Council Considers Hedging Civic San Diego's Bets - Voice of San Diego

City Council UNVEILING THE UNSEEN

Council Considers Hedging Civic San Diego's Bets

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

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.

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.

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