Deferring Dream of Revitalized City : Civic affairs: Eroded financial support for completing redevelopment of downtown--the heart and soul of the regional body--should concern all San Diegans.

If there is one San Diego success story with which everyone agrees, it is the redevelopment of downtown over the last 15 years. We are justifiably famous for that success throughout the country.

The revitalization of downtown is far from complete, or even certain, though. The precarious commercial real estate situation would be cause enough for alarm, but lately, developments at City Hall have raised doubts, too.

The recent City Council budget hearings produced a balanced city budget for fiscal year 1992, but one of the casualties of the process was the budget of the Centre City Development Corp., the city’s redevelopment agency. About $3.8 million will be “repaid” by CCDC to the city to help close a budget gap several times larger than that.

The idea of turning to the downtown redevelopment coffers to balance the citywide budget may indicate a decline in the level of support for full downtown revitalization. The council’s action approving the repayment also indicates a more fundamental disagreement about the nature of redevelopment and how it is financed.

There was a time when all elected officials fully supported downtown revitalization. Since every council member was elected citywide, downtown was considered part of everyone’s district, and each had an interest in seeing downtown succeed. With the onset of district elections, downtown appears to be viewed as just a super-neighborhood in someone else’s district, lucrative enough to fund other redevelopment projects around the city.

The theory of CCDC repaying its “borrowings” from the city must be examined in the historical context of downtown redevelopment. During the initial years, the city “loaned” millions of dollars of Community Development Block Grant money to CCDC to spur redevelopment investment. Block grant money is invested in blighted communities around San Diego every year, yet none of those communities is asked to repay that investment. Only downtown has been placed in the special category of profit generator for redevelopment needs elsewhere in the city.

Repayment by CCDC makes economic sense when the money will be expended by the city for public facilities downtown, e.g., a new civic center complex. Such facilities enhance other investment in downtown, serving as incentive to spur further redevelopment investment. When CCDC money is simply repaid to the general fund, services like street maintenance and police might be improved citywide, but there is little nexus to an enhanced downtown.

The pattern of CCDC repayments is an ominous indicator of future budget balancing acts. Two years ago, $1 million was repaid directly into the city’s general fund. Last year, $730,000 was repaid for Horton Plaza Theatre Foundation expenses and Centre City maintenance (despite the fact that the redevelopment area did not cover all of Centre City). This year, another $800,000 was programmed for repayment and allocated to Centre City maintenance and the Horton Plaza Theatre Foundation.

When the council came to the end of its budget deliberations, an 11th-hour proposal to have CCDC repay an additional $3 million passed. Despite the presence of numerous downtown representatives in the hearing room, no one was allowed to testify in opposition to the budget proposal. The audience was informed that the hearing was closed, and that their opportunity to speak had been at earlier hearings, weeks before the repayment proposal had even surfaced.

Redevelopment activities like CCDC’s are typically funded through tax increment financing, which means that as property is redeveloped and assessed at higher valuations, the higher incremental assessments are available for investment in other projects.

With the $3.8-million repayment, CCDC will be left with only $1.5 million in uncommitted, available new money from tax increment revenues to invest in new projects.

The reduced sum available for reinvestment occurs just when the long-planned redevelopment area expansion is finally proceeding. Expansion will cover all of Centre City, instead of the limited 325 acres now administered. More important, redevelopment will be expanding into areas such as Centre City East, the most blighted part of downtown, where projects will need the greatest amount of public subsidy to succeed.

Reducing the amount CCDC has to reinvest shoots downtown in the proverbial foot. Since 1972, CCDC has spent $152.8 million in redevelopment areas. That sum has generated $1.4 billion in private investments in those same redevelopment areas, an astounding 9-to-1 ratio. The ratio would be even more favorable if downtown private investment outside of the redevelopment areas were included. Obviously, those private expenditures translate into various revenue sources for the city--sales tax, property tax increments, business licenses, etc.

The erosion of support for revitalizing downtown should concern all San Diegans. Despite all of San Diego’s other attributes, we can never be the world-class city we aspire to without a world-class downtown. Downtown is the heart and soul of the regional body--it’s success or failure reflects directly on the rest of the San Diego region.

To assure future success, all downtown interests will have to work in concert. San Diego has come too far toward the vision of a world-class downtown to let the dream be deferred now.