Recent statements by a majority of San Diego city council members indicate that there should be a transfer of payment responsibility for prior Convention Center redevelopments to the downtown redevelopment agency Centre City Development Corporation. The move could decrease the City's annual budget operating deficit by a little over $9 million, freeing up those funds for vital public safety and infrastructure needs that CCDC won't otherwise pay for.

Fred Maas, departing CCDC chief and senior cheerleader for downtown condo developers and sports teams looking for a new stadium site without freeway access, worries that making his redevelopment corporation actually pay for redevelopment might lead to CCDC bankruptcy.

This all sounds good to me.

For context, this is the same CCDC that will benefit from untold billions in tax increment funds, courtesy of a Sanders-Fletcher collusion on state budget legislation that eliminated the $2.9 billion cap on what CCDC could divert from the City's tax revenues in the CCDC project area. CCDC initially sought to raise that cap to $9 billion. Without the cap, CCDC's ability to divert funds from public safety and other necessary government functions is unlimited over the next four decades, perhaps much longer if San Diego redevelopment prompts the state legislative collusion to continue in the future.

If a $9.2 million annual redevelopment payment from CCDC's anticipated tax increment revenues of $100-$150 million a year in any way threatens to bankrupt CCDC, then we may finally be getting some truth about the complexity of developers' downtown financial "arrangements." The fact that Maas feels that threatened by redevelopment corporation payments for convention and tourism redevelopment expenses may show that CCDC long-term financing rivals AIG's derivative and default swap shenanigans that nearly brought down Wall Street during the Crash of 2008; otherwise, the Fletcher earmark is just about the political pork of guaranteed funding with no defined purpose.

Most interesting is Maas' contention that no "appropriate findings" were made to justify transferring payment responsibility to CCDC. The Fletcher budgetary negotiation earmark that provided the early holiday season gift of future billions to CCDC also eliminated the necessity of blight findings before CCDC can push out existing taxpaying businesses downtown in favor of those newer, larger ones that provide even more future CCDC tax increment funding.

Not having a tax increment cap is mighty convenient for CCDC and the developers who feed at that trough. There's no point in CCDC discriminating against $9 million in annual Convention Center redevelopment costs that are incurred within the CCDC project area when CCDC has already been gifted with unlimited billions for the foreseeable future.

Let's see if there is enough gumption among our San Diego city council members to get this done. Despite the protest of CCDC's chief cheerleader, this is not a threatened matter of a local corporation that is too big to fail, and with billions in the pipeline from now to the middle of the 21st century, such a threat truly does not exist.

Comments

SanDiegoWatchDog Dec. 23, 2010 @ 11:38 a.m.

The writer of this commentary is 100% clueless as to how redevelopment tax increment financing works.

If CCDC is saddled with the debt service for the Convention Center (something the general fund has been paying - which by the way, receives all the Tourist Tax dollars as a result of the Convention Center), there will be very little left over and CCDC will effectively be done.

With CCDC going away, the General fund will have even more fiscal pressures upon it as it will have to cover many of the expenses now handled by CCDC. That is backward thinking.

It simply does not make sense that anyone in San Diego would do anything but cheer for the cap being lifted. Caps for redevelopment areas went away in the mid-1990's - why should the most successful redevelopment area in the country (CCDC) have a cap on the tax increment that can remain in the redevelopment area?

Do you understand how redevelopment financing works?

Do you realize in a NON-redevelopment area, cities receive about 17% of the property taxes paid for that City? The rest is kept by the state - they use it for schools and their bloated bureaucracies, pensions, wasteful spending etc.

In a redevelopment area, property owners pay the same property taxes as everywhere else, but in the case of a redevelopment area, upwards of 66% to 80% of the taxes they pay REMAIN in the redevelopment area for REINVESTMENT back into the area. That's how it works. These tax increment $$$ are used to help JUMP-START new development. How do you think Gaslamp was seeded or Horton Plaza? HELLO?

If you KILL the goose that lays the golden eggs, then you will have NO MORE seed money to bring more reinvestment into the redevelopment area. Improvements to downtown did not happen by themselves. CCDC partnered with developers willing to take risks and used tax increment $$$ to help incentivize projects. CCDC used tax increment $$$ to pay for roads, pipes, parks, sidewalks, etc. This will not and cannot happen without new tax increment.

Just because the cap is lifted DOES NOT mean that is $5 billion in new funds out there. Those $$$ will only flow from property taxes paid on things that HAVE NOT YET BEEN BUILT. If there is no seed money, no way to stimulate redevelopment of the area, there will be no projects. If no projects, no new taxes collected, if no new taxes collected, no $5 BILLION.

HELLO - do you understand a bit more now?

Do you see why it does not make sense to saddle CCDC with Convention Center Debt the City has been paying all along? Do you see why CCDC should not have to take on a debt for something already built??? It's probably against the law besides.

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Founder Dec. 23, 2010 @ 12:56 p.m.

One thing that needs to be added to your post is that ReDev. Project Areas BORROW against their future income by issuing Bonds which if the market changes and or the City's Credit rating changes becomes much more expensive to repay!

The City should take ALL of the CCDC money and spend it on fixing infrastructure by NOT building the "Guacamole Bowl" $TADIUM downtown! That would put the City a Billion Dollars ahead!

If you agree, call Todd Gloria who is now the Chair of BOTH the Council's Budget and Redevelopment Committees. (619 236-6633). http://www.sandiego.gov/citycouncil/cd3/toddsblog.shtml

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SurfPuppy619 Dec. 24, 2010 @ 3:47 p.m.

If CCDC is saddled with the debt service for the Convention Center (something the general fund has been paying - which by the way, receives all the Tourist Tax dollars as a result of the Convention Center), there will be very little left over and CCDC will effectively be done.

By SanDiegoWatchDog 11:38 a.m., Dec 23, 2010

I think you just made the point of the article right there.

We WANT the CCDC to be FINISHED! Kaput!, Gone!!!! Done!!!!

CCDC is nothing but a scam to hijack scarce tax $$$$$, and then give those scarce tax dollars away to millionaires and billionaires. That may be OK in your book, and if that's the case then YOU can fund it!

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a2zresource Dec. 23, 2010 @ 1:08 p.m.

So let's look at the logic here in SanDiegoWatchDog's comment.


San Diego has a tax increment cap and becomes "the most successful redevelopment area in the country" when all other California redevelopment areas have no cap and must be by the same argument less successful.

Now that the cap is removed, how does CCDC remain all that successful? Empirically, what prevents it from being like the rest of the redevelopment areas in California except more special legislation in Sacramento?


"In a redevelopment area, property owners pay the same property taxes as everywhere else, but in the case of a redevelopment area, upwards of 66% to 80% of the taxes they pay REMAIN in the redevelopment area for REINVESTMENT back into the area. That's how it works."

In this "most successful redevelopment area in the country", just how many schools, police stations, libraries, fire houses, and health care facilities has CCDC built with its tax increment revenues, compared to the number of still-unsold condos that are slowly being converted to rentals?


"If you KILL the goose that lays the golden eggs, then you will have NO MORE seed money to bring more reinvestment into the redevelopment area. Improvements to downtown did not happen by themselves."

So CCDC must therefore be the developers' corporate welfare bank that provides other peoples' money because developers risking their OWN money is obviously too much to ask in a free real estate market. That pretty much sums up what confidence developers have WITHOUT skimming billions in tax increment revenue off the City of San Diego general fund.

Let's face it: the real reason why "improvements to downtown did not happen by themselves" is that virtually all developers are only PARTIAL DEVELOPMENT SPECIALISTS. Their concentration is on building housing units, not on building the appropriate infrastructure with those units that turns a collection of housing units into a functioning neighborhood... or maybe most of us were not looking when Prop. B passed regarding a place where schools, police stations, libraries, fire houses, and health care facilities do not exist per that area's design by the partial development specialist involved.

HELLO AND BE AWARE, TAXPAYING VOTERS OF SAN DIEGO. Demand more up front, so that we are tax-incremented less for decades to come!

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laplayaheritage Dec. 23, 2010 @ 2:37 p.m.

On January 1, 1994, Redevelopment Agencies Project Plans no longer had to specify dollar limits on total Tax Increment, known as the Cap. Since CCDC's Plan was made in 1992, in order to get rid of the Cap, CCDC had to Adopt an Amendment. CCDC was in the process of adopting the Amendment to get rid of the CCDC Cap when SB-863 was passed without the knowledge or approval of the Redevelopment Agency (aka City Council).

If the regular process of an Amendment was made, CCDC would have to increase the Affordable Housing Set-Aside Funds from 20 percent to 30 percent minimum, and target the funds to include the Extremely Low Income homeless. This year the increase would be an additional $12.5 Million.

If CCDC did nothing wrong, they should change the Affordable Housing to 30 percent minimum, so they do not look like they are stealing money from the poor and Homeless.

Instead of set aside for Affordable Housing, the extra $12.5 million (10 percent) can be used to fund a new Chargers Stadium.

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laplayaheritage Dec. 23, 2010 @ 2:43 p.m.

. http://blogofsandiego.com/Elections.htm#12/07/10 .

12/07/10 The TRUE story behind raising the CCDC cap. by Pat Flannery.

The California State Legislature created a process whereby cities can borrow against future property tax revenue for the primary purpose of expanding the supply of low-and-moderate-income housing. The process is called "redevelopment".

"The Legislature finds and declares that a fundamental purpose of redevelopment is to expand the supply of low-and moderate-income housing, to expand employment opportunities for jobless, underemployed, and low-income persons, and to provide an environment for the social, economic, and psychological growth and well-being of all citizens."

This original Redevelopment Law required each redevelopment agency to set aside 20% of its tax increment revenues and put it into a "low and moderate income housing" fund, commonly known as the "affordable housing" fund. CCDC fulfilled its affordable housing requirement by creating all "moderate" income housing and no “low, very low, or extremely low” income housing. In San Diego "moderate" income housing is very close to "market" price housing.

The original Redevelopment Law also provided that in the event a redevelopment agency amends its project plan in any way, it triggers the following more stringent affordable housing set aside requirements:

(1) the 20% set aside would increase to 30%; (2) expenditure on “moderate” could only happen when at least 49% had already been spent on “low, very low, or extremely low”; (3) total “moderate” could not exceed the total of “extremely low income” in any 5 year period; (4) total “moderate” could not exceed 15% of the total set aside fund in any 5 year period; (5) the number of “moderate” units could not exceed the number of “extremely low income” units at any time.

CCDC wished to remove its revenue cap while continuing to avoid the “low, very low, or extremely low” income housing requirement. So, its Los Angeles-based outside law firm, Kane, Ballmer & Berkman, found a loophole in the wording of the Redevelopment Law.

Unfortunately Section 33333.10 (f) of the Redevelopment Law refers to "an agency that has adopted an amendment", rather than an agency that has "amended" its project plan. Kane, Ballmer & Berkman therefore advised CCDC that amending its project plan (e.g. raising its cap) by statute i.e. by State Legislative action, rather than by agency action, would not trigger Section 33333.10(f).

This is the TRUE story behind raising the CCDC cap at Sacramento rather than at City Council. Today, Jerry Sanders, who exploited this loophole in Redevelopment Law in favor of developers at the expense of citizens, is asking City Council to re-appoint him as Chief Executive Officer of the San Diego Redevelopment Agency.

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Founder Dec. 23, 2010 @ 4:36 p.m.

One thing you left out of your post was that a ReDev Project Area can spend its Low/Low Mod. Funds EITHER inside its own boundaries or in another ReDev. Area... This is why Liberty Station (NTC | Naval Training Center) is not building ANY Low/LowMod housing in it's ReDev. Project Area. BTW: CCDC has send millions to other ReDev. Project Area's instead of building that housing Downtown! The continued relocation of Low/LowMod housing will create large areas of Low/LowMod Density instead of spreading this type of housing "stock" throughout San Diego!

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a2zresource Dec. 23, 2010 @ 7:13 p.m.

This clueless commentary writer is receiving an education by comment... especially with the live link to the Pat Flannery piece.

Given the Legislature's finding on redevelopment's fundamental purpose to increase low income housing, was the Fletcher earmark a clever circumvention of prior legislative intent?

RE "ReDev Project Area can spend its Low/Low Mod. Funds EITHER inside its own boundaries or in another ReDev. Area... This is why Liberty Station (NTC | Naval Training Center) is not building ANY Low/LowMod housing in it's ReDev. Project Area":

This opens up a major political issue in general. As for specifics, we can ask this: Is Liberty Station "too good" for low income housing, and if so, says who and why? If not there, then where is good enough? Is it enough?

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SurfPuppy619 Dec. 24, 2010 @ 3:44 p.m.

"...that making his redevelopment corporation actually pay for redevelopment might lead to CCDC bankruptcy.

This all sounds good to me."

Sounds good to me too, I'll second the motion :)

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a2zresource Dec. 26, 2010 @ 12:29 p.m.

For a different view (with a Maasian twist), see today's Sunday paper for the lead editorial "A redevelopment revolt turns ugly":

http://www.signonsandiego.com/news/2010/dec/26/a-redevelopment-revolt-turns-ugly/

If CCDC is all that it's cranked up to be at the U-T, then can somebody please tell us why it takes private donations and a sky-high charter high school without proper seismic considerations to get private donors and the unified school district (which coincidentally lost millions in funding from the secret Sacramento Fletcher earmark) contributing tens of millions before San Diego can get a new main library built downtown INSIDE THE CCDC PROJECT AREA? Obviously, libraries of any sort are not happening without passing the hat, even with CCDC around...

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