How Civic San Diego Plans to Respond to Its Identity Crisis

How Civic San Diego Plans to Respond to Its Identity Crisis

Photo by Sam Hodgson

Along Imperial Avenue, a row of shuttered businesses became storefront churches. Civic San Diego wants to take over permitting authority in southeastern neighborhoods to spur development.

Civic San Diego needs to find a long-term role for itself. Without one, it dies.

So that’s basically what the former redevelopment agency has spent 2013 working out.

It wants to designate specific areas in the city — along the Orange Line in Encanto and along El Cajon Boulevard in City Heights — for a series of programs aimed at lowering the cost of development to stimulate new projects, thereby increasing jobs and housing in those low-income areas.

At the root of the plan is an attempt to take over planning and permitting authority, currently handled by city employees, because it says it can take care of that function faster than the city can. In this case, faster processing means cheaper, and therefore more attractive, development projects.

Its big idea seems to be gaining traction: Some of its primary components have shown up in the mayoral contenders’ plans.

But it’s also running up against opposition from at least one powerful force: the union representing the city’s white-collar workforce.

Civic San Diego was formed when the state, to close a major budget gap, ended the redevelopment program. Redevelopment aimed to improve neglected neighborhoods by building major projects with property tax revenue from other projects it had previously built. New development gives birth to new taxes, which were used to build more projects, ad infinitum.

That program was handled in the downtown area by the Centre City Development Corp (CCDC), in the southeastern neighborhoods by Southeastern Economic Development Corp (SEDC) and in 12 other areas around town by city staff.

But when that state program ended, the new tax revenue that sustained it went back to Sacramento, and projects that had already been approved but weren’t yet completed fell under the supervision of the state department of finance.

The actual work of finishing those projects locally was handed to Civic San Diego, a nonprofit agency formed by merging CCDC and SEDC that also has authority in the redevelopment areas formerly controlled by city staff.

Completing that task won’t take forever, though. And when it’s done, there’s not much left of Civic San Diego. So it’s looking for an ongoing role — and an ongoing revenue stream — that would not only allow it to exist, but let it pursue the same basic goal of improving blighted neighborhoods.

But shoring up the remaining redevelopment projects isn’t quite all Civic San Diego does right now, either.

It also has planning and permitting authority in the downtown community plan area. So when developers want to get a project approved downtown, they go to Civic San Diego, not the city’s development services department. The fees they pay for those permits also go to Civic San Diego.

Civic San Diego says it can only start spurring investment in southeastern San Diego or City Heights if it takes on that same authority in those areas.

And that’s where the Municipal Employees Association, the labor union that represents city planners and other city employees, says it’s drawing the line.

The Plan

Civic San Diego is proposing a plan for what it’s calling “transit-oriented economic opportunity areas.”

That clunky phrase just means it wants to help build stuff in low-income areas that are also near major transit projects.

One of the ways it’ll do this is by competing, on behalf of the city, for federal money for beneficial projects in underserved areas, called New Market Tax Credits. Civic San Diego secured $35 million in such funding for projects around the city — including projects in southeastern San Diego and City Heights — in 2013 and has requested more than $100 million for 2014. Nonprofit entities, not municipalities, compete for and administer these types of state and federal funds, so there’s a role for Civic San Diego to play.

Pushing for new funding sources like the tax credits, Healthy Food and Urban Farming Initiatives and EB-5 loans, a federal program that gives wealthy foreigners a green card in exchange for investment in local projects, is another way the group can explore its goal of serving low-income areas.

But the main new initiative it’s pushing is to take control of planning and permitting in targeted areas along transit corridors through something called “specific plans.”

Right now the city makes planning decisions for different areas with community plans, which outline long-term growth in communities. Most of the city’s plans are out of date; others are in the midst of a lengthy update process.

Civic San Diego says its proposal to implement smaller, more targeted specific plans where there’s less disagreement about what type of development should happen, can result in expedited permitting for projects in that area.

By speeding up the approval process for projects in the specific plan area, it says, the group can lower the cost of development. That could help make potential projects in the specific plan area financially feasible.

The specific areas would also be covered by a blanket environmental report. That would mean individual projects wouldn’t need to produce an environmental report of their own, as required by state law, as long as they met certain requirements set forth by the overarching environmental report.

And since those areas are located along transportation corridors, the development would theoretically capitalize on large public investments — the transit corridors — that haven’t been able to stimulate growth on their own.

The proposal also calls for the creation of a large fund that would raise money from public and private sources to help stoke new projects.

Civic San Diego would take the money from that fund and purchase properties and assemble adjacent properties, draw up new restrictions on them that increase the amount of development allowed and sell the properties to developers. Basically, they acquire the properties at a low cost, take the initiative to upzone the properties — inflating their value — and sell them off to developers who want to build at the increased density.

The private investment would come from banking institutions, developers, pension funds, insurance companies and community development financial institutions (CDFIs), a type of financial institution that provides financial services to underserved markets.

Nonprofits in the area, like the Jacobs Family Foundation in Encanto, would partner with the agency, and bring with them the land they own in the area. The public component would also include the contribution of city- or Civic San Diego-owned properties in the area.

But Civic San Diego says it can only set up that public-private partnership if it first gets planning and permitting authority over the areas. And that’s the big hold-up.

The Controversy

While it was building support for its plan to spur development, Civic San Diego met with the Municipal Employees Association (MEA) to discuss taking over planning and permitting authority in two former redevelopment areas — southeastern San Diego and along El Cajon Boulevard.

In a letter to the city’s human resources director, MEA’s lawyer made clear the union was not on board.

In that meeting, according to the letter, Mike Zucchet, general manager for MEA, “explained that MEA would never allow the city to violate state law by removing this work from MEA’s bargaining units and contracting it out to itself … (since the city of San Diego is the sole member of Civic San Diego) to be done as non-union work,” the letter said.

The agency would need to negotiate with MEA to take over those responsibilities before the City Council could approve the change. Jeff Graham, president of Civic San Diego, said those negotiations could begin in a few weeks or a few months.

But most of what Civic San Diego wants to do is uncontroversial. Pursuing state and federal grants, working with nonprofits and attracting investment from private entities to help spur development are popular ideas, even with MEA, said Zucchet.

So why not just do those things, but let city staff maintain planning and permitting authority?

Graham said the proposal dies if Civic San Diego can’t get buy-in to take over that authority.

“We can’t get the money without the planning and permitting authority,” he said. “The whole selling point here is that, if we have planning and permitting authority, we can buy (properties) today, increase value by increasing predictability with an (environmental report) and our planning authority, sell the land to developers in a competitive process, and give the money back to investors.”

Does that mean potential investors have specifically said they’re uninterested if the city retains its authority?

“They haven’t come right out and said that, but it’s a really tough sell,” Graham said. “I don’t know how we’d increase value, plus a good rate of return, without having the ability to do that.”

Zucchet said MEA thinks much of what Civic San Diego has proposed sounds great, but wants to have a broad conversation that answers why the agency thinks it needs to take over work that’s been collectively bargained.

“This is not a knee-jerk, union, don’t-take-our-work response. We’re saying, let’s talk about why we need to do this,” Zucchet said. “Is this what the city wants to do? Is this the vision for planning, to have a quasi-city department do it? I’d rather have that discussion now, rather than say, ‘Oh it’s just this little thing.’”

Bill Fulton, the city’s newly minted director of planning, isn’t so sure the plan is an all-or-nothing proposition.

Downtown, he said, has a single community plan that has the same boundaries as the planning and permitting authority controlled by Civic San Diego. That wouldn’t be the case in the new areas, he said, where there’d be a community plan area, controlled by the city, and within that a smaller planning area controlled by Civic San Diego.

“If they were to devise a specific plan and have permitting authority for a smaller area, we would probably continue to play a role there,” he said. “We’ll continue to work on what their role in the neighborhoods could be. That’s been a discussion for quite a long time, and it’s continuing.”

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Andrew Keatts

Andrew Keatts

I'm Andrew Keatts, a reporter for Voice of San Diego. Please contact me if you'd like at andrew.keatts@voiceofsandiego.org or 619.325.0529.

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12 comments
Richard Ross
Richard Ross subscribermember

Redevelopment was never intended to be an ongoing agency it was to be a jump start only. Civic San Diego rather than being a wind down is trying to perpetuate itself. Part of that is going back to some of the negative things that were a part of its predecessor. It's time to stop building things and start maintaining the things we have...our streets, our sidewalks, our bridges, our water lines and our sewer lines.

LocalBoy
LocalBoy

Getting creative after Moonbeam Brown eliminated redevelopment is a must. But the days of doing it to incentivize private, for-profit developers should be buried forever. Focus on the public good. infrastructure and affordable housing in outlying and decaying areas. If you want a Charger's ballpark, pry $1 billion out of ol' man Spanos along with his investor buddies and the NFL. Civic SD needs to do "public work" not the dirty work of any for profit endeavor (large or small). Let free enterprise take care of itself. Create better entitlement and zoning systems and they will make it happen. But keep the public purse strings off the table for these for-profit pursuits.

Don Wood
Don Wood

What CSD staff is proposing is land speculation with a difference. The difference is that typically private developers buy up land cheap under its existing zoning, then hire lobbyists to pressure the city into upzoning that property to increase its value. This typically includes making substantial "campaign contributions" to city council members who vote on those zoning changes. What CSD is proposing to do it turn this into a sure thing, where CSD would borrow funds from private investment firms, buy the properties itself, use its new zoning powers to upzone the properties, then sell them off to developers at a higher price. Of course, this means that the profits gained by upzoning the land will go to a group of private investors instead of being invested in new city infrastructure needed to support the new development projects. It's another scheme to make rich insider richer, but won't do anything to address the city's backlog of infrastructure needs. I don't see why the sitting city council members would entertain this proposal. After all, much of the campaign contributions they get are from private developers hoping for their help on zoning changes for the developers properties. If the city council handed off its zoning powers to CSD, those dollars are likely to go elsewhere, perhaps to kickbacks to CSD leaders or used indirectly to influence CSD to buy their properties and upzone them. CSD would be cutting out the zoning middlemen on the city council, thereby reducing developers incentives to make campaign contributions to those politicians. The city council should retain its zoning powers, and use those powers to encourage developers to contribute more to upgrading substandard city infrastructure around their proposed development projects and a price for getting their land up zoned.

Don Wood
Don Wood subscriber

What CSD staff is proposing is land speculation with a difference. The difference is that typically private developers buy up land cheap under its existing zoning, then hire lobbyists to pressure the city into upzoning that property to increase its value. This typically includes making substantial "campaign contributions" to city council members who vote on those zoning changes. What CSD is proposing to do it turn this into a sure thing, where CSD would borrow funds from private investment firms, buy the properties itself, use its new zoning powers to upzone the properties, then sell them off to developers at a higher price. Of course, this means that the profits gained by upzoning the land will go to a group of private investors instead of being invested in new city infrastructure needed to support the new development projects. It's another scheme to make rich insider richer, but won't do anything to address the city's backlog of infrastructure needs. I don't see why the sitting city council members would entertain this proposal. After all, much of the campaign contributions they get are from private developers hoping for their help on zoning changes for the developers properties. If the city council handed off its zoning powers to CSD, those dollars are likely to go elsewhere, perhaps to kickbacks to CSD leaders or used indirectly to influence CSD to buy their properties and upzone them. CSD would be cutting out the zoning middlemen on the city council, thereby reducing developers incentives to make campaign contributions to those politicians. The city council should retain its zoning powers, and use those powers to encourage developers to contribute more to upgrading substandard city infrastructure around their proposed development projects and a price for getting their land up zoned.

David Hall
David Hall

Civic San Diego needs to complete the mission it was given and then disband. The last thing we need is yet another unaccountable agency making decisions that affect tax paying and voting citizens.

David Hall
David Hall subscriber

Civic San Diego needs to complete the mission it was given and then disband. The last thing we need is yet another unaccountable agency making decisions that affect tax paying and voting citizens.

La Playa Heritage
La Playa Heritage

http://www.tinyurl.com/20130612 Civic San Diego, in theory a self-sustaining Enterprise Fund, is trying to take over work done by City employees without going through Managed Competition guidelines, which require Meet and Confer labor negotiations. Supplanted MEA position include land use, affordable housing, permit processing and economic development. Last year the average compensation was over $130,000 for the 32 employees. For Fiscal Year 2013, Civic San Diego was gifted $5 Million from the City's General Fund Reserves for extra excessive Administration costs over the 3% Successor Agency Administrative Cost Allowance. For Fiscal Year 2014, the IBA estimated the City will need to gift Civic San Diego between $2.3 to $9.9 million for extra Administration costs, not allowed by the Department of Finance. http://www.tinyurl.com/20130610a http://www.tinyurl.com/20130509 Good news is that a new State law only allows Civic San Diego to charge a maximum of 5% of assets annually from the Housing Successor Entity's Low and Moderate Income Trust Fund for Administrative Costs. In order to accept New Market Tax Credit, the private non-profit Civic San Diego has to have at least 50% of their programs dedicated to Low Income Communities.

La Playa Heritage
La Playa Heritage subscribermember

http://www.tinyurl.com/20130612 Civic San Diego, in theory a self-sustaining Enterprise Fund, is trying to take over work done by City employees without going through Managed Competition guidelines, which require Meet and Confer labor negotiations. Supplanted MEA position include land use, affordable housing, permit processing and economic development. Last year the average compensation was over $130,000 for the 32 employees. For Fiscal Year 2013, Civic San Diego was gifted $5 Million from the City's General Fund Reserves for extra excessive Administration costs over the 3% Successor Agency Administrative Cost Allowance. For Fiscal Year 2014, the IBA estimated the City will need to gift Civic San Diego between $2.3 to $9.9 million for extra Administration costs, not allowed by the Department of Finance. http://www.tinyurl.com/20130610a http://www.tinyurl.com/20130509 Good news is that a new State law only allows Civic San Diego to charge a maximum of 5% of assets annually from the Housing Successor Entity's Low and Moderate Income Trust Fund for Administrative Costs. In order to accept New Market Tax Credit, the private non-profit Civic San Diego has to have at least 50% of their programs dedicated to Low Income Communities.

Derek Hofmann
Derek Hofmann

"Redevelopment aimed to improve neglected neighborhoods by building major projects..." That costs a lot of money and causes gentrification. Why not just fix what's broken? "New development gives birth to new taxes, which were used to build more projects, ad infinitum." That sounds like a Ponzi scheme. Who's going to pay for upkeep of existing projects?

Derek Hofmann
Derek Hofmann subscribermember

"Redevelopment aimed to improve neglected neighborhoods by building major projects..." That costs a lot of money and causes gentrification. Why not just fix what's broken? "New development gives birth to new taxes, which were used to build more projects, ad infinitum." That sounds like a Ponzi scheme. Who's going to pay for upkeep of existing projects?

Bill Bradshaw
Bill Bradshaw

Bureaucracies, whether public or private, are, like the “undead” that appear around this time each year, very hard to kill. What they do best is grow and create new tasks for themselves. Civic San Diego is doing what comes naturally, but it seems there’s a slight problem. Union jobs appear to be at stake. MEA Union leader, nee city council member, Michael Zucchet has weighed in with the typical “that’s our work” pitch which he fervently denies is a “that’s our work” pitch, so the battle is joined. If you think for a minute that his union would sanction what Civic San Diego is proposing, then you don’t know MEA. And new Planning Director Bill Fulton weighs in trying to split this baby without killing it. The fun begins.

Bill Bradshaw
Bill Bradshaw subscribermember

Bureaucracies, whether public or private, are, like the “undead” that appear around this time each year, very hard to kill. What they do best is grow and create new tasks for themselves. Civic San Diego is doing what comes naturally, but it seems there’s a slight problem. Union jobs appear to be at stake. MEA Union leader, nee city council member, Michael Zucchet has weighed in with the typical “that’s our work” pitch which he fervently denies is a “that’s our work” pitch, so the battle is joined. If you think for a minute that his union would sanction what Civic San Diego is proposing, then you don’t know MEA. And new Planning Director Bill Fulton weighs in trying to split this baby without killing it. The fun begins.