The City Council is making a late push to neuter Civic San Diego in its new role as a commercial real estate investor.

A Council committee is considering Wednesday whether to give the Council authority to approve any move the organization makes to buy property, invest in a project or issue debt.

But if it wants to avoid a potential veto by Mayor Kevin Faulconer, who promised a major role for Civic San Diego in redeveloping low-income urban neighborhoods, it’ll have to act fast.

Civic San Diego used to run local redevelopment, a state program that spent property tax money on development projects in certain neighborhoods, especially downtown.


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When redevelopment ended in 2011, Civic San Diego started looking for new pots of money to stay solvent, and pursue its mission to improve “economic and social well being” in “targeted urban neighborhoods.”

One idea was taking over authority for approving permits and drawing up plans in certain neighborhoods. Negotiations with the city’s union to do that haven’t happened yet.

Another idea, approved by Civic San Diego’s board this summer, was setting up a $50 million fund (with money from grants, community investments by banks and other sources) to buy things like strip malls and use the rent payments to pay for administrative costs. It’d also invest some of its money to improve the properties, including possibly subsidizing rents for certain tenants if it means bringing in a preferable tenant (think: replacing a payday loan operator with a fresh produce mart).

“Currently, what specific projects are funded, and whether those projects provide adequate benefits to the community, is solely the decision of (Civic’s board),” the committee’s item summary reads.

The proposal would give the City Council final say on any real estate purchases.

In 2010, the city attorney said a city-owned corporation could take on debt, and said if the city doesn’t like that idea it should change the corporation’s organizing documents to give Council final say. That’s what the Council’s trying to do.

City Councilwoman Marti Emerald’s office, which is pushing the proposal, didn’t respond to requests for more detail, but Civic San Diego board member Murtaza Baxamusa in July argued against letting the board have final call on land deals. He has consistently said Civic San Diego needs more oversight.

When Civic San Diego was in charge of redevelopment, Baxamusa said, all of its major real estate purchases had to be approved by the Council, based on state law. Why should this be different?

Redevelopment money came from property taxes, which can only be increased by public vote. With Civic San Diego’s money coming from rents, it could go up based on the real estate market.

“My concern is at some point public interest will be compromised by our proprietary interest to make return on investment,” he said.

Civic San Diego Board Chair Cynthia Morgan strongly disagreed.

“I think it’s each board of director’s fiduciary responsibility to find replacement funding to continue to allow Civic San Diego to exist,” she said.

But Civic San Diego’s board passed the motion this summer to create the acquisition fund. It’s moving forward.

The City Council, though, could end up deciding whether each purchase Civic wants to make is a good one.

    This article relates to: City Council, Civic San Diego, Land Use, News, Share

    Written by Andrew Keatts

    I'm Andrew Keatts, a reporter for Voice of San Diego. Please contact me if you'd like at andrew.keatts@voiceofsandiego.org or 619.325.0529.

    7 comments
    Deb Porter
    Deb Porter subscribermember

    Hey City Council………. what is it about shutting down Civic SD that you don't understand???

    Citizens of the city do not want this very expensive, very autonomous , tax payer supported organization doing more damage than it already has in the past. Gov. Brown was right…. we don't need redevelopment agencies who only exist to further their own existence. 

    Chris Wood
    Chris Wood subscriber

    It might be a good idea for government and quasi government organizations to not get involved in enterprise.  It seems that using taxes to keep streets and the water system functional, along with funding retirement benefits for city employees is more than enough challenge.  


    If other funds are available then helping the homeless find a home would be a good use for the funds (houses can be bought in San Diego for ~$200,000 and turned into group homes one at a time (without taking out million dollar bonds).


    La Playa Heritage
    La Playa Heritage subscribermember

    San Diego has being robbed blind by Civic San Diego and City staff for the last three years.  Leaders have been fiddling while Rome burns. 


    The political frenzies are distractions from financial issues of Civic San Diego's handling of the Successor Agency (SA) assets and Revenue. Money is being stolen from the poor neighborhoods and the homeless.  Mayor Faulconer, the City Council, and the Civic San Diego Board of Directors are not aware that they are being suckered by staff that misinterpret State laws. 


    http://tinyurl.com/20141021a


    Please try to follow the Long Con and Conspiracy Theory by following the money.


    Civic San Diego and the City Council Liquidated $382 Million of Cash Residuals in the bank that former Mayor Filner promised to Neighborhoods to fund the 6 am to 6 pm before and after School programs, neighborhood infrastructure, and homeless solutions. The City's General Fund received 21 cents on the dollars = $80 Million in the last 3 years that balance the budget and built up Reserves.  The annual $180 million in Redevelopment Property Tax Trust Fund Revenue is missing from the FY-2012 to FY-2015 Budgets.  The missing annual $180 million in Successor Agency Revenue in the Budgets were approved without the required Annual Technical Review prepared by Financial staff for every City Department and Agency, except for the Successor Agency (SA) under Civic San Diego staff's control.



    Instead of neighborhoods, the $382 Million in Cash Residuals was redirected to the General Funds as Residual RPTTF Distribution instead of Paying down the $1.67 Billion Successor Agency Debt that includes the $223 million in HUD OIG Audit Debt Payments to Community Development Block Program Income promised for neighborhoods and the Homeless.


    http://tinyurl.com/20140728a


    On July 28, 2014, Civic San Diego staff Reclassified $151 million of the $223 million in Federal HUD OIG Audit Debt for CDBG Program Income for the poor as General Inter-Agency Debt.  Similar to loans from the City General Fund, Water Department, Sales Tax, etc.  that are subject to State laws. 


    The Results of reclassifying $151 million in Federal HUD OIG Audit Debt,  are $46 Million in cash has been diverted to the City of San Diego’s General Fund for the City staff and Union Reserves instead of CDBG Program Income for Homeless, children, seniors, and poor neighborhoods. Then Civic San Diego staff erased and deleted the remaining $106 million in HUD OIG Audit Debt to CDBG Program Income for the poor based upon a purposeful misintepretation of State law for the benefit unknown parties.  This $151 million in Federal debt approved through the Office of Inspector General (OIG) of the US Department of Housing and Urban Development (HUD) was to be used to end Chronic and Veterans Homeless by the 2015 deadline, and all Homeless by the 2020 deadline.


    All this financial information is outside of the yearly Budget process for the taxing agencies, and required 5-year Budget projections. No Successor Agency budget exists for FY-2013 to FY-2015 because supposedly the Successor Agency is just temporary agency, therefore no written budget or analysis is needed.  Shady. 


    CPRA request to the County for Successor Agency (SA) shows that $524 Million in Successor Agency (SA) Property Tax Increment (TI) is missing from City, County, and Schools Yearly Budgets. The information is also missing from the City’s 5-year budget projections.


    The annual $180 million in RPTTF Revenue will be off the City’s budget books for the next 20 to 30+ years that it will take to pay off all $1.67 BILLION in Successor Agency (SA) debt, at the current rate.


    http://tinyurl.com/20141021a


    The 3 year breakdown of Successor Agency Revenue is as follows:


    + $524 million Property Tax Increment (TI) ROPS-1 to ROPS-6.


    – $145 million Tax Sharing Pass Through Distribution off the top.
    – $166 million ROPS Enforceable Obligations (EO) paid from new RPTTF TI.
    – $202 million in Residual RPTTF Distributions to Taxing Agencies. Goal is always Zero.
    – $5 million Allowable 3% Administrative Costs.
    – $6 million Miscellaneous Fees to County and State.


    $908 Million in SA Assets as of June 30, 2012.
    Non-Housing Other Funds ($616 million) and LMIHAF ($293 million).


    $1.67 Billion in Acknowledged ROPS Debt.


    -$180 million Residual Distribution to Taxing Agency in 3 Due Diligence Review (DDR) Payments. Goal is always Zero.


    Unknown amount of ROPS Enforceable Obligations (EO) paid from existing Reserves and Other Funds Accounts. Unaccounted.
    Unknown amount of new Revenue in Reserve and Other Funds Accounts. Unaccounted.
    Unknown starting and ending balances of Reserves and Other Funds Accounts. Unaccounted.


    $20.4 million in General Fund Reserve Loans and Gifts to Civic San Diego, City Departments (City Attorney, IBA, Financial), and outside Consultants for extra Administration Cost over 3% Allowable. 

    The 20.4 million in Administrative Debt was erased as part of $211 million written off in the FY-2013 CAFR.

    Geoff Page
    Geoff Page subscribermember

    The City Council is CONSIDERING whether or not it should have authority over Civic San Diego?!  If they don't, and I thought they already had this authority, they will just be allowing the problem to blossom all over again.  Have their memories faded already?

    rcardulla@aol.com
    rcardulla@aol.com subscriber

    If no checks and balances are put on Civic San Diego now, we can expect another scandal to add to the long list of scandals that already exists from past local government actions.  When one considers that the former president of Civic San Diego left to join a giant corporation that specializes in putting together investments for government projects just after he stated boldface that "we (Civic San Diego) can buy property with low density, change the density to high, sell to developers at a profit, and the city can keep the money" No mention about the present private owners . 

    Now we have a new president for appointed to Civic San Diego who has a checkered past.  It seems that  this new president of Civic San Diego, who was once president of Southeast Development Corporation {SEDC} (a city development group like Center City Development Corporation of which Civic San Diego is its successor) decided to become a developer himself and was "able" to obtain a loan from his former employer SEDC.  The loan required that housing be built and sold at below market prices.  It seems that the new president of SEDC, herself latter forced to resign for improper conduct, and the old president of SEDC, who is now our new president of Civic San Diego, "failed"  to compete documents requiring that the newly built houses be sold below market prices.  What did our new president of Civic San Diego do when this "oversight" was discovered, you guessed it, he sold the newly built housing using government funds at MARKET PRICES!!   Just the guy you want for the "job". The question is what "job" ??? 

    Ven Griva
    Ven Griva subscriber

    It would seem that if the tax dollars are paying for any portion of the projects local government should have oversight.