Will City's $4 Billion Redevelopment Plan Evade Proposed Cuts?

Governor Jerry Brown says redevelopment projects "already underway" probably won't be touched if his plans to eliminate redevelopment agencies goes through. In that spirit, billions in proposed redevelopment projects were approved by the San Diego City Council this week. But whether the rush to get the projects under the wire will qualify if push comes to shove over new redevelopment money is not quite clear.

Guest

KPBS Metro Reporter Katie Orr

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CAVANAUGH: I'm Maureen Cavanaugh and you're listening to These Days on KPBS. Governor Jerry Brown says redevelopment projects already under way probably won't be touched if his plans to eliminate redevelopment agencies goes through. In that spirit, billions in proposed redevelopment projects were approved by the San Diego City Council this week. But whether the rush to get the projects in inter~ the wire will qualify is not quite clear. Joining us to explain the redevelopment rush at city hall is my guest, KPBS metro reporter, Katie Orr. Good morning, Katie.

ORR: Good morning, Maureen.

CAVANAUGH: San Diego City Council approved $4 billion, a virtual wish list of redevelopment projects on Monday. So does that mean that those projects will be built?

ORR: No. San Diego like many other cities in the state approved -- rushed through these projects. San Diego was by far the largest list in the state, $4 billion. Compare that to LA which has the largest redevelopment agency in the state. That redevelopment agency only had a $1 billion list. So San Diego's list is fairly large. And it includes everything from infrastructure to parks to a downtown dog park that's gotten some attention. And just because it's on this list does not mean that these projects will go forward. Some of these projects aren't scheduled to start for decades. The last project wouldn't be complete, if everything went according to schedule, till 2050. So these are projects decades in the future, and if the governor's proposal goes through, it's not clear that all of these projects would pass muster and would be allowed to continue.

CAVANAUGH: Give us a little background on the governor's plan to eliminate redevelopment agencies and where this push to get these things approved this week, where does that all fit in?

ORR: California is facing a $26 billion deficit. That's roughly the number. And the governor says this is not the time to put money towards redevelopment projects. We have -- schools need money, state programs need money, health programs, there are massive pension debts at the state. So he wants to eliminate these redevelopment agencies which he says would give the state about $1.7 billion of the first year, it would go toward state programs, not really schools but funding for state healthcare am programs, things along those lines, the second year, the money that would go to redevelopment would be split up locally among organizations, schools, and other local service, and he says it would go to pay for fire and police services, things along that nature. At a recent meeting where they were considering this, assembly member Lori Saldaña stepped up. And he said she believes that a lot of the attention was focused on redevelopment back last fall when assemblyman Nathan Fletcher and some of the mayor's staff got together and lifted the cap on CCDC, the downtown redevelopment organization. It was going through a process to try and lift the money cap on it, and there was a whole process in place. And Nathan Fletcher sort of side stepped that and passed a bill at the state assembly, and people called it the midnight deal, it gave them the potential to make an unlimited amount of money. And she says that really focused attention negatively on redevelopment and had implications for agencies up and down the state and leading us to where we are now.

CAVANAUGH: That's very interesting. And of course there was much speculation that the reason that that cap was lifted and we got more money for CCDC was that in preparation for the construction of a stadium.

ORR: Right.

CAVANAUGH: A football stadium in downtown San Diego.

ORR: Yes, and that is -- the stadium is not on the list because that would include voting, if there were tax dollars associated with it. But money to clean up the site where the stadium would be downtown is on the list. And that is something council member David Alvarez actually called out at the meeting for this wish list. Of he said, you know, this is for a stadium, folks, it may not say it, but in his opinion, and I'm sure a lot of other people's, it's in preparation for a stadium.

CAVANAUGH: Well, you make a very good point here, because in pointing out that most of this money is intended for projects in downtown San Diego; is that right?

ORR: Over half of it is intended for projects in downtown. About more than $2 billion. We should point out that about a billion of that is for affordable housing. But this has been a point of contention with some people. David Alvarez really stood up for the first time at this meeting. He's newly elected, and this to me was really one of the times when he took a firm stand on something, one of the first times. He voted no against the downtown dog park, against the downtown fire station, against moving forward with the North Embarcadero plan, and his point was he represents District 8, which is a lot of southern, poorer communities, San Ysidro, Barrio Logan, he said, listen, I'm tired of these things going to downtown. I don't think it's fair. And he doesn't think redevelopment is going in the right way.

NEW SPEAKER: It's crystal clear that the vast majority of the redevelopment's resources have been targeted towards communities that are no longer genuinely blighted, mainly in downtown. While poorer communities receive little.

ORR: And that is one of his main arguments, that downtown is not blighted. You know, downtown organizers will say in the next few years, thousands of people are projected to move downtown, so they have to get the infrastructure in place. And council president, Tony Young, who also represents poorer communities in downtown San Diego, disagreed with David Alvarez. He thinks everyone's benefited.

NEW SPEAKER: Redevelopment has proved to be a powerful economic engineer for San Diego. One that has made our city a national model. Every neighborhood from Webster to Barrio Logan to downtown east village would feel the impact from loss of redevelopment.

CAVANAUGH: And that's city council member, Tony Young. So you sort of had the for and against there, as this wish list passed the redevelopment projects earlier this week. I'm speaking with KPBS metro reporter, Katie Orr. Let's just go back, and I wonder, I was almost hesitating to ask you, 'cause I wonder if there's any sort of comprehensible, simplified way of telling us how do the redevelopment agencies get this $4 billion? I mean, what are we talking about when we're talking about $4 billion in redevelopment projects? Where does that money come from?

ORR: Well, it's not like the city just has $4 billion that it plunks down. Redevelopment agencies work by collecting what's called tax increment financing. When you have a redevelopment area -- and one of the qualifications for creating redevelopment, not the only qualification, but one of them is that the area is considered blighted, run down, shabby. And so they create this area with the idea that this -- it will improve the area. So what happens is, the organization running the redevelopment area, in this case the San Diego's redevelopment agency, gets to keep some of the property taxes that are generated within the area, taxes that would normally go up to the state and be distributed. They get to keep more of those. Of and they do have tax sharing agreements in mace with the county, with the schools, organization that would otherwise receive more of the property tax money if redevelopment was no there, and they get this and they can put that property tax money back into the area. And then, of course, if they of the to build a project, they need money up front because that comes in incrementally. They would get out bonds and they would build what they need to, and then they would pay off the bonds with the tax increment financing. And that is one of the arguments for putting a lot of stuff downtown, because the zoning is different, you're allowed to build sky scrapers, and bigger projects downtown that generate more property tax revenue than you could in Barrio Logan or negotiate park, or, you know, City Heights. So they can generate more property tax revenue there. And then a share of that tax goes to the general fund. So that's the argument that redevelopment helps everyone. More property tax there, more revenue to the general fund, we can fix the pot hole in the street in Clairemont. That's the downtown redevelopment argument.

CAVANAUGH: And supporters of the agencies point to a lot of things that have gone on in San Diego, downtown San Diego and elsewhere, that are the direct result of redevelopment projects. Tell us a little bit about that.

ORR: Well, I think, you know, anyone who grew up in San Diego, I grew up in San Diego, not that I was running around downtown when I was ten years old, but it wasn't -- it wasn't an area that people went a lot. Certainly in the '70s and '80s, it wasn't the nicest place. So they argue, look at what redevelopment has done there. CCDC is the center city development corporation manages redevelopment downtown. They've got several project areas down there. And they can say the proof is in pudding. Hook at this. Hook at the gas lamp on a Friday night. It's bustling. Look at the east village ever since Petco Park was developed. People live there, people are moving there. So they say that it is an example of redevelopment working in San Diego. And if does seem that that is a case where redevelopment -- it is a model. It's something that other people want to emulate. But then you have places like Barrio Logan which has been trying for 20 years to get the Mercado project up and running. And that is finally -- they've broken ground, and they're working on it, but it took them years to do that. So there's that issue of inequity again. We put all this time and money and attention on downtown, and maybe the results are great, but is that coming at a detriment to other places? You have NTC, that was a redevelopment zone. It is a thriving place now. But I believe the voice of San Diego, Scott Lewis, wrote a column saying is this really blighted? I mean look at this place of it's bustling. It's the middle of Point Loma. Do we need more money for this area? So it is a question of the haves and have notes, I suppose, and is redevelopment truly equitable in it? I should say too, affordable housing advocates get most of their money through redevelopment. So they do not want to see it go away. But they do say places like southeast San Diego are not seeing the same benefits, even if they are in a project area. And they feel like it's gotten a little bit out of whack as well. So they're all about reforming redevelopment. That's what they're hoping for.

CAVANAUGH: And as I understand it, governor Jerry Brown is saying at this point in the state's history with the deficit that we're facing, we can no longer divert property taxes in counties to basically subsidize business interests and construction at the detriment of education, public safety, all of that. Of that's his arm, right?

ORR: Yeah. That is his argument, and I've talked to a couple people who've said this is a pretty radical idea for a governor. And you know, people are always talking about big ideas and doing something totally out of the box, and it seems like this would really be one of those out of the box ideas, but it would have an North County Times impact, which is why we're seeing such push back from the cities.

CAVANAUGH: In fact, ten cities, including San Diego are trying to reach kind of a compromise with governor Jerry Brown. What are they suggesting.

ORR: They want the state to take out a $1.7 billion bond to make up for the money that it would otherwise get from eliminating redevelopment. And they say that the redevelopment agencies then would pay off that bond, $200 million at a time. That way the state gets its money and redevelopment can keep going. Because the cities say this might give the state a shot in the arm in the short run, but in the long run, they say it would be disastrous for cities and for economic development. So far I spoke with the governor's spokes person, and he says that's not likely to fly. He characterized it as a gimmick, a one time fix, he doesn't want to borrow anymore money to try and fix something. They seem -- he says he's still willing to talk to people, but they seem pretty set that redevelopment agencies have to go.

CAVANAUGH: We started this conversation talking with this $4 billion wish list of redevelopment projects that the San Diego City Council approved earlier this week. Is there any reason to believe that these are going to qualify as projects already under way and won't be touched by the governor if indeed he does eliminate the redevelopment agencies?

ORR: I think it depends on the project. You can't guarantee anything. The mayor -- or excuse me, the governor did put out his proposal. It said projects started before the first of this year should probably be okay. Anything started after the first of this year will receive intense scrutiny and can be reviewed and even canceled for up to three years after its approval. Normally, in the past, that time period was 90 days. But it's still -- there still seems to be some confusion about what under way means of and that's what the City Council was trying to do when it passed this wish list. Get these projects under an initial contract, even if it's just in the very -- just beginning stages. [CHECK AUDIO] that probably won't fly unless there is money associated with the project, it's likely that because if redevelopment isn't eliminated, a successor agency will be created through the state to sort of manage all the ongoing projects, and if there's no money associated, that successor agency might say sorry. But the City Council did consider several projects separately because they're further look in the process. The money for the North Embarcadero visionary plan, the park along the water way there, the homeless shelter, they approved the financing yesterday, the bay side fire station downtown, the dog park. These are all projects that were further along, and they were part of the wish list, but they were considered separately because they are just at air different phase in the process.

CAVANAUGH: I understand. And as this redevelopment money band wagon passed by at City Council earlier this week, lots of people made a grab at it, including the San Diego unified school district. They said they wanted part of that money, really far in the future, they wanted it now because they faced the prospect of this incredible deficit and laying off teachers.

ORR: Right, the San Diego unified school district has a budget deficit about of about $120 million. It's scheduled -- as I said, it has a tax sharing agreement with the Center City Development Corporation; it receives a portion of the property taxes. It is supposed to get about $64 million incrementally over the years, and it came -- it came to the council on Monday and said, we want that money now. They feel like the governor has largely framed this as an issue of development versus schools. And this is sort of the first time the schools have kind of stepped up and tried to push that their own way. Saying -- look at the situation we're facing. Please give us this money of they didn't get a very warm representation at city hall. First of all, the city attorney said they couldn't act on that, because it wasn't contained in the wish list. And other council members -- Tony Young said that the city has done all it can to reform and sort of get its ship in order, and he was questioning whether the School Board has done that. And it does not seem likely that the School Board is going to get any up front money from CCDC.

CAVANAUGH: My final question to you, Katie, we've been talking about if governor brown can get this approved, if the redevelopment agencies goes away, when will we know about that? What does the governor have to do to get this plan approved and have -- and put a sunset to redevelopment projects and agencies?

ORR: Well, it has to be approved by the state legislature. I had been hearing that they would know by March 1st. Well, obviously that's come and gone. So it's still up in the air. But it's when he's still trying to get consensus on his budget up in Sacramento, and whenever that projects gets off the ground, that's when we'll know. When the state legislature votes on it. And I've seen surveys of local state legislators. They seem to be on board with it. They seem to be anti-redevelopment. However, they're dealing with state issues, and they're trying to close their budget gap. So maybe they're not thinking about the local economic situation here. But we have to see some sort of resolution in the next few months as this budget gets proposed and ultimately passed.

CAVANAUGH: Thank you so much, Katie Orr.

ORR: Thank you.

CAVANAUGH: I've been speaking with KPBS metro reporter, Casey ore, if you would like to comment, please go on-line, KPBS.org/These Days. Coming up, a absolute to women's history in San Diego. The legacy of Ellen Browning Scripps. That's as These Days continues here on KPBS.