Thursday, March 5, 2009 | As the city of San Diego scrambles to keep up with trash cleanup at the beach and contemplates shuttering entire library branches, the government has left untouched at least one kitty of money: An outside public relations and marketing fund.

The city maintains a $600,000 contract with the San Diego Regional Economic Development Corp. for marketing and economic development, including public relations efforts that highlight the mayor’s work in the national media. The fruits of those labors were on display Wednesday when The New York Times ran a flattering piece crediting the mayor with restoring the city’s financial health and encouraging development — despite the ongoing woes with the city’s budget and the general malaise in the real estate market.

A caption under a photo of the mayor said he has “overseen a turnaround that has helped restore the city’s fiscal health and encouraged new development.” Later that day EnergyCurrent featured the city’s cleantech efforts, as did on Thursday.

EDC marketing staff took credit for engineering the stories in a mass e-mail and the mayor also sent an e-mail blast out to the media and interested residents trumpeting The New York Times story.

EDC Marketing Manager Megan Carleton said The Times story wasn’t necessarily tied to the contract with the city, saying that it was related to efforts EDC undertakes with Development Counsellors International. The Denver firm, she said, is the only one that specializes specifically in marketing cities.

The work EDC does on behalf of the city is sometimes tied directly to the mayor’s efforts and sometimes tied to the city itself, Carleton said. The mayor has also recently spoken on CNN and Fox News, but EDC and city officials say that recent national exposure is unrelated.

It’s not that the city couldn’t use some good press. The stories shine positive light on San Diego, something that boosters note has been sorely lacking in recent years. Just a few years ago, The New York Times branded the city “Enron by the Sea” in response to its financial scandal, a moniker that endures years later.

But the city is currently locked in severe budget problems that are often defined in $100,000 increments. The city, for example, cut supervision at skate parks recently to save $282,571. It removed trash cans from nearly 30 ocean-front locations to save $125,000.

The mayor proposed closing seven branch libraries to solve a $43 million midyear budget gap. The contract’s $600,000 price tag is more than the annual cost of running the Cabrillo, Cadman, Lopez Ridge, Stockton Recreation Centers and the Black Mountain Gym — five of the parks facilities that the mayor proposed closing alongside the libraries.

To be sure, EDC’s contract calls for more than marketing and public relations. It envisions for $123,850, or 20 percent, to going toward developing a San Diego’s cleantech business cluster, although some of that fund goes for marketing and public relations too. Still, 45 percent of the contract’s funds — $262,600 go specifically to “Business Attraction/Marketing Strategies.”

The Mayor’s Office defended the payments, but said outside contracts such as EDC are being examined for the coming budgets.

“Because we only had a short period of time to close the budget gap we decided to honor all of our outside contracts this year, we are however doing a thorough review of these contracts in preparation for this coming year’s budget,” mayoral spokesman Darren Pudgil said.

He said only part of the money from the contract actually goes to public relations and marketing.

“Keeping libraries open and park and rec centers are important as well. These are very difficult decisions that are in front of the mayor. Deciding between job creation and library hours can be very difficult,” he said.

The mayor already has a five-person media and communications staff who make a combined $434,675 a year. That figure does not include the $140,000 salary of Gerry Braun, the Union-Tribune columnist hired last year as Sanders’ director of special projects. There are also 17 other public information officers throughout the city that communicate with the media or the community.

The city’s annual payments to EDC have long been a bone of contention for critics. The organization came under fire in 2003 because of the pay of its chief executive officer, Julie Meier Wright. The city at the time paid $1.4 million of the organization’s $3.1 million budget, and Wright made as much as $515,000 in annual pay, according to a 2003 San Diego Union-Tribune story.

But the city’s payment to EDC has since been trimmed considerably. The city paid EDC slightly more than $1 million from its fiscal year 2007 budget. That figure was trimmed to $619,150 for the 2008 and 2009 budgets. The rest of EDC’s budget comes from private investors and its board is made of up local business and political movers and shakers.

Councilwoman Donna Frye said the public relations contract is “consistent with all the concerns” she has had in the past about EDC. She said the city’s subsidy must be scrutinized as the city faces a $42 million to $54 million budget gap for the upcoming year.

“We need to do a much deeper, more thorough analysis of EDC — and not just its PR budget, but its entire budget,” Frye said.

Councilman Carl DeMaio said he’s not opposed to the idea of EDC spending a large chunk of taxpayer money to get articles written about city programs, saying such efforts are an essential part of a well-managed marketing program that will draw jobs to the city, fill the city’s coffers with tax revenue and create a lasting way to pay for city services.

But DeMaio said he had concerns based on The New York Times story that EDC may have been spinning information that painted the city’s financial situation in an overly rosy light.

“The New York Times got it wrong,” he said. “The city of San Diego’s financial problems are severe. This is the same paper that called us Enron by the Sea. While I think we’ve moved past the Enron stage, by no means are we out of the woods.”

He said a marketing campaign providing misinformation will be a “waste of money” since business leaders can find out the truth about the city’s precarious finances with a simple phone call.

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