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Governor Brown Thinking About Eliminating Redevelopment Agencies

Audio

Aired 1/7/11

Governor Jerry Brown is considering eliminating local redevelopment agencies, like CCDC. Redevelopment funds are helping to pay for the new downtown library, and have been eyed for a new Chargers stadium and convention-center expansion. We discuss impacts in San Diego if Brown cuts redevelopment funding.

Governor Jerry Brown is considering eliminating local redevelopment agencies, like CCDC. Redevelopment funds are helping to pay for the new downtown library, and have been eyed for a new Chargers stadium and convention-center expansion. We discuss impacts in San Diego if Brown cuts redevelopment funding.

Guests

Scott Lewis, chief executive officer of voiceofsandiego.org.

Tony Perry, San Diego Bureau Chief for the Los Angeles Times.

Ricky Young, watchdog editor for the San Diego Union-Tribune.

Read Transcript

This is a rush transcript created by a contractor for KPBS to improve accessibility for the deaf and hard-of-hearing. Please refer to the media file as the formal record of this interview. Opinions expressed by guests during interviews reflect the guest’s individual views and do not necessarily represent those of KPBS staff, members or its sponsors.

GLORIA PENNER: Today, Governor Jerry Brown considers canceling redevelopment funds, Arnold Schwarzenegger gets some harsh scores, and several top earning executives at UC want bigger pensions. The editors with me today are Scott Lewis, CEO of voice of San Diego.org, Scott, it's good to see you.

LEWIS: Always a pleasure, thanks Gloria.

GLORIA PENNER: Okay. And Tony Perry, San Diego bureau chief for the LA Times. I'm gonna say it this time, Tony. Always a pleasure.

PERRY: Oh, you're so sweet.

GLORIA PENNER: And Ricky Young, Watchdog editor for the UT. I'm gonna have to make something up for you, Ricky, I didn't think of anything.

YOUNG: Good morning, Gloria.

GLORIA PENNER: Good morning Ricky! Our number is 1-888-895-5727. 895 KPBS. Well, governor Jerry Brown says there's no time for delay or denial with California's massive budget shortfall. His budget proposal will be offered on Monday, and according to the Sacramento bee newspaper, among the cuts he will propose is eliminating local redevelopment agencies. So Scott, that would be a huge change. Why would slashing those agencies help the state's budget deficit?

LEWIS: Well, property taxes are collected locally and distributed locally to local agencies in special districts. Redevelopment keeps some of those property taxes in the areas in which they've -- the redevelopment area has been formed. So downtown or southeast San Diego or Escondido. Or wherever the redevelopment area is want their increment, their sort of rise in property taxes the economic development creates is allowed to be kept in that sort of blighted area and invested in development projects. In order for that to continue, it actually depletes or keeps away -- keeps money away from schools that would benefit from those property taxes. And so the state is required to back film those schools. So if you got rid of redevelopment, the property taxes would flow, again, to schools, and the state would be relieved of that responsibility.

GLORIA PENNER: So let's envision a future San Diego without redevelopment funds. Let me turn to you on this, Ricky. How would this affect, let's say the City of San Diego, where redevelopment's a big part of what's happened downtown through CCDC, the center of city development corporation?

YOUNG: It's not entirely clear how it would affect the city. Because it's not entirely clear that it would be even remotely possibly. Because, you know, the thing about this money that Scott was describing, the mechanism to capture the added tax revenue from economic development largely is they borrow against it. So they have bonds they have to pay down before any money could go to anything else, I think. If you think public employee pensions are locked in by law, try to touch bond money that a local government has committed to paying bond holders.

GLORIA PENNER: Well, I think there's something in the California constitution about having to pay down debt as the second obligation of the state after education.

YOUNG: I thought it was before education. But I haven't -- you know, I think it's really hard to touch. Now, assuming they could touch it, up, what cities are concerned about is that they won't be able to do economic development in projects that they say help create jobs and make for a better city.

GLORIA PENNER: Okay, well, let me ask our listeners about this. It's kind of interesting, I don't know if it's an either or but it seems to be coming down to that. Of some property taxes that normally are set aside to redevelop blighted areas, and some people question whether all those areas are really blighted to begin with, or should they be funneled to local governments like counties to pick up some of the county services that right now it looks like the governor is signaling that he's gonna ask the counties to pick up more of the services that the state's been picking up. Or perhaps even go to the school system. What do you think? Our number is 1-888-895-5727. Where would those property taxes best be used?

LEWIS: And that's a question I'm gonna pose to you, Tony. Tony Perry.

PERRY: That's a very -- you know, pick your favorite or least favorite issue. On the issue of what's -- I don't think this is ever gonna happen by the way.

PENNER: You don't?

PERRY: I think it's a long shot. It's actually -- there was a state measure that the voters passed to stop this kind of thing, to stop the snatching up of redevelopment funds or tax money that is funneled back to redevelopment that was to stop that, the legislature kind of blew past it and did it anyway, grabbed some of this money last year. I don't think this thing is ever gonna go. If it does go, I think one thing we can be somewhat assured of is that there will not be a new Chargers stadium in downtown San Diego because redevelopment is to be, might be, could be a player in that. Of that's why they lifted the cap, the spending cap left year. This is really -- these are dreadful choices. And it also comes down to the idea, when is enough enough? I was here in 79 when they first started center city development corporation. So I think what it looks like. It looked like Berlin 1945, pretty bad. And it looks a hell of a lot better now. Is it time to take the training wheels off, pay the bonds and get that money out? That property tack money out elsewhere? That's a political choice. Donna Frye in all her wisdom was always for pulling more money back from center City Development and into the city's coffers to keep our bleeding red down to a low amount as possible. So we've thought of this before. Of CCDC is that thing out there that has money, and we want it.

GLORIA PENNER: Scott Lewis?

LEWIS: Well, I think, you know, at the very center of the tension in San Diego politics right now is redevelopment. Redevelopment's the reason why you can build this colossal pedestrian bridge to nowhere downtown, at a cost of $27 million, but not be able to consider anything even close to similar for Balboa Park or for other areas in the city. It's the reason why you can consider building a stadium in son Jose at the same time that San Jose has been cutting police and fire. It's the same the same reason you can consider expanding the Convention Center or building a new stadium at the same time that you're browning out fire stations or you're closing rec centers and all that. It has become a source of incredible tension in the city right now as far as residents' concern about the city's priorities. And so I think that maybe they don't do it retroactively. Maybe they don't get rid of it retroactively. But there's a chance that they could stop it. Where it is right now and say, okay, you know, downtown you've had 20 years to build yourself up, to use this investment. Of.

PERRY: 30 years.

LEWIS: Meanwhile the rest of the county has been carrying the burden of this burgeoning county government and county responsibilities it's time for downtown to now carry that same burden. And so I think that these discussions are healthy, and I think it's important for the community to analyze its priorities.

GLORIA PENNER: Our number is 1-888-895-5727. Of 895 KPBS. So you're part of the community, have you analyzed your priorities with diminishing funds available? In some cases, no funds available. Where would you like to see your property taxes go? Again our number is 1-888-895-KPBS. Let's hear from Mel in Hillcrest. Mel, you're on with the editors.

NEW SPEAKER: Oh, thank you. I think Scott Lewis put it very well. I could hardly say it about better. But I'll try. I think redevelopment is basically a scam to enrich the wealthy. And of course doing a stadium for Mr. Spanos would be a wonderful example of that. If you remember, I think redevelopment says, basically, we don't believe in capitalism. We don't believe in the private sector. We are the government and we will decide what to build and where to build it, and we will take the taxpayers' money and fulfill that. So capitalist, free enterprise people, forget it. Of we don't trust you to manage our economy. And that's why we have redevelopment.

GLORIA PENNER: Okay. Well, thank you very much, Mel. Scott, did you want to respond to Mel?

LEWIS: Well, it is something that there are --

GLORIA PENNER: Remember he said nice things about you. He couldn't have said it better than you did, actually.

PERRY: I think he could have, actually.

LEWIS: Well, you know, they do talk about downtown, they say downtown's our economic engine, we have to keep this engine going, we have to keep this funnel of redevelopment going, and yet it is interesting to see that if that is our economic engine, a bunch of, you are, free market capitalist conservatives, often Republicans who say this is how we build our come is by funneling taxpayer money into building projects downtown. I think that we need to evaluate as a community whether this needs to continue or whether it's time to, you know, downtown has had decades of redevelopment. Is it time to move on? Look at SEDC. Some of the biggest scandals we've seen in the 73 have had to do with redevelopment. With conflicts of interesting or with self dealing. And I -- I think the community is legitimately questioning whether it should continue at the same status quo. And yet now it's being expanded.

GLORIA PENNER: Yeah, wasn't there recently the CEO of CCDC who had to step down because she was tagged with inflict of interest.

LEWIS: A gigantic fine from the ethics commission, pleaded no contest to a misdemeanor, the head of SEDC, the other redevelopment nonprofit in town was caught giving her and her top staff bonuses that she neither disclosed nor had gotten approved. I think that the community is frustrated with a system that provides this. At the same time the things they care about, are the rec centers, the pot holes and everything just continue to deteriorate.

GLORIA PENNER: So when you have a frustrated community, Ricky, will you have a community that would support saying, okay, enough is enough? As Mel said, you know, pull those redevelopment funds and let's turn them over to other agencies that can use them more?

YOUNG: I think there are vocal members of the community who think redevelopment is sitting on a lot of money that could be used for a lot of other things. I think there's probably also a less vocal segment of the community that has the longer view that tone has where they've seen what redevelopment can do that can be good over the years. I did want to pick up on one thing Mel Shapiro, the caller, said in terms of this redevelopment somehow being anti-capitalism. I think that was sort of over idealistic in that there's a long history in capitalism accepting public subsidies and things that are not true capitalism. I mean, you'd think it was a Republican president who did the whole bail out with the Wall Street firms. There's a long history of capitalism intermixing with the government, causing some of the problems with Nancy Graham at CCDC and what have you.

GLORIA PENNER: Well, on a larger scale, we certainly have capitalism intermixing with the government when you think about the bailout funds for the major banking industries.

YOUNG: Right.

GLORIA PENNER: And the auto industries.

YOUNG: Right. And redevelopment is built entirely around those kinds of subsidies and tax breaks, and there are no -- I don't see a lot of pure capitalists sayings, we're just gonna do this ourselves. We don't need the government's help.

GLORIA PENNER: Scott Lewis?

LEWIS: That's one of the issues we need to grapple with, I know, that's one of the issues we need to discuss. If we're going to subsidize part of our capitalism, is the building is development industry, and tourism industry with the convention center, the one we should be subsidizing? Look at the convention center industry. Of there's a set amount of people going to conventions. If you build a new convention center, you're just trying to quiet a larger slice of that pie, a pie that is in many ways probably shrinking. And yet if -- you know, why not invest government money in an industry that would actually grow? In innovation or entrepreneurialism. Those are the kind of conversations I think we need to have as a community.

GLORIA PENNER: Well, I think we've started that conversation right here. And we have a lot of people from the community who want to become part of what we're talking about today. So we're going to take a short break. And when we come back we will turn to our callers and see what they have to say because, after all, it's call about them. This is the Editors Roundtable, I'm Gloria Penner.

This is the Editors Roundtable I'm Gloria Penner. I'm here with Scott Lewis, voice of San Diego.org. Scott's put a call out to the community, sighing get involved in this conversation. Where it is that your money should go, your property tax money, and that's what we're talking about today, whether redevelopment funds basically should be eliminated while the State of California is in this severe budget crisis. Governor has floated a proposal saying just that, and we're getting your reaction to it. Tony Perry is also here from the LA Times, and from the UT, we have Ricky Young. Of so let's go right to our callers. And we'll start with you Jeff in imperial. Jeff, welcome. Of.

NEW SPEAKER: I just got in on this conversation, and I just thought it was interesting 'cause I -- I sit on the city council of the city of imperial. And what I heard with this yesterday was just, to me, is appalling. I look at it that we're missing the boat here too. Redevelopment funds for us, we've changed our whole community. It's turned interest a beautiful, clean, vibrant city now that was brought on by redevelopment funds which also, by the way, brought us a lot more jobs. And in our economy, in Imperial Valley, and with the employment at the rate that it's at right now, we need every tool we can get. And I also believe a lot of this too is just outright stealing from our state government. When I look at -- they need to start managing the state like we manage our city. I mean, we're still in the black when other things are in the red. We try to be frugal with what we're doing and try to do the best with our funds for the city, and our constituents, and ultimately, they make the decision and tell us what they want to do. But I'm really frustrated by the governor's idea by doing this.

GLORIA PENNER: Okay. Well, thank you so much, Jeff. It's good firefighter your point of view, certainly diametrically opposite form Mel Shapiro's. Right, Scott?

LEWIS: Yeah, I would assume. I think even critics of redevelopment look at it, though, and acknowledge that downtown is a better place. I don't think people deny this it's better than it was three decades ago or two decades ago. The question is, should it continue in a place like that? The whole point of it is to fix it and move on. And I think a lot of people see what's happening as the sort of perpetuation of this continued sequestering of property taxes and reinvesting them in the same neighborhood at the same time that the county government and schools require more and more resources and downtown's simply not contributing the way that other neighborhoods are. That's the kind of frustration that's out there. It doesn't deny that there have been benefits. If you invest in building a community, the buildings will look nicer.

GLORIA PENNER: Well, thank you very much, and Jeff, thank you for your call. Let's hear from Ricardo in university heights of hi, Ricardo, you're on with the editors.

NEW SPEAKER: Hi, my comment was that I believe these redevelopment agencies should work under the cities and counties, meaning that the cities should -- each city should be responsible for making that the cities are developed properly. Of and therefore instead of this agency working completely separate and obtaining their own funds, they should work under each city and therefore the funds should actually assigned to the cities and counties and have them be responsible for the redevelopment of each of the cities.

GLORIA PENNER: Thank you, Ricardo. Ricky?

YOUNG: Yeah, well, Ricardo will be glad to know that in fact redevelopment agencies are run by the cities and counties of what happens is they have one meeting as the City Council, then they adjourn, and they immediately reconvene as the redevelopment agency for their city or county and make the decisions. So --

LEWIS: I think in particular there's something to watch in San Diego. The City of San Diego, the City Council runs the redevelopment agency, as Ricky described. It has an executive director, though, that it's appointed, and that's the mayor. And they can choose to change that, and they're actually considering changing that. The other thing to consider right now is that the City of San Diego owes about $10 million or $9 million a year on the convention center that it built earlier in the decade. And it owes this money and it pays it off through its general fund of there's a movement on the City Council right now to take that money and to have the redevelopment agency pay it off and free up that money in parks and libraries and fire issues or whatever the general fund uses would be for it. And I think that's the kind of fulcrum of this tension in the community where these decisions are really being hashed out and where priorities are actually being discussed.

GLORIA PENNER: That's kind of interesting. The redevelopment agency basically reports to the City Council.

LEWIS: It is the City Council.

PENNER: It is the City Council.

PERRY: Yes and no. There is that tether, to be sure. On the other hand, as Scott points out, the executives and the personnel --

LEWIS: Right.

PERRY: -- are not civil service in that sense. Why is that? Because that's precisely what peat Wilson wanted when he was mayor in the 1970s and he saw downtown as it was. Wanted the tax increment financing situation, of course. But he also wanted an agency that was not as civil service, not as hide bound, more nimble and could get the job done. Because he looked around, and he said, well, this is what capitalism has brought us in the mid 1970s, and downtown that was a pit. And this is also what the downtown business establishment had brought us. So the center city development corporation in its conception was supposed to essentially bypass city hall in many ways, and bypass the lather lethargic city business development.

GLORIA PENNER: Ricky?

YOUNG: CCDC is a rather unusual set up, and it is a nonprofit agency. But it ultimately advises the City Council which signs off on any important decision made. As Mel will tell you, if you ever make the mistake of saying CCDC made a decision. I did want to bring up a couple of things real quick. What's interesting to me about the whole debate is there's this perception that redevelopment agencies are taking money from schools or counties or whatever. But the argument the proponents will make is, that money wouldn't be there without the redevelopment zone. The redevelopment zone brings in additional economic development, and that's the money that they're tapping. So --

PERRY: When the property that is now Horton plaza was all night movies and s joints and pawnshops, a little bit of tax money was noting over to the schools but not much. Horton Plaza has created a heck of a lot of money, and it's helped rebuild the area. Is it time to take the training wheels off? Maybe. I don't think we can say, you know --

GLORIA PENNER: One at a time.

PERRY: -- City Center Development has been this rogue agency that's just stuffed money down rat holes.

GLORIA PENNER: Okay. Scott.

LEWIS: On the other hand, property taxes have gone up, and property values have gone up across the County. When they drew the line around downtown in the 90s and said, this is the point at which we will measure any increase and take that increase and invest it in redevelopment, places all around the county have seen inflation in their property values and that money, instead of being kept in those neighborhoods was sent to the county and the schools. And so it's not just the development that created that wealth. It's part of -- that --

PERRY: But when those lines were drawn, San Diego as San Diego is want to be, is very conservative, and only drew them very narrowly, other folks from other redevelopment agencies looked in and said, why are you doing it so small? Well, because we're San Diego, and we don't do large things. They have incrementally increased it. But it is still a fairly small portion of downtown. I don't know if that cuts for your argument or mine, but -- it is not as if we have this agency that is, you know, Robert Mosesesque huge. It isn't.

GLORIA PENNER: Tony, let's let Ricky get in here.

YOUNG: My point was simply, if you were to go back to the original idea, if you were to shut down the redevelopment agencies, you can't just take their money because at least in theory, you're also gonna lose their economic development which was creating that money.

PENNER: Okay.

YOUNG: I mean, I would agree with Scott there.

PENNER: We're gonna give the last word to Dennis from downtown. Dennis, you're getting the last word in this discussion. Because nobody else can get a word in. Go ahead.

NEW SPEAKER: I was noticing. Gloria, good morning. It's Dennis [INAUDIBLE] calling.

GLORIA PENNER: Oh, hi.

NEW SPEAKER: Hi. I just wanted to echo what Tony said. I was here in the late '70s, and was appalled at this beautiful city with this ridiculously awful downtown. And I think that might be the point. That the people of San Diego look at the redevelopment agency and they see success. And they look at what the governments have done when we've given them extra money, and they see the pension crisis. And they're very loathe to say, huh, let's give them some more money and see what they do with it. And just one final point, remember that the tax increment expires, and eventually all this extra tax money that's generated by this wonderful development downtown eventually does go back into the general fund and to the neighborhoods and is a whole lot more than would have been had we not done redevelopment.

GLORIA PENNER: Dennis, you belong on this show. You really do. I'll have to speak to the producer about that. It's so good to hear from you. Thank you very much, and Ricky gets -- I said you were having the last response, Dennis, but Ricky wants something to say too.

YOUNG: I just want to say we focused a lot on downtown. I read a piece yesterday by Chris Norby from Orange County pointing out, you know that a lot of this money has gone to build you know, empty strip malls in the suburbs that has enriched developers and hasn't necessarily been as successful as downtown. So --

PERRY: Downtown San Diego.

GLORIA PENNER: Okay, gentlemen, with that, we are going to wrap up this topic, because we wouldn't have time for our next one.

Comments

Avatar for user 'philosopher3000'

philosopher3000 | January 9, 2011 at 6:46 a.m. ― 3 years, 6 months ago

If the "businesses" downtown, that use shell-corporations to own their real-estate property, and thus avoid paying their fair share of property tax, are willing to support the 'Split-Roll' reform of Prop.13, then they can keep their "redevelopment funding".

http://www.closetheloophole.com/news/truthout

( | suggest removal )