Speculation about the future of the Southeastern Economic Development Corp. is continuing in the wake of last month’s news about its shaky financial picture.

San Diego City Council President Ben Hueso wants to see if the city would save money by folding the nonprofit development group back into the city’s existing Redevelopment Agency, which handles redevelopment activities in neighborhoods such as City Heights and North Park. Hueso and Councilman Tony Young represent the four neighborhoods managed by SEDC.

“I’m opening up the possibility to see if the Redevelopment Agency coming in to save money is an option,” Hueso said.

The fate of the corporation has been a hot button debate since 2008 when SEDC’s former director was ousted following a voiceofsandiego.org investigation into the corporation’s bonus and development practices. In the scandal’s aftermath, Mayor Jerry Sanders kept the corporation intact, but has asked for more oversight in its operations. But last month, new financial reports showing major budget deficits led city officials, including a staunch supporter in Young, to question the corporation’s ability to survive.

Hueso said the corporation’s financial reports pushed him to request a study on changing SEDC’s duties, but that doesn’t mean he wants to get rid of it.

“I’m raising the idea of folding it into the Redevelopment Agency, but not necessarily eliminating it,” Hueso said.

Hueso said that meant potentially keeping SEDC’s board and advisory structure, but possibly doing away with its administration. Personnel costs make up 10 percent of the corporation’s $15 million budget.

“There might be a savings in that area,” he said. “Right now we have one director and one controller for the entire (Redevelopment) Agency. I’m seeing if they can handle the additional work of four more project areas.”

Hueso’s request came in an interesting form. Two weeks ago, he sent a memo to Young, chairman of the city’s budget and finance committee, with his ideas for solving the city’s day-to-day operating budget deficit. He used folding SEDC into the Redevelopment Agency as an example of a cost-savings measure. But the Redevelopment Agency’s budget and the city’s operating budget are separate. Hueso said his memo was intended to address citywide cost savings measures. He said he’d follow up on his request for a study on SEDC within two months.

In an interview, Young said he didn’t believe Hueso’s memo had requested a study of SEDC and he wanted to speak with Hueso before asking for one. Young said Hueso had never told him he wanted to change SEDC’s duties and any conversation would need to include redevelopment activity all over the city.

Meantime, Young is offering a stronger endorsement of SEDC than he did when he first learned of the corporation’s budget deficit, though he remains interested in seeing the corporation’s plan to close a $3 million gap.

SEDC has sent out a survey asking if it should remain independent, and Young wholeheartedly supported the corporation in his weekly newsletter.

“What I’ve said over and over again is that I believe SEDC should continue to exist, but the question is how we can best provide these services with less revenue,” Young said in an interview. “That’s the same question I’m asking about the city of San Diego.”

— LIAM DILLON

Dagny Salas

Dagny Salas was web editor at Voice of San Diego from 2010 to 2013. She was an investigative fellow at VOSD from 2009 to 2010.

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