Building Industry Association
of San Diego

Governor Jerry Brown took little time to veto the state budget plan approved by the Democratic majority in the legislature just hours before.  In his veto message to Sacramento lawmakers the Governor declared the budget unbalanced and would continue big deficits for years to come adding billions in new debt.

Part of the budget included the elimination of redevelopment agencies with nearly $1.7 billion in revenues being transferred to the state’s general fund.  While the Governor vetoed the budget plan it is unclear if he will veto the two redevelopment bills that were part of the proposal.   Vetoed or not, local governments along with pro-redevelopment organizations vow to take the matter to court if necessary.

Stay tuned…

Redevelopment agencies are all but dead as a consequence of the new 2012 state budget adopted in Sacramento.  On a Democrat dominated vote, the State Assembly and Senate approved two bills as part of the budget package that will transfer millions in locally generated taxes to Sacramento to close a $10 billion budget deficit.

Tax increment revenues generated in redevelopment areas were required to be used locally for infrastructure improvements and affordable housing.  Now, those funds will be redirected to Sacramento’s general fund. The state expects to collect $1.7 billion statewide and  San Diego stands to lose $50 million alone if the Governor signs the bills.  Redevelopment areas could technically remain but only if they give up the money.  San Diego’s premier redevelopment agency, the Centre City Development Corporation, could remain intact provided it sends the money to the state but the financial drain may be too severe for CCDC to continue.  The Assembly and Senate delegation representing the San Diego region voted along party lines with Democrats supporting the money grab and Republicans standing in opposition.

A host of pro-redevelopment organizations including the League of Cites  and the California Redevelopment Association vowed to continue the fight against the legislative action declaring they are prepared to take the state to court.

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.

An ordinance that would subject downtown hotel development to additional regulatory scrutiny was  unanimously rejected by the San Diego Planning Commission. The ordinance is being pushed by the hotel union, Unite Here and would require hotel projects that fall under the regulatory authority of the  Center City Development Corporation, (CCDC) to return to the city council for final approval.  CCDC is a public, non-profit corporation created by the San Diego City Council to oversee downtown redevelopment.

The union hopes to bring hotel projects back to the city council where they feel they have more union support to  pursue higher hotel wages and even project labor agreements. (more…)

The San Diego Planning Commission will consider changes to the downtown Planned District Ordinance that would require hotel projects to go through additional regulatory scrutiny by the San Diego City Council in order to get approval.  For over 30 years downtown hotel projects have fallen under the jurisdiction of the Center City Development Corporation, a public non-profit corporation created by the city of San Diego to oversee downtown redevelopment projects.

The PDO changes are sought by local union groups in the hopes of attaching project labor agreements and union operated hotel requirements on future hotel development by getting these projects in front of the more union friendly city council.  However, union candidates were routinely thumped in the November election and with two new councilmembers, union influence on the council is not what is used to be.

If approved, CCDC approved hotel projects between 100 and 200 rooms could be appealed to the city council. Hotels of more than 200 rooms would require both CCDC and city council approval.   The duplicative regulatory review increases the uncertainty and time of the project review process that has been the cornerstone of the downtown renaissance.  An independent economic analysis reports that the city risks loosing up to $100 million in tax revenue over the next ten years if the new process is adopted.

The Planning Commission will hear the proposed ordinance on Thursday, December 16th at 9:00 a.m.

Policymakers are looking to tackle some big legislative issues while most  people have their attention turned to family and the holidays.

The County Board of Supervisors will again take up the General Plan Update on December 8th and bring to a close more than three days of mostly negative testimony on the controversial plan that will downzone more than 400,000 acres of private property.

The San Diego City Council is expected to meet on December 2nd to overturn an expected mayoral veto of the anti-big box ordinance which council passed on November 16th. The ordinance is aimed at Walmart Supercenter stores and was pushed by union activists who have a long standing feud with the non-union retail giant.

Unions also have a hand in efforts to change the downtown Planned District Ordinance (PDO) to require additional regulatory scrutiny of hotels beyond CCDC approval which guides development in the city’s urban core.  The San Diego Planning Commission is scheduled to hear the proposed changes to the PDO on December 16th.  Hotel unions hope to change the PDO in an effort to improve their chances for project labor agreements and union-only operated hotels by getting hotel projects before the union friendly city council.

CCDC Chair Fred Maas

Fred Maas has decided to step down as Chair of the Centre City Development Corporation effective December 31st. He had been the interim head of CCDC since the departure of Nancy Graham in 2008.  Mass advised Mayor Jerry Sanders of his decision to leave in a letter where he thanked him for the opportunity to serve and looked forward to a continued friendship. Mass has been a long-time industry supporter and served as President of Black Mountain Ranch from 2003 – 2009.