San Jose Diridon Development Authority

The what?

That’s the name of the soon-to-be-formed joint powers authority. Joint powers are defined as the City of San Jose and the San Jose Redevelopment Agency. Despite the distinct possibility that the SJRA will be no more in a few months, the creation of this organization will effectively ensure that some kind of redevelopment arm will continue on for the next several decades. Here’s the full text of the resolution under consideration this Tuesday at the weekly SJRA meeting (1:30 PM, SJ City Hall Council Chambers):

RESOLUTION NO. ____

A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN JOSE AUTHORIZING THE CITY MANAGER TO EXECUTE A JOINT POWERS AGREEMENT FOR THE SAN JOSE DIRIDON DEVELOPMENT AUTHORITY

WHEREAS, the City of San Jose and the City of San Jose Redevelopment Agency have many potential development and redevelopment projects on the horizon in the Diridon area including high speed rail, BART, and a potential sports stadium; and

WHEREAS, the Agency wishes to have the benefit of the City’s expertise and the ability to use the joint powers of the City and the Agency for the purposes of considering and facilitating future redevelopment in the Diridon area; and

WHEREAS, the City and the Agency desire to create an independent joint powers authority empowered to finance, develop, redevelop, implement, and operate future projects in or serving the Diridon area; and

WHEREAS, the City desires to enter into a joint powers agreement with the Agency to form the San Jose Diridon Development Authority (the “Authority”); and

WHEREAS, there are no specific projects proposed for the Authority at this time and any future projects will be considered by the Authority Board in a manner consistent with applicable law; and

WHEREAS, pursuant to San Jose Municipal Code Section 4.32.010, in order to enter into a joint powers agreement creating a joint powers authority with the power to issue revenue bonds, the City Council must find that the public interests and necessity demand that (a) the Authority acquire, construct, maintain, and operate the properties and the projects undertaken into pursuant to the Authority joint powers agreement, and (b) the Authority be empowered to exercise the power to issue revenue bonds; and

WHEREAS, those findings can be made based on the information in the memorandum dated March 4, 2011 from the City Manager and the Executive Director.

NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF SAN JOSE THAT:

  1. The City Council hereby determines, based upon the information contained in the memorandum from the City Manager and Agency’s Executive Director dated March 4, 2011, that the public interests and necessity demand that:
    1. The San Jose Diridon Development Authority be empowered to acquire, construct, maintain, and operate properties and the projects undertaken into pursuant to the San Jose Diridon Development Authority joint powers agreement; and
    2. The San Jose Diridon Development Authority be empowered to exercise the power to issue revenue bonds.
  2. The City Manager is hereby authorized to execute the San Jose Diridon Development Authority joint powers agreement.

The Diridon area is not itself a specific redevelopment area, but it falls under the guise of redevelopment as part of San Jose’s Strong Neighborhoods Initiative. Approval of this resolution and other related actions would create a “son of RDA” just for Diridon. The new agency would be tasked with planning and infrastructure for a ballpark (or alternative), transit hub, and a whatever ends up in the six acres between the arena and ballpark site. Included would be properties in the Autumn Parkway project.

Creation of SJDDA does not mean the City has somehow sidestepped the public referendum requirement for a ballpark, as that is enshrined in municipal code. It does mean that the new body would have potentially broad and sweeping authority to raise funds for projects within the area. At this point my guess is that fundraising would be limited to transit infrastructure, as the cost to construct San Jose’s “Grand Central of the West” will be enormous – well into nine figures on its own. Attempts to include the ballpark would be unpopular and highly transparent, creating a situation in which one project could drag another down. This is especially critical as it applies to raising bonds, as bond issuers have been very skittish about dealing with California’s cities in light of the near and long-term prospects for RDAs.

One of SJRA’s related actions is a one-year extension of the time limits for both redevelopment activity and indebtedness for all existing project areas. Diridon has the latest dates on the schedule, with a current activity end date of July 2033 and a debt end date of July 2048. BART and HSR should be in place by 2034, right? Er… By extending the dates for project areas, the relinquishment of tax increment to state/county would be further delayed. SJRA is by far the most indebted in the state.

I mentioned last week that I wasn’t thrilled about the possibility of this happening, notably because it replaces one bureaucracy with another. This is clearly a reaction to what’s coming from Sacramento, and cities feel they are being backed into corners by the Governor’s demands. It’ll be interesting to see how the Governor’s office reacts to these types of arrangements, and to find out what new funds will be recognized by the state after these “sons of RDAs” squirrel away their share. Whether a ballpark or something else gets built at Diridon, that new development will be extremely important as its tax increment (or possessory interest taxes) will help fund the future transit hub.

10 thoughts on “San Jose Diridon Development Authority

  1. do you think this “son of RDA” have access to the TIF already in place for the area (although I do not believe that it has yet been bonded against) ? Or is that TIF going to disappear together with the RDA ?
    .
    on related news: on Monday night is the first meeting of the Citizen Working Group to look at the visual design of the aerial alignment of high speed rail as it passes along the Diridon Station area.
    http://www.cahighspeedrail.ca.gov/WorkArea/DownloadAsset.aspx?id=9732

  2. @erw – I’ve been thinking about that a bit. I don’t think that they wouldn’t grant these borrowing powers if they didn’t expect to have the same TIF access.

    As for the Working Group, I’d like to be there but I can’t make it. Next time.

  3. @ML- still a bit perplexed by Brown’s rda proposals- from what I understand is that he will pass to the cities the obligation to fund certain social Programs with the understanding that they can use property tax dollars that might be currently going into rda coffers to pay for these social Programs. If this is correct than how would a city like sj, who has maximized their borrowing power under their rda be expected to pay for these types of social Programs– what am I missing in his plan?

  4. @GoA’s – Not so much social programs, rather smaller projects that would be geared towards how redevelopment was originally supposed to be focused: affordable housing, blight abatement. Other projects may require an assessment and a 55% voter approval.

  5. I like this! Further proof to MLB that the infrastructure outside the ballpark footprint will be well taken care of.
    RM, what’s a “possessory interest tax” and how would that differ from TIF? Also, could funds be issued for future arena improvements WITHOUT voter approval?

  6. Saw on KTVU this morning that the Oakland Coliseum is the #1 reason for Brown’s attack on redevelopment, stating that the city/county pays $25M (I think they said) a year for a stadium that owners have criticized as being no longer suitable. I guess that’s not really news, just weird to hear it stated so explicitly.

    • Brown’s comments are also found in a Matier and Ross blurb today. The columnists rightly point out that the Coli wasn’t funded by redevelopment, but by Oakland’s and Alameda County’s respective general funds.

      Possessory interest tax is levied to those who lease a public facility long-term, like the Sharks or the company that operates the convention center. Since those operators can’t pay property tax on something they don’t own they get charged PIT instead. It’s said to be slightly lower than actual property tax, I’m not sure how much.

  7. This is a little off-topic, but couldn’t San Jose sue Major League Baseball ± the Giants on the basis that non-compete agreements are invalid in the state of California?

    It seems like a waste of everybody’s time to form an agency if one of the agency’s primary targeted roles is in such legal limbo.

  8. @Pudgie – Hard to compare how non-compete agreements work on the micro/nano-scale with baseball’s antitrust exemption. Apples and oranges.

  9. Seems that the vagueness of the language with regard to land will make possible the SJDDA control of current RDA properties outside of the immediate ballpark area.

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