San Jose-AT&T quid pro quo

And this is where it gets messy and ugly. As mentioned in the comments thread for the Setting Oakland’s Table post, a land deal was struck between the City of San Jose and AT&T. However, it’s not quite the land deal you think. AT&T has been wanting to rezone some land near Santana Row for some time, with the company offering to consider selling its Diridon property if it got the rezoning green light. The Merc’s Scott Herhold has the grisly details.

One aspect of the AT&T transaction Tuesday night, however, made it different. AT&T also owns a key chunk of land in the path of the city’s planned A’s ballpark near the main train station. And there was plenty of council discussion about whether the fate of the two properties was entwined.

The charge of the folks who believed in this linkage, led by Councilman Pierluigi Oliverio, who represents the area, is that AT&T dangled the ballpark area land before the city as the quid pro quo for allowing housing on the Santana Row lot.

This actually goes back further than just Santana Row. Long ago, the Diridon ballpark site was planned to have housing on it as part of a TOD plan, and AT&T stood to gain from a housing-related land sale there too. Cue the economic collapse, and new housing isn’t really worth much in that part of town right now. But the area right near Santana Row is still hot, so AT&T wants to cash in.

Councilman Oliverio is in a tough spot, because his district has both locales within it. And yes, he’s heard AT&T come-a-calling before:

One of the proposed exceptions that the Council denied in May 2008 on a 6-5 vote is back again with a different lobbyist. The same property owner also owns land where the proposed baseball stadium would be located. I met with the property owner representatives who said if the City would rezone this piece of land then they would consider selling the other piece of land to the City for baseball. I believe each rezoning should be judged on its own merits and not tied to a quid pro quo.

Lobbyists. Horsetrading. Desperation. That’s what the lure of major pro sports brings. AT&T knew it had the City over a barrel as long as San Jose didn’t exercise eminent domain, so this is the price. Oliverio wanted an office building along with housing as part of his general anti-rezoning stance, but he ended up casting one of the dissenting votes (8-3 passed). Apparently he wasn’t even invited to community-developer meetings to discuss the rezoning even though it’s in his district – which sounds insane. Who knows, maybe it’s all plausible deniability. Whatever it is, it’s disgusting.

Going back, all that talk of AT&T being in so tight with the Giants was baseless, though not for the reason I cited (parking, location). Strictly speaking, it was all about money. Some will rejoice in that it’s one more domino down. I think I just threw up in my mouth a little bit.

If there’s a lesson to be learned for landowners, it’s this: Hold out as long as you can. You’ll get a better deal.

29 thoughts on “San Jose-AT&T quid pro quo

  1. Just goes to show that as much as we think we may know about the process, there’s a lot more that we have no knowledge about. When a bunch of zeros are involved, the littles be damned…

    Politics can be quite fascinating and distasteful at times.

  2. R.M.,
    I think a lot of other talk will be proven baseless when all this is over (see last thread). My view on this is simple; no harm, no foul. No SJ kid is going to go hungry over this, nor will a SJ family fall into poverty because of the quid pro quo. But seriously, because there was no net projected job loss at the Santana Row site, nothing was lost in terms of future employment opportunities. And reading the city notes, residents of the Santana Row neighborhood were all in favor of the rezoning. Now San Jose can acquire the Diridon South AT&T parcel without the use of ED. Disagree with me if you may; I think this is a win, win for the city and the ballpark effort.

  3. The quid pro quo may be a little dirty, but increasing the supply of housing in San Jose isn’t a bad thing. Too many cities have taken the opposite position for fiscal reasons, which contributes to the jobs-housing imbalance in Silicon Valley, high housing prices and long commutes.

  4. Correct me if I’m wrong, because I’m still trying to paint the picture for myself. So, San Jose rezones land owned by AT&T from commercial to residential. Residential-zone land would likely sell for higher thus AT&T basically getting someone for property/land they barely use. In turn, Silverstone Community builds some new condos/townhouses which could negatively disrupt the currently successful Santana Row economic-ecosystem. Meanwhile, SJ sees significantly less revenue from this property in the decades to come.

    .

    I know there’s the parable of turning water into wine, but this seems fishy.

  5. I am impressed this happened. ATT came to the table with the City Council and found a way where both parties got what they wanted.

    If that is not “working together” for the greater good I do not know what is.

    All that is left is the welding station to be moved and land is all owned by the city for the A’s to come through.

    Now if MLB would just announce San Jose is the next home for the A’s…Tick tock, tick tock…

  6. Well, I’m hearing form a very very pro-Oakland source the MLB will select Oakland, believe it or not, rather than have the courage to remove the t-rights nonsense.

  7. While this action isn’t directly taking food out of mouths of children or resulting in someone losing their job, it’s redefining the economic landscape into a potentially less fruitful place for San Jose down the line. Disclaimer: I’m not talking political ideologies but capitalism only works when it’s in motion. As long as there are constantly additional markets, additional consumers, everything is rosey. However, San Jose is a city with defined boundaries. In order of it to sustain a successful economic ecosystem, it needs to sustain a flow of money internally. No one can predict the future but a potential surplus of housing surround the currently successful house/commercial Santana Row complex jeopardizes not only the successful of the future housing complex, but Santana Row as well. The counter would be how successful the Diridon ballpark/area will be during the upcoming decades. Housing can quickly become a slum when it lacks the proper commercial and/or industrial backbone to justify having it. Again, I’m trying to predict the future, but SJ could be making itself economically vulnerable down the road and the people who are going to feel it are its residents.

  8. personally I think we are overstating the impact of this one transaction. Yes, a trend of doing this would not bode well for a city but lets not get too excited about something that happens in all cities everywhere,

  9. My disgust over this is two-fold. First, the Mayor and City Council have generally proceeded with an air of transparency in the stadium pursuit. This completely violates that. I know, sometimes you have to break some eggs. Well, sometimes those eggs are rotten.

    I don’t have nearly as much anger at AT&T, because they acted how I’d expect them to act. But to cloak themselves in the “trying to provide the best customer service” argument, ugh.

    • My disgust over this is two-fold. First, the Mayor and City Council have generally proceeded with an air of transparency in the stadium pursuit. This completely violates that. I know, sometimes you have to break some eggs. Well, sometimes those eggs are rotten.I don’t have nearly as much anger at AT&T, because they acted how I’d expect them to act. But to cloak themselves in the “trying to provide the best customer service” argument, ugh.

      R.M.,
      Wasn’t all this information regarding the rezoning available at the City of SJ website? I was reading up on it two days ago, and Pierluigi put the possible “quid pro quo” out there himself. By the way, even though he voted no for the rezoning, I’m sure deep down he’s looking forward to the ballpark and smiling that one more hurdle has fallen.

  10. I’m glad to see San Jose doing what it needs to do to get the job done. It can be ugly, but politics is often a game of quid pro quo.

  11. ML – I understand your frustrations, however it also proves that SJ is willing to do what is necessary to move this forward (unlike the Oakland city government).

  12. @Tony D. – Nearly everything you described is why I’m upset. Did Oliverio truly not know earlier that everything was happening under his nose? Did others within the City broker the deal and offer him political cover? Was the office rezone just a bit of window dressing so that he could stay true to his principles? It’s all just vague enough that we can’t know for sure. Whatever, it stinks.

  13. OT: get a chance read the latest BS from Tim Kawakami at SJ Merc (Giants, A’s traveling along a shared path). Tim is actually a SF/East Bay reporter masquerading as an SJ reporter.
    He seems to think that the Giants current hold over SJ is a good thing and that Bill Neukom is holy/all powerful. You know, reading these articles with baseless commentary over and over again begs the question: what the hell are they teaching in college journalism schools anyway? “Bull shit sells, bull shit sells!”?
    Thank God for this blog.

  14. I don’t know what all the kerfuffle is about. Horsetrading is a fact of life in both public and private business. That some people are trying to cover themselves is only as a result of public antipathy towards something that’s very normal.

    We should all be somewhat enthusiastic that one potential logjam of an SJ stadium is likely gone. One more deal, I believe, and the land is set. This is a good thing for the A’s.

  15. @Tony, TK is a columnist, not a reporter. He’s paid to give his opinion. Now we may not agree with his opinion, but that’s the whole purpose of him writing the column, to get fans’ wheels turning.
    .
    Frankly, I can’t disagree with too much of what he has written. The Giants currently have the upper hand, and they are using it to their advantage. It sucks bigtime that they are holding the TR over the A’s heads, but it is what it is. I suspect if the tables were turned it would be no different. You can argue that Wally Haas generously gave them the TR for free, and you would be correct. But I don’t think you’d find too many owners who would have acted so graciously. The name of the game here in the Bay Area is market share, and the Giants are not about to do anything which will deminish their advantage.

  16. Disagree with you fc,
    The Giants don’t own the “upper hand” because whether they loose or keep the T-Rights isn’t up to them; its up to MLB.
    And again, the Giants don’t “own” the T-Rights, MLB does. Beating the dead horse once again, the only reason they currently have exclusivity to SCCo. Is because they wanted to relocate to SJ.
    If MLB did favor certain franchises over the others (which it doesn’t), then all this talk of the Giants having the “upper hand” and keeping their competitive advantage would make sense.
    I respect your opinion fc, just disagree with it. I also stand corrected on TK being a columnist and not a reporter; but don’t they go to the same schools in college?
    IMHO, the real reason for the “BRC delay”: see the original topic of this thread. SJ gets ALL the land for the ballpark and a decision will be rendered.

  17. @Tony, you are correct, MLB owns the TR to SCC. But the Giants are exercising what little control they have over those rights by not allowing the A’s easy access to San Jose. They could easily hand SCC over to the A’s, much like what Wally Haas did, but they haven’t, and that’s their right. So to the extent that they are making life difficult for the A’s, they have the upper hand.
    .
    BTW, correct me if I’m wrong, but didn’t Reed say they were not going to purchase anymore land until they had the green light from MLB? So is MLB waiting for San Jose, or San Jose waiting for MLB?

  18. @fc – That is correct. All they can do is line up the pieces until it’s time to move forward, if that time comes.

  19. I’m struggling to find the ugly part here. The city gets property needed for a ballpark that has overwhelming support from anyone who is not brain dead; ATT gets property zoned residential in an area where there is zero demand for commercial and huge demand for residential. DT and Santana Row get increased density near shopping and nighglife, in areas with plenty of parking and (DT) plenty of rail transit. How could the city of SJ make out any better than this?

  20. If you all want to know how shady politics and local politicians are in an urban city, along with how shady “journalists” and reporters are. Watch the show The Wire , that was on HBO or just buy or rent the DVD’s.

    The Wire will wake you up to how corrupt and shady local politics are….especially in Urban cities.

  21. San Jose Athletics sounds good to me……more money for the team in SJ, so they have a chance to truely compete with the screwed financial economics of MLB.

  22. @biedrins – From an ends-justify-means standpoint, sure it’s fine. That’s how business works. But AT&T essentially held the Diridon site parcel for ransom, and they got it. And it’s pretty obvious that certain people within City looked away while it happened. If the goal is open, transparent government, this failed miserably.

  23. ML: following up on your last comment: note that this is the *second* quid-pro-quo this year, the first one was in May when the SVSE withdrew its appeal to the S-EIR certification by the planning commission when they got what they wanted: being able to use the RDA’s eminent domain to purchase the block (houses, businesses) just North of the Pavilion to built a parking structure. You wrote about this then (http://newballpark.org/2010/06/02/sharks-and-city-strike-deal/).
    .
    These deals both reek !
    .
    Now that one more party has been paid off, the question is: is there any money left ? Who will pay for all the mitigations / infrastructure needed to protect the surrounding areas from all the impacts (significant and unavoidable) of a baseball stadium ? The City and RDA are broke, so us neighbors can only hope that the land use agreement will be strong enough to have the A’s pay for these — they are the polluters, they should pay ! This is one of Reed’s negotiating principles, we can only hope he will be more principled than he showed at Tuesday night wiffle ball game.

  24. help me out here—now eminent domain is wrong–this is a site across from the arena that is pretty darn distressed—ed was also used to gain the property for the arena—and what was wrong with that?

  25. @GoA’s – You can like the results. But you don’t have to like the way it was done.

  26. but what is wrong with ed? Used appropriately….as it would be in the ballpark and parking garage for the Sharks and was for the arena is an appropriate tool to spur development—I don’t see the connection between what will happen for the Sharks garage and ATT that your railing against–

  27. @GoA’s – Eminent domain was initial used to build roads, things meant for the greater public good. Since most of the public stuff has been built, now we’re down to public uses of ED that largely if not completely benefit private parties. The ED process for the Arena was particularly divisive due to who was displaced. We’re just going to have to agree to disagree on this.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s