The San Diego City Council voted unanimously on Feb. 8 to transfer debt service payments on bonds issued to finance Petco Park from the city’s general fund to its redevelopment arm, freeing up about $11.3 million annually over a 21-year period. The move, however, was not favored by all. Scott Maloni, chairman of the Downtown San Diego Partnership, a redevelopment advocacy group, said that the move is a good use of tax increment, but expressed concern about the precedent that the decision sets. “If you start with Petco Park bonds, where does it stop?” he said. “If [Gov. Jerry] Brown is successful with his budget, then we can lose all of the future tax increment, unless that money is encumbered,” said Maloni. “Better to encumber it by paying off our ballpark debt than to lose our future ability to use it.” The Centre City Development Corporation (CCDC), which has been making the payments since 2009, will use downtown redevelopment tax increment funds to cover the remaining $237.6 million owed on the “Ballpark Bonds” due in 2032. The $454 million baseball stadium, which opened in 2004, was financed with $95 million of redevelopment tax increment funds, $206 million from the city and $153 million from the Padres. “It’s a step forward and we’re happy to have this win, but we’re not done,” said District 5 Councilman Carl DeMaio, who proposed the idea. “We have a whole lot of reforms that we want to implement in redevelopment funds.” DeMaio called Petco Park a quintessential example of a redevelopment project that has stimulated all sorts of private investments, created jobs and shown a handsome return for taxpayers. Its one fatal flaw, he said, is that it’s stuck in the general fund and is not paid for with redevelopment funds. Citing declining revenues as a result of the recession, increasing expenditures for city operations, unfunded pension and retiree health liabilities and a deferred capital project backlog of $800 to $900 million, officials said the move is necessary to address future deficits, which could lead to further reductions in crucial city services. “Ultimately, we feel that this issue comes down to weighing the priorities of the general fund against the priorities of the redevelopment agency,” said Tom Haynes, fiscal and policy analyst with the Office of the Independent Budget Analyst (IBA). “In this context it may be difficult to place redevelopment projects at a higher priority than critical general fund services such as police, fire, parks and libraries, which have all been significantly cut over the past several years.” Haynes urged council members to exercise caution in using tax increment dollars to bankroll general fund obligations, as redevelopment money was not intended to be used as an ongoing source of capital for general government purposes. Richard Rider, chairman of San Diego Tax Fighters, a taxpayer advocacy group, said that it was a mistake for the deal not to have been structured this way from the start. “I didn’t favor the debt for taxpayers in the first place,” Rider said. “It seems to be a downtown redevelopment project. The claim is that it helps the redevelopment of downtown San Diego. Well then, why not have them pay for it?” Rider said redevelopment money is far less important to tax payers in terms of delivery of services than the city’s general fund, which is crucial for police, firefighters, libraries and potholes. “That’s what people pay taxes for and that’s what they want the money spent on,” Rider said. Frank Alessi, executive vice president and chief financial officer of CCDC, said on Jan. 19 that the redevelopment agency’s advisory board discussed the proposed amendment without the benefit of a staff report and voted 17-1, with one abstention, to oppose the continuation of debt service payments on the ballpark. Alessi further stated that on Jan. 26, CCDC recommended to extend the payments to 2016, giving city leaders an opportunity to assess the need for additional payments. The vote was taken following budget projections, which according to Andrew Phillips, assistant vice president and controller for CCDC, showed deficits of $33 million over the next five years and $63 million over the next decade. Phillips said the agency will look at prioritizing and deferring projects during those periods, and that tax allocation bonds can be issued to offset any cash flow needs in the future. So far, CCDC has decided to cease work on the C Street corridor project indefinitely. “We made our decision, the Council made theirs and at the end of the day, they’re the boss and I’m not going to be critical of the boss’s decision,” said newly elected CCDC Chairman Kim Kilkenny. He added that the bigger challenge will come if the governor’s plan to raid redevelopment funds is approved. “If Brown’s proposal goes through, we’re going to be in a world of hurt,” he said.