Leitner and Ellis made it clear to me that they view themselves as not beholden to any party, and they would not necessarily act in Locke step with their parties. Sherry Leitner was the only council member to oppose the Balboa Park plan, and her fellow Democrats were all about it. But still, it just speaks to your tendencies, and the way you might tend to vote on certain issues,ing and it could have an impact when it comes to issues having to deal with finance or schools.
SAUER: Why couldn't the incumbent, Ms. Leitner, put it away in the primary?
ORR: Well, she had a lot of competition. She was facing Brian Peace, I believe ran and took away some of her votes. There was another candidate as well. And she has not had the best relationship with all of the labor unions. Some of them were not very happy with her. The labor council actively campaigned against her in the primary. And that's a force with a lot of money and influence. So that was a challenge this she wasn't able to fully overcome to win the seat outright. And ray Ellis is a strong candidate. She's been involved in San Diego, he's a philanthropist, he served on the SD serves board, the pension board. It was also a primary. Lots of Republicans come out to vote during the primary. So he was able to get the majority of the votes in the primary, but not enough to win the seat outright.
SAUER: Remind us where this district is demographically.
>> It's on the coast, it stretches from La Jolla up to Torrey Pines, and then currently it includes Rancho PeÒasquitos, but once the new districts take over, it will go a little bit west of that in Carmel Valley.
SAUER: Affluent district, certainly.
ORR: Yes, it's an affluent district. La Jolla, Torrey Pines, UTC, prosperous areas of the city. But it's -- sherry Leitner has had a lot of support in that district. I was at a park in university city, and a lot of people there had good things to say about her. She's not a very controversial member of the City Council. So there seemed to be a feeling that, you know, she's doing fine. She hasn't given many people a reason to vote her out. So I think it might come down to ideology, what you believe in more when people go to the ballot box.
SAUER: So let's talk a little bit about Leitner and the unions. There was some friction there, was there not? Or in the primary.
ORR: Right. District 1 is not a district that is -- where the unions have a lot of influence. So she doesn't necessarily feel obligated to vote in a way that would make the unions happy all the time, and she hasn't. Because of that, they actively campaigned against her in the primary. In the general election, she told me they reached an agreement. I think it's mostly that the labor council is just sitting it out.
SAUER: So you haven't seen much evidence of the unions backing her at this point?
ORR: No. We had the -- I believe some of the firefighters, union, I believe is backing her, but the labor council which is sort of the overarching organization for a lot of unions in town is just not getting involved.
SAUER: So they really don't mind that the businessman, Ellis, gets in?
ORR: Well, they're not going to back sherry Leitner, but they're not going to campaign for the other guy.
HALL: One thing to consider is that this is going to be the pivotal vote when it comes to the implement a recollection of Proposition B. The labor unions -- except there may not be an entirely huge difference between how the two candidates will vote. Ellis and Leitner have said they support Proposition B. So the only thing you could say is maybe Ellis supports it more fervently. And even that, will it come down to who is going to vote to maybe impose a labor contract if negotiations were to break down? Maybe. But that's very specific.
SAUER: So it's so tight, it seems like what you're saying is they have to run to the center here. There's not a whole lot to distinguish a lot of these issues for these folks.
>> That's true. And Ray Ellis has told me he believes district 1 needs a leader that is more generaled with the community. He believes he's got a lot of business savvy that he can bring to the position. Sherry Leitner, I believe, was an engineer. So Ray believes that his business experience would help him in the position. There are also a lot of local issues in this race.
SAUER: Let's talk about a few of those. I raised some of those in your feature.
ORR: The biggest one in university city which is at the southern core part of the district is of course the bridge over rose canyon, the bridge which would connect north university city and south university city.
SAUER: So picture that for our listeners where we're talking about.
ORR: It's on the west end of the university city. Sort of between -- a little bit east of the 5 freeway.
ORR: So it's there. And the people in south UC, a lot of people are very against it because it would make it a very busy road. And right now, it's a canyon, and kind of a quiet community area. But as Ellis points out, it is in the community's master plan. It's been in the plan for about 40 years. However, there's not enough money to build it right now. Sherry Leitner is anti, antibridge. Ellis says he's not pro or anti, but he wants to find some kind of solution. But he made it clear if he is elected this isn't at the top of his list because there's no money.
SAUER: That's it. How realistic is it that it's going to come to the surface?
ORR: It's been in the works for 40 years.
HALL: Not for journalistic reasons but because I live in district 1, my opinion may matter more than most. So if you're listen, Sherry or ray, you know how to reach out to me. I find this race fascinating because it's really going to test a couple of truisms in San Diego politics. One, if you're an incumbent, you get reelected, game over. And that may not be the case here. The other is that La Jollans typically win the seat. And I'm not sure that Ray lives in La Jolla.
>> He lives in Carmel Valley.
HALL: Right. So obviously -- sherry lives in La Jolla?
ORR: She does.
HALL: I think she would be like the sixth of seven council members to be from La Jolla. So that is going to be interesting to see if she can kind of cling to that. It's an interesting race, and one that I may weigh in on in a column down the road. It clearly is fascinating because it is this pivotal vote on the council which everyone said is nonpartisan, but where it comes into play is with social issues like medical marijuana, needle exchange programs that historically have given some healthcares to council members.
ORR: Right. And what I found interesting in reporting this story is that both of them do not want to be tied to any kind of label. Ellis does not want to be seen as part of the Republican slate. Leitner was saying she was acting independently or bipartisanly. . They really are both trying to -- I guess which is typical of general elections, but playing it down. They don't want to be in any little box. They want to be as available and open to voters as they can.
KEATS: One thing I want to say, unless I'm mistaken, Ray Ellis has been called what the San Diego GOP has been calling the reform team which is DeMaio for mayor, certainly, and then Ellis in district 1, and then councilman elect Sherman, and councilman elect carsy, who are all considered reliable votes for prop B, and the continuation of managed competition, prop A. So for Ellis to suggest that he is entirely independent may be true. Maybe he's not tied into any one of those, but he's certainly benefited by being tied into this idea of this reform team that's going to come into the City Council and mayor's office and continue reforming the fiscal health of the city.
ORR: Yeah, and I have to say during my interviews with him, he pointed out that he says this was never a consideration when he decided to run for office, that Nathan Fletcher endorsed him before Carl DeMaio. But I do think you're right. Carl DeMaio has talked about having a coalition on the council to help get his -- help him achieve his goals. So what would be really interesting is if we had a Republican council and Bob Filner in the mayor's office.
SAUER: Yeah, that would be a lot of fun, wouldn't it?
[ LAUGHTER ]
SAUER: For those of us in the cheap sites.
ORR: Covering, it, right
SAUER: Well, speaking of mayor's race, we have the situation of an openly guy candidate not supported by the LGBT community. Why are they at odds?
ORR: Craig Gustafson laid this out in the UT this week. What it comes down to is that many people, not everyone, but many people in the gay community feel that Carl DeMaio is in effect selling the community out by taking campaign contributions from people that supported Proposition 8, the ban on gay marriage. Basically saying how can you represent our community when you take money from people that actively work against our community?
SAUER: I think that story mentioned he got booed at the pride parade?
ORR: He did. But I have to say, I was at the pride parade, I saw him go by. It wasn't a universal booing. People were -- there was some cheering as well. Like you said, I'm sure there are a number of people out there in the community who don't have a problem. But there is a sense that a lot of them do. He's certainly not the candidate that is embraced by that community. But Carl's point of view is that he is in office to fix San Diego's finances. That's what his mantra is. So he basically, if you will, doesn't want to waste his time on the social issues that the mayor might not have any control over. Instead he wants to focus on thing he's can impact.
SAUER: Yet the current mayor, Jerry Sanders, had a change of heart. You were going to mention that.
HALL: I was going to say, I think down the road, San Diego is going to remember Jerry Sanders for nothing but that moment when he stood in support of gay marriage and his daughter. What was interesting about Craig's story, despite the fact he wrote it with one hand because he broke his collar bone over the weekend.
SAUER: He did? !
HALL: He got into this issue about gay-baiting, and whether the Filner campaign is covertly bring up the issue, which some people have suggested, Filner denies that, and Carl doesn't want to talk about it, which is why it's an interesting issue to talk about.
SAUER: And that came up in the infamous battle of the lilly pad.
SAUER: And Filner went out of his way, some people said, to point out once again to Carl's conservative constituents that he's a gay man.
ORR: It's interesting just from a political point of view the position that it puts Carl DeMaio in. He dealing with the facts of life, that there are conservatives out there who support groups who are uncomfortable with his lifestyle, but he can't deny who he is. So in that sense, it's really interesting to watch the juggling act that is he is forced to do.
SAUER: We've got a caller. Jonathan, go ahead.
NEW SPEAKER: Hi. I just wanted to call in and say I would be voting for sherry Leitner, due to her work with the north city university library.
NEW SPEAKER: I'm a big proponent of public services, and libraries are where students and people can go to improve themselves. And I believe that's a service that we need. And she's someone fighting for it.
SAUER: All right, thanks. Appreciate the call. Ellis isn't against library, is he?
ORR: No, no. I don't believe so. We did take it a point to talk about the branch libraries, and the new library is something that was in the works for years. I believe Scott Peters was the council member when they first approved the library. So that's something I did hear from a lot of people what I was talking to them, that the libraries are a big issue. Branch libraries versus the downtown library, which is -- I don't know, when is it supposed to open up? Next spring?
HALL: I'm not sure of the timetable, but I know they're on track.
SAUER: They are on track.
KEATS: Early 2013.
SAUER: In July, it's supposed to open.
ORR: But that's an important issue for a lot of people.
SAUER: Okay. And getting back for a moment to the issue about the LGBT community and Mr. DeMaio being on the outs a little bit, does it matter in this day and age whether a mayor is gay or not?
ORR: Well, I don't think it does. Honestly, and this is my experience, I can tell you back in the primaries, sometimes we pitched stories to NPR and I pitched this story that we had -- this was early in the primaries, so we had Bonnie Dumanis and Carl DeMaio, and I said hey, do you want a story about San Diego electing -- possibly electing its first openly gay mayor? And they said no, we've done that story.
[ LAUGHTER ]
ORR: So it's not -- it's becoming more and more common to the point where there are people who don't think it's a story anymore, really.
SAUER: We also had this movement to the middle which emerged in the primary and Nathan Fletcher was still in the mix, along with Bonnie Dumanis and this is a group of business executives who supported Fletcher, and now they've moved to the right, haven't they?
ORR: Well, they have moved to support Carl DeMaio. And I asked yesterday during the news conference, given the fact that Mr. DeMaio is often seen as one of the most divisive members on council, there have been those critics who have called his campaign the Wisconsin of the west. Is he really someone you can call a moderate candidate? And Scott dickie is one of the cofounding members of movement to the middle, and he said on council, Carl's job was to push the boundaries and to get people to think about things in different ways. And his term was sometimes you have to break a little glass, and that might cause some animosity, but he said he believes he'll be different as a mayor, more mainstream, and he believes that, yes, he could be -- he would be the good candidate. Bottom line, a lot of these guys are businessmen. And they like the policies that DeMaio brings.
SAUER: I'm here with Katie Orr and Andrew Keats and Matt Hall today. We have talked quite a bit about the mayor's race here. Aren't we due for another poll? The last one, if I recall, it was about 6 or 7 point, and Filner was in the lead. And I know these races don't have the money that we have on the national level, and we're seeing these presidential polls constantly from all sorts of sources, but I would think that maybe next week as we're getting toward the end of September here and in the last poll, Katie, I don't think there was a huge amount of undecided.
ORR: I believe there was about 12, 12% or so that were undecided. Which that's pretty consistent with what we saw during the primary polls too. I believe there's always about 12 or 13% undecided. So I don't know if it's the same 12% who never made up their mind or what. But channel 10 has been the one that has come out with the survey USA poll which is usually the one we cite, and other new organizations cite because it's the most public one. The campaigns might do their own polling within themselves, but they don't release that to us.
SAUER: Matt, is the UT going to be doing any polling? We certainly did quite a bit of it when I was there.
HALL: I don't know the answer to that. You might want to have Doug Manchester or John Lynch on the show and ask them. I think it's probably a good idea to poll. I also think a lot of people know who they're voting for with these guys. They're polar opposite in so many ways that I'm not sure in this race frankly what good a poll would do.
ORR: And what is interesting, even though they are polar opposite, Andy and I were talking about this before the show. You wouldn't necessarily be able to tell that if you go to this debate because they're making such an effort to moderate their viewpoints that I feel like you go to these debates and someone will say I believe this, and the other guy will be, like, oh, me too.
KEATS: And suddenly you have Bob Filner talking about cutting regulations and reducing bureaucratic red tape to get out of the way of job creators, and Carl DeMaio is releasing an education plan and a bike plan, and all these things in the primary he said we are laser-focused on fiscal reform. We're trying to improve the city's finances, and all that other stuff isn't really the job of the mayor.
SAUER: Certainly a distinction.
SAUER: My guests are Katie Orr of KPBS news, Matt Hall of UT San Diego, and Andrew Keats of the Daily Transcript. A state inquiry found the devastating 2007 wildfires were ignited by SDG&E power lines that were improperly designed, built, and maintained. Matt, you wrote a provocative column on this last week. It's timely now that fire season is upon us. Why are we still talking about paying for damages from this wildfire five years later?
HALL: It's the slow pace of government and regulation. The fire as you said was in 2007, two years after that was when SDG&E and three other utilities applied to the state regulator, called the California public utilities commission, for approval of something called a wildfire expense balancing account. And I assure you, my column was not so wonky as that.
[ LAUGHTER ]
HALL: But it's fascinating because they have been talking about it for three years, hundreds of people stormed a meeting in San Diego here outraged saying that they shouldn't -- ratepayers, customers of SDG&E, which I think the number is 1.4 million electricity customers shouldn't be paying these costs because the company is at least partly responsible for starting the three fires that contributed to so much damage.
SAUER: All right. If you want to join this conversation about the wildfires and SDG&E's push to get rate payers to pay for this, our number is toll-free. 1-888-895-5727. So remind us of the scope of that fire five years ago.
HALL: It was a major fire soon after the heels of the 2003 fire which was as destructive. The 2007 fire spread throughout the county, killed two people and destroyed something like thirteen hundred homes. So it was massive in scope and cost. SDG&E had liability coverage of $1.1 billion, and this fire eclipsed that very quickly. Their estimate right now in their most recent feelings is about $2.3 billion in claims to the company and in legal fees that they might be on the hook for. So obviously that's $1.2 billion that they don't have from insurance.
SAUER: Insurance didn't even cover half.
>> They've gotten some of that back from counterclaim, so they are getting some money back. But the they're turning to ratepayers saying they have this system in place and there's case law and precedent to ask each of the ratepayers to pony up $2, $3 a month to pay for this damage. What's interesting is that this is the first time that the utility has ever eclipsed its insurance limits, essentially, which is why it's such a novel issue. And they have to go to the state to create this balancing account, which would cover the current costs, and going forward it would -- there'll be that avenue to pay back damages going forward.
SAUER: So the big question is do we, the rate payer, pay for this, or do the share holders who own stock and the investors and the utility pay for it?
HALL: It's a fascinating subject. I didn't get into this in my column. If I had more space and time I would have. Customers, a lot of those are investors too. When I talked to SDG&E for the story, they said it's such a safe investment that widows and orphans invest. That's how safe it is. They always get rates of return, and the flip side of that is they're a business, they make a lot of money, their profits are big, but they don't share those profit ares with customers. So a lot of customers are saying, in good times, you don't gives a piece of the cake, so you shouldn't turn to us with your hand out in bad time when is you're cullpable for causing some of that.
SAUER: So Diane Conklin, figured prominently in your column. She lives in a mountainside in east county.
HALL: She's a fascinating character. She and her husband survived the 2003 wildfires because of this crazy sprinkler system that he devised that has gained a national reputation in terms of saving homes during a fire. So she's well-versed in the subject. Her point is SDG&E could have had safer equipment, they could have had more insurance, they could have taken greater step, their management could have made different decisions so they wouldn't be in this position right now. SDG&E, the flip side of that is that SDG&E says they had as much insurance as they were allowed to get.
SAUER: They couldn't buy anymore.
HALL: Which may be the case, but there were definitely some decisions that he had about equipment that they could have gotten into it. So what's interesting is SDG&E says we have a history of reliability, we have this commitment to safety which is in our DNA Show the spokeswoman phrased it to me, and on the flip side is this issue of a moral hazard. Diane's point is if SDG&E can turn to customers for money in case where is they have to pay out in excess of their insurance coverage, there's a temptation not to do the right thing. They're less likely to to build, design, and maintain their systems. No matter what SDG&E said to me, I still think that's a valid point. It's just a fact. If you have this escape clause or this way out, this Plan B, you're going to look at Plan A differently.
SAUER: Didn't we see the whole issue of moral hazard
Play out in the issue of mobile crisis? The spokeswoman for SDG&E Stephanie Donovan, how did she respond?
HALL: She said they got to their insurance limit, that they pride themselves on their safety and had done everything they could have.
SAUER: Have the mayoral candidates weighed?
ORR: Somewhat predictably, the candidates have said they do not support SDG&E coming to the ratepayers and asking them to cover the cost. And that's probably just a smart political decision because a lot of the ratepayers are voters!
SAUER: They're voters!
ORR: Right. That's not to say people's positions might change once they are safely elected. Back in the primary, KPBS did a story looking at whether any of the candidates received campaign donations from SDG&E, Sempra, and everyone but Bob Filner had. Carl DeMaio, Bonnie Dumanis, and Nathan Fletcher had all received contributions, Bob Filner had not. This was primary the during. That might have changed. He might have gotten a donation since then, he may not have. But back then, that was the case. Nathan Fletcher received a couple thousand dollars, and he said this doesn't influence how I will act when I'm in office. But it's something to consider. If they're taking campaign contributions, they might feel obligated. But at this point, they've all said no, they don't support that.
SAUER: So Andrew, the utility says that if their shareholders are going to have to pick up these costs, is that chilling on the investment community?
KEATS: They say so, but as Matt said earlier, utilities are a really safe investment as far as they go. So does it present more risk if that's an investment you're looking into? Sure. But it's a new risk that's balanced against one of the traditionally safer investments you could make. The idea that there is now some element of risk involved doesn't strike me as something that would make people say I'm going to give away the potential of winning back hand over fist in returns for 20, 30 years because every once in a while we have a once in a generation catastrophe.
ORR: But that being said, I read an article that said these megafires are becoming more and more common as people spread out into the backcountry. And the way we manage fires have changed. We don't allow for natural forest fires anymore, so these forests are like tinder boxes. And the likelihood of these fires happening is greater than it has been. It seems like this could be a precedent setting decision, if SDG&E is allowed to charge customers for these costs, what's to say another utility won't do the same thing for the next fire regardless?
HALL: And an interesting wrinkle is Pacific gas and electric and Southern California Edison were with SDG&E three years ago, and they all apply forward this at the same time trying to set up their own accounts. Since then, PG&E and SoCal Ed have dropped their request, meaning SDG&E is moving forward without their support. And so what's happening is that is creating its own little discussion point. Diane Conklin says they dropped out because it's a bad idea and it was a nonstarter. SDG&E says, well, they backed out because this was taking three years and I thattut it would get done quicker, which may be the case but it certainly looks funny that the two other major utilities in the state dropped out of the application.
KEATS: Another thing Donovan said in your piece is that utilities are different from insurance companies because they can't deny high-risk individuals, where an insurance company might be able to. That being the case, I wonder, is there really no precedent to look to? San Diego isn't the only place in the country that's subject to wildfire risk. There must be somewhere that some time a utility has reached their insurance cap and had to grapple with this issue.
HALL: That's a very good question. I don't know the answer to that.
SAUER: So why are the state regulators taking so long to decide this issue?
HALL: That's a good question. Probably better put to Morgan Lee who covers this issue day in, day out for us. They got a lot on their plate, a lot of decisions rolling through, and it's a tricky decision.
SAUER: Is there a way to split the baby on this one? Have the ratepayers pay some and have the investors pay some?
HALL: The SDG&E proposal has ratepayers paying a portion of this, but the lion's share falls to ratepayers rather than investors.
SAUER: And will the regulators' decision be the final word? Or does the public weigh in at some point?
HALL: Well, this is -- regulators doing what regulators do. So it's going to take even longer. This decision creates the account, but then to actually take money from people's pocket, they have to go back for another approval process.
SAUER: Now, your column was rather strident as I noted before we went on the air. For example, you note that SDG&E expects its requests for a wildfire account to be accepted, and "the way a robber with a gun expects a bank teller to hand over cash. Boom!"
HALL: Boom. I said I feel leak I'm looking down a barrel over one, which is how I feel. They have been saying in their reports to investors that they expect to get the money. How can they expect to get the money unless they have a sense that they're going to get it? That right there is telling that they are telling their investors that, and also telling the ratipater that we're looking down the barrel of a gun here.
SAUER: So what kind of feedback did you get on that column?
HALL: I haven't heard back from SDG&E. And Diane thought it was a great column that explored a very complicated issue and got at both sides of this argument.
SAUER: I can't imagine that SDG&E was terribly happy with it. As you mention at the outset, they're in a room full of folks who have been out there and shouting at them, and if they're going to have more public hearings, we can probably expect more of that.
HALL: I do have to say in the column I made a joke that I hope my power is on when I got home. I'd like to let my listeners know that it's still on. I can't watch the Padres, but that's another topic.
[ LAUGHTER ]
ORR: Can't watch the Chargers either.
[ LAUGHTER ]
SAUER: Remind us of the timetable again. The public utilities commission.
HALL: No one knows. But it could be two weeks, it could be longer. It's wildfire season though. So I think they should be making a decision soon to erase this uncertainty for the utility and for ratepayers.
SAUER: I'm Mark Sauer. And my guests are Katie Orr of KPBS news, Matt Hall of UT San Diego, and Andrew Keats of the Daily Transcript. Staffers on the 10th floor at City Hall constantly field angry calls from residents about boarded up and abandoned properties. Weed-choked abandoned lots. Tell us what action council members took this week regarding community blight.
KEATS: The first of those was the abandoned property ordinance which specifically expands the definition of an abandoned property to allow them to have more tools to deal with those angry constituent calls that you mentioned. So previously if somebody called and said there's this property near my house that is attracting vagrant, it's got vandalism, it's got graffiti, its weeds are overgrown, whatever, they could only react if it was an unsecure property.
SAUER: You mean a safety issue?
>> Yeah, yeah. So they've expanded that now to mean simply a vacant property that has any cod compliance issue, a vacant lot with a compliance issue, or a vacant building where a notice of default. With these three additional qualifications for an abandoned property now, based on a phone call, a City Council member would be able to send out the code enforcement department and deal with these issues. That basically gives them more tools to make the people who reelect them happier.
SAUER: So the definition of abandoned property, that changed with this ordinance?
KEATS: Yeah. It adds those three additional qualifications.
SAUER: Is there an exception for historic structures like the infamous cottages down there in the cove and La Jolla?
KEATS: Not specifically. But the way the system works, if a property falls into the program, what first needs to happen is the owner is approached, and they need to file a notice of intent, saying basically what they intend to do with this property. It could be any number of things that they intend to do with it, they might say I want to sell it, demolish it, improve it, or I want to sit on this property, I think it's a good investment and I don't have any money to do anything with it at the moment. For an historic structure, that's when you deal with it. You would have the code compliance department looking at what their notice of intent was and making a determination that way. If their intention was to demolish it or to renovate it, they would still need to go through the historic review process. It wouldn't necessarily usurp that. The La Jolla cottages, specifically, don't fall into this because the City Council and code compliance department have already bounced that over to the city attorney. So there's any number of ways they could remedy the problem, and in that situation they've decided to remedy it through the city attorney.
SAUER: Let's talk about another specific and notable property. This ordinance was authored by Todd Gloria, councilman, his district that has a restaurant that's been boarded up for decades right in the heart of Hillcrest. Does this affect Pernicano's? He got them recently to open up the parking there.
KEATS: Yeah, it will come into ply with Pernicano's. The reason it doesn't before is because it wasn't unsecure. It was not a target of vandalism.
SAUER: There were a lot of complaints about it being an eyesore. But it wasn't unsecure. Now it'll fall under one of these new definitions. So the owner will have to file with the city a notice of intent to say what they plan to do with it. Now as I said before, there's a lot of leeway there. His intent could be to sit on it because he says this is a great investment, I'm glad to have it, but I don't have any money to open a new restaurant or build a new building. So at that point, it becomes the discretion of the code enforcement department. But previously, he didn't have to do that. Now he will have to file a notice of intent. And if he doesn't remediate if, if it falls into disrepair, then he would become subject to the fine structure. Every 90 days, it's $5,000, and the next 90 days, it's $1,000, and the next it's $1,500. Or if he isn't making a good faith effort to keep up with the notice of intent, that would become an issue as well.
SAUER: So the problem when we say the word code compliance, it sounds like there's inspectors are going to be all over you, or a neighbor calls you in. But there's not a whole army of them? Their?
KEATS: No, no. This ordinance will add one code compliance.
SAUER: And how many do we have right now?
KEATS: Six as far as I understood.
SAUER: There might even be fewer than that. We're not talking about a lot of folks.
KEATS: One person, and the cost of adding one person is something in the order of $100,000.
ORR: I was watching the City Council meeting, and the council members were all very in favor of this ordinance, but they did say they are all very aware that the code compliance department has just been decimated through budget cuts over the years, and that is something that they need to build back up if they're really going to get serious about it. And I don't know enough about it to know how busy these code compliance officers are. You'd imagine if there's only six of them, they're probably running around a lot.
KEATS: They presume that this new officer will be needed to field about 130 new requests. So about 130 new requests over the course of a year.
SAUER: I was going to say, what time period?
KEATS: Yeah. But it is inherently reactive. This only comes into play if there are complaints. So you don't have people in -- we don't have the resources to, but you don't have people driving around the city looking for problem properties. This is only when a neighbor decides that there's a distinct problem with the property.
SAUER: Now, the council passed another ordinance unanimously, the responsible banking ordinance.
KEATS: It follows what has been done in a couple other cities. Cleveland introduced the first in 1991 a long time ago, earlier this year in New York and LA, they introduced ordinances. And it says if you want to get a share of the $2.5 billion that this city has that it needs to invest with banks, then you need to demonstrate that you have some investment in the community. So what it'll do is it'll force anybody who wants to apply to be able to handle the city's funds to put together a two-year plan demonstrating how they plan to handle home loans, small accident loans, consumer loans, branch openings, ATM openings, and specifically focused in low and moderate-income communities. It's a way to say this is our plan for helping these traditionally underbanked communities. Then they'll also have to put out annual data that demonstrates how well they do, and it creates a committee of six members who will review the plans, the data, and advise the City Council on who the institutions who are most deserving of those funds are.
SAUER: Is this seen as an onerous thing for the banks?
KEATS: The Chamber of Commerce spoke against it saying yes, this would be another level of regulation and that specifically banks would just say that's a pain, I don't want to do it, so then it would have the effect of, one, giving worse rates for the city. So the city in its payroll account will get a lower rate or have less favorable structures, so it would be a bad thing. What Tony Young who championed the idea said, and he talked to representative ares from all these other cities, he said he specifically limited it to the sorts of accounts that are handled by banks that are subject to the federal 1977 community reinvestment act. And based on that act, they already need to keep this data. So he's saying it's not going to have any additional costs because they already have this information. The banks that aren't subject to it, handle things like underwriting bond sale, and because they don't have that information and because he believes that there would be some effect if those institutions were subject to it, he exempted that portion. It's only going to be subject to banks who already in theory have this information available.
SAUER: And this is Tony Young, are the president of the San Diego City Council whose district of course involves lower-income communities in San Diego. There's a third ordinance that was authored by councilman David Alvarez that's getting some resistance while the two passed unanimously. Tell us about the property value protection ordinance.
KEATS: The PVPO is expected to come up in October. When it was in committee, Lorie Zapf voted against, are the rest put it forward. What it would do basically is work together with the abandoned property ordinance. And where that ordinance is reactive, this would be proactive. So the moment that a lender wanted to file a notice of default on a property, he would need to file with the city basically a form that registers that property as a pending foreclosure. Now, people will still live in the house at that time. In the abandoned property ordinance, the notice of default trigger only comes into play when the property goes vacant. This would include people who are already in their homes, trying to refinance their mortgage, negotiate a short sale,eck, but it would give the city a leg up, allowing them to know who the responsible party is if in fact it becomes vacant and becomes an issue. So the San Diego association of realtors is strongly opposed to this measure.
SAUER: The chairman says he's speaking up on behalf of homeowners who are underwater on their mortgages. Is that specious?
KEATS: You could certainly make the case that the cost of fulfilling the request and the potential cost of fines, that's something that a lender would have to figure in when they're deciding whether to take a short sale, whether to foreclose, when they're deciding whether to modify a loan agreement. And the city is basically saying we just want you to say that this foreclosure might be pending, and if in fact you're being responsible, if in fact you're not letting the property fall apart, then there's no fees associated with it. You're going to be perfectly fine. It's something that we're going to have to watch, but unless something is changed, we know at least one City Council member is going to vote against it want
SAUER: Has this been done elsewhere?
KEATS: Yeah, David Alvarez modeled it after Los Angeles which put one in place about a year ago. And the reports are that the community likes it there. The community appreciates it. And David Alvarez and I talked about, he said basically the abandoned property ordinance expands the definition of what the city can do, are expands their ability to combat blight. Then it basically takes a carrot and stick approach to the rest of the problem. The carrot being in those community plans, banks will be able to make their case that this is what we're doing to help mitigate foreclosures. We're holding workshops, working with homeowners to try to modify their loans. They can make that case, so they'll be incident vised to do more of that in order to get their share of that $2.5 billion. Then the stick would be the property value protection ordinance, which says if in fact you're not doing enough, then we have this way to penalize you.
SAUER: And you mentioned that Lorie Zapf is voting against this. Is this an example of on the supposedly nonpartisan council, this could be a split done Democrats and Republicans?
ORR: Yeah, I don't know how particularly divisive this issue is. I don't know if this is something that riles them up. A lot of Democrats right now, with the possible exception of district 1, all the Democrats represent lower income neighborhoods east of the 5 and south of the 8.
SAUER: You had a story on that, didn't you?
ORR: Yeah, a couple months back. Whereas the Republicans are west of the 5 and north of the 8. So it might not be an issue that is particularly important to the councils members representing those constituents representing more low-income neighborhoods where this is an issue. So you might see it fall along party lines.
HALL: One quick coda, but this talk about the abandoned property ordinance, it's interesting that it's being couched in terms of houses. Because we talked about -- I mean, I'm a cynic by profession; and the fact that Todd Gloria brought this forward, Pernicano's has been a huge issue in Hillcrest for so long. What people may not know is that $5,000 over the course of a year though, people are hoping that this restaurant, something happens to it, something changes there, $5,000 bucks a year to George Pernicano isn't that much. He is a minority owner of the Chargers.
[ LAUGHTER ]
SAUER: We'll leave that with the last word.