Friday, Oct. 17, 2008 | Redevelopment in San Diego is at a turning point. There is a leadership vacuum at the Centre City Development Corp. and Southeastern Economic Development Corp., while the city-administered part of redevelopment is being scrutinized by the state. Lawsuits are pending about the Grantville redevelopment area, the Navy Broadway Complex, and the “golden parachute” granted to SEDC’s departing executive director Carolyn Y. Smith.

Amidst this turmoil, Mayor Jerry Sanders has argued that SEDC and CCDC are worth keeping. He has proposed adding two new positions to each corporation’s board of directors, one each named by the mayor and the City Council, to make sure that the conflict of interest and excessive payroll problems do not recur.

I must respectfully disagree with Mayor Sanders. Using nonprofit corporations to manage redevelopment has resulted in two serious problems: lack of accountability and loss of policy control. And the city-administered part of redevelopment is hobbled by internal inefficiencies.

Responsibility for redevelopment is vested in the San Diego Redevelopment Agency, an entity that is legally separate from city government. We sometimes lose sight of this because the agency’s board of directors is also our City Council. But it is, indeed, legally separate.

The agency, on its own, can hire and fire its own staff, buy and sell property, issue bonds to finance its projects, and carry out all the duties of redevelopment. Instead of doing so, however, the San Diego Redevelopment Agency carries out all its functions through three separate contracts: CCDC manages two project areas in the downtown, SEDC manages four project areas in southeastern San Diego, and the city manages eleven other project areas. These three entities — CCDC, SEDC, and the city — report to the agency through a contract.

It seems strange to think of the city as a contractor to the agency. But that is in fact the legal relationship. In San Diego, unlike any other city in California, the Redevelopment Agency has only board members and no staff. Staff functions are carried out by contractors. That’s why no one has been there to look at the details of day-to-day operations and hold the contractors accountable.

While the interests of the Redevelopment Agency and the city government are usually parallel, sometimes they are different. For that reason, it is not workable to ask city staffers to monitor themselves in their obligations to the agency. And that’s why it’s a conflict of interest for a city employee to serve as an agency contractor.

The employees and board members of CCDC and SEDC have fiduciary obligations to the corporation, not the public. Without oversight and accountability, there will be — and have been — problems.

I agree with Mayor Sanders’ observation that SEDC and CCDC have achieved notable success, and that the board members’ knowledge, experience, and insulation from political pressures have helped move quality projects to completion. The downside, however, is that as redevelopment has achieved success, these corporations have expanded their operations beyond the goals of revitalizing neighborhoods to instead bettering the corporations and their employees. As any student of management can tell you, when a bureaucracy is successful, public or private, it continues to function, grow, and consolidate its power long after it achieves its mission.

San Diego’s Redevelopment Agency has achieved striking successes — in City Heights, North Park, and other neighborhoods, not just CCDC’s and SEDC’s areas. But the problems are coming home to roost, as seen at CCDC and SEDC and in Grantville. There are better ways to run a redevelopment agency.

In October, 2007, before the current revelations of mismanagement and conflict of interest, I co-authored a San Diego Union-Tribune op-ed that identified serious problems with redevelopment in San Diego. The article recommended that the City Council, sitting as the redevelopment board, take four key steps to move the agency into the 21st Century:

1. Reorganize the agency by eliminating the three contractor services and instead hire staff to directly manage the agency. This is how most redevelopment agencies across California and the United States operate.

2. Hire a professional executive director, not a contractor or a politician. Currently, the mayor serves as agency executive director. I would argue that, besides having a conflict of interest in this capacity, he already has another full-time job we elected him to do.

3. Adopt uniform policies for all redevelopment areas regarding salaries, eminent domain, definition of blight, access to public records, and the public’s right to participate in selecting projects and developers.

4. Close out the downtown project area and return CCDC’s enormous tax revenue back to the city, the county, and the state as a clear message that San Diego is using redevelopment to eliminate blight rather than as a back-door revenue enhancer.

If we want to take advantage of the knowledge, experience, and insulation from political pressures that Mayor Sanders says derive from the CCDC and SEDC corporations’ boards, I would suggest establishing in their place a redevelopment commission comprised of knowledgeable citizens. We in San Diego are familiar with this model. We have a planning commission that provides advisory opinions and, in some cases, final decisions for the City Council. Furthermore, as a public commission, the members would owe a duty to the public and not to a private corporation. This is also what most California cities do.

I think that redevelopment is an important tool that should be available to revitalize neighborhoods that need it and want it. It is not intended to be, and should not be used as, a tool to enrich selected interests. To be used effectively, redevelopment in San Diego should be reorganized to ensure that it is managed properly, with accountability to and policy decisions directed by our elected officials.

Michael Jenkins is former assistant director of San Diego’s Community and Economic Development Department. He is a practicing redevelopment attorney.

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