City May Ask Early Loan Repayments to Pay for More Police

Groping for ways to pay for a larger police force and solve its budget shortfall, the San Diego City Council on Wednesday raised the possibility of demanding early repayment of more than $58 million in loans advanced over the past two decades to its downtown redevelopment arm.

The suggestion, initiated at recent council meetings by Councilman Bob Filner and taken up by Mayor Maureen O’Connor and other council members at a budget hearing Wednesday, could provide the council with a significant new source of revenue to pay for its goal of adding 140 officers to the police force during the coming fiscal year.

That initiative would cost $10 million, an expenditure that might be spread out over two fiscal years. The cost of another top-priority venture, building two new police substations, was pegged Wednesday at $14.5 million.

Change in Schedule

Because the nine-member City Council also serves as the city’s Redevelopment Agency, it could, theoretically, order the accelerated debt repayment schedule with two votes, said City Manager John Lockwood.

However, such an action would alter Centre City Development Corp.’s schedule of projects for at least the coming fiscal year, said Pam Hamilton, executive vice president of CCDC, the nonprofit agency that administers downtown redevelopment.

“I believe that money we’ve programmed is necessary to the redevelopment effort,” Hamilton said in an interview. “This program has not turned the corner.

“It’s their call,” she said of the council members. “It’s a policy issue.”

CCDC’s budget for the fiscal year, which begins July 1, includes $14.1 million in the Columbia redevelopment project; $6 million in the Gaslamp redevelopment project; $3.4 million in the Horton Plaza redevelopment project and $18.5 million in the Marina redevelopment project, Hamilton said.

Specific Uses

However, much of that money may be contractually obligated, and other funds were donated by private builders specifically for use on their projects, Hamilton said. She said that she will review the budgets before a special meeting of the CCDC board of directors that will be held before next Thursday’s council hearing on possible new revenue sources and budget cuts.

Mayor Maureen O’Connor, who has led the council in its declaration that a drug- and gang-related violence has created a “state of emergency” in the city, seemed intrigued by the idea of acquiring new funds for public safety needs.

“We’ll have to feel the pain (of budget cuts) and so will they,” she said.

According to Lockwood and Hamilton, neither of whom had specific figures available Wednesday, the city began lending its redevelopment agency money from federal block grants and city sales taxes in the early 1970s, with the intention of receiving repayment from tax increment funds beginning in 1992 or 1993.

When he last checked on the total two years ago, Lockwood said, the principal and interest on the loan totaled about $58 million, and has increased since then. Hamilton pegged the total at between $50 million and $60 million.

However, the council also may be restricted in how it could use the revenue derived from federal block grants, Lockwood said. Federal regulations prohibit the use of community development funds to hire police.

With the July 1 start of the new fiscal year approaching, the council is nearing the hour when it must make difficult decisions on how to pay for the new programs it desires. On Friday, Lockwood is scheduled to release a report detailing sharp cuts in library, park and recreation, planning and other programs that would have to be implemented to hire the 140 new police officers.

$14.9 Million in Cuts

On Wednesday, he offered $14.9 million in suggested cuts in capital improvement projects over three years that would be necessary to fund construction of $8.5 million and $6 million police substations in Mid-City and Southeast San Diego, respectively.

The list included $6.48 million in cuts in Park and Recreation projects and nearly $1 million in cuts in Southeast San Diego economic development plans.

Lockwood had originally estimated the cost of those substations at about $3.5 million each, but the price of land acquisition and relocation expenses in the areas raised those costs sharply, he said.

The council deferred action on the measures until next Thursday.