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On Your Dime

By Murtaza Baxamusa


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Murtaza Baxamusa hosted the Cafeé San Diego on voiceofsandiego.org on Tuesday.

Saturday, Feb. 24, 2007 | The prevailing paradigm of development in San Diego has been to shift the risk of negative outcomes from the developer to the community. This is based on the premise that any development is good for the community.

Here are some examples:

  • Qualcomm Stadium
    In 1997, the city invested $78 million for expanding Qualcomm stadium, in return for 10 percent of the gross revenue as rent. The guarantee of 60,000 tickets was calculated by the city manager over a three-year span that included the 1994 Super Bowl and exceeded the capacity of the stadium at that time.

    According to the Grand Jury investigation, the ticket guarantee "creates a potentially severe financial disadvantage for the city and shifts the balance of advantage toward the Chargers."

    The deal became lose-lose for both the Chargers and the city, and the taxpayer investment to keep the Chargers until 2020 is now sunk, as we look for other uses of the site.

  • College Grove Wal-Mart
    In 1998, the city was eager to attract investment into a run-down multiplex and bowling alley on College Avenue. In 1998, it bought the land using its redevelopment authority, and sold it to the developer (Wal-Mart and Vestar) giving about $14 million in public assistance (including land subsidy), as CPI has documented. This included an agreement to lease back some of the land to use for a Park and Ride lot, refunding Wal-Mart $2.4 million generated in sales tax. Since then, the Park and Ride has been under-used and served as an overflow parking lot for the development. In order to reduce its debt service and principal repayment obligations to Wal-Mart, the city renegotiated the deal in early 2005. However, the deal fell through as the developer would not disclose the sales tax financials.

    When it comes back to City Council next month, it is expected the city finally will require a variety of benefits for the community, including median improvements on College Avenue and increased revenue for the general fund.

  • Navy Broadway Complex (NBC)The 1992 agreement with the Navy to develop this prime waterfront property promised "extraordinary benefits" to San Diegans including tax revenues of potentially $20 million a year.

    However, many questions were publicly raised about the deal, including serious doubts about the fiscal impacts. Most significant were the loss of $8 million in transient occupancy taxes (TOT) if condo-hotels were developed, and the future obligation of the city to provide police and fire safety services for the development. So what was the response from city officials? These critical funding questions "will be addressed at the time construction documents for the NBC project are submitted for the ministerial permitting process." A ministerial process means no public input. Delegating to a ministerial process gives an excuse for elected officials to avoid controversial community involvement.

    Finally, when media started swarming over the financing questions, the mayor's staff announced a deal in which the developer would reimburse the city for lost TOT if condo-hotels were built.

    The last example illustrates how our officials are sold on the idea that any development benefits the community. Seldom does anyone sit down with a calculator and fill in the costs and benefits columns. The CEO of the downtown redevelopment agency, Nancy Graham, recently told reporters: "We don't get into the financial analysis, and neither does the city."

    Murtaza Baxamusa is is director of research and policy for the Center on Policy Initiatives. Agree? Disagree? Send a letter to the editor.




    12 Comments so far on this story...

    The Navy Broadway Complex deal shows that nothing has changed in this city: Neither Jim Waring, the mayor's real estate czar, nor Nancy Graham, president of CCDC, believe their jobs are to protect the public interest. On the contrary, they see their role as promoting developments like NBC that are contrary to the public interest and are quite willing to violate state law to achieve their objectives. A majority on the city council led by the mayor's poodle voted to certify a sixteen year old EIR ignoring warnings that an active earthquake fault may render the Manchester project unsafe.

    Posted by Ian Trowbridge | reply to this comment
    February 19, 2007 2:01 pm

    You correctly raise the issue of the City’s drive towards “ministerial process”. Not only does this abuse of Process One (which is meant for small straightforward projects only) avoid public input, more importantly it avoids CEQA and therefore mitigation. A “ministerial” project can connect its sewer to an already overcapacity sewer line and the City, not the developer must pay for a sewer upgrade. It is hard not to believe that this is deliberate, given that the developers elected the current Mayor.

    Posted by Pat Flannery | reply to this comment
    February 19, 2007 2:40 pm

    It is difficult to believe that financial analysis to some degree isn't an integral part of a development project. While such projects might be difficult to quantify, considering intangibles, certainly someone does a ROM as part of the project management function. It can be difficult to sell future intangible benefit to the ordinary citizen, however the primary outfall of the Murphy administration demise was lack of transparency in government, followed by fiscal responsibility. "We don't get into the finances" is an enigma to me.

    Posted by Stephen B. | reply to this comment
    February 19, 2007 2:56 pm

    San Diego City government is rapidly becoming a mere appendange of the development sector. Land use decisions are made by default. We need a vision for land use in this City and the courage to make it reality.

    Posted by Jeanette Hartman | reply to this comment
    February 19, 2007 3:02 pm

    By law, the ministerial permit process is not subject to CEQA, no mitigation is required, community plans do not need to be followed, and no public hearing are required. The city taxpayers have to pick up the tab for impacts from ministerial development in which they have no say or can appeal. The development community wants to "streamline" the process and provide developers with "consistency" by reclassifying all projects from discretionary to ministerial. Using this ministerial loophole, they plan on breaking all height limits throughout San Diego including the 30 foot coastal height limit under guise of density bonus.

    Posted by Katheryn Rhodes and Conrad Har | reply to this comment
    February 19, 2007 8:45 pm

    To be "fair and balanced" the flip side of these examples is the dramatic increase in Park fees, school fees, transportation impact charges, Facility Benefit Assessment charges, and storm water regulations. Any fair analysis of development in San Diego has to also think about this and then analyze what the ultimate impact of a system that places significant up front costs on residential development - especially in fill development.

    Posted by Erik | reply to this comment
    February 20, 2007 12:01 am

    Another thing to watch in context of what you've raised is the discussion of City leasehold management, which is now at the Land Use and Housing Council committee. We all have read that the Mayor outsourced analysis of City real estate functions to the private real estate company, Grubb & Ellis, for $150,000. There's no reason a private real estate company would understand the value of transparent public process. "Stream lining" governance of our public land can too easily become a steam roller paving over transparency in the pulic interest, as your examples already show.

    Posted by Molly Rhodes | reply to this comment
    February 20, 2007 12:22 am

    Our biggest development is downtown San Diego. They expect population to triple and conventions and tourism to boom. Sounds good-but read the fine print. Downtown generates $100 million a year in property tax,of which less than 1% gets to our city's gneral fund. That's redevelopment law.. But downtown uses a lot more than 1% of the general fund. Fact-downtown is feeding off the rest of us,which is 98% of the city's population. If development is a benefit to a city , how come our cops are leaving to get jobs at opther cities ?

    Posted by mel shapiro | reply to this comment
    February 20, 2007 12:28 am

    The Qualcomm fiasco is just another example of the incompetent leadership at the helm of the city back then. I guess when you get access to a free skybox to the Chargers game, your duty to your constituents and city employees goes by the wayside. As for the developers, they don't care about the cops leaving, unless they become a victim. I tried to have an article printed in a large SD development magazine about the PD but they refused. We are not interested, good luck with your topic was the response.

    Posted by Brian R Marvel | reply to this comment
    February 20, 2007 2:55 am

    San Diegans are more proactive now than in the past. We used to sit back and let big entities like the Navy and Chargers crap on our city by using us for their own gain with no cares about the future of our city . Now with this disgusting proposal for non-descript highrises cluttering prime bayside property (NBC) the community is taking notice and saying telling the Navy to quit screwing our city!!! We need interactive space where everyone LIVING in San Diego county can come to and enjoy downtown, not more luxury hotels and condos

    Posted by Marcy I | reply to this comment
    February 24, 2007 4:04 am

    More food for thought;Let's talk about how much $$ the city lost on the Republican National Convention?Can Mr. Fred Saines finally share the numbers with the taxpayers? How much did we pay for hosting the Russian Egg festival? Why does the general fund have to pay to maintain Petco Park? How do the taxpayers benefit from the Convention Ctr. Expansion? Here's the best one:Mr. Manchester has offered to sell the city a 2 acre parcel of land he does'nt even own for a mere $20 mil.How can you sell land you leased from the feds and dont own?

    Posted by Frank Nitti | reply to this comment
    February 25, 2007 1:19 am

    The people that benefit directly from the illegal use of diverting pension funds for these projects are multi-millionares like Moores and Manchester. Here's a 'novel' approach to paying back the taxpayers; Implement a downtown special TOT( Transit Occupancy Tax. Consider using a protractor for setting starting point at the convention center. Draw a half circle that encompasses all the hotels that benefit directly from the Convention Ctr. Expansion and the Petco Park Taxpayer Subsidy. This would enable some of these millionares to pay back the city for the millions off dollars they made from the taxpayer subsidies!

    Posted by Frank Nitti | reply to this comment
    February 25, 2007 1:19 am


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