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Who Benefits Most From Downtown Development?

Who Benefits Most From Downtown Development?
What's the role of a city's downtown? We'll look at the evolving nature of downtown San Diego and what role the government plays in shaping it.

ALAN RAY (Host): You’re listening to These Days on KPBS. I’m Alan Ray in for Maureen Cavanaugh. Now if you’re of a certain age, you may recall a time when downtown San Diego was not a very nice place to go. Before there was Petco Park, before the rebirth of Horton Plaza, before the Gaslamp Quarter, much of downtown San Diego was a tatty, tattered, dirty, rundown place and not very friendly after dark. Now, downtown San Diego is a nighttime destination for locals and tourists, home to thousands of people who don’t live on the street, and the evolution is hardly complete. There’s talk of a new civic building or two and a new stadium for the Chargers, all downtown. KPBS metro reporter Katie Orr has begun a series on the continuing evolution of downtown San Diego and she joins us now on These Days. You’re welcome to join the conversation as well at 1-888-895-5727, 1-888-895-KPBS. All right, Katie, you are a native San Diegan, went to high school here, went away to college, came back, now you’re the metro reporter but what was it that made you focus on the history and evolution of downtown?

KATIE ORR (KPBS Metro Reporter): Well, I think you just summed it up in your intro. So much is happening down there right now. There are 30,000 people that live in downtown right now. By the year 2030, the population is expected to increase to 90,000 people, so a really significant population. And at the same time, there’s a lot of development projects that are going on. You know, a new city hall, a new library, expanding the convention center, possibly building a Chargers stadium downtown. All those projects cost a lot of money. So there’s just a lot going on. There’s, you know, a lot of interesting dynamics in how people are going to live their lives downtown and treat it like their neighborhood, how we’re going to deal with some of the social problems down there, and what the future of downtown is going to be.

RAY: Now, you go downtown and, indeed, as I said, it’s a destination but there are places where there are still a lot of homeless people and there – a lot of those homeless people have mental problems of one kind or another. They’re not socially adept, shall we say, in a lot of cases. That’s an issue for downtown. There’s an issue of, you know, public versus private financing when you get into things like the – a new Chargers stadium, for instance. Talk about how those issues are playing now.


ORR: Well, it’s interesting. One of the issues that the city has to deal with is building a permanent homeless shelter downtown. That’s always been something that they need to deal with. There are winter shelters but there’s not a permanent shelter for homeless people. And it’s becoming somewhat of an issue. People who move downtown oftentimes pay a lot of money to live down there. You know, people tell them to come down here, have this great urban lifestyle, you can, you know, walk to restaurants, walk to clubs, walk to a ballgame. It’s great. But then, you know, there’s a lot of things that people might not like to see on a daily basis, you know, or it’s just difficult to deal with. And so there is a conflict arising between people who live there and the homeless population down there and how is the city going to deal with that. You know, people who pay a lot of money for their condos might not want to live next door to a homeless shelter so where do you put it? That’s where most of the homeless population is, so that is something that they have to deal with. Also, like you mentioned, the public-private partnerships, CCDC, the Centre City Development Corporation, which finances a lot of the downtown development projects or they deal with downtown redevelopment, they are almost nearing their fiscal cap, meaning they’re not allowed to take in anymore money. Right now, they take in a lot of the taxes generated by downtown businesses in that area and put it back into redevelopment. They’re about to reach that cap and they’re – have begun the process of trying to raise that cap so that they can generate more money but does the city want them to do that? Or does the city think, okay, you’ve done enough, it’s time to focus on other areas. So there are a lot of issues in downtown right now.

RAY: We’ve got the possibility of a new city hall and we’ve probably got the possibility of a school-library. We’ve got the Chargers stadium. A lot of possible things going on down there. Do you have the sense right now, given the fiscal situation the city’s in that that money is there?

ORR: You know, everyone is being very careful about that. The mayor has said several times that the projects, the new city hall and the new library, if they hurt the general fund, if they are bad for the city, he’ll walk away from those. I think there’s a sense that the convention center would be paid for through like TOT taxes and the business that it generates. And as for a Chargers stadium, he addressed this in his State of the City address. He said that, you know, it’s going to be a good deal for the city. He’ll work – he’ll try and make sure it’s a good deal for the city but he seemed a little bit more willing to compromise on a Chargers stadium versus city hall and a new library. He was pretty firm that he would walk away if he didn’t think it was a good deal or would hurt the bottom line.

RAY: Talk a little bit, if you would, about how downtown has changed over the last 20 years or so.

ORR: Well, you sort of summed it up in your intro. Downtown wasn’t a place you wanted to go. It was seedy. There were a lot of adult businesses. From what I understand, there were a lot of lockers, it’s where a lot of sailors would come when they were on shore leave and, you know, sort of live it up until they had to go back to the ship. And it just wasn’t a destination. And then Horton Plaza was brought into the mix. Pete Wilson, you know, said, let’s – you have to build Horton Plaza here, and they did. And it sort of spurred the development of downtown and that got things going. And now, as we can see, it’s a place where, you know, it’s very upscale and people love going there. It’s a destination.


RAY: As we’ve said, we’d like it if you’d join the conversation. You can do that at 1-888-895-5727, 1-888-895-KPBS. Let’s check the phones. Alex in San Diego, you’re on These Days.

ALEX (Caller, San Diego): Good morning. My problem with this is that there are too much concentration of money that’s going to downtown. You have to take, for example, all the executive clubs or the nightlife where most of these people don’t go to the other parts of the town. They go to downtown. There’s, I mean, look at the Pacific Beach area, for example or even Carlsbad. A lot of these clubs are being closed down because there’s no foot traffic. Versus all, most people, traffic’s going downtown now. The same with the money being spent. Actually the money that the city doesn’t have being spent. If you’re borrowing money to do infrastructure to downtown area or to Gaslamp, in particular, yet we’re looking away from the other parts of town that actually are still paying taxes yet they’re not getting the service that they’re supposed to. So the money, I mean, in most economics, you know, they tell you, don’t put all your eggs in one basket yet that’s what we’re – exactly what we’re doing right now. We’re putting all this money in Gaslamp area hoping for the visitor or tourist coming downtown and enjoy it. Yet the city population itself is not gaining any major benefit out of it. So that’s my comment.

ORR: Well, that’s an interesting argument and it’s one that has – I’ve heard several people make. The people at CCDC will tell you, the money that they take in from these businesses is money that wouldn’t necessarily go to other parts of San Diego because if they weren’t there, the money would automatically go to Sacramento and then Sacramento would send it back to the city, you know, and then the city would divvy it up. They’re saying they take the money first and then they spend it on redevelopment projects downtown and San Diego still does get money from those areas. They’re saying they’re doing a service because they’re keeping it from going out, they’re keeping it local. But other people have said that, you know, are we neglecting other parts of the city. Steve Erie, a political science professor at University of California San Diego says cities like LA and San Francisco are now focusing redevelopment throughout their cities, not just downtown. He says San Diego is a little bit behind the mark on that, still focusing on the downtown area possibly to the detriment of other neighborhoods.

RAY: Well, how much of that, though, might be attributed to the fact that downtown is right there at the waterfront which is also a major tourist destination and in – a major arrival point for people coming in as tourists.

ORR: Well, I think you can’t underestimate that. Tourism is certainly one of San Diego’s largest industries and I think that is what people are thinking. People come here for conventions, they stay in hotels, they put a lot of money into the city. And they want people to, you know, be happy with that. They want to encourage them to do more, and I think that’s maybe the thought behind building up a vibrant downtown.

RAY: Again, we’d like it if you’d join the conversation, 1-888-895-5727, 1-888-895-KPBS. Now we’ve talked about the possibility of a new Chargers stadium downtown, give me, if you would, like in 30 seconds, a pro and con there.

ORR: Well, I think the pro is that they’re hoping it would do what Petco Park has done for the East Village, more development, more tax revenue, further improving the eastern edge of downtown. Other people say, listen, we are facing multi-million dollar budget deficits in the city of San Diego. Public funds would certainly be contributed to this project and people would argue that the city just does not have the money to contribute to a multi-million dollar stadium.

RAY: Okay, Katie, if you would, stay with us for a bit because we’re going to be joined on These Days, talking about the challenges of managing and competing priorities for downtown San Diego and other cities, being joined by Kevin Faulconer, San Diego City Councilman for the 2nd District, which includes downtown, and Vladimir Kogan, UCSD doctoral candidate in political science and Research Fellow at the Center for the American West, Stanford University. He’s co-author of the coming book “Paradise Blundered.” Welcome to you both, sirs.

VLADIMIR KOGAN (Author): Thanks for having us on.

KEVIN FAULCONER (San Diego City Council, 2nd District): Good morning, Alan.

RAY: Good morning. Councilman Faulconer, first of all, your view, please, of the role of downtown in a city, particularly in terms of what Katie was talking about and in terms of what Alex, our caller, said about money not – should not all be spent downtown.

FAULCONER: Well, I think there’s – without question, it’s very important to have a thriving downtown and downtown belongs to all San Diegans, you know, whether you live in other parts of the city, you come down and work downtown or you come down for entertainment options. It’s been very important to continue the revitalization that’s occurred. And I think one of the things that Katie just said on the air was important, that there’s 30,000 people that currently live in downtown and the community plan calls for 90,000 people. And my focus over the last couple of years has been ensuring that as that growth and development comes, as people move to downtown San Diego, as it becomes a neighborhood, that the public investment is there, the parks are there, the infrastructure, the streets and the sidewalks, and that’s very important to have that there so the tax increment money that’s generated from the redevelopment zone stays to pay for that, and the general fund doesn’t pay for that. And so I think that when you look at the success, Alan, of downtown San Diego, there’s been a lot of success but the focus – there’s still a lot to do as you look forward to more and more people coming to live and work in downtown San Diego.

RAY: Vladimir Kogan, your book “Paradise Blundered” makes me wonder if you might not think we missed a trick or two. What do you see as the role of a downtown?

KOGAN: Well, you know, I actually agree a lot with what the councilman said. And I think one of the concerns that I have is that we have spent – we’ve invested a lot of the tax increment financing downtown, we’ve invested a lot of money in the Petco Park and in surrounding development but the problem is we haven’t invested it in the things that the downtown community needs. So the parks that are in the community plan have not been built. The police stations and the fire stations have not been built. So it’s one thing to say that we’re investing a lot in downtown but it’s another thing to say that we’re investing it in the wrong things downtown, things that aren’t necessarily benefiting the community and the city. And I think that’s the bigger concern and that’s something that the city has not done a very good job at, you know, at monitoring and ensuring that the money is spent on things that San Diegans actually need and things that actually benefit the city.

RAY: You’re listening to These Days on KPBS. We’re joined today by San Diego City Councilman Kevin Faulconer, by UCSD doctoral graduate candidate in political science Vladimir Kogan, who’s written a book “Paradise Blundered,” and by KPBS metro reporter Katie Orr. Also joined by Mark in San Diego. Good morning, you’re on These Days.

MARK (Caller, San Diego): Good morning. How you doing?

RAY: Doing fine. How about yourself, sir?

MARK: Actually doing pretty good. I wanted to join the discussion this morning because I have some input I think you may not be getting from what I would call a down on the street kind of a person. I’m a firefighter for the city. I’ve been employed by the city for probably close to 14, 15 years. And in that time, the infrastructure for the fire service has not increased significantly at all, especially in the downtown area. The same five engine companies cover that area that have covered that area for probably the last 10 to 15 years and there has been no increase. So if you’re going to go from 30,000 to 60,000 population with no increase of infrastructure, it’s a recipe for disaster. Not to mention that right now they’re going to be browning out or what I should say, closing down fire stations because they just can’t afford the infrastructure. And I’d love to hear the councilman’s take on that.

RAY: Councilman Faulconer, please.

FAULCONER: You know, I’ll tell you what, I couldn’t agree more with Mark. And as – you hit the nail on the head. Particularly on the fire side, the infrastructure hasn’t kept up, which is one of the reasons that I pushed for the Bay Side Fire Station, which is to get a fire station on the other side of the railroad tracks on downtown to help with response times. And that’s been long planned and it’s taken too long to come through, but that is now finally in the design phase and there’s money established for that. And also the other focus that we need to have in terms of fire response protection is another fire station out in the East Village area, which is also on the planning books. That type of infrastructure is absolutely needed as downtown continues to grow and develop because if you want to increase people to come downtown, you want to make sure that it’s safe and you have the public infrastructure. And, you know, I’ll tell you what, something that Vladimir just said I agree with, in terms of moving quickly and more quickly on the parks. One of the big issues that’s going to be up actually at the Coastal Commission later next month in February is potentially moving forward with the North Embarcadero Visionary Plan, which is taking the streets and the sidewalks down at the foot of Broadway by the Star of India, removing all those parking lots, really turning that into a public promenade, public access. That project’s been on the books for over ten years and I’m strongly committed to getting that through because I think that from an open space, public access, public usability, that’s what the focus should be on on downtown.

RAY: Okay. But Councilman, the question has to be asked, given the deficit the city’s facing and we learned about another big hole in the budget, is there money to provide the kind of infrastructure if you’re going to triple the number of people who live downtown?

FAULCONER: Well, I’ll tell you, that’s where the whole issue of the tax increment comes in, Alan, where you’re not using general fund dollars because those general fund dollars are very scarce, and that’s the reason you have a redevelopment program is to keep that – those tax increment – that dollars that comes over the baseline of existing property taxes gets to stay in the downtown area so you can have the money to build these capital infrastructure projects that if you didn’t, they would come out of the city’s general fund. So if you look at the next several years in terms of downtown, what’s on the books and what’s on the drawing boards, and rightfully so, in my opinion, is a lot of work on parks, particularly not only the North Embarcadero but out in the East Village, the East Village Green, fire stations and some other infrastructure, money that’s generated from tax increment dollars that if it didn’t stay here in downtown San Diego would otherwise go to Sacramento.

RAY: Katie, you have a thought.

ORR: Well, I just wonder, Councilman, could you reassure people that if CCDC’s cap was raised and they were able to collect more TIF money that that money would, in fact, go toward things like parks and infrastructure and wouldn’t all go towards possibly building a new Chargers stadium downtown.

FAULCONER: I’ll tell you, Katie, and that’s a good point. I’m glad you raised that because my focus has been on the public infrastructure projects. And people talk about a Chargers stadium, that is so early in the – in even discussion phases there’s no proposal. What I’m interested in, and look at the money that’s available and the monies left, is you talked about the cap, is keeping that money here for the projects that are already on the books, which the Chargers stadium isn’t. And we have a lot of work to do in downtown San Diego because if we’re going to continue to encourage people to live downtown, to work downtown, the city has an obligation to provide for that and I can’t think of too many areas in the city of San Diego where a community is saying, hey, come live downtown, we want more development. That’s why it’s so important from (sic) the future of downtown that our focus has to remain on some of these public benefit and infrastructure projects and that’s where my focus has been.

RAY: Vladimir Kogan, you’ve done some research on cities in the American west. Is San Diego, as it is run right now, given the sustaining structural deficit problem we have, among other things, is this a longterm viable city?

KOGAN: Yeah, that’s a very big question, you know, and I think one way to answer it is to break it down into parts and to think about, you know, what – When we approve various projects, what are we giving up? What are the sacrifices that we’re making? And, you know, one important thing to consider is that the councilman said that keeping tax increment funds downtown does not affect the general fund. And I think the reality is a little bit more complicated, and the reality is that if we extend the life of the downtown redevelopment area, that’s going to take money that would otherwise go into the general fund and it would instead shift it to the redevelopment agency. So we’ll have a lot of money to build infrastructure, to build parks, to build fire stations, but we’ll also have less money to actually operate them, to pay the firemen to be in the fire stations, to pay the policemen to be in the police stations. And I think that’s a concern that we have now and if you look back over the past 20 years, I think part of the reason that San Diego is in trouble is because a lot of the projects that we’ve built downtown and elsewhere, we borrowed against future revenue. So when we built the last convention center expansion, we didn’t identify new revenue, we just borrowed against future revenue. And I think some of the things that are happening downtown are, you know, the same type of projects where we’re really taking money that would otherwise be used for other important uses and we’re really sort of setting it aside for more development. And I think that’s problematic and that certainly raises the question of sustainability in the future.

RAY: You’re listening to These Days on KPBS. We’re talking with Vladimir Kogan, a UCSD doctoral candidate in political science and Research Fellow at the Center for the American West at Stanford, with San Diego City Councilman Kevin Faulconer, and with KPBS metro reporter Katie Orr. Also on the phone from Hillcrest, Mel. Good morning, you’re on These Days.

MEL (Caller, Hillcrest): Hello. I think it’s a big mistake to triple the population for downtown. And Vladimir mentioned that I think, as I understand it, the tax increment, the property taxes from downtown, do not pay for the police, do not pay for fire department, they don’t pay for operating expenses, so guess who pays? The rest of the city. A million people are subsidizing downtown and Kevin Faulconer wants us to continue to do that and then when you triple the population, we can pay three times as much, three times as much subsidy to subsidize downtown. Do you notice that we’re cutting the general fund? Every year we cut, cut, cut. Did you ever see the redevelopment for downtown cut? It’s never been cut one cent. Why aren’t they part of the city?

RAY: Councilman Faulconer.

FAULCONER: Well, I think the caller raises a point about the positive aspects or negative aspects in terms of financing. And I know the caller’s been a frequent monitor of city hall and city government, Mel, and I’m glad you’re on the – I’m glad you’re doing what you’re doing. And I will tell you that when you look at downtown, you also have to look at all sides of the equation. And so if you look at, for example, when you have new hotel development, you have TOT taxes that go to the city’s general fund that can be used in other portions, in other areas of the city. I think that’s important. I think when people come to visit our city, visit our convention center, you know, spend money in our downtown area, sales tax and other things, that goes to the city’s general fund. That’s important. And that’s why you – I think you want to have a thriving downtown. And I don’t think anybody would advocate going back to the old days of what downtown used to be, what downtown used to look like. I think it’s quite the opposite. I think you have to look at where we are now, what should be the focus in the future in terms of where we’re attracting people to come work, where we want people to live, and providing that infrastructure. And it’s not easy because it does – you have to look at both sides of the equations, both a capital cost and also an operations and maintenance cost. But we know that there are more people going to live in San Diego. I think it’s important that they live closer to where they work. I think it’s important that they live on major transportation corridors so we don’t encourage sprawl and development in other areas of the city. And I think downtown’s the right place to make that happen and continue to make it happen. You’ve got to constantly keep your eye on the ball in how you finance that but I think as you look at, as Katie said at the beginning, what downtown used to be, it’s been a very successful transformation but it’s going to take all of us working together to make sure that in the next 15 and 20 years, we plan for that so it gets even better.

RAY: Okay, if I give you each 30 seconds, can you tell me how we measure the success of downtown? First of all, Vladimir Kogan.

KOGAN: You know, I think we have to measure the success by more than just looking at the amount of wealth that’s created, looking at more than just property values, and we have to look at economic development. We have to look at social service delivery. And I think on those two benchmarks, San Diego has definitely not done a very good job especially compared to other cities like Baltimore, Los Angeles, San Francisco. And I think that’s definitely cause for concern as we look ahead.

RAY: Councilman Faulconer.

FAULCONER: You know, I think one of the things, Alan, when you judge the success of downtown is talking to people, talking to neighbors that live here, families that are moving in downtown, people that are starting new businesses in East Village that are investing in San Diego. That’s what we want to see. I think it’s been very successful but I would just say in the 10 seconds I have left, you can’t take it for granted and the focus has to remain on good planning and good projects that benefit the public.

RAY: Councilman, you’re going to have a voice on this eventually so I’ll give you an extra five seconds. If the Chargers come to you with a plan for a stadium downtown, will you vote yes or no?

FAULCONER: Oh, well, it’s very clear that there’s so much work that needs to be done on that, Alan. There is no proposal so – and, you know, from my standpoint, the city’s in no position to spend any general fund dollars and I’ve made that very clear. And so there’s a lot of work that needs to be done but that’s a lot of work at this point. No, nothing that at this point I could say is a proposal to react to that would make sense or not make sense.

RAY: All right, Councilman, thank you very much.

FAULCONER: Thank you.

RAY: That’s San Diego City Councilman Kevin Faulconer. He represents the 2nd District, which includes downtown San Diego. We’ve also been joined on These Days by Vladimir Kogan, UCSD doctoral candidate in political science, a Research Fellow at the Center for the American West at Stanford, co-author of the upcoming book “Paradise Blundered.” Vladimir, thank you very much.

KOGAN: Thank you guys for having me.

RAY: And we were joined this morning in her graciousness by KPBS metro reporter Katie Orr. Katie, thank you very much.

ORR: Thank you, Alan.

RAY: You’re listening to These Days on KPBS.