Insight

How Civic San Diego Plans to Respond to Its Identity Crisis

October 31, 2013

 

BY: ANDREW KEATTS

Civic San Diego needs to find a long-term role for itself. Without one, it dies.

So that’s basically what the former redevelopment agency has spent 2013 working out.

It wants to designate specific areas in the city — along the Orange Line in Encanto and along El Cajon Boulevard in City Heights — for a series of programs aimed at lowering the cost of development to stimulate new projects, thereby increasing jobs and housing in those low-income areas.

At the root of the plan is an attempt to take over planning and permitting authority, currently handled by city employees, because it says it can take care of that function faster than the city can. In this case, faster processing means cheaper, and therefore more attractive, development projects.

Its big idea seems to be gaining traction: Some of its primary components have shown up in the mayoral contenders’ plans.

But it’s also running up against opposition from at least one powerful force: the union representing the city’s white-collar workforce.

Civic San Diego was formed when the state, to close a major budget gap, ended the redevelopment program. Redevelopment aimed to improve neglected neighborhoods by building major projects with property tax revenue from other projects it had previously built. New development gives birth to new taxes, which were used to build more projects, ad infinitum.

That program was handled in the downtown area by the Centre City Development Corp (CCDC), in the southeastern neighborhoods by Southeastern Economic Development Corp (SEDC) and in 12 other areas around town by city staff.

But when that state program ended, the new tax revenue that sustained it went back to Sacramento, and projects that had already been approved but weren’t yet completed fell under the supervision of the state department of finance.

The actual work of finishing those projects locally was handed to Civic San Diego, a nonprofit agency formed by merging CCDC and SEDC that also has authority in the redevelopment areas formerly controlled by city staff.

Completing that task won’t take forever, though. And when it’s done, there’s not much left of Civic San Diego. So it’s looking for an ongoing role — and an ongoing revenue stream — that would not only allow it to exist, but let it pursue the same basic goal of improving blighted neighborhoods.

But shoring up the remaining redevelopment projects isn’t quite all Civic San Diego does right now, either.

It also has planning and permitting authority in the downtown community plan area. So when developers want to get a project approved downtown, they go to Civic San Diego, not the city’s development services department. The fees they pay for those permits also go to Civic San Diego.

Civic San Diego says it can only start spurring investment in southeastern San Diego or City Heights if it takes on that same authority in those areas.

And that’s where the Municipal Employees Association, the labor union that represents city planners and other city employees, says it’s drawing the line.

The Plan
Civic San Diego is proposing a plan for what it’s calling “transit-oriented economic opportunity areas.”

That clunky phrase just means it wants to help build stuff in low-income areas that are also near major transit projects.

One of the ways it’ll do this is by competing, on behalf of the city, for federal money for beneficial projects in underserved areas, called New Market Tax Credits. Civic San Diego secured $35 million in such funding for projects around the city — including projects in southeastern San Diego and City Heights — in 2013 and has requested more than $100 million for 2014. Nonprofit entities, not municipalities, compete for and administer these types of state and federal funds, so there’s a role for Civic San Diego to play.

Pushing for new funding sources like the tax credits, Healthy Food and Urban Farming Initiatives and EB-5 loans, a federal program that gives wealthy foreigners a green card in exchange for investment in local projects, is another way the group can explore its goal of serving low-income areas.

But the main new initiative it’s pushing is to take control of planning and permitting in targeted areas along transit corridors through something called “specific plans.”

Right now the city makes planning decisions for different areas with community plans, which outline long-term growth in communities. Most of the city’s plans are out of date; others are in the midst of a lengthy update process.

Civic San Diego says its proposal to implement smaller, more targeted specific plans where there’s less disagreement about what type of development should happen, can result in expedited permitting for projects in that area.

By speeding up the approval process for projects in the specific plan area, it says, the group can lower the cost of development. That could help make potential projects in the specific plan area financially feasible.

The specific areas would also be covered by a blanket environmental report. That would mean individual projects wouldn’t need to produce an environmental report of their own, as required by state law, as long as they met certain requirements set forth by the overarching environmental report.

And since those areas are located along transportation corridors, the development would theoretically capitalize on large public investments — the transit corridors — that haven’t been able to stimulate growth on their own.

The proposal also calls for the creation of a large fund that would raise money from public and private sources to help stoke new projects.

Civic San Diego would take the money from that fund and purchase properties and assemble adjacent properties, draw up new restrictions on them that increase the amount of development allowed and sell the properties to developers. Basically, they acquire the properties at a low cost, take the initiative to upzone the properties — inflating their value — and sell them off to developers who want to build at the increased density.

The private investment would come from banking institutions, developers, pension funds, insurance companies and community development financial institutions (CDFIs), a type of financial institution that provides financial services to underserved markets.

Nonprofits in the area, like the Jacobs Family Foundation in Encanto, would partner with the agency, and bring with them the land they own in the area. The public component would also include the contribution of city- or Civic San Diego-owned properties in the area.

But Civic San Diego says it can only set up that public-private partnership if it first gets planning and permitting authority over the areas. And that’s the big hold-up.

The Controversy
While it was building support for its plan to spur development, Civic San Diego met with the Municipal Employees Association (MEA) to discuss taking over planning and permitting authority in two former redevelopment areas — southeastern San Diego and along El Cajon Boulevard.

In a letter to the city’s human resources director, MEA’s lawyer made clear the union was not on board.

In that meeting, according to the letter, Mike Zucchet, general manager for MEA, “explained that MEA would never allow the city to violate state law by removing this work from MEA’s bargaining units and contracting it out to itself … (since the city of San Diego is the sole member of Civic San Diego) to be done as non-union work,” the letter said.

The agency would need to negotiate with MEA to take over those responsibilities before the City Council could approve the change. Jeff Graham, president of Civic San Diego, said those negotiations could begin in a few weeks or a few months.

But most of what Civic San Diego wants to do is uncontroversial. Pursuing state and federal grants, working with nonprofits and attracting investment from private entities to help spur development are popular ideas, even with MEA, said Zucchet.

So why not just do those things, but let city staff maintain planning and permitting authority?

Graham said the proposal dies if Civic San Diego can’t get buy-in to take over that authority.

“We can’t get the money without the planning and permitting authority,” he said. “The whole selling point here is that, if we have planning and permitting authority, we can buy (properties) today, increase value by increasing predictability with an (environmental report) and our planning authority, sell the land to developers in a competitive process, and give the money back to investors.”

Does that mean potential investors have specifically said they’re uninterested if the city retains its authority?

“They haven’t come right out and said that, but it’s a really tough sell,” Graham said. “I don’t know how we’d increase value, plus a good rate of return, without having the ability to do that.”

Zucchet said MEA thinks much of what Civic San Diego has proposed sounds great, but wants to have a broad conversation that answers why the agency thinks it needs to take over work that’s been collectively bargained.

“This is not a knee-jerk, union, don’t-take-our-work response. We’re saying, let’s talk about why we need to do this,” Zucchet said. “Is this what the city wants to do? Is this the vision for planning, to have a quasi-city department do it? I’d rather have that discussion now, rather than say, ‘Oh it’s just this little thing.’”

Bill Fulton, the city’s newly minted director of planning, isn’t so sure the plan is an all-or-nothing proposition.

Downtown, he said, has a single community plan that has the same boundaries as the planning and permitting authority controlled by Civic San Diego. That wouldn’t be the case in the new areas, he said, where there’d be a community plan area, controlled by the city, and within that a smaller planning area controlled by Civic San Diego.

“If they were to devise a specific plan and have permitting authority for a smaller area, we would probably continue to play a role there,” he said. “We’ll continue to work on what their role in the neighborhoods could be. That’s been a discussion for quite a long time, and it’s continuing.”