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The Future Of Redevelopment In San Diego

Aired 7/5/11 on KPBS Midday Edition.

Along with a new state budget, late last week Governor Jerry Brown signed two bills drastically changing redevelopment agencies in California. These bills end the agencies as we've known them and require future agencies to use less property tax, with more going to local school districts. The change puts in question some major redevelopment projects in San Diego, along with making a serious impact on affordable housing.

Petco Park was built as part of a redevelopment effort in downtown San Diego.
Enlarge this image

Above: Petco Park was built as part of a redevelopment effort in downtown San Diego.

Along with a new state budget, late last week Governor Jerry Brown signed two bills drastically changing redevelopment agencies in California. These bills end the agencies as we've known them and require future agencies to use less property tax, with more going to local school districts. The change puts in question some major redevelopment projects in San Diego, along with making a serious impact on affordable housing.

Guests

Susan Tinsky, Executive Director of the San Diego Housing Federation

Derek Danziger, Vice President of Marketing and Communications for the Centre City Development Corporation

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.

CAVANAUGH: I'm Maureen Cavanaugh. Along with the new state budget late last week, governor brown signed two bills drastically changing redevelopment agencies in California. The two combined end the agencies as we've seen them, and require future agencies to use less property tax with more going to local cool districts. The change puts in question some major redevelopment projects in San Diego, including the expansion of the convention center, and a possible downtown chargers stadium. Joining me are Derrick danzinger, marketing and communication director for the Center City Development Corporation. Derrick, hello.

DANZINGER: Hi. How are you?

CAVANAUGH: Great. Thank you for coming in. And Susan Tinsky is with me. She's executive director of the San Diego Housing Federation. Hello, Susan.

TINKSY: Good afternoon.

CAVANAUGH: Tell us what you can about the extent of the impact of the end of redevelopment as we know it on projects in San Diego. What's gonna be hurt?

DANZINGER: The impacts are gonna be pretty far reaching. From our estimation here in San Diego, it's roughly a $70†million impact to us this year. Then it's about -- for downtown at least, that's about $47†million in one fiscal year, $11†million a year 31 after. This is things like parks and public infrastructure and fire stations and all of the things that we're counting on to make critical investments in our community future, they're gonna be affected by this.

CAVANAUGH: What are some of the bigger projects? Was i right about the convention center, the possible chargers stadium? How about the embarcadero project.

DANZINGER: There's two bills that were passed by the governor. One is ab26, and 1 is ab27. Ab26 effectively eliminates redevelopment entirely and reconstitutes it where a successor agency would be put into place, and the state could effectively go back and challenge obligations that were entered into after January. Things like you're talking about, the convention center and other things were the debts were incurring be looked at again. Then there's ab 27, which is this option for cities to opt into redevelopment, that's effectively where they have to pay this large sum of money. Then you have to look for it in terms of an impact on your budget.

CAVANAUGH: Let's step back for a moment, and as a corrector of marketing communications for CCDC, give us an over view of what you think redevelopment as done for downtown San Diego.

DANZINGER: I think redevelopment has been a tremendous success for downtown San Diego. If you remember what our downtown used to be and what it is today, it's a completely different place. Redevelopment is not all about buildings. It's about building a community, it's about providing affordable housing, neighborhood infrastructure. Just in terms of numbers, we've invested over 36†years about $1.7†billion of public money into downtown. That's been matched by $12†billion of private investment. That private investment is what generates tax revenues in the names of property tax, sales tax, and hotel tax that our city can use to do things throughout the entire San Diego area. So redevelopment as a tool, though, we're expected to grow in downtown to 90,000 residents. We're at 36,000 now, up to 90, redevelopment is the tool enabling us to build all the infrastructure in the downtown area. And affordable housing goes, that's one of the main thing our city talks about all the time. We built more than 3600 homes in downtown that are affordable. 4400 if you include those outside of the downtown community.

CAVANAUGH: Critics say there may once have been a rein for property taxes to be used for redevelopment. And the blossoming of downtown San Diego could be one of those results. But they say you don't need this taxpayer money anymore. Our schools need it more. What do you say to that argument?

DANZINGER: I think nobody would disagree that schools are vitally important. And one of the things that people may not know as part of redevelopment is that we already do have tax sharing agreement with a number of different entities. When growth and property tax, we also make hay commitment to share in the property tax revenues with the San Diego unified school district, the community college district, the county office of education and the county. So it's 30†percent of the tax increment revenues that fro to those different areas. Again, nobody disputes the fact that schools are penitentiary. But also neighborhood infrastructure, when we're dealing with the challenges that our city budget is dealing with now, and we have one of the few tools left to keep local property taxes here and reinvest those in things like parks and sidewalks and streetlights and fire stations, a state that is struggling to create jobs. Redevelopment over the course of 36†years downtown has created more than 62,000 construction jobs, more than 20,000 permanent jobs, and affect, i believe, state wide more than 300,000 jobs that are affected by redevelopment.

CAVANAUGH: Would you agree that there have been excesses in redevelopment? It's supposed to be for blighted areas, and the money is supposed to be used correctly.

DANZINGER: I would say there's no doubt that have been cases that you can look at and say, did this really fit into the definition of what redevelopment should be? You about i think here in San Diego, i think we've been a model of what redevelopment is all about. Ir think what's unfortunate is that some of the challenging situations are getting lumped into the entire thing, and rather than looking at reforming those that are not working it's the throw the baby out with the bath water syndrome.

CAVANAUGH: Susan, that sort of gets lost sometimes when we talk about redevelopment. Can you talk to us about the link between affordable housing and redevelopment?

TINSKY: Absolutely. Redevelopment is actually the second largest source of funding for affordable housing in the state, second to the federal government, had you had and other source that come from the federal government. It's no secret to anyone that San Diego is one of the most expensive markets in the nation. And i listened with interest to your prior segment on the real estate market. And we tend to really focus a lot on home ownership. But nearly 50†percent of our residents are renters. And the impact of what's going on with the economic crisis and the foreclosure crisis is that it's putting more pressure on the rental housing market. That really affects our low income residents and households. And really, we have to be cognizant that much of our laborer force in San Diego is really lower wage jobs. Our economic base is hospitality, the service sector, employment studies that say that by 2030, 150,000 new jobs are going to be created, and of those, 50 to 95% are going to be in the hospitality or service sector. Those are minimum wage jobs. To the extent this we continue to grow those segments of our economy, we need to insure that we're housing those folks. And redevelopment becomes a really significant too long for doing that, both from the perspective of the financial aspect, creating revenue to do that. But also creating a mandate for cities to include affordable housing among their housing stock.

CAVANAUGH: A lot of people would say there is no affordable housing in downtown San Diego, at least not anything that they can find. And I'm wondering if you could explain to us the link between a redevelopment project and the building of affordable housing.

TINSKY: Well -- and it's -- in terms of the law itself, a fundamental purpose of redevelopment law is the creation of affordable housing. If all of the moneys that are generated within a redevelopment project area, 20% of those are required by law to be dedicated to the construction of affordable housing. Over all, the stock of housing that's created and of any of that, 15% of that housing stock has to be affordable at some defined level. Why it's critical within the project areas is what redevelopment as a tool does is it helps to reinvest and encourage reinvestment in neighborhoods that have typically been blighted. The offshoot of that, of course, is that as you see reinvestment, the ideal is the property values go up, that's how you generate the new revenues, the tax increment. But the unfortunate thing is as values go up, the rents and home prices also go up. The affordable housing component really acts as a tool to assure that we don't gentrify the neighborhoods. And the ask folks that have been living in those communities for many years under bad circumstances can continue to live there.

CAVANAUGH: If the redevelopment agencies go away or change drastically, where would money come from for affordable housing in San Diego?

TINSKY: Well, that's a great question. And i think there's a lot of uncertainty right now. We have been -- prior to the proposal of the governor to eliminate redevelopment, affordable housing advocates were looking for other sources of affordable housing revenues at the state level. We have, over the last decade, been subsisting on two bond measures, prop 46 and 1c. Those funds are all but extended at this point. We were actively looking for other development sources. To the extent that because we're losing all of our state moneys that come from the state bond proceeds as well as redevelopment. We're gonna have to be more reliant upon capital markets, tax credits, HUD funding, and then we'll have to figure out what our next game plan is.

CAVANAUGH: I say if redevelopment goes away, even though governor brown has signed those two bills, because i know that the redevelopment agencies -- i think the leading -- we're gonna lead it here in San Diego, are intending to file suit to stop this legislation. Has a lawsuit been filed?

DANZINGER: There's two entities. The league of California cities as well ass the California Redevelopment association that are the two leading entities potentially filing litigation against this, looking at the constitutionality and the constitutional protections of redevelopment as well as proposition 22 which was passed overwhelmingly we voters last November which basically said the state cannot borrow local funds to fix its budgetary issues. That's one of the main complaints. The city of San Diego is watching these types of things. I don't know that the city is going to be -- I'm not a lawyer. I don't know that the city is going to be a necessary party to the lawsuits. There are some feelings that some of the provisions in this legislation are such that those cities that opt into the lawsuits would have no option to continue redevelopment if the state ended up prevailing in that as well. So there's a lot of discussions going on the legal side of things, and I'll leave that to our city attorneys and all of the others to assess that. Needless to say, there is litigation pends, and it will wind up in the courts for a while.

CAVANAUGH: One more legal question that i don't know if you'll feel comfortable answering, but when that lawsuit is filed if they do ask for an injunction to stop this law from taking effect, will it stop the law from going into effect and will you proceed as usual?

DANZINGER: Our hope is that if they issue a stay, we would be able to at least continue our efforts going forward. But that remains to be seen because some of the provisions within these -- 8027 is one of the options, we're looking at that and evaluating right now. In order to continue that, you need to make some decisions ooze to whether you're going to opt into ab 27 as well.

CAVANAUGH: Mayor sander's reaction to some of these bills was dramatic. He said today's reaction to redevelopment is nothing more than an extortion attempt by sacramento politicians that enables them to avoid dealing with systemic financial problems for yet another year. What kind of a rep cushion does this show you what kind of rep cushion doing away with redevelopment agencies might have on San Diego?

DANZINGER: I think absolutely. I think it's a devastating potential impact to our community to do a lot of these important projects we've been planning. There are very few cities across California that would likely be able to meet the payment threshold in order to steak around. You're talking about 400 redevelopment agencies across the state, not just the job impacts to them but the cumulative job impacts to all of those things. Here in San Diego, again, the impact for us downtown is about 45 million dollars this coming fiscal year, and about 11 million going forward after that. Our next step is in the next couple of weeks, we're going to our board of directors with a recommendation to them about how this would impact us, what types of capital projects are on our to do list, could or couldn't be affected, whether we'd be able to issue bonds out as we collect more tax increment. That will go from the board to the San Diego city council. And it's ultimately their decision whether or not to opt into the ab 27 option.

CAVANAUGH: Have you been thinking about different ways to make that payment threshold in indeed you have to divert away these property taxes.

DANZINGER: That's one of the things our staff is having to look at now, how you're going to come up with $47†million, and how do you make that impact not hurt everything you're trying to accomplish from affordable housing to the parks and everything we've been talking about.

CAVANAUGH: Both of you are in effect trying to figure out what life is like after redevelopment agencies; is that right?

TINSKY: That's correct.

DANZINGER: True.

CAVANAUGH: Okay. Well, as you consider this, how long a process do you think this is going to take, Susan, to try to find out where affordable housing goes for San Diego without a redevelopment agency?

TINSKY: As i understand it, both the California redevelopment association and league of cities have said that they are going to file this suit immediately within the supreme court, with the intent of having it resolve more quickly. And it'll really be up to the court as to when that will be resolved. There's some other measures that have been promised on the senate floor in terms of some reforms and amendments to the existing language, and we'll be watching that closely. But i knowledge for the foreseeable future everything is in flux.

CAVANAUGH: I want to thank Susan Tinski with the San Diego housing federation, and derrick Danzinger with CCDC. Thank you so much for coming in and talking about this.

TINSKY: Thank you Maureen.

DANZINGER: Thanks for having us.

Comments

Avatar for user 'jimvsmij'

jimvsmij | July 5, 2011 at 4:31 p.m. ― 3 years, 1 month ago

San Diego is in desperate need of expansion of the downtown Convention Center and a new Charger's stadium. If we don't, we are in very real danger of losing the Comic-Con and the Chargers to LA! If you take the excess money that goes into rich neighborhood public schools, to the point that they are equal to the poor neighborhood's schools, then that alone should be enough for construction on these investments to San Diego's future. I doubt that the budget cutting of rich neighborhood schools would make any effect on graduation rates. Once we build the infrastructure to generate more tax income, we can then start putting more money into schools starting with the ones that struggle the most, which are the poorer neighborhoods.

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Avatar for user 'cma52572'

cma52572 | July 5, 2011 at 11:41 p.m. ― 3 years, 1 month ago

Oh my God KPBS, you guys are really losing credibility. You never address the gross fraud and abuse of these agencies not to mention the gross profits developers are paid for affordable housing.

Why do you think they are fighting so hard for it? because they CARE about affordable housing?

No because they get about $500,000 per affordable housing unit in tax dollars and then they get to still turn around and sell the unit. It is absurd and a gross waste of $ that is desperately needed in our parks, schools and libraries.

And how about Toni Atkins wife being paid $225 PER HOUR in redevelopment $ to count homeless people and offer solutions, a job the housing commission is already paid to do. How many libraries could we have kept open for the 1/2 a million dollars we just gave her?

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Avatar for user 'cma52572'

cma52572 | July 5, 2011 at 11:45 p.m. ― 3 years, 1 month ago

let me give you 4 examples of massive redevelopment fraud here in SD.

(1). Imperial Beach: The 1960s-era Miracle Shopping Center at Palm Avenue and Ninth Street was taken using powers of eminent domain by the city. The city plans to demolish the much loved center and start building a replacement that will house multi-national corporations like "Fresh & Easy" a chain that has been charged with grossly misrespresenting themselves as organic and pesticide free.

The Shopping Center was more than just a place to shop, it was part of a collective history and identity to this small, humble beach town. Most of the businesses in the shopping center are small, local businesses. This is what redevelopment is supposed to create not destroy.

( 2). Coronado: Redevelopment is being used to build housing projects in Coronado. Redevelopment money is restricted to "blighted areas" so this notion that the City of Coronado is blighted and needs state subsidies is outright fraud.

The Orange Villas complex is located at 450 Orange Avenue
Coronado contains a total of 189 affordable housing units in Coronado.

This begs the question "why are state funds being taken from State Parks, Libraries and schools to build housing in one of San Diego's wealthiest and most coveted neighborhoods?" Is it right for redevelopment to be used to build ocean front property?

( 3). Redevelopment funds to hire expensive Consultants, LeSar Development Consultants $464,750 contract.

CA State Assembly Leader Atkins Heads Select Committee on Homelessness While her Spouse & ex- CCDC Official is Paid $225 Per Hour in Redevelopment Money "Solving" Homelessness by historymatters

Ex CCDC Treasurer and wife of State assembly Majority WHIP Toni Atkins received a questionable contract that paid $464,750 dollars "essentially cobbling together demographic information about the homeless people who live Downtown and cajoling various agencies to work cooperatively on getting them housed—sounds a lot like what former San Diego City Councilmember Brian Maienschein is supposed to be doing on a regional basis."

This notion of using redevelopment funds to pay really expensive consultants to do jobs that the city already has agencies in place to do is very troubling at the least. She billed her time at $225 per hour.

CityBeat article questioning the lucrative contract:

http://www.sdcitybeat.com/sandiego/article-8792-more-scrutiny-please.html

( 4). McMillin NTC Deal: http://www.sandiegoreader.com/news/20...

McMillin received 250 acres of prime San Diego Point Loma real estate worth 1 billion dollars for $8 and that the city spent $11 million to acquire. Additionally McMillin brings to light the issue of the Delaware LLc. A Delaware LLc essentially hides the names of investors thus anyone could be an investor in this project and we would have no way of knowing. And if that wasn't bad enough 1 of the NTC LLcs is an off shore account.

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Avatar for user 'cma52572'

cma52572 | July 6, 2011 at 12:01 a.m. ― 3 years, 1 month ago

People should be applauding the Governor and the State Controller for this decision. These agencies have had more than a fair chance and they love to point to 1 or 2 good examples of redevelopment but for every 1 example there are 100s of truly sad and contemptible examples of abuse.

These agencies MUST be shut down. They are dramatically destroying the fabric of CA. Go to San Francisco or Oakland or downtown LA and you will see these cheap low low quality projects everywhere. Redevelopment does not have to follow any of the historic rules that have saved cities like SF from being destroyed.

In fact 1 of the 1st redevelopment projects was in SF and is Western Addition. If you have ever been there it is clear to see it is the ugliest and most blighted area in all of SF. rather than rehabbing 100s of gorgeous victorians they bulldozed acres and acres of them and replaced them with the saddest most depressingly cheap architecture. The area is home to tons of homeless people and drug addicts and is the most dangerous neighborhood in SF. This is what redevelopment has done and continues to do.

It destroys historic buildings that create a sense of place and bring the community together and replaces them w/ banal soul-less boxes that could exist anywhere. If we do not stop this monster it will destroy every last piece of architecture we have left.

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Avatar for user 'dialyn'

dialyn | July 6, 2011 at 11 a.m. ― 3 years, 1 month ago

I don't blame you for doing a puff piece on Redevelopment Agencies...after all, they have friends with deep pockets and I wouldn't expect KPBS to want to kill potential donors among the developers, but it would have been more interesting if one or two challenging questions had been asked, and if callers had been allowed to ask what the interviewer wouldn't. And, no, we don't need to build a football stadium for a billionaire...he can well afford to pay for it out of his petty cash fund.

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Avatar for user 'cma52572'

cma52572 | July 6, 2011 at 10:09 p.m. ― 3 years, 1 month ago

and lets not forget the example of Grantville...the most heartbreaking of all. Big developer donor Archstone got that giveaway deal from CCDC to develop an area that is nowhere near downtown....a very nice area where many elderly residents have lived their entire lives in very humble mobile homes, homes they love and a community they consider family. That is being ripped away from them and given to Archstone to develop w/ tax dollars.
here is a great video doc on Grantville by filmaker Dan Soderberg...

Please watch this video to get an understanding of how egregious the redevelopment fraud is.

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