Neighborhood transformation: Big plans for SE San Diego

Editor’s note: An ambitious philanthropic investment plan to develop and revitalize southeastern San Diego began nearly 20 years ago. The Jacobs Center for Neighborhood Innovation, a nonprofit foundation, was established to work in partnership with neighborhood residents. Founder Joseph Jacobs believed in revitalizing neighborhoods by giving residents the ability to own its success. The results so far include Market Creek Plaza, a commercial and cultural complex and a full service catering operation at the Jacobs Center that gives residents an opportunity for hands-on hospitality training. Construction of an affordable housing development is expected to start in March 2015. In December 2012, Reginald Jones joined the Jacobs Family Foundation as president and CEO. He met with the U-T Editorial Board recently to discuss the philanthropy and its work. Here is an edited transcript of the interview.

Q: What got you out here?

A: I had long admired the work of the Jacobs family, the work that Joe Jacobs envisioned to make a deep investment in a community like Southeast San Diego. I came to recognize it as one of the most ambitious place-based initiatives in the country. I’ve had the good fortune to be selected to lead the philanthropy beyond the work of my predecessors.

The philanthropy started in the ‘90s and it’s a very robust agenda to bring about comprehensive community change. We’ve called this work embedded funding where philanthropy goes into a community that concentrate its resources on a particular place, perhaps even with a notion of eradicating the systemic socioeconomic conditions that have long existed.

The investment, commitment is quite substantial that they’ve made over time. There’s a large concentration of vacant land in Southeast San Diego, it’s probably the largest concentration of vacant land between downtown and as you move east. The project is situated on a transit station, so it’s well positioned for redevelopment. You can’t build buildings without looking at the condition of people in a place. So it’s also intended to build the capacity of residents in the neighborhood.

Part of that is really engaging residents in the process of planning for this kind of revitalized community. Over time, they’ve had an extensive period of community engagement where large numbers of residents engaged in a planning process, to create what’s being called The Village at Market Creek, which was to be this new transformed community.

In the course of that time the family began to assemble parcels of land. We have amassed 60 acres of real estate for development there. We are the largest place landholder, in Southeast San Diego. Only second to the land that the city holds through Civic San Diego, and some small holdings by MTS, Metropolitan Transportation System. There’s about 100 acres of vacant land there to put it all in perspective. We own 60.

Q: And those are undeveloped?

A: With the exception of Market Creek Plaza. While we had a robust community engagement process that set a plan for redevelopment, the redevelopment stalled. Which you can imagine can create community tensions. Vacant land contributes to blight. Why the stall? You go through an economic down turn. You lose your redevelopment agency in California. And then you got limited resources on the part of the city.

This philanthropy can’t do everything but philanthropy can certainly be a great leverage partnering with government. Mayor Faulconer has been very receptive to the notion of a public philanthropic partnership that we’re now defining, where we hope to leverage our dollars in redevelopment, with the city dollars for infrastructure development. With the philanthropic contribution to improve community, and the city’s partnership I think it creates a triple win. A win for the city in the notion “One San Diego.” A win for the philanthropy in its effort to change community. And a win for the residents in that neighborhood for a revitalized place to live.

Q: What is the vision?

A: The plan for this property is full redevelopment and our estimations, if we allow for inflation is that with the Joe and Vi Jacobs Center in place, and Market Creek Plaza in place, we’ve got about $100 million in completed development in the neighborhood. We estimate that the investment for completion and the full asset after development would be another $200 million to $250 million. At completion, we estimate about $350 million in community change investment. That’s the physical reinvestment alone. Now you add to that what we’re looking at for human capacity building. Because at the same time in building the community we want to create economic opportunity for residents. So in building a new place we have to create opportunities for jobs, asset accumulation. If we build new homes if the residents there are not able to buy into a new community, that’s not a good result. We always consider how could we create redevelopment and community change without being a stimulus for displacement. Or more specifically gentrification. We want to be very careful in the redevelopment strategy that the people that are there now have an opportunity to stay there. And that they can be a part of a revitalized neighborhood effort.

Q: Where is the funding going to come from?

A: The major portion comes from philanthropy. The philanthropy actually has tried to pay for and support the entire redevelopment effort without significant government or other supports. And that is very challenging for a single philanthropy to do. We have $200 million in assets, and that includes our land holdings in our portfolio. This work is set to sunset, as we call it in philanthropy, and that means we want to go out of business in 2030. That means we would complete the mission in Southeast San Diego in 2030. We talk about how do we build community wealth and leave assets for community. The theory of change here is that we develop all of the assets working and creating land trust mechanisms. That we would hold the land and basically all of the real estate that we developed on leased land. Where that would generate revenue in perpetuity. Or that we would develop it ourselves and own the land. The notion is we then create a mechanism where those assets would go, and ultimately benefit the community in perpetuity. Market Creek Plaza is actually owned 20 percent by community residents who invested even as little as $10 a share. There were certain revisions made to the Security Exchange laws, for what we call non-savvy investor participation to actually invest in the Market Creek Plaza. So 20 percent of Market Creek Plaza is owned by residents in Southeast San Diego, 60 percent is owned by the Jacobs philanthropy. Another 20 percent is owned by what we created as a neighborhood foundation, the Neighborhood Unity Foundation.

Q: Can you talk about the demographics of the neighborhood?

A: Southeast San Diego has historically been an African-American community. The same political power base. You look at the numbers and we’re (now) 53 percent Latino. The Jacobs Philanthropy is a majority white philanthropy in a place that has been historically controlled by African-Americans. But is now shifting to a Latino power base. That power base is not necessarily fully organized yet. There’s a lot of new arrivals. There are 12 different languages in that community so 12 different cultural backgrounds. And what we see is that they do not connect. One of our issues is how do we deal with this at the Jacobs Center. As we rebuild staff, we have to rebuild a staff that is reflective of community. We’re outsiders. Which is why the community engagement component is so important. How do you really build and can we really talk about a power balance, when we’re talking about a historically uninvested community and a wealthy philanthropy? And how do you really build an authentic relationship in that regard? I would be remiss if I didn’t tell you that they are not issues of trust challenge. And particularly given what was early on, a very significant community engagement process, but a stall in the work. So communities often feel you come in, you make promises, you don’t deliver. That erodes trust over time. We’re in the show me phase. There’s some good things that are playing out. We’re trying to connect this community to the region. What we’re doing in our cultural programing, and arts programing is very important in that. We’re finding arts is a mechanism to connect cultures and begin to create dialogue across cultures. The arts is certainly a huge tool for that. It creates an understanding of culture ways and tolerance as well. My job is community building overall.

The complexity of spurring development in a long underinvested community is hard. We need a major institutional partner in a community like Southeast San Diego. But at the same time, you need workforce development. Major institutions go where there’s a skilled workforce. And how do we begin to create that kind of opportunity, for anchor institution in our community? Because it brings new people, that brings new economy. It revolves new dollars. This community cannot sustain itself, on its own dollars rotating. You have to have new economies overall.

Q: So you’re going to try to attract development, collect the rents and return them to the community …

A: Or at least the leases on the land. We’re wearing out pencils to understand what the economic model for this will be. A good idea needs to pencil out. I think there are going to be some trade-offs and we must be open and transparent with the community. We may not all agree, but at least we have the facts.

Q: So is there a giant partnership agreement with the city that has to come before the council for approval?

A: The technical details of that we’re working out. But we are now framing the proposal for Mayor Faulconer. I hope to present it to him by the end of October. As we try to empower community it’s not the philanthropist’s job to be employer. It’s philanthropy’s job to create pathways for people. So you’re creating an (inaudible) pathway as you create investment pathways, and you know, various (inaudible), homeownership pathways. We’re giving folks, we just, we had 10 townhomes we bought. We’re giving folks $20,000 for down-payment incentives. In many communities like this, a home is the greatest asset you can have.