Investing in Economic Revitalization and Job Creation for the City of San Diego

January 13, 2016

In 2012, redevelopment agencies throughout the state were dissolved, denying local governments a critical tool in revitalizing economically disadvantaged areas. Since that time the state has designed a Redevelopment Property Tax Trust Fund (RPTTF) to disburse property tax revenue associated with former redevelopment areas to local governments. In the City of San Diego, as late as Fiscal Year 2011, $539M was available in the Redevelopment Agencies cumulative budgets to support economic development in distressed areas. This funding is now allocated to the General Fund. These funds have a direct nexus with the former redevelopment areas that they were derived from and should be used in areas that closely mirror the conditions that prompted them to be designated as redevelopment areas.

As noted in the IBA's December 8, 2015 report of the Five-Year Outlook, the adjusted residual RPTTF revenue over the next five years increases from $9.3M to $23.7M, for a total of
$107 .SM, however this is not accounted for in the revenue projections of the Outlook. The $9.3M in RPTTF anticipated in FYI 7 should not be budgeted as a revenue for the General Fund, but instead be used to fund CIP projects in the economically disadvantaged areas previously designated as redevelopment areas. Using this revenue going forward to invest in San Diego's economically disadvantaged communities, as originally intended allows areas in the greatest need of economic investment an opportunity to attract new commercial activity, which in turn creates new jobs and greater tax revenue for the City's general fund. For the time being, we would request that you allocate this funding towards CIP projects or incentive programs that impact economically disadvantaged areas in your FYI 7 budget and beyond.

The use of this funding as an economic development tool is critical in order to ensure that these areas, which continue to experience high unemployment, high crime and low levels of commercial investment, are given the opportunity to revitalize and grow their local economy. In order to provide such areas with an opportunity to improve their communities, these funds should be exclusively used to build much needed capital projects and infrastructure and fund incentive programs such as DIF waivers, storefront improvement programs, rebate programs and business attraction and retainment activities to encourage and support private investment. CDBG eligible census tracts can be used as a general guide to what areas should be eligible to receive this funding, but some adjacent neighborhoods to these areas should also be considered, as the impact of nearby economic development activity can impact surrounding communities. Eligible census tracts exist across all areas of the city, such as census tract 86 in Linda Vista and census tract 101.09 in the San Ysidro area (see attached maps), allowing these funds to be used throughout the City, while strategically using the funding in the communities that need them most.

In the next year it is our intention to explore an amendment to Council Policy 900-01 that will discuss how this funding should be allocated to ensure areas requiring economic development efforts receive the proper amount of revenue from the RPTTF disbursements.

Investing in Economic Revitalization and Job Creation for the City of San Diego