Eva Knott 10:44 a.m., May 18
San Diego City Council members, wearing their Redevelopment Agency hats, approved the Centre City Development Corporation (CCDC) plan to conduct a blight study at a cost of up to $500,000.
The blight study was a rider on CCDC's Redevelopment Agency proposal to increase the amount of the Tax Increment Limit that could be spent in CCDC's area of operations, with the new limit possibly set at $9 billion from its current limit of $2.98 billion, a potential increase of over 200%. Earlier, our distinguished daily paper prematurely reported that the CCDC plan was adopted by the City Council, but no such City Council agenda item appears in the records of the City Clerk for the day in question, June 22.
Tax Increment funds are the increase in tax revenues resulting from redevelopment projects that are retained to be spent in the redevelopment district, creating a powerful political force in that district with a state-sanctioned treasure chest.
One of the benefits of increasing the Tax Increment Limit is that it may increase revenues from transient occupancy taxes on non-resident tourists. According to the City's Independent Budget Analyst's Report of June 18, "redevelopment can result in the building of new hotels, but growth in the lodging industry is largely dependent on tourism marketing and promotion. Similarly, redevelopment can result in the creation of retail centers, but consumer spending is driven by income growth."
Less than two weeks earlier, the County Grand Jury recommended that the City of San Diego declare bankruptcy. The report cites the City's current obligations, liabilities and debts that are in excess of $7 billion.
According to Don Bauder, the latest available employment report suggests that the economy has weakened alarmingly. Most observers figure that this will hurt consumer confidence and keep spending down, leaving the economy to improve slightly at a now-lowered rate over the last half of the year. Things will not be helped by the US Senate failing in the last week to extend unemployment benefits for the long-term unemployed.
On Friday, Mike Czarcinski, the managing director of the 34-year-old Westin Bonaventure Hotel and Suites, cited less travel and lower occupancy rates as a motivation for the Los Angeles hotels' current total makeover, gutting and renovating hundreds of rooms at a time. Optimistic industry analysts have recently predicted that San Diego hotel occupancy rates may justify more construction in the next five years, but well after 2010.
There are concerns that blight exists inside CCDC's management structure. Former CCDC president Nancy Graham fled town without tar and feathers amid concerns of inappropriate ties to developers, despite her recent claims to San Diego's Ethics Commission of having a "spotless record."
Sports insiders insist that the CCDC plan approval was a necessary step to keeping the Chargers in San Diego, but a thorough review of the plan and its supporting documents offers no direct support of that claim. Opponents of public spending on the Chargers' plans to build a new stadium downtown will find no smoking gun here.
At the same time, at least one unpublished observer with numerous City ties past and present suggests that later this year, money will be "found" in or out of City coffers to help fund a new stadium downtown.
"Found" Money to Appear in July?
The found money may be in the Redevelopment Agency's request that the City Council forgive $288 million in loans. Once the Redevelopment Agency gets that loan amount forgiven on July 13's delayed City Council vote, CCDC will have its seed money to do whatever it pleases for our local NFL franchise.
The problem with the $288 million owed to the City that may be forgiven is that the loans were derived in large part from HUD community development block grants, where the loans subsequently earned millions in prohibited interest instead of being spent directly on community development. A HUD Office of the Inspector General audit found that the City had failed to insure that the massive mega-loans would ever be repaid.
The HUD OIG audit figures in the wrongful termination lawsuit of former City employee Scott Kessler, where he alleges that the mayor and others had him fired for questioning the financial practices of Little Italy's business improvement district. The Little Italy BID was subsequently investigated by FBI but not prosecuted by the San Diego County District Attorney's Office. On July 9, the City is tentatively scheduled to try for a Superior Court protective order to prevent the mayor from testifying in a deposition tied to the Kessler civil action.