Budget Review Committee Meeting – Thursday, May 7, 2020

Chair Barbara Bree convened the Budget Review Committee meeting via teleconference due to the COVID-19 pandemic. The committee reviewed the proposed FY21 budgets for the San Diego Convention Center Corporation, the San Diego Housing Commission, the San Diego City Employees Retirement System (SDCERS), the Government Affairs Department, the Office of Boards and Commissions, the Communications Department, the Planning Department, the proposed Mobility Department, and the Real Estate Assets Department. Councilmembers participated remotely, and public comment was taken by phone on several items. The meeting focused on the severe fiscal impacts of COVID-19, the need to balance budgets while preserving core services, and ongoing debates over new departmental structures.

Consent Calendar

• No consent calendar was presented.

Public Comments & Testimony

• Item 2 – Housing Commission: Joyce Sanyata expressed strong support for the $22 million set aside for affordable housing preservation. Samantha Jenkins (District 4 resident, former housing specialist) urged allocating more funds to homelessness prevention rather than exclusively rapid rehousing, noting post-COVID eviction risks.
• Item 6 – Communications: Joyce Sanyata praised City TV and the department’s work during the pandemic.
• Item 7 – Planning: Esperanza Gonzalez (District 9 resident, translated by staff) and Laura Benavidez (Environmental Health Coalition, City Heights) opposed any reduction in translation services for planning groups, emphasizing that language should not be a barrier to civic participation.
• Item 8 – Mobility Department: Seven callers spoke. Supporters (e.g., Andy Hanshaw – Mobility Board chair, Malika Marsden – Climate Action Campaign, Maya Rosas – Circulate San Diego, Marissa Tucker – advocate, Sean Van Diver, Jennifer Hunt – San Diego County Bicycle Coalition) argued the new department is budget-neutral and critical for achieving climate action and vision zero goals. Opponents (Charla Hank – Accessibility Advisory Board, Patricia Sigwin Perry – Accessibility Advisory Board) opposed the transfer of the Office of ADA Compliance to the mobility department, citing reduced staffing and dilution of ADA’s mission.
• Item 9 – Real Estate Assets: No public testimony.
• Non-Agenda Public Comment: Two callers (representing the Maintenance Corporation Trust Fund and a former cleaning company worker) opposed cuts to the Living Wage Office (ODA), warning that a single enforcement FTE would increase labor and health violations.

Discussion Items

1. San Diego Convention Center Corporation – President/CEO Rip Riteau and CFO Martin Maddox presented. FY20 revenues were $2M above budget pre-COVID, but by April the corporation faced an $11.4M loss from canceled events through July. FY21 assumes zero activity through July; net loss of $2.9M is expected, drawing reserves down to $2.1M (5.2% of revenues, below the 8% minimum). Lost business from March to July 2020 included: 411,000 attendance, 382,000 room nights, $421M direct attendee spending, $14.5M tax revenue, and $700M in regional impact. The city’s FY20 investment of $15.9M (debt service, dewatering, marketing) yielded $18M in taxes (13% ROI). The corporation obtained a $4.7M PPP loan and is pursuing a $1.25M IBank loan for roof design. The IBA warned that if the homeless shelter continues past July, the budget could be off by $10M+, and recommended the city use CARES Act funds to cover shelter facility costs. Councilmembers thanked the corporation for pivoting to a homeless shelter. Councilmember Moreno questioned the $2.1M marketing expenditure when booking is on hold, suggesting suspension. Council President Gomez emphasized workforce impacts. Chair Bree noted the general fund’s heavy reliance on tourism.

2. San Diego Housing Commission – President/CEO Rick Gentry, Chief of Staff Jeff Davis, and CFO Tracy McDermott presented a $515M proposed budget (14% increase). Key initiatives: $22M for affordable housing preservation, $10M for rapid rehousing (potential hotel/SRO acquisition), $19M for acquisition of hotel/SRO properties, $20M for COVID-19 tenant hardships, and $14M reserve for unforeseen COVID impacts. The budget adds five new positions. The IBA noted that the preservation initiative and hotel acquisitions may be eligible for CARES Act funding. Councilmembers praised preservation funding. Councilmember Moreno asked about use of $3.1M in CARES Act funds; Gentry said it will be used for COVID-related expenses, with a revised budget to follow. Council President Gomez requested that rental relief be prioritized. The Housing Navigation Center’s operations (open M–F, 8am–5pm, 202 engagements in April) were discussed; Gomez and Bree suggested reconsidering its funding and exploring alternative uses for the building. The Cortez Hill property will be sold, as the Housing Commission redirected funds to hotel acquisitions.

3. SDCERS – CEO Greg Rodemaker and Controller Ted LaSalvia presented a $13.9M administrative budget (down two FTEs to 48). Investment portfolio returned -13% in Q1 2020 and -4% fiscal year-to-date (April 30). Long-term target return is 6.5%. The IBA noted investment expenses of 0.45% of assets. Councilmembers asked no substantive questions.

4. Government Affairs – Deputy Director Adrian Granda presented the $1.2M budget (7 FTEs, unchanged). Accomplishments included securing $21M for the Park at Grade crossing, $15M for Tijuana River Valley, $5M for Coronado Bridge suicide prevention, and $248M in direct CARES Act allocation for the city. The IBA noted the mayor’s office took a larger cut to spare this department. Councilmembers expressed strong support for the department’s advocacy work.

5. Boards and Commissions – Director Joel Day presented. Proposed budget eliminates one vacant administrative aide position (supporting the Community Review Board on Police Practices). Two positions from the mayor’s office will be transferred in. IBA noted an error in the proposed FTE count (will be corrected to six). Councilmember Montgomery expressed concern about the CRB losing administrative support; Day said the impact is being monitored.

6. Communications – Director Craig Gustafson presented. Budget decreases by $251,486, eliminating one vacant senior PIO position. IBA noted this is the fourth consecutive year of PIO reductions and that a $100,000 request for Spanish translation services was not funded. Councilmember Montgomery questioned the management structure and asked for an org chart and details on general fund vs. enterprise fund billing. Councilmember Gomez asked about translation funding; Gustafson responded that it has been requested twice but not granted.

7. Planning – Director Mike Hansen presented a $7.5M general fund budget (down $2.5M and 18 FTEs). Ten FTEs are eliminated (five environmental planning, one community planning, three administrative); eight are transferred to the proposed mobility department. Translation services for planning groups will be moved to the General Plan Maintenance Fund ($71,000), with no service reduction. The IBA noted no funding for the Rewild Mission Bay alternative in the De Anza EIR. Councilmembers asked about the impact on community plan updates; Hansen stated all current updates (Kearny Mesa, Clairemont Mesa, University, etc.) remain on schedule. Councilmember Moreno opposed the transfer of planning positions to a mobility department. Council President Gomez also opposed creating a new department at this time.

8. Mobility Department – Deputy Director Alyssa Muto presented the proposed new department as budget-neutral, funded by special revenues ($2.95M general fund allocation offset by $1.6M in repayments from parking district, shared mobility device, and GPMF revenues). The department would consolidate eight positions from Planning, three from Economic Development, and three from the Office of ADA Compliance. Two new positions (executive director, program manager, project coordinator) would be added. The IBA noted that the ADA office would shrink to three staff, potentially affecting federal compliance. Public testimony was split. Councilmember Campbell opposed creating a new department during a fiscal crisis; Councilmember Ward supported it; Councilmember Moreno and Council President Gomez also opposed, citing the need to focus on critical services. The committee appeared divided, with a majority expressing opposition.

9. Real Estate Assets – Director Sidel Thompson presented. General fund budget reduced by $4M and 43 FTEs, including all 30 positions at the stadium (assuming sale or lease to SDSU by July 1). IF the sale is delayed, the city could be left with no budget for stadium operations (current lease runs through Dec. 31). The IBA noted that sale revenue is projected at $52.8M (less than the $55.2M assumed). Councilmember Moreno asked detailed questions about contracts, vacancies, and preventative maintenance; Thompson agreed to email responses. Council President Gomez noted the Cortez Hill property will be sold.

Key Outcomes

• Convention Center: No formal action; committee acknowledged the corporation’s budget and the need for ongoing monitoring. Councilmember Moreno’s suggestion to suspend marketing funding was noted. The IBA’s recommendation to use CARES Act for shelter costs was supported by several members.
• Housing Commission: The committee did not vote; the budget will be considered by the full council. Preservation funding was widely praised. Council President Gomez and Chair Bree suggested re-evaluating the Navigation Center and Cortez Hill sale.
• SDCERS: Minimal discussion; budget noted as routine.
• Government Affairs: Strongly supported; no cuts recommended.
• Boards and Commissions: Concerns raised about CRB staffing; will be addressed in May revise.
• Communications: Questions about management structure and enterprise fund billing; director will provide details.
• Planning: Councilmember Moreno and President Gomez opposed the mobility-related transfers; several members stated they would not support creating a mobility department.
• Mobility Department: A majority of council members (Campbell, Moreno, Gomez, and likely others) expressed opposition to creating the new department at this time. The proposal appears unlikely to advance.
• Real Estate Assets: The stadium sale timeline is critical; if delayed, the city has no FY21 budget for operations. Council discussed the need to preserve affordable housing and maintain city assets.
• Non-Agenda Items: The committee heard concerns about the Living Wage Office cuts but took no formal action.

The meeting recessed at approximately 1:00 PM and reconvened for the afternoon session at 2:00 PM, adjourning around 5:30 PM. The next meeting is scheduled for Friday, May 8, 2020 at 9:00 AM.