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Richer, newer San Diego neighborhoods have amassed millions in fees paid by developers used to build things like parks, roads and libraries while older and generally poorer neighborhoods collect much less.
The result: San Diego’s nicest neighborhoods get nicer and neighborhoods that need improvements don’t get them, competing instead for the ear of their local Council member who could push a project forward in the mayor-dominated budgeting process.
“We’re constantly being left behind,” said Christian Ramirez, a former City Council candidate and Sherman Heights resident.
The city of San Diego acknowledges the system hurts low-income neighborhoods.
“This system treated (parts of the city differently) over many decades and has, in my opinion, created a vicious cycle of inequity,” said Mike Hansen, director of San Diego’s Planning Department.
The system is based on a revenue source called development impact fees. It’s a one-time payment by a developer to a city. The idea is that money will be used for public amenities used by new residents or customers coming into a neighborhood because of new development.
But each of San Diego’s 50-plus neighborhoods sets its own rates based on a calculation of the cost of its desired improvements divided by the amount of development it expects. Those rates could be low because they’re out of date and updating them is a laborious bureaucratic exercise, or they could just generate little revenue because there’s not much new development in the area.
To add another layer of inequity, San Diego’s newer neighborhoods to the north operate under a different and more luxurious fee. They charge developers based on what they think the neighborhood will need to build in the future, and can charge developers for 100 percent of that cost.
The city’s planning department wants to retire them both. Instead, it wants to set one flat developer fee and put all that money into a citywide pot. The department says it could give more money to the neediest neighborhoods and boost nearly funded projects over their last hurdle.
“What we’re finding is, in most communities, they don’t have enough money to fund their own infrastructure anyway,” said Tom Tomlinson, assistant director of planning. “By pooling those resources, we’ll be able to build more infrastructure more quickly.”
Imagine the city as a scrupulous bartender and San Diego’s neighborhoods are thirsty patrons. Their beers are filled only as high as they can afford. Under the proposed plan, the bartender would collect all their money at the door and top off the patron’s beers. Except, neighborhoods still aren’t sure when they’ll get to take a swig.
It’s still unclear exactly how projects would be prioritized under the new fee. The city is waiting on a study to make the case.
“There are questions about … whether it’s even legal to collect fees from one community and spend them somewhere else,” said Wally Wulfeck, who leads the group formed by all the chairs of neighborhood planning groups. He isn’t convinced the city’s plan is the right solution.
San Diego would test its new fee structure on parks and recreation first. It so happens San Diego’s new citywide parks masterplan is making its way through City Hall, and this structural fee change is its somewhat obscured underbelly.
It’s been nearly half a century since San Diego modernized its vision for public outdoor recreation spaces, which are experiencing a kind of renaissance as the public searches for space to safely breathe during the COVID-19 pandemic.
But neighborhood groups feel under-consulted on both the parks plan and the new fee structure. Neighborhood groups have direct say in how developer fees are spent, and they’re not eager to give it up – even in the name of equity.
“I think we’re substituting one form of inequity for another,” Wulfeck said.
Neighborhoods write decades-long lists of projects they want to complete using developer fees, which include needs like disability playground access to sports complexes.
In June, leaders of San Diego’s neighborhood planning groups unanimously asked for more time to review the parks plan that some say is moving too quickly toward adoption.
San Diego’s Saddest Park
A gutted ballfield surrounded by a 10-foot chain-link fence is the only space resembling a park in the Sherman Heights neighborhood.
It’s actually a “joint park,” used also by the adjacent elementary school, that’s unpredictably locked. But the spit of an acre, half filled with weedy blackened baseball gravel, seemed heavily frequented one Monday afternoon.
Groups of children ran along the perimeter as if caught in a spinning horizontal hamster wheel. The playground equipment sat unused, swirled in caution tape due to the pandemic. Half the basketball hoops stood netless; those too surrounded by their own set of security fencing.
Usually a story that opens like this would tell you there’s no money to make the park better.
Actually, there is.
Sherman Heights technically has access to about $203,000 paid by developers building in southeastern San Diego that’s sitting unspent in their developer account. But seven other of the city’s neediest neighborhoods are competing for it, too, and Sherman Heights’ joint park is not on the list of projects awaiting funding.
“Our neighbors and friends are in the same situation as we are and it’s shameful we have to fight over the same resources,” Ramirez said.
Louisa Torio, a historic preservationist and a Sherman Heights representative on the neighborhood planning group, said the joint park isn’t on the needs list because Sherman Heights, as an urban neighborhood, is totally built out and “doesn’t have parks.”
She cited Balboa Park as a nearby amenity the public can use.
That park is still a mile away. Grant Hill Park, just a few blocks away, is also nearby but it’s a mighty uphill walk for a mother pushing a stroller. For a family looking for a lunch hour picnic area, it’s the weedy ballfield or nothing.
Torio said preserving Sherman Heights’ historic character is more important than providing open space for residents.
“The only way to add parks would be to destroy the historic fabric of the neighborhood and that’s never acceptable,” Torio said.
For small neighborhoods that are mostly built out, though, the biggest issue in the current system is that there’s unlikely to be enough new development to provide much of a lifeline for unbuilt upgrades, like the 15 other projects waiting on the southeastern planning group’s list.
For example, the southeastern planning group plans to meet in July to consider a proposed new cannabis shop in an old office building. That’s not new development, so, no fee money for the community.
No Land Left? Tough Luck.
Newer neighborhoods have tens of millions in development fees sitting in their accounts even after they’ve maxed out their planned park projects.
North University City has $38 million paid by developers under its facilities benefit fee, the one paid on future neighborhood needs.
Since developers began paying North University City, it’s amassed over $230 million. A large portion of that is spent on street projects like road widening or connections between avenues and freeways.
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The fee is based on wildly different costs per new home, depending on the neighborhood.
If a builder added one new studio apartment in southeastern San Diego, they’d pay the community $9,883. If they did it in northern University City, they’d pay the community $31,802.
The highest fees in the county are in Del Mar Mesa, $122,048 per home. They’re lowest in San Pasqual Valley, home to the San Diego Zoo Safari Park, at $2,054.
Still, Chris Nielsen, chair of the University planning group, is having the opposite problem of southeastern San Diego. Money is coming into his group’s account from developers, but it can’t get projects from their neighborhood plan into the city budget.
“It’s the mayor’s office that controls when projects are added for spending,” Nielsen said.
Though the money is allocated by neighborhood, it’s all “city money,” said Tomlinson. He confirmed that it’s ultimately the mayor who recommends and approves these projects in his annual budget.
Shrinking ‘Power of the People’
While developer fees seem to generate lots of money, it’s just .01 percent of San Diego’s budget.
Still, it’s the one fund in which communities get to set their priorities. It takes an attentive community with time on its hands to follow the money and ensure it’s spent in the right places.
Marc Sorensen, a retired federal government employee, served on a parks-focused subcommittee of the Scripps Ranch neighborhood planning group. To date, the neighborhood has collected over $19 million from developers who must pay the higher bracket of fees in the newer community.
But unlike the other seven newer communities with similar high developer fees, they’ve spent all they have. There’s just a few parcels of developable land left, Wulfeck said.
You have to have a very “active planning group … to make sure those funds aren’t being moved around to places it shouldn’t go,” said Sorensen.
Sorensen said neighborhoods used to have special parks funds controlled by recreation committees until some corruption within the system ended the practice citywide. But, now it’s easy to lose track.
“The power of the people is shrinking,” Sorensen said.
Myron Taylor, nominated to lead the underserved southeastern planning group just before COVID-19 hit, agrees the money is hard to track.
It’s up to “staff discretion and what a Council member can push forward,” Taylor said. “We still have a lot of work to do but we need the advocacy of community involvement to support these agendas.”