A San Diego City Council committee this morning began charting the future of the Southeastern Economic Development Corp., with Councilman Tony Young saying that the entire culture of the redevelopment authority needs to be changed.

The council’s Audit Committee called today’s special hearing following the release last week of a long-awaited audit into SEDC. The audit found fraud in SEDC’s hidden system of bonuses and extra compensation and issued damning conclusions on the agency’s transparency, its communication with its board, the way it selects its consultants, and a number of “questionable” expenditures.

Despite those problems, Young, whose District 4 most directly overlaps with SEDC’s project area, said the city shouldn’t abandon the atypical nonprofit structure it uses for SEDC and its sister agency, downtown’s Centre City Development Corp.

Both agencies have seen their business screech to a halt in the past two months as the result of scandals.

“We have a successful model, we just have to make it work,” Young said.

Young’s colleagues on the Audit Committee, Council members Toni Atkins and Kevin Faulconer, agreed with him. Mayor Jerry Sanders has also showed support for keeping both agencies in tact despite their recent troubles.

However, the problems faced at SEDC and CCDC can be directly traced back to the fact that they are structured as nonprofit agencies outside of the typical City Hall bureaucracy, an arrangement that is completely unique statewide.

That hasn’t gone unnoticed. Today, following the hearing, District 3 City Council candidate Stephen Whitburn’s campaign announced that he will call tomorrow for the disbanding of “two scandal-plagued non-profit development agencies.”

During today’s hearing, the committee voted to have the City Council’s independent budget analyst review the audit’s recommendations and provide her own recommendations for updating SEDC’s operating agreement with the city. Auditors blamed the outdated agreement for creating an environment that allowed the problems to occur.

Young said he is also researching whether the city can add greater mayoral and council representation at SEDC, including adding representatives to the board.

Council members and IBA Andrea Tevlin also stressed the need to better define the roles and responsibilities of both the mayor and the City Council when it comes SEDC oversight.

Over the past couple of years, officials at all levels of power at City Hall ignored warning signs at SEDC, as few if any felt it was their responsibility to exercise oversight over the city agency.


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