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  When Gina Champion-Cain was born in 1965, the economic heyday of Downtown San Diego was fading. High-rises still bustled with office workers, the defense industry was churning out thousands of solid blue-collar jobs near the airport and the San Diego Union and Evening Tribune ran 24 hours a day producing verbiage for the masses. But the largest retailers already were moving to Mission Valley’s cow pastures. As the Ann Arbor, Mich., native blossomed, suburban sprawl was draining the life from Downtown. The newspapers followed the retailers to Mission Valley. The defense manufacturing industry began its long swan song, and the fanciest offices were built in the fields of the University Towne Centre area, with no less than eventual Downtown icon, the late Ernest Hahn, helping lead the way. By the time then-Mayor Pete Wilson came to power and moved to reverse the trend, things had gotten ugly. Today, a handful of slightly aging high-rises, Horton Plaza, the San Diego Convention Center and revitalized Gaslamp Quarter serve as a nice salve on old wounds. Construction of thousands of housing units seems a soothing tonic for the 1,500-acre neighborhood’s aches. But the well-rounded inner-city economy of days gone by remains a memory. Tourism and government, and bless them for their consistency, too heavily dominate the 75,000-strong Downtown employment scene. Pleas and hollers for help fell mostly on uncaring ears. Now, in a stroke of timing, Champion-Cain, an emerging rehab developer with wild hair and confident enthusiasm, is taking the helm of the urban core’s most influential private group, the Downtown San Diego Partnership. By luck and circumstance she does so at a time when the leading economic power brokers have all decided — and only recently — to sit together at a table and, maybe, just probably, in theory, hammer out Downtown’s first economic development plan geared toward bringing in a new class of employers. The leaders of this Downtown Economic Development Program task force are Peter Hall, chairman of the Centre City Development Corp.; Hank Cunningham, director of the city’s Community and Economic Development Department; Fred Baranowski, president of the Downtown San Diego Partnership, and Julie Meier Wright, president and chief executive of the San Diego Regional Economic Development Corp. Other members include Champion-Cain; Donna Alm, CCDC’s vice president of marketing and communication; Bill Carney, EDC’s vice president of corporate services, and Deb Egelske, manager of Bandwidth Bay. By late 2001, and into the holidays, the group was meeting weekly to discuss a new venture. “It is great news,” says Champion-Cain. “I am very excited.” What’s Been Going On Since CCDC’s creation, the development of Downtown has mostly focused on bricks and mortar, helping the private sector construct buildings. Assistance typically involves infrastructure improvements like streets, water pipes and the occasional park; sometimes acquiring property or even, in the case of some housing, financial contributions that are repaid with discounted units for low and moderate income folks. Yet most of the commercial buildings fostered by CCDC in the 1980s are occupied by traditional service firms, professionals like lawyers, accountants or government bureaucrats, a tenant mix little different from what has long existed. Seniors, the homeless and tourists were the chief occupants of most of the housing. While San Diego’s economy diversified in the mid-1990s, Downtown was left behind. As economic development efforts focused on turning undeveloped lands north of Interstate 8 into white-collar campuses, Downtown leaders chafed at a sense they were being deliberately kept from meetings with site decision makers. The main target of their complaints was, and is, the San Diego Regional Economic Development Corp., which ironically itself is headquartered Downtown. “The frustration was that whenever they had a potential tenant for San Diego, they would never tell anybody who it was,” says Craig Irving, the millionaire owner of one of San Diego’s most successful commercial brokerages and a former president of the Downtown Partnership. “We wanted to show them Downtown. The answer would be, ‘Well, we already told them about Downtown and they are not interested.’ Our beef was, ‘You don’t know Downtown and you shouldn’t be trying to sell it.’”
“Once the groups such as CCDC and the Downtown Partnership heard we were coming, they got involved vigorously in making sure we had lots of information about what Downtown had to offer the station and its employees, in terms of being close to cultural entities, restaurants, shopping, public transportation, etc.,” says Phyllis Schwartz, general manager of NBC 7/39. “The Downtown Partnership’s Clean and Safe committee has also been a big help in educating us and helping educate our employees on dealing with an urban environment. Same with San Diego Police. They sent people out to speak to my employees while we were in our old building.” When it came to funding marketing programs such as Paradise in Progress or Bandwidth Bay, it was CCDC that reached into its pocket and the Partnership that helped lobby, along with CCDC, other agencies for support. Nothing came from EDC. “We recognize EDC is a regional institution,” Hall says. “But you know, Downtown is part of the region. It is the hub of the region. It is the heart of the region.” “The EDC has yet to provide any financial support for Downtown,” Irving says. “The irony is they get almost half their budget from the city of San Diego.”
“If you look at the region, there is one extremely scarce commodity, and that is land,” Irving continues. “But there is one place you have an incredible amount of land. I believe Downtown San Diego, geographically, at 1,500 acres is huge. We are talking reuse. We are talking about developers coming in and playing Monopoly. Buying Park Place and Boardwalk, scraping buildings and building new ones. You have floor area ratios here of up to 10. So on a 60,000-square-foot block you can put 600,000 square feet on it. Try doing that in a suburban location.” The Right Response? Taking all of this criticism somewhat personally, and feeling her agency is a bit misunderstood, is Julie Meier Wright, the EDC’s president and chief executive. “We have been involved with CCDC for quite some time in their Downtown redevelopment/marketing efforts through a couple of people no longer with EDC and more recently with Penny Baldwin, our director of corporate services,” says Wright. “We provided quite a bit of input into this effort that Deb Egelske did on Downtown marketing (for the Bandwidth Bay program). Our input is helping to reshape some of the marketing effort.” Wright stresses the regional nature of her organization’s efforts, noting that Downtown has much in common with other parts of the region. “Every area of San Diego County has assets and liabilities,” she says. “Those need to be understood completely before you can craft a high-payback marketing plan.” Indeed prominently featured on the EDC Web site is the phrase “Catalyst for a Competitive Region.” In addition, EDC has endured strong criticism from other areas. Some communities to the north have complained Downtown gets too much attention while four years ago the East County communities nearly staged a funding revolt over their alleged exclusion from EDC efforts. The Tech Cure Probably nothing would soothe the angst of Downtown advocates more than a decision by a prominent technology firm to locate its headquarters Downtown. At one time Yahoo was pondering placement of its logo on the building now home to NBC 7/39. More recently, Sun Microsystems was looking at Downtown as an option for its already sizable presence. The recession cooled those plans, although Downtown leaders remain optimistic about Sun’s future. Downtown is not without its technology component. Companies like Mass Hysteria, Bay Logics, CollegeClub.com and PeopleFirst.com all call it home. Same goes for Ventureplex, an incubator opened in the Gaslamp Quarter last summer by Dante Fichera and David LeFrenz. And Akonix Systems Inc. is looking to revolutionize the way Web surfers interact with an Internet site. But size in tech employment is everything. PeopleFirst.com has been wildly successful in pioneering auto loans via the Internet, but its 270 employees, while impressive, are not the 500 to 1,000 a trophy tech tenant would bring. “Downtowns are typically service and government oriented,” Wright says. “There are challenges to bring tech Downtown. I sometimes call it getting the optimum anchor tenant. We had a couple in the pipeline, but the Nasdaq and (slowing) economy haven’t helped.” A TV Station’s Buzz Schwartz’ decision to move her station Downtown has provided a larger than expected boost to the Downtown ego.
“NBC is huge,” Hall agrees. “Most great cities have the media, in particular the new media, Downtown. As I left the office tonight people were waving in the windows of the NBC studios. Al Roker is coming in next week to do the national weather out of Downtown San Diego.” Yet Schwartz decided to move Downtown because it fit a business plan. She had never heard of Bandwidth Bay before making the decision, a point likely not lost by Wright, but one kept private. “I decided to bring the station Downtown because we needed a new facility and we wanted to be near a place where there was a ‘pulse’ of people so we could do a Today-show-style street-side studio,” Schwartz says. “It wasn’t as a result of any marketing being done by the various Downtown groups. I am from San Diego and was living in Chicago for many years. So I followed the rebirth of Downtown from afar and through my Mom, who lives in San Diego and was one of the early supporters of Downtown and its restaurants, jazz places, etc.” Parking Remains A Big Hurdle
Irving recalls back in the mid 1980s when the Air Pollution Control District was threatening sanctions on employers who did not actively promote ridesharing. Zoning laws were going to prevent suburban developers from building projects with four to six parking spaces per 1,000 square feet of development. Instead, the city cracked down on Downtown developers, restricting the amount of parking per project. “To me, the city leaders had it reversed,” Irving says. “The thought was if we don’t build it, people will just take the bus or trolley.” Instead, they just drove to jobs in new projects in the suburbs, Irving says. “Parking has always been a problem for Downtown, either the lack thereof or the cost of it. We are seeing even more of that as parking rates continue to increase. We need more people, more brain power at the table to pay attention to it.” However, the issue often seems worse to prospective tenants than the eventual reality. Or such was the case with Golden Eagle. “When we first met they had 1,200 employees and 80,000 square feet of office scattered in Mission Valley,” says Irving, who as a leasing broker helped the company consolidate offices into a single site. “They said, ‘Well, we want to be in the suburbs.’ They said, ‘We would never consider Downtown.’” Irving asked why and was given crime and parking as the issues. He requested the home ZIP code for each Golden Eagle employee and entered the data with a computer program back at the Irving Hughes office. The resulting map was then presented to company executives. “Interestingly enough they were pretty balanced between East County, South Bay, Central San Diego and North County,” Irving says. “If we drew a circle, the closest geographic area was Downtown. Also, the bulk of them lived very close to the trolley line.”
Working with the owner of the 525 B Street Building and Ace Parking, Irving made an offer that would provide Golden Eagle with 200,000 square feet of office and, for two years, the five-per-thousand parking ratio of the suburbs. The number of spaces would then gradually decline, or cost more to buy. “But from the day they moved in they never used five per thousand,” Irving says. While Irving’s firm was built on representing Downtown tenants in leases, he says he has no conflict advocating for an employment marketing program. “We do 80 percent of our business outside of Downtown,” Irving says. “If you combined every other brokerage in San Diego, they would not amount to what we have brought to Downtown.” Eventually, Irving would like to see the city dip into the $7 million to $10 million it collects each year from Downtown traffic fines and use that money to subsidize parking lots. That money now goes into the general fund. “When you are talking about marketing Downtown, there is nothing worse than someone coming Downtown and driving away with a $35 or $50 parking ticket,” he says. “I would like to see all of that money stay in Downtown San Diego and have the city build parking structures for residents and tourists and even the businesses. We have seen parking rates increase significantly over the last five years and there is no end in sight. A year or two, or three from now, when a tenant’s lease is expiring and the landlord is charging $175 a space, the tenant is going to move from Downtown San Diego. If there is a subsidy, you will reach equilibrium. The tenant will say, ‘I can get parking across the street for $70.’” Why This Marketing Effort Now Clearly, Downtown executives, on and off the record, have long been frustrated by their perceived lack of attention from EDC. Now the four major players are talking like best business partners. It may be because the region is running out of developable commercial land, and suburban traffic is seemingly getting worse by the day. City Hall, from Mayor Murphy on down, is talking about smart growth geared toward adding more density to the older neighborhoods, and Downtown has finally become a serious player in the new housing market. “Now we’ve got to go back and encourage job formation,” Hall says. “It is always this balancing point. We need smart growth where people can live or play. You can’t just have all the job growth north. That exacerbates the problems. We must make this work. It is smart growth. It is ultimately the destiny of the city. Downtown is the hub of the region. It has to be strong, commercially, culturally and economically.” The move is being portrayed across the board as one for the region.
Taking The Next Economic Step “One of the first things we need to do is an inventory of who is down here right now and why,” says Baranowski. “What is the come-on for Downtown? What is the, ‘I gotta be here?’” Those kind of questions are right in the EDC wheelhouse. Toward that end, Wright expects to work with Cunningham on refining the agency’s existing contract with the city to focus a large number of surveys on Downtown businesses. “As a region we have a vested interest in the success of Downtown and the success of South County,” says Wright. “We need to understand who is down here, why they are down here, what they like and dislike and what their plans are. We are a trusted partner and can gather that information. It is not only a smart thing to do, but it is in itself a good marketing tool. You have the opportunity to work with them. We also need to talk with some of the companies that have relocated out of Downtown and why. Generally we will find the ‘why’ is client based, and it is ‘tech’ and it is ‘north.’ “The research and the outreach calls will be done on a fairly expedient basis in the new year,” she continues. “We would get a good cross section of what we know to be an industry Downtown. As we look at the data, we will be watching for patterns of information very closely so they are contributing to our dialogue. But I think we have to have some really concrete things to present, some options for going forward with a marketing plan.” Still to be resolved is who is responsible for collecting the hard data on Downtown employers. Today, questions such as the demographics of the workforce within five miles of City Hall, don’t have answers. Hall says the focus of the new collaboration with EDC should encompass other older parts of the city where smart growth efforts are promoting increased density in exchange for an array of new amenities. But he wants to ensure the focus remains on Downtown for major employers. “I think Downtown should be in play for every prospective high-tech tenant who comes to San Diego,” he says. “We need to promote a vertical campus not a suburban campus. Look at the typical employees; traffic is coming from south of Interstate 8 while the jobs are north of I-8.” While the Downtown crowd of today is coat and tie, Hall says, “What we want are more tattoos and T-shirts.” Who Should Be In Charge? “The Downtown San Diego Partnership, as a business advocacy group for Downtown, has a responsibility to take an active role in the marketing of Downtown,” says Champion-Cain. While she won’t insist her organization should run this program, she wants a seat at the table and is precise on its necessary direction. “I want to see an active movement to bring corporations to Downtown San Diego,” she says. “My notion is I want to fight hard to make sure it gets implemented, that we have stakeholders involved and that the program moves out and we have stakeholders in it.” Irving is most worried about turning it over to EDC, not that EDC has publicly said it even wants such a specialized operation. “As to who does it, it doesn’t really matter to me,” Irving says. “But EDC historically has not done anything for Downtown. But if they are now going to focus their attention and their money on Downtown, then God bless them. But I don’t think one entity should do it alone.” Irving notes that the Downtown Partnership has the internal skills to manage an employment marketing program. It developed and sold to the Downtown business and real estate market the now widely acclaimed Clean and Safe program that does everything from scrub sidewalks and clean graffiti to direct homeless to care agencies. It is the largest property-based improvement district in the United States. “We didn’t get any more for that from EDC,” notes Irving. Baranowski says what office the economic marketing plan works out of is not important. “Although there has to be a lead, I think it is important that we take the unique capabilities of all four organizations and meld them into a marketing organization for Downtown,” says Baranowski. “The partnership supplies the enthusiasm and the base business community while the EDC supplies the wealth of economic development knowledge. CCDC helps the process with its tax increment financing and incentives that could lure businesses Downtown, as does the city of San Diego through its economic development division. “To say that any one of these groups would be any more important than another ignores the fact that we could do more as a collaborative than any one of us can do separately,” Baranowski continues. “While there may be allegations and intimations that the EDC does not have a Downtown focus, we have recently seen redoubled efforts on their part to assist us in the process. The challenge is, if it goes into EDC, keeping the funds separate, or somehow ensuring they are used to market Downtown.” Alm, who has the longest record in the marketing of Downtown — she was with the Centre City Development Corp. at its founding, moved over to open the San Diego Convention Center and then came back to CCDC — is the most certain EDC should staff the effort. “Originally, we were trying to place it with the Partnership,” Alm says. “The more we looked at it with this angle, the money isn’t there. As supportive as they have been, I don’t think they can afford the costs. We are talking $500,000 and up to get this started. It needs EDC. It needs what EDC brings to the table.”
Rask, who came to San Diego from the San Jose Redevelopment Agency, notes that other cities subsidize large employers. San Jose, for example, spent about $35 million to bring Adobe Systems to its Downtown. “If we had that kind of money we would have corporations falling all over themselves to locate Downtown,” he says. Alm is optimistic. “We understand that smart growth, jobs/housing balance and the region’s dwindling commercial land supply are major concerns of our city’s leadership. Therefore, Downtown should logically be a significant element of the city’s economic development strategy,” she says. “We, after all, can be part of the solution. I think all involved agree with that point, and we are now progressing from there. I still feel confident that after all these years and all the attempts at marketing Downtown, that we are very close to getting it right — both the program and organization. It’s starting to feel good.”
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As examples, Irving says the EDC played no role in attracting the three biggest tenant success stories of Downtown in recent years — Golden Eagle Insurance, American Specialty Health and, most recently, NBC 7/39. In each case, the Partnership and CCDC played an active role if, not in the original marketing pitch, in some hand holding and cheerleading with employees and execs.
Irving does not see Downtown failing without EDC’s support. Rather, he is more proud of all the accomplishments that took place despite a lack of the agency’s help. “It is not about EDC,” Irving says. “We have never relied upon them for anything. Nor are they the silver bullet for a marketing campaign. But I look at Downtown for being the heart of the region. I look at how is it now. Could it be better and how could we make it better? Better for the region. Let’s have less people on the freeway. Let’s have them live, work and play in Downtown San Diego. Let’s use the mass transit infrastructure we already have in place, which will just benefit MTDB and allow us to finance more trolley lines.
“I don’t think we ever appreciated how much publicity they would give us,” says Walter Rask, a senior planner with CCDC. “For an awful lot of people, Downtown is really off the map. They don’t know it. They don’t have a reason to come here. It is unfamiliar territory. They hear negative things about it. The traffic is bad. You have to pay for parking. Park in parking garages. But if you have things like TV stations beating the drum for Downtown, events like Street Scene, a ballpark, that kind of breaks the ice. It always has been the expectation that Downtown belongs to the whole city, the whole region. It is the living room of the entire region. It is a place you come when you want to have a celebration, a rally, a political protest. The more people have a sense of ownership that it is theirs, that they have pride in it, it will translate into stronger economics. Things are moving in the right direction, but there hasn’t been a concerted effort to market Downtown in any sense.”
“I think the thing that is the most challenging for us, or any company, is the parking situation Downtown,” Schwartz says. “We are subsidizing employees’ use of public transportation. But it is tough. We are a 24/7 operation, and the buses and trolleys don’t run around the clock. We have been able to work with the parking garage industry and worked up a variety of ways people can park around the clock reasonably and safely. CCDC and Sentre Partners, our landlords, and Ace Parking put together a team that worked with us on this. MTDB also helped our employees with their commute plans.”
“One thing that would help enormously, would be if the city itself had a stronger commitment to being Downtown,” Rask says. “The city, or at least individual departments, have looked at their own needs, space and cost of renting or owning space Downtown and a couple of departments have decided they are better off being located outside of Downtown. That makes sense in terms of their own operational needs, but it doesn’t make sense in supporting the Downtown effort.”