Building Industry Association
of San Diego

In December 2010, the San Diego City Council rushed through new and more stringent regulations governing the construction of big box retail store – most notably – Walmart Supercenters.  Pro-union members of the city council engaged in a beat the clock process to ensure a majorty vote to enact the regulations before the new council members took over following the November elections.  Walmart representatives announced after the vote that they would begin a signature drive to  take the matter to the voters. Today the City Clerk’s office declared that they had verified enough signatures to force the issue back to the council and perhaps on to the ballot.  City officials said by their count more than 42,000 of the 54,000 signatures turned in by Walmart and a coalition of business and community leaders we valid, well above the 32,000 signatures needed to qualify.

Now the council has two options: repeal the ordinance outright or let the voters decide.  Either move comes at a price: political or financial.  Union leaders moved heaven and earth to get the council to impede Super Walmarts and won’t take kindly to their union allies if they turn tail and run by repealing the ordinance.  The council, on the other hand, would have to spend as much a $3 million of money they don’t have on an election that polling data and political experts say would end with the voter throwing out the council’s excessive rules governing Super Walmarts.  Several councilmembers are still stinging from the voter rebuke of their tax hike proposal in the November election and are not eager for another thumping by the electorate.

In any case, the council has to decide without delay on what action to take and council President Tony Young has yet to decide which way he will go when the council meets to weigh its options.  Young says he’ll bring the issue forward as early as next week.

The San Diego City Council voted 7 – 1 Monday night to formally oppose Governor Jerry Brown’s plan to eliminate redevelopment agencies (RDAs) statewide. Brown wants to do away with RDAs and redirect their revenues to the state and as part of his plan to close the state’s multi-billion dollar budget deficit. The money would be spilt between local jurisdictions, public safety and education.

The council was having none of the Governor’s plan and fiercely defended the 17 redevelopment agencies in San Diego – some of which have generated billions in private investment and hundreds of millions of dollars in taxes that are spent mostly on local capital improvements and other public amenities.

The resolution opposing the Governor’s plan was authored by Councilman Kevin Faulconer and cited the tremendous success of the downtown redevelopment agency that has been credited for generating $14 billion worth of investments while generating 23,000 permanent jobs in San Diego. District 1 Councilmember Sherri Lightner was the lone hold out and expressed concern that schools and public safety would suffer unless redevelopment funds were redirected to Sacramento.

San Diego joins a growing choir of opposition to the elimination of redevelopment agencies that includes the California League of Cities and several cities throughout California.

Governor Seeks End to Redevelopment Agencies

Claiming that redevelopment agencies have outlived their usefulness, Governor Jerry Brown wants them eliminated as part of his just released budget package.  In presenting his first budget since taking over for Arnold Schwarzenegger, Brown alleges that local jurisdictions and schools have lost billions in property tax revenues “subsidizing” redevelopment and was never intended to be permanent.

Under redevelopment rules, property taxes generated from redeveloped property remains within the community where it was produced to be used for  public infrastructure improvements and affordable housing.

In recent years, the state government has raided redevelopment funds as a means to help balance its books and now the governor wants them eliminated altogether.  Redevelopment in downtown San Diego has been hugely successful in revitalizing an urban core that consisted of saloons, strip clubs and tattoo parlors 25 years ago into a thriving commercial and residential center.

Downtown redevelopment has generated nearly $13 billion in private investment since being established and generates $191 million a year in taxes.  Nearly a half a billion dollars in redevelopment funds have been used for public improvements and infrastructure and has created over 18,000 affordable homes downtown.

Expect a fierce battle over redevelopment funds as the budget debate unfolds over the next few months.

The Second District Court of Appeals has ruled that if public funds are used to pay for any portion of a development project, prevailing wage law  must be applied to the entire project regardless if it’s paid for with private funds.  The appeals court ruled in a case involving  the construction of 1,200 homes and 50,000 square feet of commercial space on 500 acres in the City of Azusa.  The city required construction of multiple public works projects as a condition of project approval and approved the creation of a Mello-Roos district to provide ‘partial’ funding for the improvements.  The Department of Industrial Relations determined that since Mello-Roos funds were used the  entire project was subject to prevailing wage requirements.  The developer went to court. The court agreed with the department (as did the appeals court) that prevailing wage law must be applied to the entire project.  The issue could end up before the California Supreme Court.  If  the ruling stands it will have serious financial ramifications for the building industry and could cripple the industry’s chances for recovery.   Prevailing wage projects typically cost up to 30% more than their privately funded counterparts.  While the BIA cannot offer legal advice, we believe it is critical for the building industry to correctly structure and delineate the public financing component of their projects to avoid the maximum impact of this ruling if it stands and/or in the interim period leading up to a Supreme Court Ruling.

Opponents of a San Diego City Council approved ordinance making it harder to build Walmart Supercenters turned in 54,000 signatures in an effort to get the council to change its mind.  The city clerks office has 30 days to verify the signatures and if it finds that at least 32,741 are valid the council must take action to either repeal the ordinance or send it to the voters for a final say.

The council voted in December 2010 to require large retail developments to conduct an extensive economic analysis as part of its project review process.  The city’s independent budget analyst concluded that the findings required in the study could amount to a de facto ban on supercenters within city limits.  If the council opts for a citywide vote rather than an outright repeal, the cost to taxpayers for a special election could reach $3.4 million.