San Diego by CivicFM

October 29 Council pauses data centers; flat water rate replaces tiers after court loss

The San Diego City Council unanimously put a 45-day pause on new data centers and voted 6-2 to replace tiered water rates with a single flat rate after a court ruling. The city also drew $4.7 million from its reserves to close out the last fiscal year.

City Council, Monday, October 26

Overhaul of the city's arts and culture funding policy (00:12:35)

The Independent Budget Analyst's office said, for its Division of Race and Equity, that an explicit amendment would be offered requiring recipients to incur and pay eligible expenses and provide proof, with payment schedules set in program guidelines and written agreements (00:13:04)

The Independent Budget Analyst's office noted that the new model moves grant payments from a split of 85% upfront and 15% after year-end reports to a single upfront payment (00:14:05)

The Independent Budget Analyst's office said the payment terms particularly affect historically underserved organizations and those serving low- to moderate-income communities, which often have smaller budgets and may lack cash to front costs and wait for reimbursement (00:14:05)

The Independent Budget Analyst's office explained that scoring would shift to 60% on an organization's demonstrated impact and 40% on its annual operating income, calling it a more equitable approach for smaller organizations (00:15:05)

The Independent Budget Analyst's office suggested that after this grant cycle the council could ask Cultural Affairs whether the 60/40 split should tilt further toward impact, and ask how panelists will score impact (00:15:05)

The Independent Budget Analyst's office recommended the council keep watching arts funding in next spring's proposed budget, since that amount determines whether every applicant can be funded and at what level (00:16:06)

A councilmember argued arts nonprofits should spend more time serving communities and less navigating city bureaucracy, calling the changes a good way forward (00:35:49)

A councilmember voiced strong support for multi-year agreements, upfront payments and a simpler application process (00:37:02)

A councilmember asked the mayor's office for a staff presentation on the changes at the ED and IR committee soon, noting it hadn't been able to go there first (00:37:02)

The mayor's office said it would bring an information update to the committee in the coming weeks (00:37:02)

A councilmember said moving to 100% upfront payments, as the council has already done with its own CPPS and ACCF funding, makes a large difference for smaller organizations (00:39:22)

A councilmember cautioned that the new system only works if the budget actually funds arts and culture, and said stability matters for small organizations (00:40:23)

A councilmember asked the mayor's office and the economic development director to respond to the Division of Race and Equity's analysis (00:42:00)

The Economic Development Department said the equity division went through the calculations with the department, and that the department wants to learn from how the new formula performs (00:42:44)

A councilmember said past funding cycles tended to favor established organizations expecting a trickle-down effect that does not work, and said he would be watching for true impact (00:43:30)

A councilmember cited the Design Capital 2024 effort as falling short on commitments to include smaller, grassroots organizations, especially in District 4 (00:44:32)

A councilmember said he docketed the item because of application timelines, after verifying that extensive outreach had been done (00:46:26)

A councilmember said someone close to the issue told him smaller organizations would likely benefit and some bigger organizations would likely see less funding (00:46:26)

A councilmember noted that as a council policy it can be easily adjusted if results are not what the council hoped (00:47:29)

Ban on smoking and vaping in outdoor dining areas introduced (00:34:40)

A councilmember said the ordinance sets a consistent citywide standard prohibiting smoking and vaping in outdoor dining areas, protecting health and giving restaurants and patrons clarity (00:34:40)

A councilmember credited research from San Diego State University's Center for Tobacco and Environment and input from the California Restaurant Association (00:34:40)

A councilmember supported the item as a step to let families and workers dine outdoors without secondhand smoke and vaping (00:38:15)

Documents: Agenda

City Council, Monday, October 26

Fiscal Year 2026 year-end financial performance report (00:21:20)

The Department of Finance explained that the report compares unaudited year-end revenues and expenditures with the third-quarter projections (00:22:02)

The Department of Finance reported that the projected available fund balance went from a positive $1.7 million to a negative $4.7 million, requiring a $4.7 million reserve draw (00:23:06)

The Department of Finance explained that much of the rise in both revenues and expenditures came from accounting entries for moving vehicles and equipment to the solid waste management fund, which largely cancel out (00:23:06)

The Department of Finance said property tax revenue fell because of lower collection rates, more refunds from assessment appeals and lower residual RPTTF revenue (00:25:09)

The Department of Finance said sales tax came in above expectations, citing resilient consumer spending and inflation (00:26:20)

The Department of Finance said accounting rules let the city recognize only part of the San Diego Zoo's advance payment in FY2026, with the rest counted in FY2027 (00:26:20)

The Department of Finance said later developments cut the projected balance by $18 million, to a $16.3 million shortfall, before mitigation (00:30:31)

The Department of Finance said $11.6 million in mitigation measures and positive developments reduced the shortfall to $4.7 million (00:31:34)

The Department of Finance reported that combined emergency and stability reserves will fall from $207.1 million to $202.4 million, below the 14.1% policy target (00:32:39)

The Department of Finance said no excess equity will be available and the $1.7 million reserve contribution planned in the FY2027 budget is no longer expected (00:32:39)

The Department of Finance said the $7.4 million in Cal OES storm reimbursements once expected in FY2026 is now expected in FY2027 (00:33:53)

The Department of Finance reported a same-day update that the city has been approved for $450,000 of the $7.4 million so far (00:33:53)

The Department of Finance said Cal OES reimbursements received in 2027 will first go to replenish the stability reserve (00:34:56)

The Independent Budget Analyst's office said general fund spending ended about $2 million over the adopted budget, or $17.6 million under it without the solid waste asset transfer (00:40:00)

The Independent Budget Analyst's office said fire suppression constant staffing accounted for about $6.3 million, or 78%, of Fire-Rescue's overtime overage (00:40:00)

The Independent Budget Analyst's office said the Transportation department may be relying more heavily on overtime, and recommended closely monitoring overtime trends (00:41:00)

The Independent Budget Analyst's office said police overtime still came in over budget, but much closer to it and well below the last two years' actuals, and that the department's efforts appear to be working (00:41:00)

The Independent Budget Analyst's office noted this is the first time in recent history the city has drawn from the General Fund Reserve (00:42:24)

The Independent Budget Analyst's office said reserve levels will fall from 11.1% to 10.9% of operating revenues, against a 14.1% target (00:42:24)

The Independent Budget Analyst's office reported that the risk management reserves ended almost $50 million under target, or $40 million excluding a loan to the sewer fund (00:43:53)

The Independent Budget Analyst's office recommended that any Cal OES money beyond what the stability reserve needs go to the risk management reserves (00:43:53)

The Independent Budget Analyst's office said the Publishing Services fund's deficit more than doubled, from negative $800,000 to negative $1.7 million (00:44:58)

The Independent Budget Analyst's office said the EMS fund ended $5.3 million below the fund balance the current budget assumed would support the general fund (00:44:58)

The Independent Budget Analyst's office warned that the city has less room for mitigation measures than before, and urged realistic, conservative projections in future budgets (00:45:51)

The Department of Finance said the delayed reimbursements cover city costs for cleanup and recovery after the storms (01:03:11)

The Department of Finance attributed part of the delay to Cal OES's small staff (01:04:41)

A councilmember offered his office's help, including with state legislators, to speed up the reimbursement process, citing possible El Nino effects (01:04:52)

A councilmember noted that the council's budget had set out steps in case the Cal OES money came late, with the reimbursement going first to the stability reserve (01:05:22)

A councilmember cautioned that the years of property tax beating expectations appear to be over, given housing prices and high interest rates (01:05:22)

A councilmember flagged lower parking meter operations revenue as a significant variance to watch (01:06:23)

A councilmember warned that many one-time resources the city has relied on are no longer available for future budgets (01:06:23)

The Department of Finance attributed the property tax dip to slower growth in assessed values, little housing turnover, and more and larger appeals, especially commercial (01:08:27)

The Department of Finance explained that lawsuit settlements are paid from the Public Liability Fund, which the general fund pays into (01:09:35)

A councilmember noted that if the $7.4 million had arrived, the city would have ended about $2.7 million ahead on a roughly $2.2 billion budget (01:10:13)

A councilmember said he would support putting all $7.4 million into reserve accounts when it arrives (01:10:13)

A councilmember noted the balanced budget still carries painful cuts, and encouraged the public to raise budget concerns year-round (01:11:17)

New and updated fees to fund the Office of Labor Standards and Enforcement (01:11:57)

The Office of Labor Standards and Enforcement presented the request to approve two cost-recovery fees for the city's labor standards programs (01:12:33)

The Office of Labor Standards and Enforcement said the two fees together are projected to recover about $1.8 million a year once fully implemented (01:13:39)

The Office of Labor Standards and Enforcement said a third fee for traffic control worker minimum wage enforcement was deferred for more legal review of possible exemptions (01:14:45)

The Office of Labor Standards and Enforcement said the office's duties grew with new ordinances but its staffing didn't (01:15:54)

The Office of Labor Standards and Enforcement said the minimum wage enforcement fee would rise from $1.47 to $2.82 per covered employee (01:16:58)

The Office of Labor Standards and Enforcement said about $1.5 million in annual program costs was divided by the estimated number of covered employees to set the fee (01:18:02)

The Office of Labor Standards and Enforcement said the compliance system fee would be charged to the prime contractor on a covered city contract (01:20:20)

The Office of Labor Standards and Enforcement described an eight-tier compliance system fee that rises with contract value and is charged once per contract, not annually (01:22:26)

The Office of Labor Standards and Enforcement gave the tier range as starting at $144.35 and rising to $4,853.24 for the largest contracts (01:22:26)

The Office of Labor Standards and Enforcement said outreach included notices sent to about 27,000 city vendors and contractors, plus direct contact with hotels and motels (01:23:37)

The Office of Labor Standards and Enforcement said the minimum wage fee would take effect on council approval and the compliance system fee on January 1, 2027 (01:24:38)

A councilmember asked whether the council already gets annual reports on compliance efforts, so fee information could go in them, as the lodging association had requested (01:32:49)

The Office of Labor Standards and Enforcement agreed to include information about the fees in the office's existing annual reports (01:33:48)

The Office of Labor Standards and Enforcement named restaurants, hotels and motels, janitorial and construction as the industries with the most violations (01:35:10)

The Office of Labor Standards and Enforcement said the added compliance officer would allow proactive investigations that don't wait for complaints (01:35:42)

A councilmember said workers in those industries are vulnerable and often hold several jobs, and backed giving the office more resources (01:36:22)

A councilmember said he has long wanted new legislation paired with the capacity to enforce it (01:36:50)

A councilmember asked for a one-time first-year review of whether the fees are true cost recovery and whether they improve compliance (01:37:53)

A councilmember asked whether the city can impose penalties on minimum wage violators, beyond recovering back wages (01:39:30)

The Office of Labor Standards and Enforcement said the city has collected about $100,000 in penalties over the past ten years (01:40:01)

The Office of Labor Standards and Enforcement said the office often waives penalties in settlements to get small businesses to pay workers their back wages (01:40:13)

A councilmember argued that bad actors should pay more and compliant businesses less (01:40:51)

A councilmember urged the city to seek bigger penalties, rather than settle, where there is evidence of intentional underpayment (01:41:55)

First step to overrule airport commission on child care centers near MCAS Miramar (01:43:45)

The City Planning Department explained that the amendment would allow child care centers as a limited use with a 0.42 floor area ratio in the Miramar transition zone (01:44:43)

The City Planning Department noted that child care centers are currently prohibited in the transition zone (01:45:47)

The City Planning Department said the floor area cap for new centers matches the 300-people-per-acre limit already allowed for expanding existing centers (01:46:48)

The City Planning Department said the Airport Land Use Commission found Item 93 inconsistent at a July 9 hearing and found the rest of the code update consistent (01:47:49)

The City Planning Department said state law lets the council overrule the commission with a two-thirds vote at two separate public hearings (01:48:52)

The City Planning Department said neither the Miramar compatible use zone study nor the state handbook recommends a transition zone, which the commission added as an extra buffer (01:49:54)

The City Planning Department said centers would still have to meet existing airport noise rules, including a 45-decibel indoor level (01:51:55)

The City Planning Department said the item next needs a Planning Commission recommendation by November (01:53:59)

The City Planning Department reported that the Community Planners Committee opposed Item 93 in February (01:55:02)

The City Planning Department said the committee wanted centers in the zone to need a site development permit instead of a ministerial permit, because they would be close to the accident potential zone (01:55:02)

A councilmember said he had supported Item 93 as part of the 2026 Land Development Code package (02:02:28)

A councilmember distinguished the accident potential zones from the transition zone, which neither Miramar nor the state handbook recommends (02:02:28)

A councilmember cited the high cost of child care and the value of locating it near the employment centers in Sorrento Valley and Miramar (02:03:30)

A councilmember moved the staff recommendation to start the overrule process (02:04:34)

A councilmember said his office consulted a regional child care advocate, who supported the change (02:05:41)

A councilmember argued that more child care near people's jobs matters, citing the extra hour his family sometimes spends driving to child care (02:05:41)

A councilmember said most of the public comment on the item was wrong and stressed that the item is only a zoning matter (02:07:03)

A councilmember said he had voted against Item 93 earlier, partly out of frustration over an unrelated council decision about Little Italy (02:08:08)

A councilmember called the change a technical fix that makes new centers consistent with existing ones, rather than a policy shift, and staff agreed (02:08:08)

Documents: Agenda

City Council, Tuesday, October 27

Emergency 45-day moratorium on new data centers (00:42:48)

The mayor's office said the municipal code doesn't define data centers, which are permitted today under rules written for telecom switching stations (00:44:35)

The mayor's office explained the ordinance would set a 45-day moratorium within the city's jurisdiction while rules are written (00:44:35)

The mayor's office acknowledged the moratorium does not settle what happens on the federally owned Navy site and said the city's government affairs team would press Sacramento and Washington (00:45:36)

City staff explained the ordinance takes effect immediately with a four-fifths vote and lasts 45 days, with a possible extension after another noticed hearing (00:47:41)

City staff noted the city has no land use authority over the federal NAVWAR site but said the proposal there shows how immediate the interest in large data centers is (00:50:53)

City staff listed exemptions, starting with accessory server rooms that serve only on-site operations (00:54:04)

City staff said the mayor signed an executive order last Thursday creating a stakeholder working group, whose input will shape Land Development Code amendments returning to council next year (00:55:05)

A councilmember allowed public comment on both the moratorium and the proposal on federal land, calling the federal proposal a separate matter (00:56:55)

A councilmember reminded members the emergency action needs eight yes votes, which is why it was moved from Monday (02:20:08)

City staff explained state law allows 45 days at first, then an extension of up to 10 months and 15 days, then another of up to a year (02:21:22)

A councilmember cited a Voice of San Diego report that a developer was exploring a 400-megawatt data center at the Navy site and called on the congressional delegation to stop it (02:23:49)

A councilmember asked staff about the ordinance's statement that industry representatives were interested in standalone data centers and vacant office space (02:23:49)

City staff answered that staff was mainly citing newspaper reports on the Navy site and possible downtown sites in empty buildings (02:24:27)

The mayor's office said the working group is still being formed and would include labor, community advocates, utility, water, housing, technology, environmental and higher education representatives (02:26:47)

A councilmember objected to including SDG&E in the working group and suggested San Diego Community Power instead (02:27:19)

A councilmember moved the item with added direction, including that staff notify the council within seven days of any inquiry from a prospective data center developer (02:28:34)

A councilmember proposed principles for the permanent policy: no by-right approval, approval only if housing isn't feasible on the site, all-renewable power, no fossil fuel backup, and recycled water for cooling (02:28:34)

A councilmember also asked for working group progress updates, the first within 45 days, and for the Office of Government Affairs to lobby against a large data center at NAVWAR (02:29:35)

A councilmember asked the city attorneys to confirm the added direction wouldn't compromise the moratorium's legal requirements (02:30:26)

A councilmember said he requested legal research on regulating data centers in early August and had been preparing a policy for his committee (02:31:20)

A councilmember described the Navy site proposal as a hyperscale campus of 400 to 500 megawatts, far larger than typical data centers (02:32:22)

A councilmember argued families and small businesses should not pay for data centers' water, power and infrastructure, and cited a recent papal encyclical on concentrated technological power (02:34:36)

A councilmember warned some members might need to leave by 1 p.m. and the item needed eight yes votes (02:36:21)

A councilmember said he was confident the council would extend the moratorium for the following ten and a half months (02:38:09)

A councilmember argued the Navy site, next to the Old Town Amtrak station and transit center, should be used for housing, including for service members (02:38:09)

A councilmember called the Navy site a once-in-a-generation opportunity for housing and transit-oriented development (02:40:16)

A councilmember asked whether the city, not an applicant, decides if a project qualifies for an exemption, and staff confirmed it does (02:41:18)

A councilmember said data centers must cover their own electricity and water costs and create good jobs for local skilled workers, and that she would vote yes (02:42:04)

A councilmember said he supports making things harder for data centers, as speakers urged, but that it will take time to make the required findings (02:44:31)

A councilmember called for studying the leverage the city has through its utility franchise agreement and its role in community power (02:45:32)

A councilmember warned the NAVWAR developer that if the data center proposal is a stalking horse for another agenda, there would be a price to pay (02:45:32)

An attorney for the city clarified for the record that the amendments are part of the motion but won't be written into the ordinance (02:47:08)

City staff said staff had no concerns with the added direction but would look into some items and report back (02:47:29)

Water rates switch from tiered to single flat rate after court ruling (03:41:59)

The city clerk reported 3,644 protests in the protest period, against the 132,968 needed for a majority protest (03:41:59)

City staff said the city disagrees with the court decision but is legally required to adopt a rate structure the court deems valid (03:43:48)

City staff pointed customers who can't afford the change to zero-interest payment options (03:44:48)

City staff explained that the plaintiffs, high-volume single-family users, argued they were subsidizing lower tiers (03:45:53)

City staff said the courts didn't reject industry-standard cost allocation, only found it didn't meet Prop 218's burden of proof (03:45:53)

City staff said the city must pay a $40 million settlement and the planned 14.5% increase for January 1, 2027 is unchanged (03:48:02)

City staff said no more capital projects need to be delayed to cover the settlement, and total revenue collected stays the same (03:48:02)

City staff estimated a low-volume single-family user's bill rises about $5.62 a month (03:50:07)

City staff estimated a high-volume single-family user's bill falls about $19.52 a month (03:51:09)

City staff said the required notice went to about 286,000 customers, and 27 legal objections are in the docket with responses (03:51:09)

The Independent Budget Analyst's office said the existing tiers rested on standard industry methods but strongly cautioned against rejecting the proposal, warning that more litigation costs would ultimately fall on ratepayers (03:54:15)

A councilmember said the ruling penalizes customers who conserved and rewards those who didn't (04:09:53)

City staff described efforts to raise non-rate revenue from leasing department property, solar and grants, and said staff would return in February with the cost of service study (04:12:04)

City staff said tiered rates could come back under a new state law, AB 2180, but not before rate increases after 2030, while a pending case tests how the law applies (04:14:34)

City staff said the state Supreme Court asked for briefing on how AB 2180 applies in a case against the Los Angeles Department of Water and Power (04:15:36)

A councilmember blamed anti-government activists and the wealthy for state rules that limit fair fee structures (04:16:41)

A councilmember moved the staff recommendation, adding a request that the utilities department and the IBA expand water customer assistance programs and return to the Environment Committee with a funding plan (04:18:58)

A councilmember seconded, noting other water agencies statewide use the same method the city was faulted for (04:19:46)

A councilmember asked about state efforts to create low-income relief for water like the one that exists for electricity (04:20:47)

City staff said staff supports legislative efforts for a statewide water subsidy program (04:21:29)

Jennifer Campbell (Councilmember, District 2) explained the case's history for the public, saying it began in 2015, and said the city must comply or face fines (04:22:34)

City staff said not complying would bring back the full $120 million judgment the city settled for $40 million, plus interest and penalties (04:27:54)

City staff estimated that the extra liability would equal layoffs of at least about 800 staff (04:28:29)

City staff said the next court hearing is around December 11 and the city agreed with the court to set rates effective January 1 (04:30:37)

City staff said the water system's outstanding debt of $1 billion to $2 billion could be called if bond covenants are violated (04:31:37)

A councilmember noted a dissenting appellate judge found the city's work sufficient and the majority did not rule tiered rates improper in themselves (04:32:44)

A councilmember said he voted against the 2025 rate increase and would oppose this too, since it shifts costs to low users and smaller households (04:33:44)

A councilmember urged assistance for low-income households and seniors, noting the city just did so for trash fees (04:34:53)

A councilmember asked the mayor's office to confirm that a public commenter who had left was offered help (04:36:12)

The mayor's office said he walked the commenter out and offered to be a resource (04:36:45)

$5 million loan for The Joule affordable housing in Grantville (04:37:18)

City staff asked council to authorize a $5 million loan from the Low and Moderate Income Housing Asset Fund for each of the two projects (04:38:23)

City staff said 30 Bridge to Home loans in all will create nearly 3,000 affordable homes, with eight funding rounds since 2021 (04:39:30)

City staff described the eight-story project with 208 affordable apartments for families in Grantville (04:41:40)

City staff said the city loan works out to about $24,000 per apartment and $13,000 per bedroom, and the total cost to about $169 million (04:42:43)

City staff gave the loan terms: 3% simple interest, a 55-year term repaid from residual receipts, and 55-year affordability covenants (04:43:48)

City staff said construction could start as early as the end of 2028 and take about 26 months once financing is secured (04:44:56)

A councilmember noted 53 of the 208 homes are for extremely low-income households and that the county owns the site and chose the developer (04:56:56)

A councilmember stressed the site is in a high-resource census tract, saying the city has legal and moral obligations to add affordable housing in such neighborhoods (04:56:56)

A councilmember asked staff for cost per unit and per bedroom, which he said the council had come to expect (05:00:30)

City staff calculated total project cost at about $803,000 per unit and $444,000 per bedroom (05:05:07)

A councilmember said costs should be pushed as low as possible but per-bedroom cost better reflects how many people are housed (05:05:20)

$5 million loan for Salvation Army Rady Center Phase II senior housing downtown (04:37:18)

City staff said the site is owned by the Salvation Army and will be built under a 99-year ground lease (04:40:33)

City staff described a six-story building with 89 affordable studios and one-bedrooms for senior households (04:43:48)

City staff said the loan is about $56,000 per apartment and per bedroom, with a total project cost of about $64 million (04:43:48)

City staff said construction could begin as early as the end of 2027 (04:44:56)

A councilmember backed the project in his district, saying too many seniors are being priced out and falling into homelessness (04:59:42)

A councilmember asked why the downtown building is only six stories, and a developer representative said the roughly 90-unit count reflected the Salvation Army's vision and available financing (05:05:48)

Documents: Agenda

This episode was produced with AI from the public recording of the meeting. Links to the source are in the show notes.

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