Category Archives: San Jose

03.09.11
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San Jose’s Two Front War

If you follow this blog’s Twitter feed, you’d have seen this on Tuesday afternoon:

SJRA: Item 8.1 – Creation of San Jose Diridon Development Authority – approved unanimously. Objection by Santa Clara County.

The approval took all of a few minutes and had no speakers for or against. Compared to what was discussed during the rest of the session, it was highly anti-climactic. I left Council Chambers wanting more. After the swearing in of the SJDDA board (mayor + city council), there was a brief stretch used to establish a few ground rules, then an adjournment and a return to regular city agenda items. I didn’t realize what that last bit meant until I got home, when I saw an article in the Merc describing Santa Clara County’s $62.9 million lawsuit against San Jose.

To settle prior lawsuits over redevelopment tax grabs, the agency since 2001 has paid the county a portion of the tax dollars it collects, but agency chief Harry Mavrogenes stopped those payments as the economy soured.

By July 1, the agency will owe the county $62.9 million to fund such essential services as mental health, drug rehabilitation and juvenile justice.

San Jose city officials said they weren’t surprised by the suit.

“They need to protect their interests against whatever the state is going to do, so I understand their action,” Mayor Chuck Reed said Tuesday night. “But we also have to protect our interests as the state takes action.”

Reed said the lawsuit would not stop negotiations with the county, which have been going on for more than a year.

By acting to preempt a raid by the state, San Jose raised the ire of the county. The city and county have often clashed over funding and development priorities. I guess I’m surprised the peace lasted this long. Now we wait for the other shoe to drop in Sacramento, if it happens at all.

03.08.11
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New Census data out, Bay Area growth slows

The Census Bureau has been releasing its updated state-by-state figures on a piecemeal basis. Today it was California’s turn to learn the good/bad news. Articles in The Bay Citizen and Contra Costa Times both present a similar picture of slower growth and significant demographic changes. The big three cities look like this:

  1. San Jose – pop. 945,942, up 5.7%
  2. San Francisco – pop. 805,235, up 3.7%
  3. Oakland – pop. 390,724, down 2.2%

San Jose boosters don’t get to claim the million mark for now. Maybe in 2012. It also became more Asian and less White (you’re welcome?). SF and Oakland both became more White, but the biggest surprise is Oakland’s drop in population, coupled with an exodus of part of the Black population to Contra Costa County (likely related).

What does this all mean besides the cyclical apportionment and redistricting battles? Probably not much, but I’m sure the commenters will figure out a way to make a mountain out of it.

More to come as I read further.

03.07.11
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Traffic nightmare? Wrong last time…

The Merc’s authority on all things local transportation, Gary “Mr. Roadshow” Richards, fielded a question about redoing streets in the Diridon area and a ballpark’s effect on traffic.

Q Maybe it’s a little early to ask this, but how does San Jose figure on making up for the loss of Montgomery Street if an A’s ballpark is built next to the Diridon train station? A two-way Autumn Street? Reversible lanes? Seems that when events let out at HP Pavilion, it would be a nightmare to get to Interstate 280.
Craig Tomasello
San Jose

A The plan is to close Montgomery and convert Autumn Street from a three-lane, one-way road to a two-way street with two lanes in each direction. This would be a key connection to and from HP Pavilion to I-280. Traffic signals on Autumn would be managed to accommodate traffic exiting HP Pavilion. I would not worry too much about this. When the Sharks began playing downtown, naysayers said traffic would be a mess. It hasn’t been as the city has proved it can move people in and out efficiently. Baseball games would attract larger crowds, but light rail, BART, Caltrain and Amtrak would all be within an easy walk of home plate.

We may run into scale involving capacity at Diridon. The are plenty of intersections that don’t rate well. Still, traffic going through the area isn’t anywhere near the catastrophic gridlock predicted before the arena was built (hint: Julian Street is almost always clear). With vigorous enforcement of a revised TPMP, a ballpark and arena combo shouldn’t be gridlock either. A little worse, yes, but not gridlock.

03.07.11
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State Controller’s Redevelopment Audit Released

As promised, State Controller John Chiang’s audit of 18 different redevelopment agencies was released. It paints a picture of obligations not met, bloated salaries, and limited returns. Here’s the summary of findings from the report (PDF):

  • All 18 redevelopment agencies made deposits into the Low and Moderate Income Housing Fund in accordance with statutory requirements.
  • Of the 18 redevelopment agencies, 5 failed to deposit a portion of their tax increments into the Supplemental Educational Revenue Augmentation Fund (SERAF). Collectively, the amount was $33.6 million. On a statewide basis, we identified another three redevelopment agencies that collectively failed to deposit a total of $7.1 million into the SERAF. As a result, the state General Fund had to make more than $40 million in backfill payments to meet minimum funding levels for the schools for FY 2009-10.
  • Ineligible charges were made against the Low and Moderate Income Housing Fund. These charges were identified through review of a limited number of transactions.
  • Questionable charges were made to the RDAs. Again, these charges were identified through a review of a limited number of transactions.
  • All of the 18 redevelopment agencies reviewed had reporting deficiencies.
  • All of the 18 redevelopment agencies’ independent auditors failed to identify major audit violations and did not include all required information in the audit reports.
  • The City of Calexico has failed to repay the RDA for principal and interest for a loan. Under current legal standards, virtually any condition could be construed to be blight.

Specific observations include:

  • The redevelopment agencies do not have a consistent methodology to capture accurate and reliable data regarding the number of jobs created or retained as a result of redevelopment activities.
  • Significant variation exists among the redevelopment agencies for how indebtedness is determined.
  • Significant differences exist among redevelopment agencies for accounting for planning and general administrative costs.
  • Compensation of redevelopment agency officials appears to be in line with other local government officials.

Regarding the last charge, San Jose’s RDA appears to be an exception in that its top five highest paid employees earned more than $180k last year, the head making nearly $300k. 25% of salaries for Mayor Chuck Reed, the City Council, and 40 of their staff members are under the SJRA budget. In Fremont, the City Attorney and City Manager are on RDA payroll. Richmond’s agency neglected to pass through over $10 million in education-bound revenue. And then there’s Palm Desert, which will go down in ignominy by somehow declaring one of the best public golf courses in the state, Desert Willow Golf Resort, “blighted.” The report’s finding:

The fact that the RDA continues to insist that a 4 1⁄2 star golf course to be blighted further illustrates our point that virtually any condition could be construed to be blighted. Moreover, the renovation of all 18 greens, reshaping of greenside bunkers and fairway bunkers, new bunker drainage improvements, bunker liners, new sand, and restoration of all lake edges to maintain the publicly owned golf course is in violation of Health and Safety Code section 33445(a)(3) which prohibits RDAs from paying normal maintenance or other improvement of publicly owned facilities.

If you’re looking for that one item that the media, especially the national media, will pick up and run with, that’s it.

03.06.11
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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.

03.04.11
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Ray Ratto: Ballpark Feasibility Detective

Several hours ago I listed to the latest installment of Dale Tafoya’s Athletics After Dark podcast, this one featuring Ray Ratto. Ratto thinks that the San Jose stadium plan is near death:

The “Blue Ribbon Committee” is a fraud. The territorial rights argument is a fraud. This is about one thing and one thing only, and it’s always been about this: Do the A’s have the money to put a shovel in the ground? If they had the money to put a shovel in the ground, we would’ve gone to Bud Selig and said, “We’re ready to go now.” And then Bud Selig can either tell the committee to produce a report or he could just go without it and start harvesting votes if they really want this to happen. I think it is incumbent upon the A’s to show that they’re ready to go right now and the fact that they keep saying, “well we haven’t seen the blue ribbon report…” You know what? That’s due diligence and you’re supposed to do that. If you’ve got that stuff down you’re already working at that.

…In the current economic climate, where you really need help from cities and states to get buildings done if you don’t want to go into your own personal debt. I think that the idea of a San Jose stadium is really fading. It may be dead at this point. It’s taken too long for the A’s to get what ducks they have in a row, in a row. So I think the problem here is the A’s needed more help than they let on and now they’re stuck.

The bedeviling thing about how MLB works is this black hole of information around Selig. We know a lot about what San Jose is doing, we know a decent amount about what Oakland is doing. We have Wolff and his media campaign, we have responses from Neukom and Baer. The only thing we don’t have is the really important stuff. We don’t know what Selig’s, and by extension the other owners’, motivation is. To fill that void, Ratto theorizes that money is the problem. Which it may be, none of us have a financing plan in front of us.

But unlike the territorial rights issue or the progress of environmental impact reports, there is absolutely zero data or precedent to back up Ratto’s supposition. He is quite literally going on a hunch, making the analytical leap that it must be the money and everything else is a sham.

That makes little sense when you consider the following:

  • The Giants have been spending millions on preserving T-rights to the South Bay over the last two years. They bought a majority share of the SJ Giants. They’ve been redoubling marketing efforts in the South Bay. Their stance on T-rights has gotten more hardline with the passing of time. They’ve threatened legal action – not directly, through intermediaries. No organization goes to this much trouble if they don’t believe that something major is at stake.
  • They don’t call Selig “Slug” for nothing. The man is interminably slow when it comes to big decisions and is more than willing to say the sky is green when it is obviously blue (his remarks about competitive balance are a good example). This one’s a very big one since it involves something the big market owners consider sacred. I’ve said before that Selig isn’t going to act until at least one of these cities has all of their ducks in a row. That means the site, legal/political clearances, everything. San Jose isn’t there yet. Oakland isn’t there yet. And the Grim Reaper is coming fast for cities. Plus there’s the possibility that upcoming CBA negotiations will come into play, especially because the biggest debate will be about revenue sharing. If you’re Selig, why would you lift a finger until this other stuff shakes out? I wouldn’t. I guess you can call me “Slug” too.
  • The money is a lot more “there” than “not there.” Wolff hasn’t been afraid to say when money is an issue – look at what’s been happening with the Quakes. He also hasn’t been afraid to bail on a project when it couldn’t work out financially, as was the case in Fremont and Oakland. Is it all locked in and under contract? Probably not. The timing of the hiring of Darrin Gross to the business side of the A’s may be a clue. Wolff hired David Kaval under the same auspices with the Quakes last year, and now we’re a few months away from groundbreaking. And let’s not forget that Cisco and SVLG are nothing to sneeze at.
  • This stuff takes a long time to pan out. Peter Magowan took over the Giants in spring 1993. It took four years to get a ballpark deal in place and another three to build it. Magowan never had to worry about complications like T-rights. San Jose has been handicapped by the T-rights debate, which has strung the effort out to five years to get to this point (though there were two silent years). Ratto makes it sound like either Selig or Wolff can just forcefully say, “Make it so,” and things start happening, chop-chop. That’s not reflective of how this works. It’s an ugly, dirty process, borderline corrupt (if not outright) at times.

This post is yet another case of devoting nearly 1,000 words to something that was not news, merely a theory from a columnist. Who knows, maybe Ratto will be proven right in the end? If not, I suspect that when a groundbreaking ceremony occurs at Diridon this very interview will be played over the loudspeakers, an audio version of the “Dewey beats Truman” moment. Tech writer John Gruber calls it claim chowder. I’ll just call it a hunch.

03.03.11
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News for 3/3/11: Quakes site demolition + Redevelopment

A couple of A’s business-related items from the Silicon Valley Business Journal:

  • Neil Kraetsch was named the team’s general counsel. He had previously been assistant general counsel. His predecessor left to take a similar position with the Tampa Bay Buccaneers.
  • Darrin Gross, who spent more than a decade with the Sacramento River Cats, was hired by the A’s to become the Senior Director of Corporate Partnerships.

Today’s a pretty big day for Quakes fans, as a ceremony for the demolition of the remaining FMC plant will happen at noon. The entire demolition process should take 12 weeks, including cleanup, and should be followed by groundbreaking shortly thereafter.

Articles in the Oakland Tribune and the San Francisco Business Times go over Oakland’s challenges in saving redevelopment.

The Merc’s Tracy Seipel reports that as the Cinequest Film Festival begins in San Jose, the City’s redevelopment agency must decide if it should subsidize over $800k in rent for operator Camera Cinemas on the Camera 12 multiplex, which is owned by Forest City. Absent that freeze, the multiplex would probably shut down and remain vacant for years, just as it did when UA vanished over a decade ago. The Camera 12 is the flagship venue for Cinequest and it would be a shame for downtown if the Camera 12 closed.

An almost hidden item in the article above is San Jose’s interest in creating a joint powers authority that would hold the Diridon ballpark land in case Sacramento wanted to seize or liquidate it. That’s different from the successor agencies that other cities have been creating, and I’m curious as to why they’d move in this direction. I’d also like to know what the joint powers would be (two or more public agencies) and what its “powers” would entail. Frankly, I don’t like where this is headed. Next Tuesday’s City Council meeting should explain this further.

03.02.11
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Requiem for a Finley (or Peterson complains about Wolff’s complaining)

One of the problems I have with Lew Wolff pleading his case in the media is that it gives the media plenty of fuel for columns – columns that are almost invariably anti-Wolff. Such is the case today, with a Bloomberg article followed up by a rejoinder by Tribune columnist Gary Peterson. None of it moves the conversation forward, and it creates a cloud over a team at a time when all teams should have unfiltered hope on their side. You’ve got pro-Oaklanders and most local columnists on one side and Wolff, Beane, and the national columnists on the other side. And there isn’t much room for convincing either.

Peterson has plenty of good points (the beer size scandal) and some bad ones (the non-existent big development in SJ), but he makes one rhetorical mistake in comparing Wolff to Charlie Finley. In no way is Wolff as cheap, colorful, or rebellious as the maverick Finley. MLB wouldn’t have a Finley in the current era. As much of a mixed bag as Finley was, his honeymoon in Oakland may have ended as early as April 18, 1968. That was the date of the second ever home game for the Athletics in Oakland. After a sellout, 50,000+ crowd on opening night, game two brought in a whopping 5,304, most of those probably season tickets. Out of curiosity, I did a check of every first and second home game ever played in Oakland, and the results are only marginally better, sometimes worse.

Bold/italic figures indicate doubleheaders. Blue years are in Kansas City, Green years are in Oakland. Home games played outside of Oakland were not counted. Data source: Baseball Reference

There’s a story – possibly apocryphal – of how Finley said that he made a mistake in moving the A’s to Oakland when he saw the crowd for that second game (that may be how Selig got the basis for his famous quote). To be fair, BART was under construction. On the other hand, traffic was not nearly as bad on the Nimitz, then also known as Highway 17. Seriously though, 5,304? And less for the second games the next few years? The Haas era bumped things up, but even then the A’s had two years whose second games had four-figure crowds. Increased season ticket sales this year should ensure that a <10,000 crowd won't occur this year. Still, no matter how much Oaklanders and columnists despise Lew Wolff, hate alone won't save the A's. Showing up just might. I know that many of you will be there on Opening Day. What about the following day?

02.25.11
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Emphasis, or beating a dead horse

The Chronicle’s Susan Slusser catches up with Lew Wolff on the stadium situation:

Wolff reiterated that he believes that the Bay Area should be considered like the other two-team markets, none of which have territorial rights assigned.

Wolff said that funding for any stadium approved in San Jose is in place. “We’re prepared to build the stadium,” he said. “We have the funding, the equity, the sources of revenue.”

This is the first I’ve heard or read Wolff confirm this. Obviously he’s not going to divulge details on how this would work, but we’ve made plenty of reasonably good guesses here to paint a picture.

In other news, the Kings have asked for an extension to the March 1 deadline to petition for a franchise move, presumably to Anaheim.

With both of those in mind, here’s a simple poll question.

02.23.11
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News and Interviews for 2/23/11

Carl Guardino’s interview with Lew Wolff and Michael Crowley is now available (MP3). Nothing really new, other than one particular quote from Wolff that I took note of. When asked by a caller about whether it’s San Jose or out of the area to Sacramento or Vegas because Oakland’s not possible, Wolff replied:

I don’t agree with you that the Oakland situation is quite that bad. It’s a fanbase, but the problem is that implementing a privately financed ballpark is difficult.

So what it comes down to, as I’ve been hammering home for the last year or so, is being able to pay for the stadium. Oakland is simply behind the eight ball when it comes to corporate interests and it’s a nonstarter for seat licenses if those ever become necessary. I don’t have specific numbers to back this up, but I suspect that the club seat market is also poor. Even for fairly well-attended A’s and Raiders games, club sections are frequently empty compared to others. If building in Oakland or Fremont was based on an economic model that collapsed (real estate), what is to take its place? It brings to mind comments made by official Yankees blowhard Hank Steinbrenner regarding revenue sharing and markets (via ESPN):

“At some point, if you don’t want to worry about teams in minor markets, don’t put teams in minor markets, or don’t leave teams in minor markets if they’re truly minor,” Steinbrenner said. “Socialism, communism, whatever you want to call it, is never the answer.”

Say what you will about the Yankees, but there’s a reason their ticket prices are so astonishingly high: they’re privately financing $1.1 Billion of the new stadium. Which means that they’re privately financing a stadium, paying luxury tax, and contributing the lion’s share of revenue sharing into the pool. Yet they still can’t fill out a rotation. Hank probably has a nice ulcer over all of that.

Shortly after the market question, the subject matter changed to Wolff’s communications (or lack thereof) with Oakland Mayor Jean Quan. Quan, who was misidentified as the first Asian American mayor of a major US city in Baseball Oakland’s otherwise good interview (Norm Mineta was San Jose’s mayor 40 years ago), has mentioned that she hasn’t spoken to Wolff since his aborted Coliseum North plan, which Wolff himself confirmed. Now, they can both play political points with each of their respective bases by continuing to point this out, or they can actually choose to have a real conversation. Not like anyone’s stopping either of them. And for those of you who say, “so-and-so should act first,” grow up. It doesn’t matter.

Further on in the Quan interview, she suggests that redevelopment is in a much more secure position than portrayed by others who may be signaling alarms (including me), simply due to the legal trouble the state would face in dismantling it. That may be the case, but it isn’t stopping cities and counties which have real, ready-to-go projects from taking the necessary measures to protect their plans. In Oakland’s case, Victory Court isn’t anywhere near ready-to-go, so committing resources to it with so much up in the air is certainly premature. I just have a hard time believing that any city in this era can act on a hair trigger. The process is long and arduous, and if you’ve been reading this blog more than a year you need no further reminders of that.

One thing that puzzles me is that Bud Selig’s committee is working in a silo with Oakland. It is doing the same with San Jose. It is apparently not communicating any of this to Wolff. Why not? Shouldn’t there be some sharing of information to get the best ideas to the forefront? It’s not like we’re dealing with multiple teams competing for the same stadium. It’s the same team regardless of which city is picked. It doesn’t make much sense.

In other news, Santa Clara unanimously approved a resolution to create a stadium authority for the 49ers.

According to BoSox president Larry Lucchino, Fenway Park is expected to stand another 40-50 years. (Well, as long as the climactic scene in some recent movie set in Boston doesn’t happen frequently.)

Over the weekend there was some hubbub about a rough rendering of the Quakes stadium, previously discarded and sent to the City of San Jose for code verification as part of its permits process, showing up on the interwebs. To which I say, Wow. Just wow.

Going back to the Wolff interview for a second, I noticed that the show was sponsored in part by construction firm Webcor Builders. Could they be trying to get in good on the stadium construction tip? They are handling the work at Cal’s Memorial Stadium. Devcon has been involved with the 49ers’ plans and the expansion of Buck Shaw Stadium at SCU.

More on Wolff regarding the A’s future regular season and spring training homes from MLB.com writer Barry M. Bloom.

Also, Ken Rosenthal’s argument against contraction seems familiar.