Friday, April 30, 2010

Eight Fiefdoms and a Football Stadium – Let the Games Begin

Written by: Just Wondering

We live in a time where every taxpayer’s penny counts. We live in a town divided into eight council districts, or maybe more appropriately labeled, eight fiefdoms. A fiefdom is an area over which a person, or organization exerts authority or influence. I’m just wondering if that influence is for the greater good?

Our City Council has begun discussing a $500,000 study regarding the Downtown Redevelopment Agency, or CCDC, that could lead to it receiving more tax dollars and each council district less. The argument is this new plan will allow CCDC and the City to pay for more projects downtown, like a new football stadium for billionaire owner Alex Spanos, and of course other projects too. To get a better understanding of part of what CCDC and other redevelopment agencies do follow this.

Here’s my concern, there is only so much of any pie. If downtown redevelopment takes a bigger bite what’s left over? The key here is revenue and in redevelopment areas such as downtown tax revenue is stagnant because the increased tax increment from redevelopment remains with redevelopment agency and CANNOT be used to fund the City’s day in and day out operations. In other words redevelopment causes an increase for city services but cannot pay for it. At first I thought I was missing something, but then Carl Maas, CCDC Chairman confirmed it when he said, CCDC pays for “sticks and bricks, hard assets” it cannot pay for day-to-day operations.

As reported by the City’s Independent Budget Analyst, the City’s general fund, that is its day-to-day operating monies, would lose $300 million if CCDC’s revenue cap is raised. IBA’s report. Take the time and read it yourself. I’ve included the “Conclusion” statement of the report here:

This report, provided in response to a January 13, 2010 memorandum from Councilmember DeMaio, illustrates the potential impacts to General Fund property tax revenue that may result from an increase in the tax increment cap for the Centre City Redevelopment Project. Based on current projections, increasing the cap to a hypothetical level of $9 billion (from the current level of $2.98 billion) would result in a net reduction to the General Fund of over $300 million cumulatively from FY 2011 to FY 2043.

However, this analysis only provides one side of the equation. A number of other factors must be duly considered in evaluating the merits of an increase in the tax increment cap, including the remaining projects and activities that, if not completed, will become General Fund obligations; the potential ancillary economic benefits from continued redevelopment, such as increased sales tax, transient occupancy tax, employment and business activity; and the increased funding for affordable housing.

Let the Fiefdom Fights Begin

During a presentation before Council, Phil Rath, the Mayor’s policy wonk, and Frank Alessi, CCDC's Executive Vice President and CFO, argued the city's day-to-day operating budget actually would receive a $235 million boost if the cap were lifted.

I love guys with crystal balls who can see into the future. I just want them to play with their money, not mine or yours. Even better, why doesn’t CCDC guarantee the risk, instead of you, me and every other San Diego taxpayer. Oh, wait, they can’t, the law forbids that.

Rath and Alessi say the money would come from additional hotel rooms and sales taxes, as well as CCDC repaying debt. Oh by the way, that’s the debt, one Councilmember, Donna Frye, has been trying to get them pay for last several years with no progress whatsoever.

According to an article in the Voice of San Diego, Rath and Alessi brought up matters some council members were sure to like.

“For Councilman Carl DeMaio, they discussed the downtown redevelopment agency, not the city's day-to-day budget, paying $215 million in outstanding debt for Petco Park. For Councilwoman Donna Frye, they discussed accelerating a repayment to the city for outstanding federal housing loans. For Councilman Todd Gloria, they discussed further money for homeless services. Also, Rath and Alessi prominently mention an additional $1.2 billion for affordable housing.”

Council President Hueso fought for his fiefdom saying, "I think we largely heard from advocates who want to see downtown continue to grow. I want to see downtown continue to grow. But I also want us to make a proportionate reinvestment in other parts of the city." Guess he means his district.

But since the law forbids redevelopment agency dollars paying for public safety services, libraries and park and rec center operations, look for no help there. And when financial and economic times go really South, as they have today, the taxpayers, the media, and the politicians blame their mismanagement problems on the employees, their wages and so labeled “Cadillac” benefits.

The City’s General Fund, the one according to the Independent Budget Analyst which already runs a chronic structural deficit, cannot afford any additional loss of revenue on vision through a crystal ball.

Our so called leaders need to get this city’s finances back on solid ground and away from the risk filled morass and practices of the past. The taxpayer’s treasury has nearly run dry thanks to 25 years of mismanagement, fraud, and other schemes. It’s time for San Diego get cut up the credit cards, properly fund its obligations to its number one responsibility, public safety, and stop spending money it doesn’t have in the bank.