Sunday, October 7, 2007

Retired, Finally

Now that I'm "retired" from scholarly writing, I plan to finish the remodeling on our house. No more weekends doing research writing, but rather painting, landscaping, carpentry, eating hamburgers and drinking some Miller High Life, and the usual break to get some runs in at the half-pipe at the skatepark. This literary historian named Ron wants to start a garage punk band this month, so I've pulled out my white SG and Les Paul custom, and hooked up my Marshall stack and Vox AC 30 again. To me, all this sounds more fun than reading documents, don't you think? I do.

When I woke up this morning, it was the first time in 10 years I never had a writing deadline looming over my head. I'm now retired from the academic historical profession. I gave my last scholarly conference paper yesterday at the Western History Association meeting in Oklahoma City. It was great fun and very lively, with two young historians named Ray Rast and Phil Gruen presenting material on the history of urban development in San Francisco and Los Angeles. Their papers were extremely interesting and testament to their talents as urban critics. Chris Wilson from University of New Mexico gave a very thoughtful commentary to the standing-room-only crowd.

I gave a paper on the revitalization of downtown San Diego, especially in light of the pension scandal since 2002. It was fun to give a paper in political journalism at a scholarly meeting. People seemed to like it, even though some of what I spoke of would be hard to prove, since the documents aren't available to researchers or the public with the federal trial underway locally. It was an exercise in the educated guess. I'll put an excerpt below:

The 1992-2007: The New Urbanism and False Promises

"California’s fortunes appeared bleak during the recession of 1990-1991, and San Diego experienced defense plant and base closures, and lost important defense and high technology jobs. The recession almost halted downtown revitalization indefinitely. With one of the lowest tax structures in the American West, San Diego went through a fiscal crisis only deepened by twelve years of Proposition 13 tax deficits. When Republican mayor Susan Golding succeeded progressive Democrat Maureen O’Connor, there would be no possibility this politician with senatorial ambitions would raise taxes to pay for local growth in jobs, infrastructure projects, and downtown revitalization. Relying on her Greenspanesque city manager Jack McGrory, Golding’s administration had pulled the rabbit out-of-the-hat by 2000. Downtown stood almost completely revitalized. With a cash poor, general operating fund, one must ask, "How did growth happen?" All post-1991 downtown redevelopment suffered problems of municipal financing, since the general operating fund would not support municipal bond issues and threatened to halt projects underway for almost twenty years. Ever the resourceful financial manager, McGrory looked to San Diego’s recent past to remedy the budget situation, however, with dire consequences for the future. In the process, the period of urban growth and revitalization from 1992-2002 lacked an important ingredient central to earlier regimes of urban development, namely, public accountability.1

At the beginning of Golding’s administration, local progressives wondered how growth would proceed, with many hoping San Diego would avoid "Los Angelization." "San Diego has never been sure of what it wanted to be when it grew up," said Union-Tribune editor Neil Morgan, "What it did know is that it did not want to become L.A."2 Despite concern with "quality of life" issues, the boom of the 1990s proceeded in the downtown, especially the Gaslamp Quarter historic district. Known as the "New Orleans of the West," San Diego’s Bourbon Street offers its bright lights and bars and clubs, but there is almost nothing of historical interest similar to the street-level gravity that absorbs tourists who view the historic structures of New Orleans once they leave Bourbon Street. With the backdrop of history only 80 to 100 years old, Broadway and the Gaslamp district stand as the quintessential commuter paradises of postmodern urbanism, along with the ersatz-piazza design of the Horton Plaza Mall meant to resemble an Italian hillside village of the Cincaterra. Downtown has practically no sites of heritage tourism downtown. The historic district, besides increasing property values, serves as the backdrop for retail and cuisine-related commercial tourism.3

The secret recipe to Golding and McGrory’s "boom of the 90s" relied on an old formula, namely, utilizing funds from the municipal employee’s pension fund, which had been used for the Community Concourse in 1962. After the financially disastrous 1996 Republican Convention (in which an estimated $30 million dollars is unaccounted for, and no city budget documents exist), the city manager’s office approached the San Diego City Employee’s Retirement System board to propose redevelopment loans in lieu of monetary payments to the fund in exchange for future increases in payments and a lucrative early retirement program known as DROP for older employees.4 The SDCERS board, naturally, approved since the fund had generated windfall interest profits during the high-tech boom of the 1990s, centered in California. During the Reagan Era in California, municipal employee pension funds beaconed as available sources of operating revenue during the "downsizing" of local, state, and federal government, especially after Proposition 13. Democratic mayor Maureen O’Connor never entertained use of the pension fund as operating revenue. During the 1990s bull market, however, Golding and McGrory looked to the pension fund for operating revenue to continue projects begun by Pete Wilson, and leverage municipal bond issues for downtown revitalization. By November 2001, Frank Alessi, chief financial officer of the CCDC claimed "We have projects in active construction that are worth a billion dollars and another billion dollars in the pipeline." The ambitious list of tax-supported, bond issue projects were the convention center, 1996 Republican Convention, the $600,000,000 rehabilitation of Jack Murphy Stadium (now Qualcomm), the tax-supported ticket guarantee for Dean Spanos’ Chargers, and the $450,000,000 downtown Petco Park for John Moores’ Padres. Except for the downtown baseball park, which was on the ballot, financing for these public projects were determined behind closed doors. The local media reported suspicious improprieties that bordered on collusion, bribery, and conflicts-of-interest. There had been formal investigations, but no prosecutions except Valerie Stallings, who was sentenced for conflict-of-interest in land deals before the downtown demolition for Petco Park.5

The pension fund loan for revitalization would have been fine if the stock market did not lose value in 1999. After the SDCERS deal, Jack McGrory resigned 1997 quite conscious that the city would fall behind its payments to the pension fund.6 The entire Ponzi scheme was revealed in November 2002 when Diane Shipione, USB Financial Services investment advisor and trustee of the city’s employment retirement system, noticed important financial information missing from a sewer bond proposal. The proposal did not indicate the city had withheld roughly $1.5 billion in payments to the public pension fund, with an additional obligation of $1.0 billion in health care benefits to retirees. Without approval of the fund’s actuary, Shipione blew the whistle. "I had completely lost confidence in the city’s financial decision making," she said, "I just couldn’t let this go forward." As the under-funded contributions scandal gained momentum by summer 2003, independent auditors and the city attorney’s office revealed that the city had misstated its financial condition to creditors since 2000, while the city did not have a certified financial statement for 2003. Immediately, Wall Street dropped San Diego credit rating to junk bond status, and the Securities and Exchange Commission, the US Attorney’s office for San Diego, and the Federal Bureau of Investigation opened investigations into the matter, searching for possible fraud and political corruption in the city’s financial disclosures.

According to Michael Aguirre, the future city attorney, blame lay with the laid-back civic culture and economic bipartisanship of San Diego’s elite and leadership class. "The basic story is that San Diego has become a thoroughly corrupt community in which the power players cut the deals, and you don’t ask any questions, and everybody gets what they want," he said, "People don’t realize that one of the largest cities in the United States is on verge of bankruptcy, and it’s on the verge because of a massive amount of local corruption that has resulted in the thorough mismanagement of the city’s finances." Even arch neo-conservative Carl DeMaio of the local Performance Institute, a graduate of Grover Norquist’s anti-tax and government privatization movement, conceded "If the US Attorney finds the city knowingly misled investors with Enron-like accounting, we could see both a large civic liability and criminal indictments." He explained that "I believe that people for political and personal gain built this Ponzi scheme, and it’s coming home to roost." Dick Murphy, San Diego’s current mayor, resigned over the issue. An interesting special election resulted between progressive write-in candidate Donna Frye and Republican Jerry Sanders, who won on a platform of fiscal responsibility and a no-new-tax pledge. According to political scientist Steve Erie, "America’s self-proclaimed ‘Finest City’ now has the reputation of being among the most poorly managed." In the interest of promoting growth where none could be had, Golding and McGrory had completely bypassed the necessary government channels to legitimately turn downtown San Diego’s economy into a vibrant commercial tourism venue. 7

US Attorney for Southern California, Carol Lam, handed down a 20-count indictment in January 2006, charging five present and former members of SDCERS with "wire fraud, mail fraud, and conspiracy to commit wire and mail fraud." Naturally, the SDCERS trustees plead "not guilty" when the case reached court in Spring 2006. The trial has been delayed twice, most significantly when the US Attorney General fired Carol Lam in December 2006, as the Bush Administration targeted US attorney general’s involved in the investigation of Republican congress members and campaign contributors. (Lam’s mistake is rumored to have been her prosecution of Randy "Duke" Cunningham for bribery by land developers and defense contractors). Interestingly enough, neither Susan Golding nor Jack McGrory have been investigated for prior malfeasance or named in any indictment. Nonetheless, the level of municipal financing for San Diego’s urban revitalization reaches an estimated total of $1,500,000,000, a sum almost equal to the San Diego municipal employee pension deficit. The situation makes the latest commercial development and tourism efforts downtown appear fraught with corruption and built on smoke-and-mirrors. The fact is that San Diego has opted to propose enormous municipal bond offerings since 1992 solely focused on the downtown revitalization and commercial tourism related to sports franchises - choices that have siphoned off important pubic investment in the local economy for light industrial development, trucking, manufacturing, and shipping. The city loses $4-5 billion of value-added activity every year by relying on the trade-related infrastructure built by Los Angeles.8

The downtown revitalization and commercial tourism boom of the 1990s in San Diego raises important questions about urban commercial and tourism development in the globalized, postmodern American city, especially the all important mechanism of city planning commissions controlling and managing growth with proper fiscal and tax policies in place. San Diego engaged too many public projects requiring municipal bond financing, and other cities have promoted proper tax policies for growth, such as New York City and Oklahoma City, whose urban revitalization was met with sound tax policies. San Diego’s political and business culture historically has often been one seamless entity unlike Los Angeles, with its historical divisions between downtown, Westside, and San Fernando Valley money. In the end, no politician knew anything, but special interests received everything. According to the Los Angeles Times in April 2007, San Diego "may lead the league in public figures who prefer to stay out of the public eye - reticence appears to be viewed as a civic virtue by many of the rich and powerful." This "growth consensus" (what Mike Davis calls "the private governments" of San Diego) resembles the reservations of Charles Dail, Hamilton Marston, and even Pete Wilson’s generation: how private interests override the city planning commission and the city council for growth. Ironically, it was Pete Wilson’s efforts to forge a strong relationship between the mayor and city manager’s office that allowed Susan Golding and Jack McGrory to bypass the city council and planning commission during the boom of the 1990s.9 It was a financial windfall for land developers and real estate speculators that will likely be unparalleled for at least a generation. The new mayor Jerry Sanders and city attorney Michael Aguirre will find it necessary to get to the bottom of the pension scandal, devise a repayment plan, and develop new mechanisms of public policy to promote San Diego growth on a more proper and accountable basis."