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San Diego Could Lose $41 Million Next Year Through Redevelopment, Pension Costs

San Diego's Gloomy Budget Outlook
San Diego Could Lose $41 Million Next Year Through Redevelopment, Pension Costs
GuestsJay Goldstone: San Diego Chief Operating Officer Jeff Graham: President Civic San Diego

The state will not allow San Diego to spend $4 million in redevelopment money on a permanent homeless shelter. It also nixed a $20 million affordable housing development and nearly $5 billion in additional projects, including cleaning up a downtown site for a potential Chargers stadium.

Redevelopment Letter
Letter on redevelopment projects.
To view PDF files, download Acrobat Reader.

Last year the state legislature eliminated redevelopment agencies, but said the agencies could continue funding projects that were already underway if the state approved them. City officials say they will either have to accept this latest blow or file a lawsuit against the state.

But not everything got the budget ax. The state approved spending about $21 million on the North Embarcadero Visionary Plan, which aims to beautify the area around the Broadway Pier on Harbor Drive.


The state's elimination of property-tax funded redevelopment agencies will cost the city's general fund about $11 million a year in debt service for Petco Park and about $3 million annually in bond repayments for a previous expansion of the San Diego Convention Center.

San Diego Mayor Bob Filner said he would try to get Department of Finance officials to change their mind regarding some of the projects.

"The position I'm going to take with regards to everything, but especially the budget, as mayor, is not to be Pollyanna. We're not going to say the roof is falling or we're not going to cry wolf, but we are going to try to be honest about the budget,'' Filner said at a news conference.

The city of San Diego's budget could also take a hit next year because of a decision made by the board that oversees the city of San Diego's employee retirement system, Filner and Chief Operating Officer Jay Goldstone said today. Combined with the state's redevelopment decision, the city could lose a total of $41 million next year.

The San Diego City Employees Retirement System directors decided to budget about $27 million in upfront costs for Proposition B for the coming fiscal year, which starts July 1. City officials had hoped to defer increased annual contributions to the pension system for another year.


Two-thirds of voters approved Proposition B in June in anticipation of the city saving hundreds of millions of dollars through 2040. But pension system changes will cost the city more than it will save for the first four years or so, according to Goldstone.

Filner said San Diegans should temper their expectations about things such as expanded library hours or quicker repair of potholes.

The city recently was awarded $27 million in a settlement with San Diego Gas & Electric over the 2007 wildfires, and nearly $7 million in lawsuit over miscalculated fees for the administration of property taxes.

Filner said he wants to use that money to pay for public safety projects, such as replacing the police department's communications system.

City officials previously projected a surplus of about $4.9 million for fiscal 2013-14, and growing surpluses in the future, but they failed to account for pension and redevelopment issues, because those decisions had not been made yet.

At worst, according to Filner, the budget deficit for FY 2013-14 would be about $37 million. The city may have to make a one-time payment up to $10 million to the pension fund, which has been performing below expectations.

Also, the city could lose some state funding for municipal construction projects because voters passed Proposition A, which bans the city from requiring Project Labor Agreements.