Statewide, redevelopment is still dead.

But the San Diego version that rose from its ashes, Civic San Diego, has been taking some baby steps toward what leaders hope is its future as a local reincarnate of the program that subsidized development projects to improve urban neighborhoods.

Civic San Diego was officially created last summer when the City Council voted to merge its two nonprofit entities that had been empowered to run the replacement program. Centre City Development Corp. and the Southeast Economic Development Corp., which managed projects downtown and in southeastern San Diego, respectively, became a single entity.

A New Old Agency

Civic San Diego’s first order of business is to finish paying out the redevelopment projects that were lined up before the state axed the program — projects like building public plazas at Horton Plaza and along the bayfront for the North Embarcadero Visionary Plan, creating a quiet zone surrounding downtown train tracks and a helping pay for a host of affordable housing projects.

In the 2013 fiscal year, Civic San Diego had a budget of just more than $6 million, which covered 32 employees and its office space downtown. Next year’s budget is expected to be almost identical. About 75 percent of the budget, or $4.5 million, is dedicated to unfinished redevelopment projects.

Finishing out all of those projects could take years, but the process will eventually end. There aren’t any new redevelopment projects getting approved at this point.

So it’s possible for Civic San Diego to exist in some capacity when those projects wrap, but it will be much different and far smaller.

After redevelopment ended, the state mandated all cities put an agency in charge of ending the program. Many cities made themselves responsible for the task, but the council and Mayor Jerry Sanders’ administration decided a new organization could do a better job.

But city leaders made clear they envisioned Civic San Diego as a group that could carry the mantle of urban renewal even without its previous funding stream.

Right now, the rest of its money comes from three sources.

The Centre City Development Corp., one of Civic San Diego’s predecessors, already had the authority to approve developer permits and manage parking funds downtown. Those activities account for $360,000 and $960,000 of the group’s yearly budget, respectively.

Civic San Diego’s $6 million budget last year also included $250,000 in funds directed from the council for “economic development.”

That money was meant to do things like pursue grant money it could then lend to other companies looking to create jobs.

The organization caught its first big fish in that pond earlier this year, when it won $35 million in federal tax credits to distribute to six local beneficiaries, such as the Ocean Discovery Institute, a science education nonprofit looking to build a $12 million, 11,000-square-foot property in City Heights.

Civic San Diego will act as a “community development lender,” when distributing those tax credits, charging a 3 percent fee any time it closes a loan. The fee is below the market rate charged by private lenders.

Jeff Graham, the group’s president, said the fee is meant to recover the associated costs, since it isn’t collected until the loan is closed.

“Our business is solely to reinvest, so we’re not gouging huge fees, we’re just out to recover costs,” he said.

Next Steps

Another way the group is looking to build out its budget and encourage economic development involves expanding the roles they currently play downtown into other parts of the city.

Civic San Diego, like the Centre City Development Corp. before it, approves development permits in the downtown area. It prides itself on issuing approvals in a matter of months, whereas projects elsewhere can take years to win final permits. And it collects fees on the permits it issues.

The group is proposing to take on that function in a specific area along the trolley line in a few neighborhoods in the southeastern portion of the city. The group will present that plan to the council as early as September.

Supporters say it’d make development in the area more attractive, bringing needed improvements to an underserved city neighborhood.

If the plan works, it would also serve as a template Civic San Diego can replicate throughout the city.

That could go a long way to securing the organization’s long-term livelihood, and — along with acting as a lender for federal tax credits — give the city a viable way to pursue neighborhood development even without redevelopment.

But those aren’t the only thing Civic San Diego has discussed as a means of building out its annual budget.

Graham has discussed taking advantage of a federal program whereby wealthy immigrants seeking permanent residency invest in job-creating projects.

He’s also mentioned expanding a program that allows developers to purchase the right to build units or stories on projects above a certain threshold. Civic San Diego would then use the money to build community utilities like parks or parking garages.

Civic San Diego leaders are scheduled to appear before the council’s committee for economic development Wednesday to discuss another potential funding source, called a public-private investment fund.

The fund would look to attract grant money, work with philanthropies or bank proceeds from the sale of city properties to pay for things like sidewalks, affordable housing and bikeways.

But the presentation emphasizes the long-term goal is finding ways to raise money so the group can continue stoking development throughout the city.

Troubled History

Civic San Diego is built of the bones of two organizations with histories of ethical issues.

The San Diego Ethics Commission fined the former head of the Centre City Development Corp., Nancy Graham, $32,00 after it found she violated ethics laws 18 times by failing to disclose financial ties to a developer with whom she negotiated a $409 million downtown project.

The two-year saga dragged the agency’s name through the mud and held up $2 billion in other downtown projects.

Officials from the Southeast Economic Development Corp., for their part, concocted an illegal bonus scheme for which they eventually pleaded guilty to one count of embezzling public funds and managed to avoid jail time.

Both officials — Carolyn Y. Smith and Dante Dayacap — received five years of probation, hundreds of hours of community service and were forced to repay some $430,000 to the city at a rate of $100 a month.

I’m Andrew Keatts, a reporter for Voice of San Diego. Please contact me if you’d like at or 619.325.0529 and follow me on Twitter:

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Andrew Keatts is a former managing editor for projects and investigations at Voice of San Diego.

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