Talks on Secret Redevelopment Deal Began in August

Secret negotiations between city of San Diego, state and redevelopment officials on a bill to remove limits on downtown redevelopment began with conversations in August, a full two months before a state legislator introduced and passed the bill in the middle of all-night budget negotiations.

Those in the know kept quiet about the bill so others, including the politically powerful developers of two different NFL stadium projects in Los Angeles, wouldn’t scuttle the deal, City Councilwoman Donna Frye said after speaking with a redevelopment official Friday. The deal enables the city to help pay for a new Chargers stadium downtown.

The legislation’s timetable shows that for two months Mayor Jerry Sanders has been pursuing two major goals at the same time: raising the city’s sales tax to offset potential police and fire department layoffs and finding a way to keep more tax dollars downtown without knowing the impact to the city’s bottom line.

Frye has been one of the most outspoken opponents of the deal as the City Council, San Diego County, San Diego Unified School District and City Attorney Jan Goldsmith all didn’t know anything about it until hours before its passage.

“It is the very root cause of what’s wrong with the city of San Diego,” Frye said. “Because we just can’t seem to follow a basic process and keep our word, and when we don’t do that the public suffers.”

The bill eliminates limits on downtown redevelopment and removes the primary hurdle to a public subsidy for a Chargers stadium. As much as $500 million in public money could be needed for the team’s $800 million project. But the bill also has unknown impacts on the tax dollars received by other city neighborhoods, the county and the state.

On Tuesday, the City Council, which was negotiating an elimination of the downtown redevelopment cap until the state deal made that meaningless, demanded that those responsible for the legislation explain what happened. City and redevelopment officials promised a report on the deal within a month. Downtown redevelopment head Fred Maas also said he would meet individually with City Council members. Maas met with Frye on Friday. So did the bill’s author, local Republican state Assemblyman Nathan Fletcher.

The new timetable and the reasons for secrecy revealed by Frye conflict with statements made about the deal since it became public.

Previously, Sanders, Fletcher and redevelopment officials have said Fletcher first approached the Mayor’s Office about legislation a couple weeks before it passed.

They also have argued job creation motivated the legislation. Now the influence of a potential Chargers stadium is becoming clearer — the two Los Angeles stadium projects are potential destinations for the team. Ed Roski, the developer of a proposal outside of Los Angeles, is a political heavyweight who used his muscle with Los Angeles legislators to boost his stadium’s prospects via state legislation last year. AEG, the developer of L.A. Live, is behind the other stadium proposal near the Staples Center in downtown Los Angeles.

Frye said Maas told her someone in the Mayor’s Office contacted him to meet with Fletcher in early August and that Maas had more than one conversation with Fletcher afterward.

In an interview late Friday, Maas confirmed that the Mayor’s Office contacted him to meet with Fletcher in August. But Maas insisted his first conversation with the assemblyman was not about potential legislation, but instead a general update on downtown redevelopment limits.

“It was really Nathan’s creativity that got this done,” Maas said.

Maas declined to confirm any further aspects of Frye’s account because he believed their meeting was private. He wanted to brief the remainder of City Council before speaking further.

Frye said Maas also told her the office of local Republican Assemblyman Martin Garrick, the assembly’s minority leader, contacted him following the conversations with Fletcher. Frye said Maas at some point recommended involving Murray Kane, the city’s outside redevelopment attorney.

Negotiations heated up as the state budget deal took shape. Frye said Fletcher indicated to her that Gov. Arnold Schwarzenegger’s office was aware of the bill as part of an effort to create jobs, an important tenet of the budget deal. Previously, Schwarzenegger’s knowledge of the bill was unknown.

Fletcher couldn’t immediately be reached for comment late Friday.

Fletcher has said he spoke with Chargers officials prior to the deal’s completion. Local organized labor leaders were aware and approved of the deal as did nearly all San Diego-area legislators. Sanders has said he personally lobbied four local legislators as the bill took shape.

Chargers officials have not commented on the bill. Schwarzenegger has yet to sign the bill and is expected to make a decision in the next week.

Frye connected the deal to those made 15 years ago that began the city’s well-known financial scandals. City leaders, she said, tried to find money to pay for big-ticket items, like the Republican National Convention and Chargers stadium upgrades, without telling the public what they would cost.

“Nothing has changed,” she said.

Please contact Liam Dillon directly at liam.dillon@voiceofsandiego.org or 619.550.5663 and follow him on Twitter: twitter.com/dillonliam.