Roundtable: Redevelopment Projects In Jeopardy

The State of California this year told cities if they wanted to keep creating redevelopment districts, they had to pay up. The tax-increment financing cities were capturing was taking money that would otherwise go to the state. Jerry Brown didn't like it. The legislature didn't like it. So now they're telling San Diego it has to give up $70 million dollars in redevelopment funds this year, and 16 million in subsequent years. Cities have filed suit, calling the move unconstitutional. We'll see what happens with that. In the meantime, a lot of redevelopment projects, from fixing roads to funding economic development projects, to paying for sports stadiums, are in jeopardy.

Guests: Michael Smolens, government and Politics editor, San Diego Union Tribune

Katie Orr, metro reporter, KPBS News

Matthew Hall, correspondent, San Diego Union Tribune

Read Transcript

FUDGE: You're listening to the Roundtable on Midday Edition. Michael Smollens is the government and politics editor for the Union Tribune. Katie Orr is metro reporter for KPBS news, and Matt hall is a reporter for the San Diego Union Tribune. If the city wanted to keep creating redevelopment districts, they had to pay up. Jerry Brown didn't like that, the legislature didn't like that, so now they're telling San Diego in one case, it has to give up $70†million in redevelopment funds this year, and 16 million in subsequent years to keep the program going. Cities have filed suit calling this move by the state unconstitutional, not to mention larcenous. We'll see what happens with that. In the meantime, a lot of redevelopment project accident from fixing roads to paying for sports stadiums are in jeopardy. And Matt, what are we looking at? Give us a few examples of what kinds of redevelopment projects are in danger.

HALL: It runs the gamut as you suggested from street lights and curb cuts to massive football stadium in San Diego. And the minor league ball park, the Padres were hoping to put their triple A team in Escondido. So cities since 1965 when redevelopment began as a concept have been using this money to eliminate blight in run down parts of town, and in some cases to create success. All you have to do is look at Horton Plaza --

FUDGE: Downtown San Diego has been a huge success.

HALL: Turned it around. And there are cases where redevelopment officials have gotten in trouble for misspending funds. And here locally, Coronado is a good test. The whole city is in a redevelopment zone, meaning technically it's blighted.

FUDGE: Coronado is blighted.

HALL: Bring your microscope to Coronado, and maybe you can find some blight there, is the joke. There are real projects that were planned and on the booked for a long time that are in jeopardy. A good example of that, one more point, is in Chula Vista. They have been talking about redevelopment of their bayfront for a long, long time. Projects have come and gone. They need to build a $10†million fire station. And that project is in danger now.

FUDGE: Matt, when the governor signed the bill about redevelopment, he gave cities a choice. You can either pay up and send a bunch of this redevelopment money you raise to the state or quit doing it all together. There are any cities you know television in San Diego County that have decided to pack it in?

HALL: I think that that -- none have yet. There's 16 cities in the county that use redevelopment, all about Del Mar and Encinitas do. I think 6 or 7 sever. The biggest of which you mention, San Diego, has agreed to pay additional money to the state to keep their redevelopment activity going on. Others have scheduled votes. I think the deadline is August†1st they need to act by. I'd be surprise first degree any choose not to continue it. Maybe a few up and down the whole state. But it's going to be a small number if there are any.

FUDGE: Certainly one thing that cities are putting their hopes in is this lawsuit that is being brought by the California league of cities. How are they arguing that this move by the state to essentially tax these redevelopment districts is unconstitutional?

HALL: They're pinning their hopes on proposition 22 which recently passed to prevent the state from taking money from redevelopment agencies, essentially. It's more complicated than that. But the state has argued that by shutting down redevelopment agencies, we're not taking money from them, we're just doing what we can by statute. We created entities by statue, we can eliminate them. City it is up and down the state, disagree, they have filed a suit, and they asked the state Supreme Court by August†15th to overturn what the state's bottom has done and allow them to continue with their redevelopment. It could get complicated. But the state is saying we are on solid ground. Attorney general kamala Harris just two days ago filed a brief in the case that said that the city's case is meritless. And overturning it would wreak havoc on the budget.

FUDGE: 1-888-895-5727 if you want to talk about changes in redevelopment law. We've heard a lot Matthew from local city officials who have called this highway robbery, unconstitutional. What's the other side of the argument? What are we hearing from the state?

HALL: The state is saying that in tough budget time, you got to make tough decisions. And schools are more important than subsidies for developments in cities up and down California.

FUDGE: Let's hear from the other reporters. Katie, I know this is a subject you've reported on. What would you like to say about the redevelopment tussle?

ORR: I think it's interesting to the point that Matt just made about the state. And what are our priorities right now? We're facing I billion dollar deficit, is this something we really need to be spending our money on? I it think the question of downtown has certainly had to deal with the question of whether it's even still blighted. Redevelopment there has been so successful that can we even call downtown blighted anymore? Certainly people at CCDC, the downtown redevelopment arm would say yes, of course there's places we need to go. But I feel leak a lot of people within the City of San Diego and other neighborhoods have said, listen, you spent so much time and money downtown, what about city lights? What about Barrio Logan? It took 20†years for the Mercado project to happen. Maybe there is something we need to change about the way redevelopment is run. If the areas that truly need it aren't getting the attention that they may be feel they should. And of course it all comes down to tax dollars. CCDC is able to keep doing projects because it has the tax revenue to do those projects. That's where you get the argument that maybe we need to look at redevelopment and rejigger how it works.

FUDGE: I think that redevelopment is controversial in more than one way. We had the U.S. Supreme Court case that raised the issue of whether the city should have the power to go in and condemn somebody's land in order to create some kind of economic development project that'll put money in the possibilities of large corporations in some situations. So this is controversial.

ORR: Right. And you can't -- obviously redevelopment plays a role in affordable housing too. That's a whole noter kink in the system. Although to buy into the $70†million, San Diego took ten million out of the fund for affordable housing, so they were hurt that way too.

HALL: I think a lot of cities are doing there.

FUDGE: Doing what?

HALL: Taking money from their affordable housing pots to pay the state. That's where they have some money sitting around that they can send to the state for in additional obligation of theirs, and it's a good point.

FUDGE: What about you, Michael?

SMOLLENS: What Matt said, and Katie, is sort of ironic that the other need, wee talking about schools and priorities, affordable housing and, and that's where they take the money from. I thought that Jerry Brown kind of -- he ultimately you know with. He signed the bill. But he kind of lost the argument. Early on, he was talking about schools versus these big mausoleums they build in downtown, I'll take that argument any time and win. But it seemed to me he lost it because it was the state stealing our money as opposed to the state stealing our money. And he was not able to get that argument back. The redevelopment thing was touch and go because they largely had the majority vote pushed through on the budget. But also redevelopment, it harkens back to the urban renewal days. I think these were supposed to be things that had a life that would end at some time. But like so many government programs, each ones that seemed to be more capitalist oriented like redevelopment, they tend to go on and on and on. And we have perhaps the classic case of a downtown that's really nice now, and I guess the argument can come up should that still be a redevelopment area or at least to the extent it has been?

FUDGE: You were saying that you thought that Governor Brown lost this argument. But does he have a point? Are redevelopment districts somehow stealing money from school, school kids?

SMOLLENS: I don't know. Mostly the argument was the other way around, the state's stealing our redevelopment money. But the state has to back fill that tax money that would have otherwise gone to schools with general fund money. It's certainly a legitimate argument. It was kind of interesting that throughout this, the school community, the education community was not -- it wasn't like the redevelopment versus the school people. They were on the side lines because in some cases they benefit from certain redevelopment thing. I think they didn't want to have that fight be on their plate so much and let the governor carry the ball.

FUDGE: Katie?

ORR: I think it's interesting in terms of the public and their views on redevelopment. When Nathan Fletcher, last fall I believe, when CCDC was looking at raising its cap circumstance the amount of money before it can collect before it has to sunset, that was a controversial thing that the city was studying. And put mayor and Nathan Fletcher got together to push this thing through AT&T state level giving CCDC an unlimited cap, and I think they were expecting a warmer representation, like we saved CCDC. And it didn't turn out that way. They had to come out and apologize for the way they did it, not that they did it. But how it went with. And I wonder how that will play into the mayor's race. Will people remember that?

HALL: Redevelopment is going to be a part of the mayor's race because of what we talked about on the outset of this, because there has been a plan to get a Chargers stadium, and the hope on the team that they could use redevelopment dollars as a chunk to move that project forward. Without that money, every person who runs for mayor is going to have to say where they stand with the Chargers, redevelopment. Certainly the Chargers becomes a big question.

FUDGE: And Matthew, I know you had a conversation with Mark Fabiani who represent the Chargers and you asked him about this. It's difficult to nail him down and get him to say controversial things, but what are the Chargers saying about this? Are they saying that this is it another nail in the coffin of trying to reach some kind of a deal on the football stadium?

HALL: I don't think the Chargers will say it's another nail in the coffin until the coffin has been moved to another city, possibly leads. But right now, what they're saying is that there's still hope, which is interesting because -- if you rewind six months or so, when the talk of redevelopment being eliminated first started to come around and there was all this uproar about the NFL's laborer deal, Fabiani said we need to resolve two things. We need to get the laborer deal behind us, and figure out what's going to happen with redevelopment. Those decisions have now been made. So you would expect maybe he would be more pessimistic. But he's saying there's still opportunity out there. We're meeting with the mayor's office. We want to tie some stadium project in with the Convention Center downtown. That's a whole other hour long show. He's keeping the door open essentially.

FUDGE: He's suggesting it may still be possible to do a stadium deal even if the Courts don't strike down this change in redevelopment law.

HALL: Correct. He's saying it hurts, clearly. But you have to find other ways to finance it. If there's a will, there's a way. And that's what he's saying.

FUDGE: Let me thank my guests who joined me on the Midday Edition Roundtable. Michael Smollens is government and politics editor of the San Diego Union Tribune. Thanks for coming in.

SMOLLENS: Thanks for having me, Tom.

FUDGE: Katie Orr is metro reporter for KPBS news. Thank you.

ORR: Thank you.

FUDGE: Matthew Hall is correspondent for the San Diego Union Tribune. And thank you very much.

HALL: My pleasure.

FUDGE: Thanks very much to our listeners.