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The Jacobs Center for Neighborhood Innovation, which promised years ago to develop 60 acres in southeastern San Diego, has been forced to fundamentally change its development vision and to significantly pare down operations.
Years after a Pasadena family promised to transform 60 barren acres in southeastern San Diego, the nonprofit they built to carry out that mission is facing significant upheaval.
The Jacobs Center for Neighborhood Innovation staff has dwindled to 20, down from more than 100 at one point – and layoffs have reached even high-level executives. The Jacobs family is now contributing $1.5 million annually, down from at least $6 million a year. The group’s signature achievement, Market Creek Plaza, has contributed to a crippling $33 million in debt.
The struggles have forced the nonprofit to fundamentally change its development vision and to significantly pare down operations. It now hopes to let other developers take control of the land and may even sell some of it outright.
CEO Reginald Jones said the nonprofit’s taken strategic steps, including the debut of a new master plan, he expects will draw developments that residents want.
Next month, Jones said, the nonprofit expects to announce three significant new deals with developers.
“This family deserves this to work. This community deserves this to work and we’re intent on making that happen,” said Jones, who previously led a Chicago-area foundation focused on neighborhood revitalization.
The Jacobs’ story in San Diego starts more than 20 years ago.
The Jacobs family made its fortunes in the 1970s when the engineering company Joe Jacobs founded two decades earlier went public.
In 1995, after learning about historic disinvestment in southeastern San Diego, Joe and wife Violet Jacobs founded the Jacobs Center for Neighborhood Innovation with the goal of driving economic development there.
The Jacobs set a plan to develop an expansive portfolio of properties and eventually transfer the assets to the community. Initially, they planned to do that close to 2020. More recently, the family’s said its contribution would sunset by 2030.
Jones estimates the Jacobs Family Foundation and individual family members have sunk close to $300 million into southeastern San Diego community-building and revitalization efforts.
In 2001, the Jacobs opened Market Creek Plaza, now the area’s go-to meeting spot and home to the nonprofit’s headquarters. The nonprofit later bought dozens of acres of property. The community’s since seen a new Walgreens, a 52-unit affordable housing development adjacent to the Jacobs Center and restoration of a stretch of Chollas Creek.
But it’s come at a steep cost. The Jacobs Center carries $33 million in debts, including for Market Creek Plaza building costs.
And about 40 acres of remaining Jacobs properties sit vacant.
Those continued vacancies have left some community members questioning Jacobs’ mettle and Jones admits the need for a shift.
“We obviously, as an organization, were challenged by the execution for 20 years,” Jones said.
Meanwhile, the Jacobs family has started to roll back its contributions. Annual $6 million gifts from Vi Jacobs ended around the time of her 2015 death.
Jones said the Jacobs Center hadn’t made plans to address the reduced investments prior to his arrival.
Three Jacobs family members who lead the Jacobs Center board declined to comment on the organization’s reduced staffing, changed vision or their lowered financial commitment. A fourth did not respond.
Multiple rounds of layoffs have followed the family’s reduced contribution. The organization that at one time had more than 100 staffers now has just 20.
Starting this year, the Jacobs family is committed to invest just $1.5 annually.
The Jacobs Center last year made a major shift from a foundation that doles out money to the community to a public charity that takes in money.
In the past few months, Jones said he’s eliminated three vice president positions to reflect the organization’s changed real estate goals and decreased staffing.
Executive Vice President Angela Titus and Vice President Omar Passons left earlier this month.
Late last year, Jacobs brought in Richard Seges, a former Civic San Diego official who previously served as chief real estate officer for El Paso’s housing authority, to help the nonprofit implement the master plan it released last year.
Seges has a new mandate to follow than what the Jacobs family initially foresaw.
The Jacobs Center had long tried to play the role of nonprofit developer. The hope was that the charity would buy up properties and develop them on their own.
Jones said the board, for now entirely composed of Jacobs family members, has since realized that’s not feasible.
In most cases, Jacobs now hopes to maintain land ownership and work with developers to build on its properties or to contribute land as an equity partner on development projects. In limited cases, Jones said, the Jacobs Center might sell land outright to developers pushing projects that match the master plan Jacobs released last year.
“What we’re trying to do is what we can do best as a philanthropy, (and that) is to deliver community benefit to the largest extent possible,” Jones said. “Philanthropies are not developers. We were challenged by moving development at the scale with which we acquired land.”
Jones said three additional projects are already lined up, though he said he can’t divulge details yet. The organization aims to start construction projects on all its properties by 2021.
He’s also optimistic about an upcoming, large-scale street upgrade project he believes will pave the way for more development in the area.
The organization’s inked a couple unique partnerships with the city and also is operating under a new community plan that could ease development hurdles there, too.
But amid all the change, community members are worried.
Joseph Kelly, treasurer of Jacobs’ Diamond Community Investor Advisory Council, said he was surprised to learn of both Passons’ and Titus’ departures this month. He’d been working on a project with Passons.
Kelly said the investor group, which has financial stakes in the Market Creek Plaza project, expects to be apprised of Jacobs Center shifts and changes.
They haven’t been briefed enough recently, Kelly said. “We don’t have input and we don’t have knowledge until after it’s a done deal.”
Francine Maxwell, a southeastern San Diego resident, said she and others have also grown frustrated with Jacobs’ lack of transparency the past few years.
They’re particularly concerned about the organization’s future and what that means for the neighborhood. They’re also wondering what to make of recent changes.
“A new leader doesn’t have to gut everything,” Maxwell said.
Jones said the Jacobs Center has made every effort to keep residents updated on plans by publishing letters in local news outlets and regularly speaking at community gatherings. They also took significant steps to publicize their master plan and surveyed more than 1,300 residents about it last summer.
“Correction is hard and it doesn’t win favor in every instance but we must be focused on the long-term successful outcome and make the adjustments necessary to do it,” Jones said.