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‘If you build it, they will come.” It works in fantasy movies (Field of Dreams, 1989). But it hasn’t worked in San Diego’s East Village. As part of the $301 million ballpark subsidy, developers created a slew of condo and hotel units. But few folks are in them. The whole project is a drain on an insolvent city’s general fund.

Because the truth hurts, the San Diego Regional Economic Development Corporation paid for a study to attempt to show the opposite. The purported study, by consultants Conventions, Sports and Leisure International, estimates that tax receipts from the development of Petco Park and nearby areas have come to a net $107 million. Every $1 invested by the public sector has resulted in $5.25 in private investment, claims the study.

The story about the so-called study was planted in the Union-Tribune, which played it on page one July 14 with a banner headline, then followed up with a jubilant editorial the next day. But wait a second. The same day as the front-page rave review, the U-T’s online edition noted that the posh and deeply depressed W Hotel in San Diego has been foreclosed upon. The next day the Daily Transcript revealed that 40 San Diego hotels are in default, and according to Atlas Hospitality Group, the situation is likely to get worse. (Any local hotel built or refinanced in the last five years is underwater, says hotel guru Jerry Morrison.)

The same week, the Voice of San Diego reported that there are more than 1000 condos for sale downtown. A month earlier, the U-T had said there are 1400 condos for sale downtown, a “three-year glut.”

So there might have been a lot of private investment generated by the government subsidies, but was it efficacious spending? Of course not. The conclusion is inescapable: all the subsidized construction accomplished was to exacerbate a big, bulging glut.

Indeed, the study confesses on page 61, “Would redevelopment have happened anyway? Likely, but not to this extent, and not at this rapid pace.” The ballpark project just hastened and exacerbated the harmful overbuilding, which won’t be worked off for some time, particularly as the economy sags anew.

Back in 1998, when voters approved the project, civic leaders and planners were sure that tourism would soar and there would be a need for more hotels. One reason would be the new ballpark. However, there isn’t a respectable economist believing that a sports facility stimulates tourism to any extent. Another reason for the expected boom was convention business. But convention centers are vastly overbuilt around the country, as Heywood Sanders, the nation’s ranking expert on the topic, has shown conclusively.

Sanders, a university professor, won’t say anything specifically about Conventions, Sports and Leisure International, which has been hired in San Diego by both the Economic Development Corporation and convention center, but he will speak of the so-called sports/convention center consulting firms that twist statistics to provide a conclusion desired by those paying the bills. “They often use gross figures, rather than net figures; often don’t necessarily account for the full cost of a subsidy; and don’t account for ongoing market dynamics,” says Sanders.

The purported study clashes with one published earlier this year by political scientists Steve Erie and Vlad Kogan of the University of California San Diego and Scott MacKenzie of the University of California Davis. “There is strong evidence that the bulk of the benefits from East Village revitalization have been captured by private developers, while many of the costs have been borne by San Diego residents,” says the study.

Kogan doesn’t doubt that the project generated wealth for developers. But property tax increment from a redevelopment project does not go to the general fund. Most goes back into development — or into the pockets of “the wealthy who are already wealthy,” says Kogan. (Former Padres majority owner John Moores is said to have reaped $700 million to $1 billion from the deal.) A redevelopment project is supposed to achieve three things: affordable housing, good jobs, and elimination of blight. The ballpark project did eliminate blight but was “a colossal failure” in providing affordable housing “and basically created low-wage tourism jobs,” says Kogan.

What really rankles him, and others, is that the all-too-willing propagandist Union-Tribune declared in an editorial, “The Petco study provides clear reason to think a Chargers stadium could be a major long-term positive for the city and its economy.”

What a non sequitur! Even the Chargers concede that related development is not in the cards. “It’s apples and oranges,” says Kogan. “No one is talking about pairing a Chargers stadium with ancillary development. The economic impact of stand-alone stadiums is nonexistent.”

In 1998, San Diego was giddy. The Padres went to the World Series. The Dow Jones Industrial Average was nearing 10,000. (It’s still around that level.) People would not learn until several years later of the phony accounting and financial mismanagement that dated back to 1996 and earlier. At the time of the vote, a grand jury report warned that there could be a recession and the assumption that hotel taxes would cover ballpark bond debt service could be erroneous. That was prescience personified. We went through two recessions, including the worst since the 1930s, and two horrendous bear markets. Worse, city bureaucrats admitted they were pressured to juggle the hotel-tax projections.

San Diegans learned the extent of the City’s corruption. Moores showered expensive gifts on a councilwoman who got a wrist slap while Moores didn’t even get that. Officials misled bond investors about the City’s dire financial straits. One reason the bad news was hidden was to get the ballpark built.

“Very few of the condos were built because of the ballpark,” notes Mike Aguirre, former city attorney. Kogan and Richard Rider of San Diego Tax Fighters agree. The subsidies, not the ballpark, seduced builders to erect those condo towers. If there had been a market for them, they would have been built without a ballpark. After all, there was a downtown condo boom throughout the United States, almost all in cities not having ballpark projects, says former councilmember Bruce Henderson.

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Comments

a2zresource July 28, 2010 @ 3:33 p.m.

This article seems to go hand in hand with the proposal to raise the Tax Increment cap from around $3 billion to $9 billion in and around Petco Park, keeping that $9 billion in the hands of the developers who control CCDC or at least lead CCDC about by the nose.

Maybe the Tax Increment cap raise will come about as another unannounced "change" to the City Charter.

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Don Bauder July 28, 2010 @ 4:35 p.m.

Response to post #1: Absolutely. One purpose of the spurious study was to hype the raising of the CCDC cap so that more and more taxpayer money will go to subsidize establishment developers. More money goes downtown while the rest of the city rots. The reason for the attempt to boost the cap is to raise money for the Chargers subsidy -- a $600 million to $900 million subsidy by an insolvent city. Best, Don Bauder

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Founder July 29, 2010 @ 11:53 a.m.

-- Call Foul --

"Build and they will come" quotes, all our Big Biz, and they will keep coming, our bills that is...

making BIG profit at the expense of our Great City, forgetting about the Public's Good, that's a real pity.

If all the voters really did care, Developers would just move else where!

and while those Developers made giant bucks, The voters got stuck with huge bills, and that sucks!

It's all those Big Business deals, "What do you really expect", how about a bigger cut for the City, what the heck?

Doing the old, "Switch-A-Rou", ripping US all, me and you!

When they decide to do it again, it will be just another Win - Win,

but not for the City budget for that, it will be a fudge-it!

BTW: For too many years, the City Council has helped themselves, (sitting as The Redevelopment Agency), by taking all the City's Public Works money (and much more) out of the City''s own budget and then given it as The Redevelopment Agency to the same Developers that have supported our Elected Officials in a big way!

Same Officials + same supporters + two separate budgets equals one HUGE amount of San Diego debt!

A Win - Win, but only for all of them!

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Don Bauder July 29, 2010 @ 1:14 p.m.

Response to post #3: I understand there is a very good op-ed in today's (July 29) U-T. An expert in downtown real estate says that estimates of what it will cost the city government to rent office space in the next couple of years are grossly inflated. Space is going cheap. There is no need to build a new city hall complex. The Sanders administration says the grandiose project will pay for itself because without a new building, so much space will have to be rented at high rates. That is a bald-faced lie. The lease rates are low now and will remain so for awhile. Best, Don Bauder

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HonestGovernment July 29, 2010 @ 7:44 p.m.

Guess Jerry is reading the Reader...it isn't going to be left to the rabble to vote on a new "money-saving" expenditure...Gerding-E, though, has been paid? Seems SD is about jobs mainly for consultants and tourists.

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Visduh July 29, 2010 @ 8:58 p.m.

During the economic downturn of the early 90's, and when it often looked as if half the office space in downtown San Diego was vacant, the county broke ground on the Hall of Justice. Why? Well the construction industry and the construction unions wanted a big project, little else was happening, and they got what they wanted. Oh, the building is a fine structure, and being purpose built as a court facility, works well. The only problem is that it cost far more than it would have cost the county to buy or lease (long term) some existing structure in the same area. And yes, there were many within a couple blocks of that location.

So, in a repeat performance of that fiasco, the city is now going to insist that it needs a new city hall, even when vacant office space in downtown is again ready to be snapped up at bargain rates. This would be a wonderful opportunity for the city to lock up prime office space in the area for fifty years or more, and pay rents that have not been seen in more than twenty years. So is KFC really serious about reducing the cost of city government? Only if it means saving it where his supporters have no interests. Such as with the landfill and street lights. When it comes to construction, he's Mayor Bulldozer.

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Brian_T_Peterson_DVM July 30, 2010 @ 5:56 a.m.

Despite the condo glut downtown, the current plans on the table for Grantville redevelopment call for adding 11,000 condos to the project area. To make this even more insane, the City’s own economic analysis of the project area says that for this plan to be economically feasible, the units need to sell or lease for the same price as those downtown. Undeterred, the developers who dominate the Grantville “Stakeholders” Committee accepted this as great news. After all, the economics don’t really matter to them, because they will be using public funds in the form of tax increment to subsidize this folly. We can stop this by supporting the Grantville Action Group’s legal challenge of the Grantville Settlement Agreement, which will send over $31 million of the Grantville tax increment to downtown to subsidize more construction there. If we can block the City’s and the County’s agreement, we can stop the redevelopment. We will be in court on Oct. 29. If you would like to help, go to www.GrantvilleActionGroup.com.

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Don Bauder July 30, 2010 @ 7:07 a.m.

Response to post #5: Sanders has said all along that he does NOT read the Reader. I can't speak for management, but this doesn't bother me: we want a high-quality readership. Best, Don Bauder

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Don Bauder July 30, 2010 @ 7:11 a.m.

Response to post #6: You are absolutely right. There is good office space available for very low prices right now. There is no need to build a city hall complex. The claim that a new city hall would actually save money is fraudulent. But, as I have said so many times, the real estate development industry has Sanders and the rest of San Diego government dancing on its puppet strings. The city hall complex is a classic example of this truth. Best, Don Bauder

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Don Bauder July 30, 2010 @ 7:14 a.m.

Response to post #7: You have used exactly the right word: "insane." Why look at a glut and propose even more construction? Why present completely phony numbers and believe the voters will be willingly bamboozled? You make excellent points on that project. Best, Don Bauder

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Founder July 31, 2010 @ 1:23 p.m.

7 Good Luck!

How about suggesting this money saving action instead of raising our tax 1/2 % ...

Suggestion: Contact the IBA at sdiba@sandiego.gov and Councilmember Demario at carldemaio@sandiego.gov

                    and give them the "good" Fiscal (Policy) News!

+ I'll try to be there too; now if we could get at least 75 other folks to join US...

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Don Bauder July 31, 2010 @ 11:05 p.m.

Response to post #11: From everything I have read, including my own mail, this sales tax increase may be DOA. Mine is an unscientific sample, of course, but it seems San Diegans are having none of that tax increase. Best, Don Bauder

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Brian_T_Peterson_DVM Aug. 1, 2010 @ 6:36 a.m.

Response to post #11: In June I pointed out to the City Council how they could raise enough cash to restore all the public safety cuts: don’t lift the cap on downtown redevelopment. Here is a commentary I wrote for the Voice of San Diego on the subject: http://www.voiceofsandiego.org/letters/article_353107d6-7d67-11df-b75c-0017a48dd294.html . Currently, downtown redevelopment diverts at least $25 million from the City’s general fund annually. Seemingly, they would like that to continue into perpetuity. Perhaps, when we vote down the sales tax increase, they will see things differently.

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Don Bauder Aug. 1, 2010 @ 8:41 a.m.

Response to post #13:I would say a $25 million annual drain is conservative. Best, Don Bauder

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Founder Aug. 1, 2010 @ 9:47 a.m.

Regarding #14

IN$ANE Dough Drain

I don't have the time to write a long rhyme

but if I did, I would make it crystal clear that the City is wasting, what we hold dear!

Please look at the big Redevelopment Agency, it has the same Leaders, as the City Council, you'll see!

On one Board our Leaders are just pushing money out of the door and on the other Board, our Leaders, more taxes, they're asking for!

Like real spoiled children asking for more, they won't quit until the voters get sore!

And as for the size of the "Real" City Debt, ten times as large, would make a very safe bet!

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Don Bauder Aug. 1, 2010 @ 1:19 p.m.

Response to post #16: CCDC is a bunch of buccaneers Who hold councilmembers up by their ears.

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Founder Aug. 1, 2010 @ 2:36 p.m.

-- Sweet, Number 16 --

You are so cool and above the rest that you respond to your own post, Best

Who better than you knows just how true

writing what you say each and every day.

From all your San Diego fans and Readers have some fun and watch out for trick or treaters...

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Don Bauder Aug. 1, 2010 @ 7:48 p.m.

Response to post #17: Suggest we change the last line to: "Continue reporting on crooked leaders." Best, Don Bauder

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Founder Aug. 5, 2010 @ 8:32 a.m.

Reply #18

I am just in awe, Reading what I saw...

I guess, there is only one more thing left to say, I hope that our $trong Mayor, doesn't get his way!

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Don Bauder Aug. 5, 2010 @ 10:48 a.m.

Response to post #19: His weigh? Best, Don Bauder

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Don Bauder Aug. 5, 2010 @ 3:09 p.m.

Response to post #21: We are going weigh, whey over the top. Best, Don Bauder

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Founder Aug. 6, 2010 @ 11:01 a.m.

Reply #21, #22 & #23

  • Whey Weigh -

Hip Hip Who-Way for what you say.

You both are right In how you write,

now let's stop fooling around and let's cover some more ground.

Remember what William Bendix used to say, in "The Life of Riley"; back in the day:

"What a Revolting Development this is" and it's apt for our City Leaders today...

Our City Government depends upon honest Leadership still and should not include letting your friends, dip into the public Till.

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Don Bauder Aug. 6, 2010 @ 9:19 p.m.

Response to post #23: Yes, San Diego's leaders are revolting. Best, Don Bauder

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Founder Aug. 8, 2010 @ 10:48 a.m.

  • Frame Game -

Response to post #24: A frame of reference, I need More,

A-greed with you I am, seems like a Giant scam.

Writing that just makes me smile but I guess that is my style.

So here we all are, making up rhyme while our Leaders ask, for our last dime!

Not knowing what we can do, to help our City, makes me so sad, perhaps we can collect some money and take out a glossy ad;

it should have a real sexy picture, with lots of silken skin, maybe the voters would pay attention to it's message then,

"It's starting to hurt now, No More, No More; all these Big Taxes are making me sore...

I've now had my say and will give it a rest, Thank You for your help and to you Don, the Best!

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Don Bauder Aug. 8, 2010 @ 9:16 p.m.

Response to post #25: They even steal from poets. Best, Don Bauder

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Founder Aug. 9, 2010 @ 10:03 a.m.

Response to post #26:

-- City Sells, City Shells, by the Seashore -- or Legal Lapses, Like Loose Lisps, Love Lore

What is a poor poet to do, keep writing until I am blue,

about all the tax increases, coming down the road, that may actually force me, to move from my abode.

Before I allow my City, to take that big windfall, in an attempt to help others, I wonder who to call?

Besides reading, the Readers great blog, I find, most others, are in the fog.

It's tough, working on being, a word smith, when most folks, don't know, the chaff from the pith,

but, I've found, that when it comes, to our City's budget, most realize, it is way to easy, to fudge it.

So I spend my time, picking words to write, trusting that others will join the good fight,

for it is far worse for me, to just say nothing at all, than to let our Leaders set US up, for another fall...

I keep wondering, why all our Residents are so lax, when it comes to public debating, about our new TAX.

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Don Bauder Aug. 9, 2010 @ 11:02 a.m.

Response to post #27: They are setting up San Diegans for a fall, but you can bet they will take care of themselves. Best, Don Bauder

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Founder Aug. 9, 2010 @ 12:15 p.m.

-- Fall Tax --

Response to post #28: I agree with your timing, to date.

We will all take a fall, sometime, early this Fall.

So it will be, fun for me, to see, just what we shall see,

just what the Council will do, to avoid, all that will sue!

Why is a good plan, so hard to make, is something I find, so tough to take,

I guess, I don't know enough, about Big Money, but do I know, when folks waste it, that's not funny!

I bet there are many at the City, that spend their nights a shiver, because, they all know too much and don't want to be sent, up the river.

Here's my simple suggestion, to all of them, please, do not give in, to an illegal whim,

that is the best way, to avoid having to make bail, testify, standing trial and maybe going to jail...

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Don Bauder Aug. 9, 2010 @ 5:38 p.m.

Response to post #29: Yes, they know they should be sent up the river, but they also know that with San Diego's current crop of prosecutors, they won't even be investigated.Best, Don Bauder

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