Property owners in downtown El Cajon have been paying a special tax to promote the struggling central business district for decades. For nearly as long, oversight of that funding has been less than stringent.
Now, if the El Cajon City Council gets its way, the assessment district boundaries will be expanded and the taxes paid by downtown property owners will grow by hundreds of thousands of dollars a year.
Over the next two decades, central city landowners would be charged at least $16 million — not including tax increases that could be imposed every year without council approval.
According to El Cajon, the city plays no role in determining how the special taxes are spent. Rather, city officials say, an independent governing board is responsible for making sure that the revenue is properly invested.
The existing special district, called the Downtown El Cajon Business Partners, is a nonprofit organization that raises and spends more than $500,000 a year — totaling millions of dollars since it was incorporated in 2011.
When it was created, the so-called property and business improvement district, or PBID, was limited to 15 years.
With the organization now set to expire at the end of this year, city officials are planning a broader assessment district that will affect even more property owners — and generate millions of new dollars for pet projects downtown over its planned 20-year lifespan.
“This is important to the city,” City Manager Graham Mitchell said in an interview. “If the PBID were to go away, we don’t have the funding to pick up what they are doing.”
The El Cajon City Council on Tuesday agreed to move forward with a special vote asking property owners within the proposed district to approve the new taxing authority, which is being called the Downtown El Cajon Community Benefit District.
The successor to the Downtown El Cajon Business Partners would be larger; some 427 individual parcels owned by 300 or so different landowners. It is expected to generate almost $800,000 in its first year — and would be subject to 7% annual tax increases.
Ballots were scheduled to be mailed out by Thursday. The election results are due Sept. 15, when the council is expected to tabulate the votes at a public hearing.
Individual parcel taxes range from a few hundred dollars each year to tens of thousands of dollars for larger properties. The city of El Cajon is one of the biggest contributors to the fund; it would pay almost $100,000 a year — roughly $1 out of every $8 — into the special district.
With property owners’ permission, the tax will be imposed as soon as December, weeks before the Downtown El Cajon Business Partners successor agency is formally established.
But while the city promotes the new 20-year assessment, one critic of the Downtown El Cajon Business Partners is raising questions about how district officials have spent previous revenue, and whether they have complied with state laws.
They also question the plan to outsource management of the new district to New City America, the same San Diego firm that has been running the current agency since last year.
“This is not how public-benefit districts are supposed to operate,” said Rich Riel, a San Diego resident who sued Downtown El Cajon Business Partners in 2022, and won, after it refused to comply with state open-meeting and open-records laws.
“PBIDs are created by the city, funded by property owners and governed by rules that require transparency and annual reporting,” Riel said. “When the city participates as a property owner and board member, it cannot pretend to be a bystander. It cannot benefit from the system while disclaiming responsibility for how that system is run.”
The Downtown El Cajon Business Partners mission is to promote the city’s central business district. It works to meet those objectives by hosting events that attract people to the area and by keeping the neighborhood clean.
The district generally has spent most of its revenue on a clean-and-safe program that scrubs sidewalks and beautifies the downtown corridor. It also promotes a summertime weekly car show that has drawn crowds to Main Street on Wednesday nights for years.
El Cajon officials said they are not responsible for monitoring how the Downtown El Cajon Business Partners spends its property tax revenue, or whether it adheres to state and federal laws.
“The city does not have any oversight capacity of the community business district,” said Vince DiMaggio, the assistant city manager who previously served on the agency’s board of directors. “They don’t … We happen to be a board member.”
Even though the improvement district was set up under a law passed by the El Cajon City Council, city officials say their only oversight mechanism — besides holding a seat on the board of directors — is receiving an annual report that is forwarded to the council once a year.
By accepting the annual report, the city council confirms it will maintain the same level of basic city services in the district as elsewhere — it doesn’t gain the authority to approve, reject or control the PBID’s spending.
But the reports amount to little more than summaries of the group’s revenue and spending, and pages of addresses of the taxed properties listed by parcel number.
Hundreds of thousands of dollars in spending by the district lack any detail beyond broad categories such as “outside contract services,” “environmental enhancements,” “legal expenses” and “marketing.”
By contrast, the El Cajon City Council regularly posts specific public expenditures in staff reports and other documentation that regularly exceeds hundreds of pages.
The lack of detail in the district’s spending records is part of the reason the city supported hiring New City America to better manage documentation and expenditures, Mitchell said.
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The Downtown El Cajon Business Partners also has not disclosed any related-party transactions — financial arrangements between the organization and its directors and senior staff — even though it leases space from one of the governing board members.
Mitchell said he was unaware of the district’s lack of conflict-of-interest disclosures.
Federal tax law permits related-party transactions, as long as they are conducted at fair-market rates and disclosed to the public.
In his interview with The San Diego Union-Tribune, the El Cajon city manager downplayed any lack of disclosure, lack of outside district oversight and the nonprofit’s handling of the $500,000-plus that it collects from property owners every year.
“It’s not my area of authority,” Mitchell said. “It (The Downtown El Cajon Business Partners) wasn’t bleeding out.”
In his report to the City Council last week, Mitchell said the nonprofit has “a strong history of well-attended events and activities” and that “services have drastically increased and improved” since an outside consultant was hired to take over management.
Downtown El Cajon Business Partners board chair Ron Nevell declined multiple requests for an interview and did not respond to questions posed by email. Instead, he referred all questions to New City America.
Established by Marco LiMandri decades ago, New City America is largely credited with revitalizing the Little Italy neighborhood north of downtown San Diego over the past two decades.
The company also runs the Ballpark District surrounding Petco Park, the nearby East Village Association and a special benefits association in downtown Chula Vista, among other sites. It has worked with dozens of cities across the country to launch special taxing districts.
New City America was awarded a no-bid contract for $150,000 by El Cajon city officials three years ago to evaluate the Downtown El Cajon Business Partners operations and practices after some residents registered concerns about internal spending.
“It was sole-sourced,” said DiMaggio, the assistant city manager. “All of the rules were followed.”
After submitting a series of reforms and recommendations, the company was selected to take over management of the Downtown El Cajon Business Partners early last year.
“Their report showed that the current PBID law was becoming obsolete and didn’t provide for the transformational dynamic that’s seen in successful and thriving downtowns,” senior El Cajon management analyst Nate Prescott said.
Terms of the legal settlement between Riel and the Downtown El Cajon Business Partners call for the district to comply with the California Public Records Act and the Ralph M. Brown Act — the guiding rules over government documents and public meetings.
But the plaintiff now says the special district is no longer complying with the agreement, and says he may file suit once again.
Riel is not an impartial observer in his criticism of the Downtown El Cajon Business Partners. He and a business partner competed for the management contract that was ultimately awarded to New City America.
LiMandri said New City America was hired by the Downtown El Cajon Business Partners to manage the district after a competitive budding process, but he acknowledged there are no public records related to the bidding or evaluation process supporting the decision to retain his company.
“Everything was done verbally after the applicants were interviewed in a public forum,” he said by email. “We will send you any records you request, IF we can find them. Record-keeping was not apparently a priority prior to New City America taking over management.”
LiMandri later said New City America has no documents from the Downtown El Cajon Business Partners prior to the date his company assumed control of the organization.
“All of the records for Downtown, since we took over management of the district in March 2025 should be on the website, which we revamped to be compliant with the (California Public Records Act) and the Brown Act,” he wrote in an email.
LiMandri had a different response to Riel, after Riel requested documents related to the Downtown El Cajon Business Partners’ use of tax funds to help establish the new and larger community benefit district.
“DECBP is subject to the CPRA as it pertains to the work it does to operate the CBD,” he told Riel in a July 17 letter. “Formation and renewal activities are not undertaken using (PBID) funds. For this reason, DECBP is not a public entity as it pertains to the subject of your request.”
Current revenue and spending data for the existing district is not fully visible.
The most recent annual report on the Downtown El Cajon Business Partners website covers the year ending June 30, 2024 — more than two years ago. It cites $590,000 in expenses for the year and anticipates $570,000 in spending between July 2024 and June 2025.
According to the most recent annual audit, performed by an accounting firm in Mission Valley, the district saw $645,000 in expenses for the year ending June 2025, an increase of just over $20,000 over the prior year.
The audit is dated Aug. 26, 2025, and cites total assets of $854,000, about $40,000 more than the previous year.
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