The Morning Report
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Few phenomena have defined San Diego as starkly as the dramatic fluctuations in the local housing market. Once depressed in the early 1990s, real estate values have given area homeowners a great deal of wealth in recent years. The real estate and mortgage industries have employed thousands.
It was understandable, then, for government officials to worry about the city’s less fortunate residents and to ponder the fates of the area’s most blighted neighborhoods in the midst of such growth.
But the affordable housing initiatives of at least one of the city of San Diego’s redevelopment projects appear to have proceeded with an alarming lack of oversight. As voiceofsandiego.org reporter Andrew Donohue discovered in an exhaustive probe recently, the Southeastern Economic Development Corp., or SEDC, has allowed taxpayer dollars to subsidize affordable housing developers who did little or nothing to ensure the homes they built remained part of a so-called affordable stock.
An already awkward attempt at protecting some would-be homeowners from the brutal realities of an expensive housing market went bad. Vital documents meant to ensure that government-subsidized homes went to the families for whom they were intended were not filed. Private contractors were allowed, for no apparent reason, to charge more for the homes than city officials had dictated. And at least one insider, who already benefited from the contracting process at SEDC, found herself at the top of a list of those eagerly awaiting the chance to buy one of the affordable homes.
All told, the people who secured homes at a reduced price were able to sell their units almost immediately at market prices. Then those buyers were able to flip the homes again for even more. The homes, by law, were supposed to remain affordable. It’s hard to imagine when, if ever, they will be affordable again.
Inside SEDC, employees warned of what was happening – crucial documents weren’t being filed, homes were being sold for more than they should have, and owners were contractually able to rent the homes out.
An SEDC official repeatedly noted that Reese Jarrett, the developer who worked closely with SEDC, was not following the guidelines laid out in his contract with the city.
Rather than look into these concerns, SEDC leadership merely fired the employee who brought them up.
Donohue’s report brought up many questions about SEDC’s past operations. But it is incumbent on the city to commission an outside audit of the organization. There are questions auditors can and should be asking of that agency. San Diego already has a government under severe financial stress. It must ensure that each one of its tax dollars is spent in the most efficient and effective way possible.
But this is especially the case in southeastern San Diego. It is imperative that tax dollars captured in, and redirected to, the long-neglected area be used well. The city owes it to residents to spend their tax dollars according to the laws the City Council passes. The public has, at least ostensibly, the right to scrutinize the creation of those laws.
The city suffers when an agency decides for itself how to spend money, and then displays an apparent lack of concern about whether it has served the purpose intended.
It’s up to our leaders, particularly Tony Young, the City Council representative for the area, and Mayor Jerry Sanders, to learn about everything that has happened at SEDC and ensure that the worst examples of careless spending never occur again.