End of Redevelopment: Start of Money Issues

Redevelopment may be dead in California.

But the problems created by its demise -- and all the costs passed on to local governments -- are still alive and kicking.

A dramatically visual case in point of how taxpayers could end up holding the bag on former redevelopment costs is the $26 million pedestrian bridge over Harbor Drive links the Convention Center and Petco Park.

The city didn’t bill San Diego's redevelopment agency for $600,000 worth of extra permit, processing and inspection fees for the project until after the agency shut down.

Now, a collections outfit is on the case, but will the state allow payment by Civic San Diego, the redevelopment agency’s successor in winding down operations and sorting out financial obligations?

Or will the city’s staff time and expenses on the bridge go unreimbursed?

"The state's the one making the rules, the city's just subject to it,” says Liam Dillon, who covers politics, government and civic issues for Voice of San Diego. “The state says yes or no, and the city wants to complain? Good luck."

The situation galls University City resident Bob Henry, who offered these comments as he took a mid-day break from a power walk across the bridge on Monday: "Ridiculous. Just ridiculous. I mean, it doesn't make sense. And I guess the state has passed that on to us.”

But the debt over the bridge project is just a small chapter in a bigger story of how much money the end of redevelopment could cost the taxpayers.

At risk, according the city’s outside auditors, are $22 million in bond payments on Petco Park that the redevelopment agency gave the city -- and which the state wants to recover under its so-called “clawback” power.

Also at risk: $6 million in Convention Center bond debt -- because of the city's late timing in assigning the agency the costs of the ballpark and 2001 expansion of the Convention Center. 

It's not clear whether this dilemma can be resolved without going to court.

"It's really the city's fault at the beginning, when they made these deals in the first place,” says Dillon “Those (projects) were clearly things that could be done by the redevelopment agency. And if they were done at the original point when the Convention Center expansion first happened, when Petco first happened, this wouldn't be a question."

This reaction, from Tierrasanta resident Paloma Garza as she strolled the bridge during Monday’s noon hour: "We love living here. But getting stuck with all the other things that the city just does not take care of is not good."

City Councilman Kevin Faulconer, chair of the city’s Audit Committee, points to these concerns as further evidence of the need for continued fiscal austerity at city hall.

"We've spend a lot of time in making financial changes, financial turnarounds,” Faulconer said in an interview Monday. “For the state to come in now and say, 'We're potentially going to reach back in a take back some of those dollars' puts our city at a tremendous disadvantage."

Meantime, the city has set aside $28 million in a budget account to cover potential losses of the Petco Park and Convention Center money.

Another huge question mark, according to auditors, is the fate of nearly $200 million in principal and interest on city loans to the redevelopment agency, involving federal community development block grants.

If payback is allowed, it's expected to go into a special urban renewal account.