Economic Development Committee Reviews BID Budgets, Arts District, and Arts Funding on March 9, 2017

The Economic Development Committee of the San Diego City Council met on Thursday, March 9, 2017, to review business improvement district (BID) budgets, receive updates on grand jury recommendations regarding the Convention Center, and hear presentations on the economic impacts of the NTC Foundation's Arts District and the Commission for Arts and Culture. The meeting was chaired by Councilmember Zap, with Councilmembers David Alvarez, Barbara Bree, and Mark Kersey present. Staff included Deputy City Attorney Daphne Scogan, Jack Straw from the Mayor's Office, Jeff Kawar (IBA), and Ryan Purdy (committee consultant).

Consent Calendar

• The February 13, 2017 meeting minutes were approved by unanimous consent.
• No consent items were on the agenda for this meeting.

Public Comments & Testimony

• Robert McNamara (public speaker, former member of the FY2015 Grand Jury) spoke on the Convention Center grand jury report, noting that the Convention Center Corporation had improved transparency by including previously omitted city payments (e.g., $12.5M annual debt service and $1.2M for pumping water from the basement) in its presentations and linking to city budget pages. He noted that the audit left some governance questions open and that no decision had been made on tourism marketing changes.

Discussion Items

Item 1: FY2018 Business Improvement District (BID) Budgets

• Staff from the Economic Development Department (Lydia Moreno, Deputy Director; Christina Vincent; Day Chi Pantaleon) presented the annual appropriation process for 18 BIDs across San Diego.
• The BIDs are authorized under state law to support small businesses, create jobs, and revitalize commercial corridors. More than 14,000 small businesses participate, raising over $1.4 million annually.
• Staff requested approval to move the FY18 BID budget package to full City Council for two hearings: April 11, 2017 (advisory board appointments, budget approval, and declaration of intent to levy assessments) and May 16, 2017 (public hearing and confirmation).
• Councilmember Alvarez raised questions about the San Ysidro BID's budget, noting concerns about additional revenue beyond assessments. Jason Wells, Executive Director of the San Ysidro BID, explained that they had reduced staff from five to three and taken over chamber events to fill a $50,000 redevelopment fund gap, expecting additional revenue this year.
• Councilmember Zap commented on the disparity between assessments and other activities, noting that Ocean Beach BID receives only $27,000 in assessments but raises $858,500 from activities, and Downtown receives $72,000 but leverages $8.7 million. He questioned the burden of monthly reports for small BIDs and recalled a prior suggestion for quarterly reports for those below a threshold; staff confirmed monthly reports are still required.
• The committee voted unanimously to move the item forward to City Council.

Item 2: Grand Jury Report Recommendation Status (Convention Center)

• Lisa Byrne from the Office of the Independent Budget Analyst (IBA) presented IBA Report 1708, providing status updates on two recommendations from the May 2015 Grand Jury report on the San Diego Convention Center Corporation (SDCCC).
• Recommendation 1518 (Transparency): The city's original response indicated future implementation; SDCCC has since included a link to city budget pages and additional info on ownership and funding.
• Recommendation 1520 (Governance): The city's original response indicated future implementation; the City Auditor's Office reviewed governance models as part of a planned audit, and no further review is planned. The audit committee requested additional information on competing convention centers' governance structures when the audit goes to City Council.
• This was an information-only item; no action taken.

Item 3: NTC Foundation Arts District Economic Impact Presentation

• Alan Ziter (Executive Director), Lori Fleet Martin (Board Chair), and Lisa Johnson (President/CEO) presented the progress of the NTC Foundation's Arts District at Liberty Station.
• The district was established from 26 historic buildings at the former Naval Training Center; the foundation is responsible for renovating and operating them under a 55-year lease with the city.
• Key statistics: 82 arts and culture tenants (28 nonprofits, 53 small businesses/artists), 90% occupancy, average rent of $1.52/sq ft (commercial rates exceed $3), 977 jobs restored, 600,000 visitors annually, $53 million economic impact, and $15 million from redevelopment funds, $4 million in private donations, plus tax credits and financing.
• The foundation has renovated 16 of 26 buildings; 10 remain (including 4 barracks, 3 officers' homes, base exchange, and pump house). Future plans include a 300-seat performance venue and a boutique hotel in partnership with the McMillan Companies.
• Councilmembers commented on the district's success and challenges, including the loss of redevelopment funds, the need for gap funding for prevailing wage requirements (increasing project costs by 25-27%), and the need to renovate remaining buildings to reduce blight.
• This was an information-only item.

Item 4: Commission for Arts and Culture Economic Impact Presentation

• Larry Baza (Chair), Carlos Christiani (Advocacy Committee Chair), and Whitney Rue (Funding Programs Coordinator) presented the commission's programs and economic impact.
• The commission was established in 1988. It manages the Organizational Support Program (OSP), which provides 70% of its budget; Creative Community San Diego (CCSD) grants (minimum award now $5,000); public art programs (2% for city construction, 1% or 0.5% options for private); arts education (allocated $100,000 annually for two years); and cultural tourism marketing.
• Economic impact data (FY2015): City invested $6.7 million in TOT funding for 85 nonprofits; those organizations generated $209.3 million in expenditures, supported 6,656 jobs, and served 5.2 million people. Cultural tourists spend more ($564 vs. $325) and stay longer (3.7 vs. 1.8 days) than average tourists.
• Councilmembers discussed the need to support arts education, the potential impacts of proposed NEA cuts, and the challenge of affordable housing for artists. They praised the commission's work and noted the importance of arts funding.
• The commission is expected to release updated 2016 numbers in April 2017.
• This was an information-only item.

Key Outcomes

• Unanimous approval (with a verbal 'aye' vote) to move the FY18 BID budgets to full City Council.
• The Convention Center grand jury recommendations were noted as implemented or resolved; no further action needed.
• No formal votes were taken on the NTC or Arts Commission presentations; they were informational.
• Staff were asked to provide comparisons of arts funding with other cities and updated economic impact data when available.