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san diego
After re-election, incumbent mayor promises results
Sanders vows to fix city’s infrastructure as he begins his second term
Published Thursday, 12-Jun-2008 in issue 1068
Mayor Jerry Sanders fought his way to a second term on gauzy promises to keep the nation’s eighth-largest city moving “in the right direction,” but the day after his win he promised to reward voters with more concrete results.
Standing in front of a city work crew pouring steaming asphalt on June 4, Sanders pledged to start borrowing money to fill potholes and repair water mains that have been left to deteriorate as the city struggled with a $1.4 billion pension deficit.
“It’s not any mystery why we chose this location today,” he said. “San Diegans want their infrastructure repaired.”
Sanders, a moderate Republican and former police chief claimed victory with nearly 54 percent of the vote in last week’s election, allowing him to avoid a runoff in November and claim victory to a second term. Sanders, 57, raised just $426,000 in the race, getting outspent 10-to-1 by business tycoon Steve Francis.
Turnout was only 27 percent.
With mammoth pension obligations to city workers and retirees and a bleak outlook for the state budget, Sanders has his work cut out.
The mayor’s victory, however, allows him to move forward on efforts to revive San Diego’s reputation with Wall Street credit rating agencies, notably publishing long-awaited audits of the city’s books.
Sanders spokesperson Fred Sainz said one of the mayor’s first meetings the day after his victory was with Fitch Ratings to discuss changes to the city’s finances. Such changes could prompt the agency to upgrade the city’s debt rating.
The rating agencies are growing more confident that San Diego is putting its pension fund scandal, and its effect on the city’s finances, behind it.
San Diego has been locked out of the public debt market since early 2004 after a whistle-blower revealed an earlier bond offering by the city misstated its pension debt by about $1.4 billion.
Federal, state prosecutors and the U.S. Securities and Exchange Commission investigations followed as did a shake-up at San Diego’s City Hall, which brought Sanders into office.
Standard & Poor’s Ratings Services last month reinstated its “A” underlying rating and positive outlook for San Diego’s general obligation bonds, lease revenue bonds and certificates of participation.
S&P also reinstated its “AA-“ rating on the city’s water utility revenue bonds and its “A+” rating on both the city’s subordinate water utility revenue bonds and its wastewater utility revenue debt.
According to Sainz, in the next few weeks the mayor will make clear to the City Council the need to overhaul the city budget and pension system to assure credit rating agencies.
Over the next few months, Sanders also plans new financial controls, to release audited financial statements for the city’s 2007 and 2008 fiscal years, and to improve public works
The national private-sector credit crunch may also curtail Sanders’ ability to raise funds on the open bond market. While Wall Street has restored San Diego’s credit rating, its bonds did not qualify for the highest ratings, making them less attractive to skittish investors.
“There’s only so much money available, and this town doesn’t like to raise taxes,” said Carl Luna, a professor of political science at San Diego’s Mesa College. “They don’t have the golden rating they would have preferred.”
Sanders, who gained a reputation as a turnaround artist at local charities, has shown he knows how to stretch a dollar. He thumped Francis, who committed $4.3 million of the $52.3 million fortune he made selling stock in his medical-staffing company AMN Healthcare, Inc.
Francis, who failed to energize voters with his pervasive television ad campaign making vague promises of change, won just 35 percent of the vote. He conceded Wednesday.
“I am optimistic and confident that the mayor and the new City Council will begin to address the challenges that still face our city,” Francis said.
Sanders’ first term was marked by a continued deterioration of city services, with potholes going unfilled and water mains regularly breaking. But the city completed overdue audits under his watch and Standard & Poor’s recently restored the city’s credit rating, ending a virtual freeze on the city’s ability to borrow money.
Still, Sanders’ success depends in part on who he’ll work with on the City Council. Contests for three seats will be decided in November runoffs because no candidate won an outright majority.
The day after the elections Sanders backed off his earlier endorsement of Republican former state court judge Jan Goldsmith who is challenging incumbent City Attorney Michael Aguirre. The mayor had earlier said he would prefer any candidate over Aguirre, who has won both admirers and enemies for his pugnacity and litigation to roll back city pension benefits.
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