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June 12, 2013. Revised.
City of San Diego, Mayor Filner, and the City Council
City Council Budget Committee of Wednesday, June 12, 2013.
Subject: Mayoral Executive Order Solution to Commercial Development Linkage Fees and
Minimizing Homeless Funding by CDBG and General Funds Reserves by Transfer of
all Successor Housing Entity Assets into our San Diego Affordable Housing Fund
and/or the Housing Trust Fund (HTF), with associated Assets Management duties
transferred to the award-winning San Diego Housing Commission (SDHC), from the
private Civic San Diego.
Dear City of San Diego:
Please analyze our solution to minimize Commercial Development Linkage Fees for Affordable
Housing project; limit the use of up to $15 million in loans from the General Fund Reserves for
excessive Civic San Diego administrative costs associated with the winding down of Redevelopment,
and free up millions in Federal HUD Community Development Block Grants (CDBG) for worthy
non-housing project.
The Linkage Fees, General Fund Reserve loans for denied administration and legal costs, and
CDBG funds subsidize Homeless and very-low income housing options. Our solution to
augment revenue is to transfer all $292,851,844 (as of June 30, 2012) in Successor Housing
Entity assets identified in the Housing Due Diligence Review (DDR) into our San Diego
Affordable Housing Fund and/or the Housing Trust Fund (HTF). With associated assets
management duties transferred to the award-winning San Diego Housing Commission (SDHC),
from the private Civic San Diego. Both Agencies are solely owned by the City of San Diego.
Please put our easy solution through the policy and legal analysis process. Using independent Legal
advice from the San Diego Housing Commission (SDHC) and/or the County of San Diego legal
counsels. All are part of the HUD-mandated Regional Continuum of Care Council (RCCC). Within
the City and County of San Diego there are currently no written or approved plans to end Veterans
and Chronic Homeless by 2015, and all Homeless including children and families by 2020.
Therefore the San Diego Region is in violation of the Federal HEARTH Act.
With the end of Redevelopment (RDA), Civic San Diego working as an agent for the RDA
Successor Agency lost its bonding authority to finance development projects. Therefore, we
recommend the $292.9 million in assets of the Successor Housing Entity status, be moved,
along with operational control to the San Diego Housing Commission (SDHC) from Civic San
Diego. In the City of San Diego, the SDHC is the local agency within the RCCC responsibility
for Affordable Housing and Homeless issues. The SDHC now has bonding authority previously
under the control of Civic San Diego (CCDC) through management and administration fees for
the former RDA.
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Our simple administrative idea to move our Successor Housing Entity assets to the Housing
Trust Fund under operational control of the SDHC should go through the public review process,
including the City’s Affordable Housing Taskforce, the City Council’s Land Use and Housing
Committee (LU&H), for ultimate approval by the San Diego City Council, and the RCCC.
We recommend that the Office of the Mayor, in consultation with legal staff from our San Diego
Housing Commission (SDHC), and RCCC, issue an Executive Order moving the Successor
Housing Entity funds into the Housing Trust Fund for immediate access. Then State officials
including the State Department of Finance (DOF), State Controller Chiang, and State Attorney
General Kamala Harris should be consulted to confirm the legality of the Executive Order solution.
The use of the $32 million in cash and bonds and the 22 properties of the Successor Housing
Entity assets, would allow the City flexibility to mitigate the planned increasing and doubling of
Linkage Fees for Commercial Developers, and allow a reallocation of General Fund Reserves (up
to $15 million) and CDBG funds to other worthy non-housing project that did not receive funding
this year. The Consolidated Plan Advisory Board lacked access to local public financial resources
of the former RDA, hoarded by Civic San Diego.
Due to the reclassification of the Rose Canyon Fault Zone (RCFZ) as active in the mid-1990s,
local Hospitals in San Diego have to be seismically retrofitted. These large commercial
retrofitting of Hospitals in San Diego would pay a small fortune in Commercial Development
Linkage Fees, based upon the number of low, non-sustaining minimal wage jobs for medical
staff. The San Diego Regional Chamber of Commerce wants to stop the doubling of
Commercial Development Linkage Fee prices specifically for local Hospitals, and for all
businesses conforming with State Seismic laws, and investing in their private structures to
protect public safety. The Affordable Housing Taskforce met for three years, and have failed to
identify an alternative Revenue generation vehicle besides doubling Linkage Fees on
Commercial Development.
Prior to the City of San Diego establishing the San Diego Housing Trust Fund (HTF) in 1990,
the U.S. Department of Housing and Urban Development (HUD) achieved “major legislative
reforms including the Fair Housing Amendments Act of 1988, the HUD Reform Act of 1989, and
the Cranston-Gonzalez Affordability Act of 1990 which introduced a federal housing block grant
program as well as sweeping homeownership initiative for low-income families.” Local Housing
Trust Funds exist through State Health and Safety Codes 50840 to 50843.5, specifically to
provide “a permanent source of financing to be used solely to fund housing programs that serve
low- and very low income households.” “At its 1990 inception the HTF was to receive a portion
of future Transient Occupancy Tax (TOT) increases. TOT funding ceased and was replaced with
[the 20 percent set-aside in] Redevelopment funds in FY93" and FY95. For Fiscal Year FY-1996
to FY-2012, instead of the 20% Affordable Housing Set-asides being placed in the Housing
Trust Fund (HTF) controlled by our San Diego Housing Commission (SDHC); Civic San Diego,
the former Centre City Redevelopment Corporation (CCDC) was given the Management
Contract and Operational Control over all Redevelopment Agency Tax Increment (TI) funds
including the 20% Affordable Housing set-asides.
The Public Facilities Financing Authority (PFFA) Preliminary Official Statement for the 2013
Lease Revenue Bonds states the following in Appendix A, Page A-12 - City Government and
Financial Information – Former Redevelopment Agency - NP Draft dated May 28, 2013.
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“The Redevelopment Agency of the City of San Diego (the “Former RDA”) was dissolved as
of February 1, 2012. The City is serving as the Successor Agency to the Former RDA and as
the Successor Housing Entity to the Former RDA. The Successor Agency is a separate and
distinct legal entity from the City, whereas the Successor Housing Entity is the City, not a
separate legal entity.”
The City Council, acting as the Successor Agency has transferred management and
administration of the $1 Billion in Housing and Non-Housing Successor Agency asset to the
control of the private Civic San Diego, with oversight by the City Council President. However
unlike the Successor Agency, our Successor Housing Entity is the City, therefore, our Strong
Mayor Filner is the CEO of all Successor Housing Entity assets including $32,871,000 in
Unencumbered Low- and Moderate-Income Housing Bond Proceeds and Cash, and 22
Affordable Housing properties.
“In June 2003, the City Council amended San Diego Municipal Code Chapter 9, Article 8,
Division 5 (Code) to create an Affordable Housing Fund. It was created to meet, in part, the
housing needs of the City’s very low, low, and median income households and has two
permanent, annually renewable funding sources. The funding sources include: Inclusionary
Housing Fund (IHF) which is funded with fees charged to residential development; and San
Diego Housing Trust Fund (HTF) which is funded by Housing Impact Fees charged to
commercial development (also known as Linkage Fees). This fund previously had additional
sources of revenue, but is now limited to the Housing Impact Fee. Repayments of loans made
with those sources are recycled back into the HTF.”
On May 13, 2013 as Item 150 the Successor Housing Entity Affordable Housing Master Plan was
approved by the City Council siting as the Successor Agency. As the same time, the City, as the
Successor Housing Entity directed “Civic San Diego to proceed with implementation of the plan,
pursuant to the Consultant Agreement between the City and Civic San Diego for services to the
Successor Housing Entity” and to “negotiate an Amendment to the Consulting Agreement.” Civic
San Diego prepared the wonderful Master Plan report with the cooperation of the San Diego
Housing Commission (SDHC) and identified the large amount of cash, bonds, and property under
operational control by Civic San Diego through hoarding of the former Redevelopment Agency
(RDA) Tax Increment (TI) fund into Reserve accounts siting in the bank.
On May 13, 2013, the City Council siting as the Successor Agency and the Successor Housing
Entity also established the new Low and Moderate Income Housing Asset Fund to emphasize
“the production of Homeless housing as a Primary Goal of the Master Plan.” The Successor
Housing Entity Master Plan for the Housing Assets Fund states the Successor Agency could
“generate approximately $65 million of net funds for future affordable housing purposes,
comprised of unencumbered bond proceeds, land disposition proceeds and other revenues from
loan repayments and rent payments, after deducting administrative costs.”
Item 333: The Proposed FY-2014 Affordable Housing Fund Annual Plan was heard by the City
Council on June 11, 2013. The San Diego Regional Chamber of Commerce was concerned about
the Nexus study being commissioned to increase and double the Affordable Housing Linkage Fees
for the Housing Trust Fund (HTF) managed by the San Diego Housing Commission (SDHC).
In order to relieve their concerns, we recommend Mayor Filner as the CEO of the City of San
Diego and the Successor Housing Entity transfer management of the former RDA Housing assets
to the San Diego Housing Commission.