City Budget Takes a Hit

>> >>PEGGY: THE STATE DEPARTMENT OF FINANCE SAID NO TO 60% OF SAN DIEGO'S REQUEST FOR REDEVELOPMENT FUNDS FOR PROJECTS INCLUDING THE DOWNTOWN HOMELESS SHELTER WHICH IS NEARLY COMPLETE. HERE WITH MORE DETAILS ARE KPBS METRO REPORTER KATIE ORR AND ROGER SHOWLEY. THANK YOU FOR CONTINUING TO UPDATE US ON THIS REALLY KIND OF COMPLICATED STORY. ROGER, TELL US WHY THE STATE HAS POWER OVER SAN DIEGO'S REDEVELOPMENT PROJECTS IN THE FIRST PLACE. >> >>ROGER SHOWLEY: THE STATE LIMITED REDEVELOPMENT AGENCIES LAST YEAR AND IT BECAME EFFECTIVE FEBRUARYÊ1. SO EVERY SIX MONTHS THEY LOOK THROUGH THE LIST OF ENFORCEABLE OBLIGATIONS THE CITIES HAVE, AND THIS LAST WEEK THEY SAID AFTER A MEETING WITH THE CITY, SAN DIEGO AND ALL THE AGENCIES IN SAN DIEGO COUNTY, ALL OVER THE STATE ABOUT 250 OF THEM, THEY SAID YOU CAN DO THIS, CAN'T DO THAT, AND IN THE THE CASE OF WHAT YOU'RE TALKING ABOUT, THE HOMELESS SHELTER, IT WAS A LITTLE BIT OF AN ODD DECISION BECAUSE THE MONEY HAD TO DO WITH AN OVER RUN ON THEIR BUDGET IS THE CONNECTION, HOUSING PROJECT AT SIXTH AND A DOWNTOWN. >> >>PEGGY: THAT WAS ONE OF THEM, THE HOMELESS PROJECT. HOW MUCH MONEYÊ >> >>ROGER SHOWLEY: LIKE 4ÊMILLION OR SO. >> >>PEGGY: THEN THERE WAS ALSO 5ÊMILLION DIRECTED ON THE AFFORDABLE HOUSING, HOW WAS THAT DIFFERENT? >> >>ROGER SHOWLEY: IT'S ON THE 4ÊMILLION DOLLARS HAS TO DO WITH THE OVER RUN OF THE CONSTRUCTION AND THEY HAD TO FIND A SOLUTION SO THEY GOT TAX CREDITS TO MAKE UP THE DIFFERENCE. THE 5ÊMILLIONÊ >> >>PEGGY: I THINK FOR AFFORDABLE HOUSINGÊ >> >>KATIE ORR: 20ÊMILLION. >> >>ROGER SHOWLEY: SO IT WAS A SECOND PROJECT A FEW BLOCKS AWAY. THAT WAS A NEW PROJECT, HASN'T STARTED YET. AND THE CITY HAD AGREED OR FOUND A WAY TO GIVE THEM ABOUT 20ÊMILLION DOLLARS IN BOND MONEY. BECAUSE OF CERTAIN DEADLINES THE STATE SAID NO, YOU CAN'T HAVE THAT MONEY. THIS WEEK THEY WERE SUPPOSED TO CLOSE ESCROW ON ALL THE FINANCING, AND NOW THE DEVELOPER IS IN THE LUMP ABOUT WHAT AM I SUPPOSED TO DO WITH THESE PROJECTS, MAKE UP THE DIFFERENCE. >> >>PEGGY: UNDER THE DEVELOPER, THIS GOING TO COST THE CITY SOME BIG MONEY, ESPECIALLY BECAUSE SOME OF THESE PLANS ACTUALLY WERE AWE OBLIGATIONS, RIGHT? >> >>KATIE ORR: RIGHT, THE CITY HAD BEEN PAYING FOR THE PAYMENT ON PETCO PARK WHICH IS ABOUT 11ÊMILLION DOLLARS A YEAR, AND 3ÊMILLION DOLLARS A YEAR TO PAY FOR THE SECOND EXPANSION OF THE CONVENTION CENTER. THE CITY HAD TRIED TO LUMP THOSE PAYMENTS INTO THESE ON GOING ENFORCEABLE OBLIGATIONS AND THEY SAID NO, YOU CAN'T. THAT'S ESSENTIALLY 13ÊMILLION DOLLARS THE CITY IS GOING TO HAVE TO COVER. THEY WERE ANTICIPATING, FORMER MAYOR JERRY SANDERS HAD COUNTED ON THAT, BUT THAT'S MORE BAD NEWS FOR SAN DIEGO BECAUSE SAN DIEGO HAS TO IMPLEMENT PROPOSITION B NEXT YEAR WHICH IS THE PENSION INITIATIVE, SWITCHING MOST NEW EMPLOYEES TO A 401K SYSTEM AND THAT'S GOING TO COST ABOUT 30ÊMILLION DOLLARS. THOSE TWO SUMS TOGETHER, MAYOR BOB FILNER SAYS IT'S REALLY GOING TO PUT THE CITY IN A DEFICIT SITUATION NEXT YEAR AS THE CITY TRIES TO COVER THOSE COSTS. >> >>PEGGY: SO 13ÊMILLION ON THE REDEVELOPMENT OBLIGATIONS AND THEN ANOTHER ALMOST 30ÊMILLION. THAT ALMOST 30ÊMILLION WITH PROPOSITION B, THAT CAME UP JUST FOR THIS YEAR'S FISCAL YEAR WHICH STARTS IN JULY. IS THAT SOMETHING IN THE LONG TERM THAT'S GOING TO HURT US OR DO YOU THINK IT WILL BENEFIT THE CITY? >> >>ROGER SHOWLEY: OUT OF A BILLION DOLLAR BUDGET I'M SURE THEY CAN DEAL WITH THAT. I THINK THIS YEAR THEY CAN. I THINK IT'S THE LONG TERM EVERYONE SHOULD BE LOOKING AT. BY LIMITING REDEVELOPMENT IN THE CASE OF SAN DIEGO CITY THE USE OF 100ÊMILLION DOLLARS A YEAR TO GET FROM REDEVELOPMENT. SO IN THE BIG PICTURE, AND IN MANY OTHER ELEMENTS OF THE CITY BUDGET THEY'RE GOING TO HAVE SHORT FALLS AS WE GO ALONG. >> >>KATIE ORR: THEY ALWAYS KNEW THEY WERE GOING TO HAVE TO PAY MORE MONEY TO IMPLEMENT PROP B. YOUR ESSENTIALLY SHUTTING OUT THE PENSION SYSTEM AND SWITCHING TO A NEW ONE AND THAT TAKES MONEY. THE FINAL TALLY, IT'S SURPRISING TO SOME PEOPLE ESPECIALLY PEOPLE WHO WERE NOT IN FAVOR OF PROP B IN THE FIRST PLACE, THIS IS A LOT MORE THAN YOU TOLD US IT WAS GOING TO BE I FEEL THE SUPPORTERS OF PROP B WERE CLEAR IT WILL COST MONEY FILINGS INITIALLY. IN ABOUT SIX YEARS WE SHOULD RECOGNIZE THE SAVINGS, BUT HOW DO YOU GET THROUGH THAT PERIOD OF TIME. >> >>PEGGY: IT MIGHT SAVE THE CITY A LOT MORE MONEY IF THEY CAN PAY THAT OFF QUICKER. KATIE, THERE WERE A COUPLE OF PROGRAMS, WELL, 40% OF THE REDEVELOPMENT PROGRAMS WERE SAID OKAY TO DO, WHAT WERE SOME OF THOSE? >> >>KATIE ORR: ONE OF THE MOST NOTABLE ONES ROGER REPORTED ON WAS PHASE ONE OF THE EMBARCADERO VISIONARY PLAN. IT'S A COUNTY PLAN, PORT PLAN, SAN DIEGO PLAN. AND IT BUTTE FIES THE AREA ALONG THE EMBARCADERO DOWNTOWN. PHASE ONE FOCUSES ON THE AREA ON HARBOR DRIVE AND BROADWAY PIER. THE BOTTOM LINE IS THE STATE DECIDED THAT YES, THAT'S AN OBLIGATION BECAUSE IT GOT UNDERWAY BEFORE THE DECISION TO ELIMINATE REDEVELOPMENT WENT INTO AFFECT AND SO THAT CAN KEEP GOING. >> >>ROGER SHOWLEY: I THINK MORE IMPORTANT IS THEY RECOGNIZE THERE ARE MANY BOND PAYMENTS THAT WILL CONTINUE OVER THE NEXT 20 YEARS OR SO, SO THERE WASN'T A QUESTION ABOUT APPROVING THOSE OBLIGATIONS. THEY'RE LEGAL HITS ON THE CITY AND THE REDEVELOPMENT SOURCE WILL CONTINUE FOR THAT. IT'S SOME OF THE PROJECTS THAT HAVEN'T STARTED YET. ALL THE STREET IMPROVEMENTS, THE LIGHTS, LIBRARIES, THE CITY WERE COUNTING ON ARE NOW STUCK. THAT'S THE BIG QUESTION IS HOW ARE THEY GOING TO FIND MONEY FOR THESE LONG WANDED PROJECT. >> >>PEGGY: THAT'S A QUESTION WE'LL HAVE TO EXPLORE LATER BECAUSE WE ARE OUT OF TIME. THANKS SO MUCH FOR TALKING WITH US.