An open letter to the Civic San Diego Board of Directors about New Market Tax Credit application
2013 NMTC Application of a “Government-Controlled entity”
By Anna Daniels
What’s going on at Civic San Diego,the non-profit entity that has become the new model for redevelopment? On April 10, a legal complaint was filed by the San Diego County Building and Construction Trades Council and Dr. Murtaza Baxamusa, a CivicSD Boardmember. It was made available in its entirety at the San Diego Free Press.
On April 16 the Voice of San Diego published an opinion piece “Time to Shine a Harsh Spotlight on Civic San Diego” by former City Councilmember and current open government advocate Donna Frye. Frye refers in her article to the under-reported resignations of Cynthia Morgan, Civic’s Treasurer and CFO/COO Andrew Phillips. “I’m not sure what prompted the resignations of Phillips and Morgan, but it can’t be a good sign. It will be interesting to see who the mayor appoints, and the City Council confirms, to fill the vacancy left by Morgan, and who the new CFO/COO will be and how quickly that happens.”
On April 10 I sent an email to Jeff Gattas, chairman of the board of CivicSD, detailing my own concerns about the information that I had received from a public records request. I had requested, as a private citizen, copies of CivicSD’s application for 2013 New Market Tax Credits (NMTC) as well as those for subsequent years.
The request was filled by CivicSD staff with the note that “All proprietary/trade secrets have been redacted.” As I thumbed through the sixty-some heavily redacted pages of the 2013 NMTC application it was apparent that CivicSD functions more like Halliburton than as a publicly accountable entity.
CivicSD has been in the news recently because it is using federal New Market Tax Credits – a new breed of tax-saving incentives for Wall Street investors to stimulate new development in low-income neighborhoods. Administration of these credits also provides a revenue stream to CivicSD. These revenues are not insignificant–they were $175K in Fiscal Year 2015 and are projected to be a whopping $719K in FY’16, an increase of over a half million dollars.
Click for larger image of Community Accountability and Involvement
The discussion of community benefits which has circulated across the media for the past months is tied to the use of New Market Tax Credits in low income communities. Community benefits have been discussed in the Public Safety and Livable Neighborhoods committee and CivicSD itself launched a consensus tour to generate public input from impacted communities such as City Heights and Encanto where development could occur. A significant number of residents, non-profit and community planning committee members felt that this effort did little more than grease the skids.
My reasons as a private citizen for requesting those applications are straightforward. I have lived for almost thirty years in one of the poorest census tracts in a community which has the feel of a place colonized by corporations, developers and Wall Street financial interests. The attendant built and social landscape is largely outside of the control of those of us who reside here, unless public monies are involved. CivicSD is dependent on public monies.
I wanted to find out what CivicSD is contemplating in City Heights– and came up empty handed.
There were, however, a few significant revelations in the information provided which are detailed in the email below.
Dear Mr. Gattis Gattas:
I recently requested copies of the New Market Tax Credit applications via a Public records Request. As in prior instances, Ms. O’Malia provided that information in a timely manner, which I appreciate.
I was informed by Ms.O’Malia that “All proprietary/trade secrets have been redacted.” A great deal of the applications appears to have qualified for redaction and that concerns me.
The 2013 NMTC application includes a description of Civic San Diego’s structure as a Government Controlled Entity (p2). This designation frankly came as a surprise to me. It is not how CivicSD has described itself nor is it how our City elected representatives describe it either.
The public has a clear interest and stake in “government controlled entities” with all that implies in terms of public subsidies, the public good and potential public financial risk.
CivicSD has designated my City Heights community as an area in which it would like to expand its Downtown redevelopment strategy via the use of New Market Tax Credits. The summary of the business strategy (NMTC application for 2013, p8) is heavily redacted. I have no idea as a City Heights resident about the type of projects or the borrowers that will be targeted. Citizens have the right to know how CivicSD, as a public entity, intends to invest in low-income communities such as City Heights.
A whole section regarding asset management and collection policies, strategies for minimizing defaults and managing delinquencies has been heavily redacted. (p 42) Citizens have the right to know CivicSD assets and what public risk is involved in its activities as a government controlled entity.
CivcSD’s lack of transparency, accountability and oversight is deeply troubling. I could find no board minutes on the site that verified that the board of directors had reviewed and signed off on the NMTC applications.It is apparent that the City Council has not reviewed these documents either.
Todd Gloria, City Council liaison to CivicSD publicly stated that he had heard about CivicSD using NMTCs for a charter school outside of the City of San Diego by reading about it in the newspaper. Yet the notice of CDE Certification from the the Department of the Treasury states: “[T]he CDFI Fund has determined that your organization’s accountability is to low-income communities in the following service area: Local-San Diego, CA MSA in California. (December 10, 2012)” The San Diego MSA includes the whole county. Why is there such confusion and secrecy?
I have been following CivicSD’s activities for a number of years now and still have no idea what it is, what’s its mission and what it intends to do in my City Heights community as well as other neighborhoods. What I have been able to surmise is that CivicSD wishes to operate as a private entity while using public funds. That is a problem.
Anna Daniels
Note: Blue links and application pages were not in the original email. They are added to provide additional context for readers.
Anna Daniels is a past president and board member of the City Heights Community Development Corporation and long time resident of City Heights. She is also a retired member of MEA, the Municipal Employees Association. She is a current member of the Community Budget Alliance, representing the Library Organizing Project. The opinions expressed in this article are her own.
Anna Daniels
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It’s difficult to think any democratic government could survive practices so secret as this. We don’t even know who Civic San Diego reports to. Da Mayor? Goldman Sachs? A bank in the Caymans?
For info – Metropolitan Statistical Area = MSA. Definition on the CDFI website:
CDFI Fund Project Profile Guidance
Geographic Location:
Major Urban: A Metropolitan Statistical Area (MSA) with a population equal to or greater than 1 million, including both central city and surrounding suburbs.
I wish our city would stop distributing so much money into these sly friends/friendly investors’ start-up “non-profit” committees… I wish our city would stop acting like some nouveau riche with bad taste uselessly “redecorating” everything at great expense, enabling these specially funded friends committees, especially in low income neighborhoods where, often, the people don’t have the confidence or experience to protest, or even investigate… We get “railroaded” into proliferating assessment districts…
It is not only over the edge of legality, but it is patronizing , any bullying by bureaucrats and the bureaucratic system.