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How to Save the General Fund $10 MIllion

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The city reached a deal with Jose Theater to extend the lease of the property, home to comedy club The Improv, for another 10 years. But a different item discussed at last week’s Oversight Board meeting could have a huge impact on the city’s upcoming budget.

Many of the historic buildings in the downtown area were purchased, renovated and brought to life by the now defunct Redevelopment Agency(RDA). One example of this is the $13 million restoration of the Jose Theater, which currently houses The Improv comedy club.

The Improv brings national comedy acts to San Jose, and with it an audience that animates the downtown district. The property was previously owned by the RDA and has now been transferred to the RDA successor agency, appropriately called the “Successor Agency Redevelopment Agency,” known by its acronym of SARA.

The City Council serves as advisory to SARA, but the SARA Oversight Board must ultimately approve all actions, such as the disposition of property or allocation of funds. Since the formation of SARA, I have attended the Oversight Board meetings in order to understand what options are before us as a city, and what impact any actions taken will have on the general fund.

Last week, the SARA Oversight Board, comprised of members from local tax entities as laid out by the state, approved a 10-year lease with the Improv. The terms of the lease allow SARA to charge rent and collect a portion of gross receipts on a monthly basis, and all proceeds go to pay off the debt. The county representative, who is not an elected official, stated that the city of San Jose was doing a good job in negotiating these leases, and that it was important to have this comedy club downtown as it draws more visitors to the area. I appreciated this perspective and positive feedback from the county board member.

Later at the same meeting, the Oversight Board discussed the Housing Due Diligence report. During the course of review, it was revealed that $10 million had not been allocated in a clear manner. In no time at all, a strong difference of opinion surfaced on how the funds should be spent: for building a specific affordable housing project or paying down the debt. Not surprising, the housing director, Leslye Corsiglia, wanted the entire $10 million to be dedicated only to the affordable housing project.

Bearing in mind that SARA has inherited over a billion dollars in debt from the RDA bonds that were issued over past decades, I could not support the “double whammy” outcome of yet another non-revenue producing project that simultaneously casts a blind eye to the city’s debt situation. (As an aside, I found it very interesting that when the subject of the $10 million was being discussed, the only other person present for this item—besides myself and staff members—was a representative from an affordable housing developer.)

As it turns out, the housing director has been lobbying the state Department of Finance (DOF), which oversees all of the oversight boards in California, for quite some time. The objective of the lobbying is to get a favorable opinion from the DOF that would exclusively dedicate the $10 million to the affordable housing project.

Such an action, with no further deliberation or input from the council, would fly in the face of flexibility, especially in situations that became available to cities when the state dissolved RDAs. Until the council has had the opportunity to weigh in on this issue, in the form of a public session, all lobbying efforts should cease immediately.

The flexibility reference above allows excess affordable housing funds to cover debt payments, or, in city speak, allows these funds to be “swept in.” If the city chooses to responsibly pay down the debt, it would have the additional benefit of avoiding any further hits to the general fund, which other city departments—police, libraries, etc.—draw from to provide services to residents.

This $10 million would minimize the hit to the general fund next fiscal year, which would permit us to pay down senior debt obligations and allow continued funding for other city services. As you may know, the general fund is currently covering the shortfall in SARA property tax revenue by paying the senior debt payments on the 4th Street Garage and Convention Center. Bridging this funding gap from the general fund means less money for day-to-day services such as public works, road maintenance, code enforcement, etc.

In conclusion, I feel strongly that the discussion of how the $10 million is allocated should go before the council for a decision in a public meeting. After all, it was already covered once at the public Oversight Board meeting, and I do not think this issue is one that would be best addressed in a closed session.

Furthermore, I disagree with the housing director’s viewpoint. It is shortsighted and untimely to advocate for an additional affordable housing project that would directly and negatively impact the general fund.

Ultimately, we all have choices and responsibilities in life, and we must work within the dictates of reality. The opportunity cost of allocating $10 million to an affordable housing project that doesn’t pay property taxes means we cannot simultaneously pay down our debt in the same amount. The money simply cannot be in two places at once.

By dedicating the $10 million to paying down debt obligations, it allows more funds to remain in the general fund and be directed towards vital city services.

Also posted in City Council, Downtown, Economics, Housing, RDA | Comments closed

A Few Good Lobbyists

As many of you know, the San Jose City Council is on recess for the month of July.  Therefore, I thought I would share something lighthearted with you.

“Monday Night Live,” a comic theater production by the San Jose Stage Company, is an ongoing tradition for some. The yearly event started about ten years ago and depicts well known San Jose officials in a comical manner. The event acts as a fundraiser for the theater company and mimics the TV show, “Saturday Night Live.” “Monday Night Live” can be very sarcastic, silly and even self-deprecating. I was asked to participate this year as an Italian (what an original idea) in a “Sopranos” skit.

The theme of the production this year was lobbyists. Worth noting is that the person behind “Monday Night Live” is none other than the front-man lobbyist himself, Jerry Strangis. If you remember, I don’t like lobbyists (smile). Rather, I don’t like what lobbyists have done, so I was excited to participate in this “let’s rip on lobbyists comedy.”

I love theater in my own right and enjoy movies old and new. One of my favorite movie scenes was in “A Few Good Men,” where Jack Nicholson and Tom Cruise exchange words at the trial on the witness stand.

My imagination got the best of me. I was thinking about this scene and decided to put words to paper. I took the scene and rewrote it, modifying the words in the original dialogue to a courtroom exchange about lobbyists between Allen Ruby—the attorney for ex-Mayor Ron Gonzales—and me.

Here is my rewrite:

ALLEN RUBY: I would like an answer to the question Judge. Councilman Oliverio . . . you made the call. You Placed the Order. You personally gave approval and made it happen. Councilman Oliverio, did you place the order?

OLIVERIO: I’ll answer the question. You want answers?

ALLEN RUBY: I think I’m entitled to them.

OLIVERIO: You want answers?

ALLEN RUBY: I want the truth!

OLIVERIO: You can’t handle the truth! Allen, we live in a city that has walls. And those walls have to be guarded from lobbyists. Who’s gonna do it? You?  Les White? Rick Doyle? I have a greater responsibility than you can possibly fathom. You weep for Ron Gonzales and you curse SanJoseInside. You have that luxury. You have the luxury of not knowing what I know: that the downfall of Tony Arreola and Sean Kali-Rai, while tragic, probably saved San Jose’s remaining industrial lands. And my existence, while grotesque and incomprehensible to you, saves Coyote Valley from development . . . You don’t want the truth. Because deep down, in places you don’t talk about at the Chamber and Labor Temple, you want me on that wall. You need me on that wall.

We use words like “no bundling of checks,” “no back door meetings,” “clean money” . . .  we use these words as the backbone to a life spent defending something. You use ‘em as a punch line. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the Reed Reforms I provide, then questions the manner in which I provide it! I’d rather you just said “thank you” and went on your way. Otherwise, I suggest you pick up a checkbook and write me a check for $250. Either way, I don’t give a damn what you think you’re entitled to!

ALLEN RUBY: Did you order the blow-up doll to Jerry Strangis’s house?

OLIVERIO: I did the job the people sent me to do.

ALLEN RUBY: Did you order the blow-up doll?

OLIVERIO: You’re goddamn right I did!

My script wasn’t used; however, I stand by it.

Have a good week.

Posted in Lobbyists | Comments closed

The Scarlet Letter

Last week, the San Jose City Council passed additional rules for governing lobbyists.  I supported this item and made a few comments of my own.

It is important to specifically define—as best that the city can—who lobbyists are and what they do. Lobbyists who are registered with the City of San Jose are individuals who are hired and paid money and/or receive in-kind gifts to influence government decisions on behalf of their respective clients.  Lobbyist’s use their influence—“influence” being purposeful communication for the purpose of supporting, changing, opposing or intentionally affecting the actions of city officials by persuasion, incentives, studies or analyses—to obtain an outcome in their favor.

To be fair, I don’t think that lobbyists are evil people nor do I believe that they are intentionally out to destroy city processes. Many lobbyists are former staff aides and council members in addition to being developers.  These folks have an internal knowledge base by default because of their employment at city hall.  However, the problem there lies in the fact that registered lobbyists use their knowledge base and influence to push issues through city government.  Since many people know them, and the fact that lobbyists usually represent clients with deep pockets who give money to and raise money for campaigns, those being lobbied can be placed in an uncomfortable position and “give in” to the lobbyist.

Of course one could argue—successfully so—that those being lobbied, such as elected officials, should have the guts to say no to something they disagree with.  However, the relationship between a lobbyist and a council member usually begins when the council member is a candidate. During the campaign, lobbyists can raise thousands of dollars for a candidate.  If the candidate should win, he/she may feel obligated to support the lobbyist and their clients because of the money they raised for the campaign. (When I ran my election, I did not accept money from lobbyists nor did I ask lobbyists to raise money for me.)

In an effort to have some fun with a serious subject, one of my fellow council members asked if we might consider requiring lobbyists to wear a badge that says “LOBBYIST” when they roam city hall. This Nathaniel Hawthorne Scarlet-Letter approach, albeit funny, does not accomplish the overall goal that we are trying to achieve. The goal is to make visible to the average citizen what a lobbyist does and how their influence can impact the outcome of policy that affects our everyday lives.

An important part of disclosure is for the city to require candidates for city council and mayor to identify those persons who are lobbyists on their campaign fundraising reports. I raised this issue from the dais on Tuesday. This is important because I believe that the public should know whether or not the candidate is taking money from lobbyists. These reports are viewable on the city clerk’s website.

Another amendment was to change the revolving door from one year to two years. As I mentioned, many former staff and elected officials leave public service with hopes to immediately use their knowledge base to benefit themselves personally.  Many lobbyists make a six-figure income based entirely on their familiarity with city government.

As a council member, I only meet with lobbyists if their clients are present. In addition, my web calendar lists the word “lobbyist” next to those individuals that are registered lobbyists.

What are your thoughts regarding the amendments made to the lobbyist ordinance?  What other changes/additions do you think should take place in the future?

Also posted in Reform | Comments closed
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