Rda | District 6

On Gangs and Doing the Right Thing

Neighborhood Watch programs serve as one tool for communities to combat gangs. (Photo by hsivonen, via Flickr)

The Mayor’s Gang Prevention Task Force held its fifth annual community summit Saturday, and more than a hundred San Jose residents were in attendance. This task force started in 1993, spanning the terms of three mayors, three district attorneys and five police chiefs. The Department of Justice believes that the Mayor’s Gang Prevention Task Force is a model to be emulated by other cities across the USA.

The summit had four different breakout sessions. I attended the following three: promoting Neighborhood Watch programs, recognizing distinguishing characteristics of different gangs, and gang exiting strategies from a female, Latina perspective.

For me, much of the information presented at the meeting served as an unfortunate reminder of the havoc gangs create in our communities. From youth violence and drug trafficking to prostitution and other forms of organized crime, gangs represent one of the single most detrimental forces in society. Gangs rob individuals of their personal freedoms and introduce unwelcome violence into our neighborhoods. Organized crime impedes the legitimate economic activity that allows communities to prosper. This much I already knew.

What I was surprised to learn is that gangs use social media in a very effective fashion, sharing information and communicating across platforms, such as Facebook, with affiliates in different cities. This expanded reach ensures that gang-related activity does not stop at neighborhood, state or country lines. Indeed, countries and cities throughout the world struggle with this challenge. But the fact remains: Gangs are more organized now than ever before, and we must be organized in our efforts to curb their expansion and appeal.

To this end, I am hoping residents will join city officials in recommitting to crime prevention practices. This includes watching out for and reporting suspicious behavior, block by block, via the Neighborhood Watch program. For its part, the city will continue the good work currently underway by the Mayor’s Gang Prevention Task Force, including but not limited to community engagement and youth intervention programs. In addition, we should prioritize filling existing vacancies in the police department to augment gang suppression efforts.

The sad truth of the matter is that gangs will never disappear entirely, even from the most vigilant and proactive of communities. A city can never have complete control over the unpredictable nature of select deviants, or be held responsible for the unfortunate choices these individuals sometimes make. Fortunately, we have many hardworking and sincere people in San Jose who are doing their best to prevent young people from making choices that may lead to a life spent in and out of jail. This gives me hope, because—given the opportunity—I feel that most youth will see the wisdom in choosing the path of non-violence.

For those of you who were unable to attend the summit and want to learn more, click here.

Also posted in Culture, Graffiti Abatement | Comments closed

How to Save the General Fund $10 MIllion

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, Lobbyists | Comments closed

Park in the Sky or Pie in the Sky?

Planning departments across the USA commonly create “specific plans” and/or “master plans” for certain streets and neighborhoods within a city. San Jose, not unlike other cities, has many of these same plans.

These plans tend to have colorful illustrations depicting what life in the future would be like, and almost always seem to be utopian in nature: happy residents walking with their animal companions in tow, people on bikes, massive parks that melt into the horizon, cafes filled with laughing people laughing, and my favorite … children with balloons.

Most of the time these plans are put together with the best of intentions, but they end up sitting on a shelf due to their inherent lack of practicality or feasibility. For example, many of these plans depict large parks that have no funding source—this is deceptive. If a plan calls for a large park, then many market rate housing units are required to fund that park. (Only market-rate housing, not affordable housing, pays 100 percent of park fees.) In one instance in my district, Cahill Park could have been larger. However, the City Council prior to my tenure approved a housing development that was less dense, and therefore a smaller park resulted.

Sometimes staff solicits ideas from the community, and in doing so propagates a false hope that can only exist in an alternative universe separate from our fiscal reality. For example, one idea involved building a park “in the sky” over the 280 freeway, which would have ended up costing approximately $100 million. This idea should have been eliminated instantly, due to the prohibitive cost. Instead, it was kept alive by the somewhat absurd notion that San Jose voters may someday tax themselves to support a nine-figure project.

In the past, staff and ultimately the council have limited the development potential in a specific plan area when it has been deemed that residents would prefer to maintain the status quo. Case in point, based on community feedback, the 1998 Alviso Master Plan limited the construction of any new industrial office buildings to one or at most two stories on North First Street. The unfortunate consequence of the height limitation is that we have had to forgo market driven demand for taller, 5-8 story buildings. In effect, this specific restriction in the premier technology corridor of San Jose has limited the city’s economic development as a whole.

An alternative approach that would be more conducive to economic growth would involve first identifying a limited number of job creation sites in San Jose located within specific plan areas. We should then re-examine any existing limitations within these job creation sites and remove any restrictions that may block private investment, as in the Alviso example cited above.

Another reason these plans are often doomed to failure can be attributed to the fact that a private property owner may simply not want to develop their land. In other instances, residents will express a desire for a new park on land that is privately owned, and oftentimes this same parcel has an existing structure with tenants already in place. At the end of the day, America is a country that places high value, rightfully so, on private property rights. Thus, successful development is most likely to occur when the private property owners themselves initiate plans, not when an outsider who does not actually own the property injects impractical conceptual drawings into the process.

Currently, staff is planning the development of “Urban Villages,” with the goal of mixing residential and employment activities. Furthermore, the development of such villages would establish minimum densities designed to support transit use, bicycling, walking, high-quality urban design, revitalization of underutilized properties, and the engagement of local neighborhoods and private property owners in the process. Here is a map of the future Urban Villages.

Having attended three Urban Village planning meetings in October, it is my hope that the plans ultimately approved by council are realistic and allow for expedited development. However, I believe a disclaimer acknowledging private property rights should be on the first page of any proposed plan, and that ultimately development will be initiated on a timetable that government cannot control—especially if the plans are too far from market realities.

Sometimes, a proposed development is in harmony with a pre-existing plan, but just as often this is not the case. In either instance, my objective as a councilmember has always been to consider different points of view and support or oppose development based on the long-term economic benefits to San Jose as a whole.

Also posted in Housing, Parks, Politics | Comments closed

Borrow or Pay Out of Pocket?

The Council last week made the second SERAF payment to the state. SERAF is where the State raided all RDA coffers in California—again—in our case taking $75 million from San Jose.

The state allows payment of the SERAF to come from the housing department if a city chooses to do so. This second payment of $13 million is due this week so Council had to decide to pay or perhaps not pay or even to cease RDA operations. I have advocated paying the state with housing department funds.

What was decided, however, was to issue commercial paper to replenish the housing department as a way to finance the payment. Yet there is more than $13 million on hand in the housing department that would not require borrowing.

Ultimately the general fund is at stake for commercial paper, in the same way that the general fund is on the hook for the Hayes Mansion and golf courses.

I voted no, since I felt “Why borrow when you have cash in your pocket?” We do not get “miles” or some other reward for borrowing.

I understand that we would not be able to continue with two more affordable housing projects if we did not borrow, but felt that was OK since neither project will be paying property tax to pay for city services. I could contemplate borrowing if we were going to get something like road repair but in making a payment to the state I would rather just pay it and be done with it.

RDA was not meant to last forever but the recent settlement with the County of Santa Clara, which included the old city hall and was approved in closed session, makes closing the RDA even more complicated.

Also posted in Politics | Comments closed

We Pay Twice for Affordable Housing

In past blogs I have expressed my concern about the cost to our city of too much housing. Specifically, housing that does not pay its own share of revenue. One example I have pointed out—and constantly been the lone vote against—is affordable housing.

We run the daily operations of our city with tax revenue. The city does not write paychecks signed “goodwill” or “number-one provider of affordable housing,” but rather with dollars backed by tax revenues. So when we add to the housing stock by approving, for example, an affordable housing project that does not pay property tax, road-paving fees and only 50 percent of park fees, it is a net loss for our city. Therefore existing residents subsidize city services for the new residents.

Annual property taxes in San Jose are needed to pay ongoing salaries and benefits of employees. Road-paving fees go towards paving streets in San Jose. If you ride a bicycle or drive a car you know that we need every dollar. Park fees allow for new parks or increasing the size of current parks so we do not wear out the existing park infrastructure in established neighborhoods. For years developers were exempted from paying park fees for affordable housing projects which created more residents but not enough open space. However last year with the support of the city council I managed to get it changed to where developers must now pay half the park fees that market-rate housing pays.

The other item of interest is that affordable housing generates extraordinary calls for service from our police. Attached is a snapshot of data for eight affordable housing developments in San Jose and the calls for police service. Since there are more calls for service around these affordable housing projects, over time our police department may schedule more police in this area to manage those calls. This may translate to less police coverage in other areas of San Jose, perhaps where you live. In addition, our fire department receives more medical-related calls, and again there’s no tax revenue to pay for the employees.

So we pay twice. Once, by exempting taxes and fees. Twice, by higher use of city services than existing residents. (Also, most of these projects were financed with RDA funds, and the State of California mandates that 20 percent of that money be spent on affordable housing. And many of these projects were put in places zoned for jobs and not housing.)

Out of the many suggestions I have made on this topic I believe affordable housing developments that have too many calls for service should hire an off-duty officer and/or ambulance to be there on site.

Here is a link to 730 police calls on eight housing developments, among some 11,000 units built.

On another topic, one of my favorite Downtown events starts Tuesday night, The Cinequest Film Festival. Check it out at Cinequest.org.

Related to cinema I obtained a documentary film about urban parks directly from the filmmaker called The Olmstead Legacy. Monday, March 7 at 6:30PM will be the premiere showing in San Jose at City Hall. Find out more about The Olmstead Legacy here. The film will be followed by a discussion on urban parks. The event is near capacity; please email me if you want to reserve one of the remaining seats at Pierluigi.Oliverio@SanJoseCA.gov

Finally, the bipartisan Little Hoover Commission, an independent state oversight agency, made its recommendation to Governor Brown about pensions last week:

Read the Feb. 24, 2011 Little Hoover Commission Report here.

Also posted in Affordable Housing, City Council, Parks, Politics | Comments closed

$1 Million in RDA Money

In my opinion, the Council made two great investments two weeks ago for our tax base and jobs. The Council provided $500,000 of Redevelopment Agency (RDA) funds each to Sunpower and Maxim, totaling a one million dollar investment for economic development. These two companies compete globally, therefore they could have chosen any other location in the world.

Maxim, a billion-dollar semiconductor company, will consolidate its offices and relocate its corporate headquarters from Sunnyvale to North San Jose. Maxim has design facilities all over the the USA and the world.

Sunpower will double its headcount to a payroll of approximately $75 million in San Jose instead of Texas. Texas offered Sunpower $4 million. Sunpower could have also expanded its Malaysia facility and been exempt from taxes.

We can’t ignore that we are competing at a global level and the fact that San Jose was able to have these two companies call us home after the Great Recession is an accolade. Although I do believe RDA has lost its focus from time to time, this kind of economic development is right on target.

The County of Santa Clara is upset with these two investments, issuing a letter to the City of San Jose citing Sunpower and Maxim specifically. This is the same government agency that says time and time again that they want job growth in the County; especially green jobs. The saying “action speaks louder than words” comes to my mind here. The County will benefit from these investments as the majority of Sunpower and Maxim’s employees will have homes in the county paying property tax and sales tax, of which the County government gets a significant portion.

In contrast, the Council funded the construction costs for an existing charter school in East San Jose with $950,000 of RDA money. So, is one million better spent for economic development or a school? Neither economic development nor schools are in the City Charter. Do they provide the same measurable return on investment?

RDA did fund the extensive remodel of the existing Horace Mann elementary in our downtown 10 years ago when there was more cash on hand. Horace Mann was an eyesore and is now a very attractive school. Part of the thought process was for downtown to have a good public school for young families. I think the Horace Mann PTA would agree it has benefited the school community. On the other hand, the money spent did not generate any new ongoing jobs or revenue for the City.

Council could have directed the million dollars to fund more affordable housing, since that is funded by RDA, or another million on top of the $73 million RDA has spent on the Strong Neighborhood Initiative, which benefits a fraction of San Jose.

Finally, important to note is that long ago RDA funded a bridge and light rail station in North San Jose next to then-small company that relocated from the Peninsula. That small company was Cisco and is now the largest private employer in San Jose.

Also posted in City Council | Comments closed

Decisions on Housing Types Affect Future Tax Revenue

Unfortunately, not all housing developments create the same economic value in areas assigned to the Redevelopment Authority (RDA). Last week, the council approved financing for an affordable housing development on North 4th Street in a RDA area. Since the housing developer is a non-profit, the development is exempt from paying property tax.

In addition, the fees that are paid for a market-rate development—road paving fees and park fees, to name two—are exempt from this project as well and all other projects like them. (Point of clarification, this project was entitled prior to the Council cutting the park fee requirement in half for affordable housing. I remain committed to my support of 100 percent park fees for affordable housing developers).

Locating affordable housing in an RDA area creates a lost opportunity for tax increment revenue for RDA ,since projects are exempt from property tax. As a result this type of housing does not fund ongoing city services in non-RDA areas that the new residents will require (usually at a higher rate than market-rate housing). It also shortchanges the RDA because RDA needs the tax increment from the increase in property value which then could be invested towards economic development. This housing development is a financial loss and therefore I voted no.

One way to fix this is to require that affordable housing be built by a for-profit developer so it would be subject to property tax. We would still provide affordable housing but it would help to carry its own weight in paying for city services.

At the same meeting, the Council agreed to a multi-year exemption for four north San Jose housing developments from the citywide inclusionary housing policy, which may bring in over $1 billion in private-sector spending. The current San Jose inclusionary policy has been blocked in the short term for apartments only by the Palmer court case. These developers would commit to start their housing projects by September 2011 to qualify for the exemption; however they want to make sure the exemption would not change half way through construction if the State Legislature passes a law to circumvent the Palmer case. This is an example of how an inclusionary housing policy raises the cost for the developer and inevitably increases the price for the market-rate units.

The short-term benefit would be thousands of construction jobs and city planning jobs for these 4,000 housing units that were approved as part of the Vision North San Jose plan ,where the city already has public infrastructure like roads, sewers, street lights, etc. The long-term benefit is that these housing developments are market rate and pay property tax. When the construction is complete the property is reassessed and that increase in value creates millions of dollars in tax increments to fund the RDA each year—ideally to be spent on economic development.

These market-rate developments will also provide 100 percent park fees, creating large parks since they are all high-density developments and the park fees are paid on total amount of units. More housing units per acre equals more park fees.

Tomorrow night Council will consider a new policy (I support) allowing these apartment developments to donate maintenance services for parks so there would be no cost to the City, but enabling residents to enjoy a well-maintained park. They will also pay 100 percent of the road paving fees. If a city has a RDA to create tax-increment revenues, then ideally each parcel in that RDA area should be strategic for revenue growth.

Please consider attending the Veterans Day parade in Downtown San Jose this Thursday. The ceremony is at 11am and parade is at noon. 1919 was the first Veterans Day event in Downtown San Jose and it is an opportunity to honor those who have served in our military.

Also posted in Parks, Politics | Comments closed

The Only Economist Worth Trusting is Named ‘Hindsight’

Last Tuesday, the City Council had a study session on the upcoming Redevelopment Agency (RDA) budget. RDA funds are regulated by state law and are almost entirely spent on land and construction, similar to how bond monies are restricted. We have funded some limited city services in RDA and Strong Neighborhood Initiatives (SNI) areas (not citywide), such as anti-gang programs and code enforcement. The bulk of RDA funds have gone to capital project like the HP Pavilion, numerous museums, the convention center, parking garages, hotels, Adobe and facade grants as well as industrial projects in North San Jose and Edenvale. However, RDA also funded approximately $70 million for SNI capital projects like community centers, parks, traffic calming, etc.

The larger discussion was about how we spend or do not spend the limited RDA funds after the State of California raided the funds last year and again this year. RDA funds are based on assessed property values in the merged RDA areas (Downtown, North San Jose, Edenvale). If those commercial and residential properties increase in value, that creates more tax increment dollars. If those values decline there is less. All 350 RDA agencies statewide are experiencing the same pain. As we know, property values have declined and may decline further depending on which economist you listen to.

San Jose RDA hires an outside economist every year to forecast future revenues for a third-party review. The economist has not always been accurate. The economist has projected higher tax revenues in years past which did not pan out. Economists do not have a crystal ball and economic conditions have not been this dire since the Depression, which makes future forecasting that much harder. We may consider a different economist next year however the current economist has already been paid so I do not see the need to spend more money and hire an additional economist. I would rather take the economist’s number, cut them in half, and budget based on conservative numbers.

The main question for me is: “When revenues are uncertain, do we budget on the lower conservative numbers or the higher optimistic numbers?” I would prefer to do a budget on the lower numbers as it is easy to spend money but harder to constrain spending. The only economist I trust is “Hindsight,” and we will only know the answer in the future.

The RDA laid off 20 percent of its staff last fiscal year and may have to do more layoffs this coming year from their current 72 employees. The RDA is the only city department that is non-union, so layoffs are done by the director and not necessarily by tenure. I believe that with limited funds, the scope of RDA should be narrowed to economic development which creates a tax base and net new employment. That may also mean refraining from issuing any new debt this year and next. Mayor Reed has suggested a mid year budget review for RDA so if revenues change, adjustments can be made.

I attended the ribbon cutting for the Brocade campus on Thursday. The Mayor knocked the ball out of the park with his comments on how federal law, state law and local regulations hinder job creation. In addition, Mayor Reed pointed out a simple economic lesson—that this country will grow the economy through exporting, and Brocade is a testimony to that as the majority of its technology products are exported overseas.

The RDA spent $4 million to retain Brocade and the jobs in San Jose at a new campus at Highway 237 and North First Street. I believe strategic investments are good. We cannot always predict which company will succeed, but we know these investments reap increased revenue for the city of San Jose.

Finally, here is a table from Mayor Reed’s RDA budget message last year that shows how RDA economic development is better for city tax revenues and ongoing jobs then RDA affordable housing. The chart shows the increased property tax revenues and both direct and indirect job increase.

Do you plan your household budget on your net paycheck or on expectations of increased wages and/or return on investments?

Also posted in Chuck Reed, Politics | Comments closed

The Center of our City Center

Last week I attended evening budget meetings in Districts 3 and 5. The center of our city (District 3) had a high turnout from residents who find great value in community centers. Particularly, the Gardner and Washington Community Centers. Both facilities provide a place to go and where residents can be positively impacted. Classmates and friends of mine from Willow Glen High grew up in the Gardner area, formerly known as “Barrio Horseshoe.” It was a problematic neighborhood with many gang issues.

My friends in Gardner managed to stay out of the gangs because their parents would physically discipline them if they hung out with people involved in gangs, and kept them busy with chores and work. David Pandori and Cindy Chavez both worked hard to make improvements in the Gardner neighborhood and should be complimented for turning that neighborhood around with the help of passionate residents like Rudy Martinez. Also, praise to my colleague Sam Liccardo for continuing the Pandori/Chavez legacy in Gardner.

The other facility is the Washington Youth Center located in the neighborhood around Washington Elementary and Sacred Heart church. This is another area that has been dealing with gangs for decades. The Redevelopment Agency funded the construction of the Washington Youth Center and the adjacent library along with physical improvements to Washington Elementary. However the general fund is responsible for the day-to-day expenses. Many came to tell their stories of what these facilities meant to them. Some stories brought people to tears as they had family tragedies but also success stories of their children.

Some attendees came from other cities to advocate for our Therapeutic Services program that enables kids in wheelchairs to participate in sports like basketball. They come from other cities like Cupertino and Monterey since surrounding cities stopped offering these services.

There were those who asked, “Why did we ignore the structural deficit all these years?”

Many expressed their opinion that public safety unions should accept wage cuts to save city services and binding arbitration was unfair. Pastor Sonny Lara asked, “Why are people so generous with money for tragedies in other countries but we do not donate to our own local community?” My favorite quote of the night: “We need to stop electing politicians that promise us everything!”

If there was one theme in the District 3 budget meeting it was to keep community centers open. It was stressed by many that community centers and libraries save lives in certain neighborhoods and that these facilities act differently than in Almaden, Cambrian, Evergreen, Rose Garden and Willow Glen. Many felt that community centers and libraries should be open more hours in neighborhoods that have higher needs, which could be determined by crime rate, poverty rate, etc..

I was asked afterwards by several young people who were good role models if would I support their specific community centers over others. I said, “The easy answer is to tell you yes and then walk out the door and vote no.” However, I continued, “the idea of, should some neighborhoods get more services then other neighborhoods is worth debate.” I then asked the youth if they cared who cleans City Hall or would prefer that their community center stay open. They chose the community center.

I believe we should maximize cost savings in areas of our city that do not directly touch residents before cutting services that impact residents. Otherwise we are saying, “Sorry young people, the status quo on cleaning city hall is sacred and better then providing you services that would directly impact your future.” If you do not like this trade off of cleaning staff versus community center employee, then how about community center employee versus librarian or community center employee versus a police officer? Take your pick. Side note: Laying off new police officers is a double loss since we lose the investment/cost to recruit, test, background, academy, field train the new officer.

But let’s get back to the debate on providing more services to certain neighborhoods and less to other neighborhoods. I would acknowledge that higher needs exist in certain neighborhoods and that prevention is less costly than the worst-case scenario of incarceration. There is a disconnect between costs and responsibilities of the city and final costs that may end up on the County or State, but there is also limited sharing of revenue to achieve these goals. On the other hand, I do not believe every person in a certain neighborhood or zip code is affluent.

Within each neighborhood perceived to be upper-middle income, there are those who rent, have a mortgage they are struggling to pay, long- term unemployed, a single mom with kids, seniors on a fixed income, disabled veterans, etc. I assume these residents and specifically youth would want to have the opportunity to read a book or partake in an activity at a community center.

In addition these perceived upper-middle income neighborhoods pay higher property taxes and may feel that they should at least have equal neighborhood services. Personally, I think each neighborhood should get equal infrastructure like sewers, streets, sidewalks and streetlights. Equity in parks is more difficult because of the build-out of nearly all open space and the cost to procure it at today’s prices. (Such a tragedy that we lost out on approximately $90 million in park fees from exempting affordable housing from this fee.) When it comes to what amount of neighborhood services for each zip code, I am open for debate and would like to hear your views.

Is it fair to provide more service to specific neighborhoods? Is that Marxist? “Each according to his abilities to each according to his needs. Should government be neutral and provide exactly the same to all areas?

When people buy a more expensive home does that mean something? People choose to buy or rent in areas based on surrounding amenities and pay a price determined by other property owners and renters. Do we let that be the barometer?

Also posted in Budget, Parks, Politics, Unions | Comments closed

When Times Get Tough Just Borrow More Money

Mayor Reed shared a candid and honest view of city revenues and expenses at the State of the City Breakfast last week. (Personally, I miss the State of the City speeches in the evening as it led to dinner after the speech and spending money Downtown.)

As we already know the City is walking the plank, with the sharks swimming below in the ocean (sharks = bankruptcy) and a sword wielding pirate (pirate = hard choices) is forcing us to walk down the plank off the ship. Walking back up the plank in not an option unless tough decisions are made now. However it seems that another alternative being heard more and more at city hall is borrowing.

This week the council will vote on an RDA budget that proposes to borrow $10 million from the Park Trust Fund, Ice Center and Water Pollution Control Plant to be repaid in approximately six years. Six years of risk. What if there is a major repair needed at the Water Pollution Control Plant or the Ice Center?

Six years of not being able to make a strategic purchase of property for a park or trail connection. The Park Trust Fund comes from fees paid by housing developers who build market rate housing (affordable housing is exempt from paying park fees). In turn, they want to see their money spent on what it was intended…parks! Actually if we do not spend Park Trust Fund money within a certain amount of time the city must return the money.

The Library Parcel Tax reserves were considered for borrowing but spared since it would kill the chance of getting the voters to continue the tax in 2012. (A point I brought up at the Neighborhood Services Committee.) The alternative to borrowing this $10 million would be to borrow this amount from the Housing Department as allowed by the State Legislature, which I support.

Borrowing of these funds today limits the city’s options tomorrow when the state will grab more money from the city. If we are forced to borrow then let’s do it to maintain core services like police and libraries, not more affordable housing, most of which does not pay property tax.

The City will also be issuing $25 million in commercial paper to pay a portion of the State’s raid of San Jose RDA. Commercial paper is the equivalent of a home equity line that must be paid back. The collateral for the $25 million in commercial paper is our beautiful California Theater, home of San Jose Opera and Symphony Silicon Valley. Again the other option would be to borrow this money from the Housing Department instead of borrowing more on our equity line. Borrowing in both cases is due to the State Legislature taking $75 million away from San Jose RDA funds.

At the budget study session last week a union lobbyist touted the idea of risky pension obligation bonds. Pension Obligation Bonds (more borrowing) are used to fund the unfunded liability of pensions, so as to lessen the large amounts coming out of the general fund in future years when there will be losses. This year $38 million is being transferred from the general fund to cover the pension investment losses which is equivalent to over 200 police officers or staffing for 17 fire stations or paving 24 miles of road. This arbitrage scheme would have the city issue taxable bonds at say 6 percent and then take that money and invest it with the city Retirement Funds. The hope is that the city Retirement Funds would have a greater rate of return than the 6 percent we would have to pay the bondholders. In the last 10 years the average rate of return for city Retirement Funds has been 4.4 percent. (While doing my taxes on Valentines Day I noticed my own mutual funds had returned 3.5% percent over 10 years.)

If the Retirement Fund investments do not perform over time then we could lose more money or possibly break even or make a higher return. Positive investment returns would be restricted to paying off future retirement liability. I think outside of the risk, Pension Obligation Bonds may give the council a reason to not seek second tier retirement benefits the taxpayer can afford for new employees.

The other idea suggested by the union lobbyist was bonding construction and conveyance tax (C&C) funds so that we could spend more now so cuts do not have to be as deep. There again you have to gamble on the future tax receipts and the total amount of C&C funds will shrink since you have to pay the costs associated with bonds. However this borrowing would allow the Council to avoid the question of outsourcing.

It is just another day in local government. Perhaps one way to raise money for the city is to sell bumper stickers that read, “Why do today what you can put off ‘till tomorrow?”

Also posted in Budget, Politics | Comments closed

Punting the RDA Budget

The Council punted the Redevelopment Agency (RDA) budget last week to February 2010. As has already been highlighted in the news, the state is taking $75 million away from San Jose’s RDA. We need to pay the State off in May and identify where the money is coming from in March (no negotiation or payment plans on this matter are allowed by the State). The legislature, recognizing that this payment would be difficult for all RDA agencies, allowed for borrowing from affordable housing money which is 100-percent funded from RDA. Twenty percent of all RDA money goes off the top to the Housing Department in San Jose. The payroll for the housing department alone is $9.7 million a year for 83 employees for an average salary of $117,000.

The Mayor’s Budget message was pragmatic in that it said let’s not spend any money ‘til we work out borrowing the money from the housing department to pay the State; let’s determine whether or not RDA is able to issue bonds to pay for a capital program—which would include matching the hotel owners’ share and expanding the convention center; and let’s continue negotiating with the County of Santa Clara (which by the way in the last decade has been paid $270 million by the RDA).

The Mayor had a very good public meeting with stakeholders from all sides prior to writing the budget message. Everyone who attended realized the choices are difficult and few options exist. Everyone at the meeting got the same information—that San Jose has already built 18,000 units of affordable housing by spending hundreds of millions of RDA dollars making San Jose the number-one provider of affordable housing in the state of California. Everyone left the meeting understanding that there is no pixie dust to magically fix things. A majority at the Mayor’s meeting felt that economic development should be the priority now.

However, when it came to voting on the budget, another option was voted upon at the last minute that asked for a $25 million reduction in how much would be borrowed from the Housing Dept., and instead look at borrowing from other sources. This option was well liked by the audience (which was made up by mostly paid affordable housing lobbyists and people who work for affordable housing entities in some capacity—the Housing Director is campaigning against the Mayor and is ensuring that she has her supporters at the meetings). This “option” would take money by borrowing monies from the following: Commercial Paper backed by the General Fund, Sewage Treatment Plant Connection Fee, Library Parcel Tax, Sewer Service and Use Charge, Integrated Waste Management, Ice Centre Revenue Fund and HNVF-Anti-Tobacco Funds. This “option”—taking from all of these other resources—was approved on a 7-3 vote with Mayor Reed, Pete Constant and myself voting no.

We have borrowed money from some of these funds before, but that was to balance our general fund so we could fund core services like public safety and not more affordable housing. If we borrow this money now to create more affordable housing, then we will have one less arrow in our quiver to balance the general fund budget in June.

My question to you is: Should we use money that is supposed to go towards core services like sewers and water treatment plant so that we can build more affordable housing that does not pay fees for parks or road paving?

How do you feel as a voter that may have supported the library parcel tax to let that money be borrowed for more affordable housing that does not pay property taxes (property taxes is the number one revenue source to pay for city services) versus what you intended that money to be spent on…libraries.

I remember months back Councilmember Constant and I were criticized because we wanted to use the Healthy Neighborhood Venture Fund (HNVF)/Anti Tobacco money to pay for school crossing guards, a public safety service the City has had in place since the 1940’s. It’s okay to use these funds for affordable housing but not for crossing guards? Hmm…sounds like maybe a vote of the people should be had on how these funds should be spent. With a $75 million deficit just for RDA and another $96-plus million deficit for the City’s General Fund, I am all for the residents sharing their votes via the ballot. If we can ask residents to raise their taxes then we can ask them for direction on spending their money.

I now have a Facebook page for my tenure on the city council. Here is the link.

Also posted in Budget, City Council, Politics | Comments closed

Feedback From RDA Survey is Beneficial

A couple of weeks ago I put together my own web based Redevelopment Budget survey. I shared financial information in bullet point form in the introduction and then gave information throughout the survey. In some cases I would state the dollar amount given to a particular program and then ask a question. More than 600 people completed the survey, which required that each question be answered. The survey could not be taken twice.

As with most issues that involve money, the feedback to my survey was mixed. I had a person who refused to even participate because they didn’t like how I set up the survey. Others lauded my courage to share data and seek their input. They felt I was taking a risk to allow residents to share their concerns.

Web surveys are not necessarily scientific surveys, since web surveys allow anyone to participate. As we know, a true scientific survey controls and limits who is surveyed by gender, age, race, income level, voter registration and geographic location of the respondent. Scientific surveys can cost about $40,000 for 1,000 people.

Viewpoints are subjective. Whereas one person may view a question as biased another may view it as objective. However, the most important part of a survey question is that the data be factual. In my survey, there were approximately 10 comments out of over 600 people who completed the survey who felt that particular survey questions were biased. For example, one person told me that I was “leading” the survey because I said that San Jose RDA has spent hundreds of millions of dollars on 18,000 units of affordable housing. I shared that this is information is factual and not leading.

My survey shared, in synopsis form, how much money has been spent on various issues. Many people did not realize that San Jose is the leader in affordable housing. Some respondents shared that they are very pleased with the Strong Neighborhood Initiative (SNI). While others, agreeing with affordable housing and SNI, felt that that we should spend money on economic development this next fiscal year. My survey allowed those who chose to participate an outlet to share concerns, recommendations and rank their priorities for RDA monies.

As I have said, there were a few participants who felt the survey was biased; however, when I did a cross tabulation all but one of them chose Affordable Housing or SNI as more important then Economic Development. Cross tabulation also showed most of these specific participants felt that we should not borrow money from the Housing Department to spend on Economic Development this year. In addition, most of these participants shared that it was okay to spend money on a small fraction of neighborhoods in San Jose even though there are neighborhood infrastructure needs citywide.

After reading comments and speaking with survey respondents, I would add more choices to future surveys. For example, when it comes to ranking priorities I would add two more options; “Save Money”—since some people would rather not spend—and “None of the Above.”

The survey required that beach question to be answered, identical to how a councilmember “must” vote. Many times the Council votes on an ordinance or budget that individual councilmembers may not agree with 100 percent, so sometimes council votes for a package of things that are a bit uncomfortable. It’s the same feeling that some of the respondents felt when asked to make decisions regarding the survey.

Another item I would add in the future is a web link if available for additional information. For example, respondents did not necessarily know what specific improvements were proposed at St. James Park, Japantown, Civic Auditorium, etc. The RDA budget is available online, however specific information on the proposed improvements is not easily found.

Thank you to those of you who participated in the survey. I know it was not easy and may have caused you to feel conflicted. I appreciate your time to engage and share your viewpoints with me.

Some of the results:

• 69.5% out of 787 respondents felt that borrowing from the Housing Dept. this year for Economic Development was okay.

• 70.8% out of 763 respondents disagreed with spending RDA money for a small fraction of neighborhoods in San Jose versus overall.

• 79.4% out of 709 respondents felt that Economic Development should be number one priority of RDA money.

• 59.7% out of 709 respondents approved of the Convention Center expansion.

• 52.8% out of 709 respondents did not approve of RDA land banking for a Downtown Baseball stadium.

• Here is a link to all the results, including 268 comments.

Finally here is a table from Mayor Reed’s RDA Budget message that shows how economic development is better for city tax revenues and ongoing jobs then affordable housing.

Also posted in Budget, Politics | Comments closed

Small Decisions Can Result in More Layoffs

Last week, at the city council meeting, I removed an item from the consent calendar on the agenda for discussion. As you may remember from my blog about San Jose’s million-dollar golf nets, consent calendar items do not have individual discussion, but rather are voted on all at the same time. If one wants to discuss a consent item, you have to “remove” it for discussion.

The item I removed was asking $993,876 for the library to spend over the course of seven years on an online tutoring service for kids. Nearly a million dollars is a significant amount of money. The $993,876 was not restricted funds and could have been spent on librarians instead. My comment/question to the council was: If we know we are going to have to do layoffs of library staff on July 1, 2010 to balance the budget, then maybe we should hold off on discretionary spending so we can retain staff to keep our libraries open. This expenditure is approximately two librarians salary each year for seven years. My comment fell on deaf ears and the council voted to spend this money; I voted against this expenditure.

When it comes to the libraries, the core deliverable to me is that libraries are open as many hours a week as we can afford, so users can access information and have a place to study. Any and all other programming should be funded after libraries are open seven days a week. If we have funds left over after libraries are open seven days a week then we can start evaluating the option of adding different programs. Until then, the City’s money should be used to keep libraries open with staff.

The online tutoring service could be canceled from year to year; however, good luck ever canceling a program/service once it starts.

On another note, I posted a survey last week regarding the Redevelopment Agency (RDA) budget. The RDA board adopts the final budget on Dec. 8. A person shared with me that the question I posted below (which appears on the survey) was “biased.” I shared that the information I gave was factual, not biased. I thought I would share the question with you here. I have added commentary in bold parenthesis:

The Redevelopment Agency has spent $774 million on housing (true) making San Jose the number-one provider of affordable housing in the state of California (true) by financing 18,000 units (true) of affordable housing while neighboring cities do next to nothing for affordable housing. (Neighboring Cities have not met the Association Bay Area Governments (ABAG) affordable housing targets, while San Jose has exceeded overall ABAG affordable housing targets). With so much given to affordable housing and so many people in need of jobs (12.5 percent unemployment), should the RDA borrow money from affordable housing reserves this year, as allowed by state law (true), to be spent instead on economic development to help create jobs?

The Redevelopment budget survey can be found here. It closes this week.

Happy Thanksgiving San Jose.

Also posted in Budget, City Council, Libraries, Politics | Comments closed

RDA Budget Survey

Last week, the council had public hearings regarding the upcoming 2009-2010 Redevelopment budget. Mayor Reed ensured that the public had both a day and night session to attend, allowing more people to participate. In addition, tonight (Nov. 16) at 6pm the mayor is hosting an additional public meeting at City Hall to garner feedback on the RDA budget.

During last week’s public hearings, the usual lobbyists—those who are paid to speak at council meetings on behalf of special interests—attended and spoke. The lobbyists have also been known to orchestrate the other speakers, giving them colored stickers to wear and scripts to read from.

Others spoke on what the RDA money should be spent on, which happened to be items that might affect their own future employment. For example, people who work for an affordable housing developer will speak to the need for RDA money to be spent on affordable housing.

This past October, I held a meeting in the District I represent (on a Saturday) to talk only about the RDA and the upcoming budget decisions. At my meeting, there was nearly unanimous support for spending the limited RDA funds on economic development. Unfortunately, the council is not hearing this at the public hearings at City Hall since most residents are busy with work, family or seeking a job.

Therefore, I have prepared a web survey for San Jose residents to fill out online. This survey is much shorter then my May 2009 General Fund budget survey, but does require that each question be answered and may be only taken once. I will share the results here on San Jose Inside.
The link is here: Redevelopment Agency Budget Survey.

Also posted in Politics | Comments closed

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