Ethical Conflicts Loom for CCDC

— Centre City Development Corporation's board members -- all connected with the real estate industry in their professional lives -- are constantly running into potential conflicts of interest. But there is a broader issue: this developer-friendly board has not shown itself capable of grappling with the question of whether the corporation itself has outlived its usefulness, if it ever had any.

Most San Diegans think the nonprofit Centre City Development Corporation (CCDC), formed by ex-mayor Pete Wilson in 1975, is the city's redevelopment agency. Not so. The city council has that task. CCDC supposedly has an advisory role. It says its job is to "staff and implement downtown redevelopment" and be a "catalyst for public-private partnerships."

The term "public-private partnership" is merely a euphemism for corporate welfare -- the steering of taxpayer funds to the pockets of developers and their cronies. But with the city broke, is it sound policy to subsidize luxury condos and the developers who build them?

Late last month, CCDC director Gina Champion-Cain resigned because of a so-called "potential" conflict: she sells residential real estate downtown. On Friday, chairman Hal Sadler resigned. In July, activist Mel Shapiro had filed a complaint with the Ethics Commission, noting that Sadler's architectural firm, Tucker Sadler, had a feasibility contract for a pedestrian bridge over Harbor Drive, and he had voted on matters regarding it. Sadler has already been fined $6000 by the commission for voting in 2003 and 2004 on issues regarding the proposed downtown library. CCDC is committed to pouring $80 million into the library.

Robert Ito and Reese Jarrett resigned in 2003 because they voted to give land to the Housing Commission. Both were with firms that did business with that commission, as Shapiro pointed out at the time.

Shapiro notes that other board members, such as real estate financier Jennifer LeSar and banker Robert McNeely, occasionally disqualify themselves from certain votes. But city attorney Mike Aguirre says, "Disqualification is not enough if you're regularly handling business that is before CCDC. You should be resigning from the board."

CCDC attorney Helen Holmes Peak says that's true in many cases, but directors also abstain from votes to "avoid an appearance of impropriety."

CCDC's board "is basically made up of people of special interests," says Aguirre. And those special interests trample project-area committees, comprising elected citizens from the community who are supposed to join in planning efforts.

Indeed, Shapiro believes CCDC "was set up to take away the power of project-area committees." Reason? "Redevelopment is a subsidy for the developers." For example, the ballpark is a redevelopment project that is a classic case of redistributing funds from poor and moderate-income folks to the rich and super-rich.

The mentality is woven into the city's fabric, says Shapiro. Prior to Friday's resignation, the last three major pieces the Union-Tribune did about CCDC's involvement in the proposed downtown library did not mention Sadler and his obvious conflicts. "They have been covering up for Sadler," says Shapiro.

The city doesn't need CCDC, he avers. The board should be abolished, and staff members who have some value should work directly for the city bureaucracy. The power of project-area committees should be restored. "I would rather see a citizens' group make these decisions than seven rich people appointed by the city council."

Former councilmember Bruce Henderson takes it a step further: why have government-subsidized redevelopment at all? "The time for government priming the development pump downtown is long past," says Henderson, noting that the concept is based on the untruth that downtown is blighted. "Years ago the whole downtown was declared blighted," he says. "So when they brag how wonderful downtown is, it's a bit of a hypocrisy, because at the same time they claim it is blighted." (Peak says that areas in which there has already been redevelopment would no longer be considered blighted. But she concedes that most of downtown is classified as blighted.)

Remy Bermúdez worked for CCDC for six years and for its cousin, Southeastern Economic Development Corporation, for two. Bermúdez, a council candidate from the Eighth District in the last election, agrees that monies now going to CCDC and Southeastern "should be administered internally through the City."

Citing her own Sherman Heights, she says that citizens refuse to be designated a redevelopment area for fear that homes will be seized through eminent domain. Redevelopment bureaucrats then neglect to provide the area other services. She would like to see "commercial corridors for redevelopment -- leave residential areas out of it. Give our businesses a chance to get grants and loans like they give to major developers."

So-called gentrification harms those with low and moderate incomes. As luxury condos shot up like mushrooms in the ballpark district, gentrification started moving east. Property values soared in those low-income areas. So did rents. Condo conversions exacerbated the problem. Some people sold their homes to real estate sharks, then realized that they could not buy another home with the proceeds. "Property taxes also went up," Bermúdez says.

The ballpark district was "earmarked for low- and moderate-income housing," she says. CCDC "let it deteriorate, and lo and behold here comes a ballpark. So there is a ballpark but not low- and moderate-income housing. We're still waiting to reap the benefits of that ballpark. Do they want working people? No."

She thinks the CCDC staff is capable of taking an enlightened approach, "but the board may not be capable of accepting such recommendations because they may not be lucrative."

Councilmember Donna Frye would like to see CCDC begin paying back the $100 million it owes the city and direct more funds to "affordable housing in the downtown area for very low income people and for seniors."

Like Henderson, she notes that more than half of the tax money collected in redevelopment districts goes back into redevelopment, and other political jurisdictions such as the county and state are shorted. This leads to economic distortions. She, too, is upset at the abuse of blight designations. For example, the county, worried that it will be shortchanged in tax revenue, is suing the city over its attempt to name Grantville a redevelopment area.

Nationwide, redevelopment reform is in the air. In June, the U.S. Supreme Court upheld the seizure of homes in New London, Connecticut, for a development that would theoretically generate more tax revenue. The decision set off a firestorm. At least 35 states have moved to restrict eminent domain seizures. Says Frye, "In the ballpark district, people had moved in and invested their life savings in the community, then were told to move out. I'm also concerned about the cost of providing police and fire services to these redevelopment areas," which are billowing and gobbling up funds that should be going to essential services.

Says Aguirre, "We're repeating mistakes of the past -- building more and more without providing infrastructure. We have to have significant improvement of the transportation system."

However, "there is not an interest in reform" on the CCDC board, says Frye.

Some would even extend the CCDC approach. One idea for overhauling the city's Redevelopment Division, which handles projects in several neighborhoods, is to make it a nonprofit consultant like CCDC. "I am going to be asking a lot of questions," says Frye. "I am in no big hurry to set up a lot of agencies using CCDC as the model."

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