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DIAMOND IN THE ROUGH

San Diego nonprofit uses retail to revive a neighborhood

BY JESSE SERWER

What’s in a name? Sometimes nothing. The long-neglected San Diego neighborhood known as the Diamond, for instance, sure didn’t have much glitter.

The only local businesses serving the residents were junk-metal companies and liquor stores. For everything else, they had to go elsewhere. In fact, they were spending more than $60 million a year shopping outside their own neighborhood, which did not have so much as a supermarket.

This was the state of affairs that greeted the nonprofit Jacobs Center for Neighborhood Innovation when it set up its headquarters there.

In 1998 the community-development organization, an outgrowth of engineering giant and philanthropist John Jacobs’ Jacobs Family Foundation, settled on a 20-acre industrial site. The plot afforded it room for the headquarters and much besides.

Jacobs volunteers polled 800 residents of the neighborhood — a melting pot of whites, blacks, Hispanics and Pacific-Islanders in 10 small communities that form a diamond shape around Market and Euclid avenues in southeast San Diego — to learn what their priorities were. The organization resolved to use its extra space to create a town center for a supermarket and other commercial entities it wanted to bring to the community.

“Lots of people had come into the area and done studies to see what the problems were here, but it was never backed up by any money,” said Chip Buttner, a San Diego-area commercial developer and the CEO and president of Diamond Management. Jacobs brought Buttner in to head up the development operation. “They would come and study the area, and not take care of the recommendations,” Buttner said. “We developed a top 10 list of needs in the area, and set about filling those needs.”

Local residents were involved in every aspect of decision making, from design and layout to leasing. Using a cooperative approach based on the Jacobs Center’s driving principle — that residents must own and drive the change in their communities if change is to be meaningful and long-lasting — nine “community teams” saw the project through. A resource team, for example, solicited the aid of such entities as the Rockefeller Foundation for funds beyond the initial Jacobs investment, while the business and leasing team sorted through the applications of would-be local entrepreneurs.

Southern California Business Development Corp., a government-created lending organization funded by private banks, put together a financing program to help local entrepreneurs open businesses at the center, which came to be called Market Creek Plaza.

“Developers had tried to build shopping centers here before, but you can’t pay market rate,” said Mike McCraw, Business Development’s president and a former Diamond-area resident. McCraw headed up the business and leasing team. “The people going in were local businesses, and they can’t afford the rent, so they weren’t successful.”

But a combination of Jacobs’ $40 million investment, its procurement of financing at below-market rates and a tax-deductible investment from Wells Fargo helped the project fly, McCraw says. “This is what it is taking to get things going in areas like the Diamond. National foundations have the capacity to do what developers can’t.”

Seven years and $65 million later, the now fully leased Market Creek Plaza has become more than the center of commercial activity in the Diamond. It is the center of all activity in the neighborhood and has even been the catalyst for further local development.

Market Creek has given Diamond dwellers some community pride.

“When we developed our first plans for what the Plaza would look like, the people in the community said, ‘That isn’t us, that looks like Mission Valley,’ ” Buttner recalls. (They were referring to an upscale area elsewhere in the city.) “They wanted strong, vibrant shapes augmented by a lot of art projects from the different ethnic communities. Throughout all the different ethnic groups in the area, the one thing in common was the bright vibrant colors in their textiles.”

Musical and other performances take place in the 500-seat amphitheater. Where The World Meets, a gift shop, serves as a forum where local artists and craftsmen sell their wares on consignment. Supermarket anchor Food 4 Less opened in 2001. Market Creek recently added a Cold Stone Creamery, a Starbucks and a Wells Fargo to a mix that already included a Curves gym, several locally owned restaurants, a Jacobs-operated business service center called Business Matters, and San Diego Gas & Electric’s bill-paying center, which gets about 30,000 visits a month.

“Major users weren’t interested until we got the supermarket,” said Buttner. “Then everybody wanted in. But from the start our goal was to bring in as many local entrepreneurs as possible.”

Living up to the project’s promise of community empowerment, 69 percent of Market Creek’s construction contracts went to local minority-owned enterprises, and 90 percent of Food 4 Less employees were hired from the surrounding community. In all, 1,700 new jobs have been created in an area where nearly 40 percent of residents live below the poverty line and unemployment is at about 13 percent, more than double the overall jobless rate in San Diego.

Jacobs Center is set to begin the next phase at Market Creek: creation of residential units on what has now expanded to 45 acres, followed by more retail in two or three years. Last summer the project got $15 million through the New Markets Tax Credit Program, a government program that offers tax incentives to companies willing to invest in economically troubled areas. This was the largest single loan on a commercial property in California last year.

The center is attracting civic, business and academic groups from all over the country to study the project. “The tours are constant and unending,” Buttner said. “We are going to start limiting them to several days a month, because it is hard to get our work done. But the people who come say they have never seen anything like it before.”