Thanks to everyone who has written in so far. The questions have been thought-provoking and excellent.
The one I’d like to tackle first is this:
Why doesn’t the city’s Redevelopment Agency (RDA) pay back the $200 million debt it owes the City?”
A little background: The Redevelopment Agency is a separate legal entity, created in 1958, under a special provision of state law to attempt to turnaround “blighted” areas. The separation, however, is purely a legal one – the City Council still serves as the agency’s legislative body, and the mayor is its executive director. Taking certain action as a redevelopment agency, instead of as a regular city government, gives the city special privileges, including ability to capture more property taxes.
San Diego also has two public, nonprofit corporations that are supposed to implement the redevelopment projects in certain parts of the city, the Centre City Development Corp. and Southeastern Economic Development Corp.
Several people have thrown out the idea that these entities owe the city money. City Councilwoman Donna Frye argued during her mayoral campaign that the city could use some of it to pay down its unfunded retirement liabilities.
In one interview with the Union-Tribune‘s editorial board, she argued:
The redevelopment agencies owe the city over $200 million. It’s probably more like $245 million. And there is probably additional revenue that is owed to the city, potential sharing in the (property) tax increment. So we could get approximately $20 million a year out of that. We would realize approximately $50 million (annually) by not recognizing the $500 million in potential illegal (pension) benefits.
In another, Frye said:
Is there any money we can go out and collect before we go into deeper debt? Very simple thing. If you look at the amount of money that the city has been loaning to the redevelopment agencies, in the form of either community development block grants or just outright cash, the Centre City Development Corp., just one of the redevelopment agencies, has on the books a debt payment that they owe to the city of over $100 million.
At the time, she claimed that the city could realistically expect to be repaid $100 million of the money within three years.
However, I haven’t heard much more about this since she lost. I’ll try to get some more details out of her office and from CCDC. In the next post, I’ll try to answer the question.