Off Course
By Hank Cunningham
Thursday, Aug. 28, 2008 | I've been reading with some interest the growing discussion/debate over the continued viability of the city's two nonprofit redevelopment entities, Centre City Development Corp. and Southeastern Economic Development Corp.
 | | | | "It's now, I believe, abundantly clear that both CCDC and SEDC exist mainly for their own benefit rather than that of the community at large." | |
In my opinion, both organizations should be dissolved and rolled into the Redevelopment Agency under the direct control of its legislative body, the City Council, and its executive director, currently the mayor.
The organizational structure of the San Diego Redevelopment Agency is unique among all of the numerous RDAs in California. No other agency includes nonprofit corporations such as CCDC and SEDC wherein staff are employed by an outside organization, rather than by the city government of which both entities are by state law a part.
While in the case of CCDC, in particular, this structure was helpful in facilitating the revitalization of a blighted and neglected downtown central business district, it certainly wasn't the only possible way by which to have accomplished this urban revitalization. One only has to look as far as Los Angeles or San Francisco to see similar redevelopment success stories achieved under the auspices of large, well-funded RDAs that didn't utilize the separate nonprofit corporation model.
The inherent problems with this structure have now become painfully obvious. The corporations are, in effect, quasi-public development entities that are lacking in adequate oversight by the municipal government which they ostensibly serve.
It's now, I believe, abundantly clear that both CCDC and SEDC exist mainly for their own benefit rather than that of the community at large, nor just as importantly, for achieving the objectives proscribed by state redevelopment law. Pure and simple, redevelopment was created in California and elsewhere around the country to eliminate slums and blight, both physical and economic.
It was not established for the purpose of facilitating the construction of expensive condominiums affordable only to high-income individuals, many of whom were clearly real estate speculators. To the contrary, the basic tenet of redevelopment is to improve the quality of life for low-income persons and families through fostering job opportunities, affordable housing, and public infrastructure improvements in older, urban core areas. Somehow this goal became obscured as CCDC and SEDC pursued projects that tended to enhance the bottom line of the corporation and/or its executives rather than the community or its residents.
I was hired by the city in 1999 to administer the operations of the Community Economic Development Department and the Redevelopment Agency. I remained in that position until mid-2005 when I left to accept a position in the private sector.
On paper, at least, through the city manager who then served as executive director, I was in charge of all RDA activities, including those of CCDC and SEDC. I soon found, however, that my authority didn't really apply to these organizations when the CEOs of each made it abundantly clear that they reported solely to their board of directors, not to me or the city manager. This disconnect came to a head during 2004 when I recommended to the City Council Land Use and Housing Committee and the Public Safety and Neighborhood Services Committee that :
(1) the low-to-moderate income set-aside be increased from its statutory minimum of 20 percent of annual redevelopment tax increment up to 25 percent; and,
(2) the city consider advocating for a change in state law that would allow for the use of tax increment to help defray the enormous cost burden for public safety (police and fire protection) in the downtown area.
Both recommendations were strongly opposed by the CCDC and SEDC boards and executive staff, and ultimately died for lack of political support. In the first case, a broad-based citizen committee on affordable housing had previously recommended that the LMIH set-aside be increased to 35 percent. The second proposal caused then-CCDC CEO Peter Hall to erupt with the following charge in an e-mail to the city manager: "Hank's cavalier attitude about focusing the legislation -- on downtown only demonstrates again his rogue behavior. This is the second instance recently where his intrusion into CCDC business is not only inappropriate, but absolutely off the mark. I'm not sure what drives his lack of regard for downtown redevelopment, but feel the time has come to request that you direct Hank to refrain from engaging in any policy recommendations that impact downtown redevelopment," according to the memo quoted in CityBeat.
Interestingly, none of the nonprofit CEOs, past or present, possessed any public sector redevelopment experience or credentials. In my mind, this creates a problem. How can professionals lacking any public sector background whatsoever be expected to function effectively in this much more open, as well as more highly regulated governmental environment?
Nationally, redevelopment/economic development is a credentialed profession with a uniform code of conduct and educational standards. It's not a field where executives should be hired based on political or business connections. The simplest way to avoid future problems such as those being faced today is to dissolve CCDC and SEDC, return their assets and repay their substantial loans to the city, and bring the Redevelopment Agency under direct city management control.
Hank Cunningham was director of community and economic development and assistant executive director of San Diego redevelopment. Previously, he was an appointed technical advisor to the California Redevelopment Association Board of Directors. You can email him at: hank.cunningham@sbcglobal.net Agree with him? Disagree? Submit a letter to the editor here.
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