Oliverio for Supervisor 2018

Independent - Transparent - Fiscally Responsible

All New City Employees Should Be Given Second-Tier Pensions

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The city of San Jose should put a hold on hiring firefighters until the firefighter union accepts a lower cost, second-tier pension plan for new employees. This would achieve cost savings and keep the city on a fiscally responsible path. Doing so would allow us to dedicate more funds to hiring police officers.

My prior work experience before joining the City Council was in the high tech industry, so pensions and their financial obligations were new to me. However, given that the annual property tax revenues collected by the city were not sufficient to cover the annual pension payment, it was obvious that action needed to be taken. Nearly three years ago, I initiated a pension reform ballot measure that allowed the city to establish a lower cost, second-tier pension plan for new employees. Voters passed Measure W with more than 72 percent of the vote. The city was then able to negotiate a second tier pension plan with 10 of the 11 city unions, including the police officer’s union. The firefighter’s union is the one exception.

The firefighter’s union set themselves apart from the other city employee unions, and simply refused to negotiate a two-tier pension plan. In order for the city to sustain itself and provide day-to-day services to residents, a second-tier pension system for newly hired employees, including firefighters, is not only the financially responsible option, but it has become essential.

Every other city employee union has realized that the only way to keep the city viable, and the existing pension system intact, is to accept a second-tier pension plan for new hires. The firefighters have shown their objection to joining fellow city employees through their unwillingness to start arbitration on the issue. The city was forced to request that a judge compel the fire union to arbitration, and, on June 17, the court ordered the fire union to arbitration pursuant to the city charter. Even with the judge’s recent decision, final implementation of any changes could take approximately one year.

Filling any future vacancies with new hires on the first-tier pension plan is not only financially costly, but it is also unfair to the other city employees who have agreed to the two-tier system. Continuing to hire firefighters under the old single-tier system simply increases the unfunded pension liability that has plagued the city for years, and it impedes the city’s ability to meet its critical needs in the future, such as hiring additional police officers. Among all the proposed pension reforms, a second-tier pension plan for new employees has always had the strongest support from the public. The fire union should not be exempted.

I appreciate and respect the work of all San Jose firefighters, but I have found the fire union bosses to be obstructionist in their dealings with city officials. They have historically been unwilling to work towards the necessary solutions that are required, so that San Jose can have both adequate police and fire protection for residents.

How I Allocated District 6’s HP Grant Money

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There was a brief mention in Sunday’s Mercury News about the HP grant funds that are allocated by elected officials in San Jose. I thought that I would take a more in-depth look into the topic by sharing my perspective and providing greater information regarding my allocations.

Each fiscal year, councilmembers are allocated $20,000 that can be utilized to provide grants to cultural, educational or recreational groups. The mayor is allotted $50,000, for a grand total of $250,000 in available funds.  These funds are allocated solely at the discretion of the elected official. As the name implies, HP grant funds became available to city officials as a result of the naming rights arrangement for our arena, which will be known as the SAP Center in the future.

HP funds are separate from the annual $1.3 million that goes to the city’s general fund, which is also attributable to naming rights.

My allocations, listed below, represent my personal priorities and values not only as an elected official, but also as a proud citizen of San Jose.

Public School and Youth Athletics: $52,000
Upon review of my allocations since taking office, I found that my largest allocation by a wide margin was for public schools and youth athletics. I myself attended K-12 public schools in San Jose, and perhaps because of this, I have an affinity for public education and feel that supporting local school organizations is valuable. I have great respect for PTA and youth sports organizations. Volunteers staff them all, they work within timelines towards measurable goals and they spend every dollar judiciously.

Beautification & Revitalization: $13,000
I have also allocated funds to efforts aimed at the further beautification of San Jose. Specifically, I funded the Art Box Project organized by community volunteer Tina Morrill. Her volunteer work brings art to the neighborhoods in the most cost-effective manner I know of, and it has the added benefit of dissuading graffiti. I also allocated funds to Friends of the San Jose Rose Garden. Earlier this year, the Great Rosarians of the World presented the city of San Jose and Friends of the San Jose Rose Garden with an international award for Best Municipal Rose Garden. With this honor, San Jose joins award-winning gardens in New York and England.

Community and Cultural Organizations: $11,000
In my opinion, San Jose is such a desirable place to live due in large part to its diversity, both in terms of the multiculturalism of our city and the vibrancy of our LGBT community. Thus, I have allocated funds to such worthy organizations as the Billy De Frank Center, the African American Heritage House, the Italian American Heritage Foundation and Gay Pride.

Charities: $10,000
These are larger groups like the YWCA, American Cancer Society, Planned Parenthood and Stroke Foundation. In each case, these groups help San Jose residents not only in times of need, but on an ongoing basis as well. They also host local events like Relay for Life, Walk a Mile in Her Shoes and the Stroke Walk.

City Foundations: $8,000
My allocations also went to foundations associated with city services, such as auxiliary organizations that support our police, police chaplain, library, parks, and Happy Hollow Zoo. Allocations in this category provide funds that can be utilized to augment core services by providing financial support above and beyond the city budget.

Performing Arts: $8,000
I enjoy the performing arts and appreciate the added economic stimulus that groups such as City Lights Theater and San Jose Stage Company provide to our downtown. Cultural groups that perform for audiences of all ages deserve our continued support. To this end, I have allocated funds to Children’s Musical Theater, San Jose Jazz, San Jose Young People’s Theater and Shady Shakespeare Theater Company.

Miscellaneous: $11,000
Other allocations I made that do not fit neatly into any of the categories listed above include: Veteran’s Day Parade; Rose, White & Blue Parade; San Jose Day Nursery; Books for Treats; Christmas in the Park; Good Karma Bikes; California Pioneers of Santa Clara County; Pat Tillman Foundation; Turning Wheels for Kids; and Silicon Valley Roller Girls.

These allocations were all made directly on behalf of my office, and reflect my values as a citizen of San Jose. My colleagues on the City Council have given their support to many of the same organizations, as well as others. I cannot speak on behalf of my colleagues nor would I criticize any choice they made. Ultimately, there are many good causes. The funds that are allocated, although small, are helpful to these organizations and their beneficiaries.

SAP Center at San Jose

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When the San Jose Arena first opened in 1993, I remember standing in a long line in order to apply for a job. Several friends who were also keen to work at the impressive new venue accompanied me. We thought it would be great to work in this facility. At the time, with the benefit of 22 years of wisdom, we did not understand the level of risk taken by the city of San Jose, or the massive investment that the Redevelopment Agency (RDA) had made on behalf of the city. Out of our group of five, two of us were hired, including myself. I was so happy to work in this fine facility and make “minimum wage plus tips”  that I didn’t mind getting the haircut that my future supervisor requested.

So how, exactly, did our shiny new arena enter the scene? The now-defunct Redevelopment Agency had purchased the land in the 80s, and in 1988 voters approved the construction of the building that many fans now fondly call “the Shark Tank” for $162 million. Most would agree that the arena has been a huge success for San Jose, giving residents a place to gather for sports and entertainment. It provided a “shot in the arm” to our downtown, and draws people to the region. As a San Jose native, it brings me great pleasure and a strong sense of pride to hear arena visitors conclude that they have an overall positive impression of our city.

The annual cost to SAP for naming rights is $3.35 million, which is to be split evenly between the Sharks and the city of San Jose. This agreement provides the city with $1.675 million annually, and $8.375 million over the five-year term, of which the general fund nets $1.3 million or $6.5 million over the same term. This includes an allotment of $250,000 each year that the City Council and mayor may allocate to charities, school PTAs and other organizations that benefit San Jose residents. An additional $125,000 each year is provided to the council and mayor for constituent outreach, which eliminates the need for year-round fundraising by the elected official. I wrote about this back in 2007.
The transfer of the naming rights from HP to SAP is a positive move. First, SAP is a software company known the world over. San Jose is internationally known as a tech-centric city, and also the home of a well known NHL team. Having a European company hold the naming rights is a good thing, as we are a global city. Although not a household name for some outside of the technology industry, SAP touts local clients such as Adobe, Apple, eBay, HP, Intuit, and Tesla, and many other global clients as well, including EMC, General Motors, Hasbro, Honeywell, Proctor & Gamble and Siemens. With clients like this, we have a secure naming rights client with a multi-billion dollar market cap and global brand recognition.

Alternatively, the city could have accepted bids from other corporations. However, given a choice between Domino’s Pizza Palace or the Doritos Nacho Cheese Arena or others, I think that staying with a technology company is more in keeping with the international image of San Jose. The city did contract with a consulting group familiar with naming rights, and their report—which compared 20 other naming contracts from across country—concluded that $3.35 million is a fair price.

Let’s hope that this win-win outcome results in further victories on the ice for the Sharks, culminating in a Stanley Cup championship some time before high-speed rail comes to San Jose in 2027.

An Open Letter to Netflix

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Dear Netflix,

Congratulations on your company’s success in the marketplace. Your first-to-market strategy, technology and service offerings have made Netflix a well respected global brand.

Netflix has not only created millions of satisfied customers, but your success has also generated substantial wealth for shareholders, employees and their respective families. Netflix has also increased tax revenue to government, whether by capital gains and income taxes from employees to state and federal government, or sales, utility and property tax revenues from business operations to local government.

Companies have choices when it comes to expansion—they may expand locally, or they may take their business out of state. Many would argue that California does not provide a hospitable environment for business. It has earned this reputation due to nonsensical laws like CEQA, which delay and prevent companies from expanding and employing people. The same anti common sense law has even been used to block the construction of bathrooms at parks and the remodeling of an existing library.

CEQA law was used to block Netflix’s first attempt at expansion in Los Gatos, and it could potentially be used again. Unfortunately, time is money. Delay, uncertainty and lingering doubt can really take a toll on even the most optimistic among us. Based on public testimony from Los Gatos Town Council meetings, one could easily conclude that Los Gatos residents simply does not want Netflix to expand in their town. Los Gatos is a great community with many positive attributes, and residents may have a vested interest in ensuring that Los Gatos remains unchanged.

As an alternative, the city of San Jose would be ready to act quickly on the entitlement of the Netflix corporate headquarters. Netflix would be welcomed with open arms, and appreciated for the value you bring to the community. San Jose can also offer additional perks to your workforce that are different from the standard offerings of an office park. For example, Santana Row, located just down the road, would offer a dynamic work environment that does not require your employees to get in car to enjoy all of the amenities just outside of their workplace.

Another site on the 280 corridor is located at Meridian Avenue, next to the Echelon Corporation. This facility would be adjacent to light rail and within walking distance to the Willow Glen business district. If Netflix is open to looking further east, then locating in downtown San Jose may be an even better fit for your company. Since a good portion of Netflix’s business entails mailing or streaming movies, why not locate closer to where performing arts thrive in the form of live theater and musicals, in the same city that is also home to the Cinequest Film Festival?

San Jose would be proud to have Netflix call our city home. San Jose is a good long-term choice for Netflix, as the majority of your workforce is likely to live in San Jose, which can accommodate more residents than a small town. San Jose could also get creative when it comes to sharing tax revenues generated from your new campus. A portion of these funds could be directed to local philanthropic organizations in the name of Netflix.

In conclusion, encouraging businesses to locate in San Jose can either be done quietly under the table or it can be done out in the open. I am personally a fan of negotiating out in the open, with no hidden agenda or secret deals. The simple fact remains: We want your business.

Regards,
Councilmember
Pierluigi Oliverio

West San Carlos: Part 2

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Last month, I wrote about West San Carlos Street as one of the major boulevards in San Jose. West San Carlos is the strategic link between our city’s downtown and the Santana Row/Valley Fair area. A major parcel on West San Carlos is the site of the former Fiesta Lanes bowling alley and retail/auto center. The City Council voted this month to remove the final hurdle in the transformation of this strategic parcel by funding the construction of a housing complex that would be exempt from property tax. The vote was 10-1 in favor of approval, with my vote as the only one against this proposal.

The parcel’s transformation started back in 2002, when the council rezoned it from commercial to residential usage. The composition and nature of the land changed during this process, going from a parcel that was previously comprised of approximately 50,000 square feet of retail/commercial space to one that will eventually become all affordable housing with a token 3,600 square feet of retail. As a result of rezoning, the parcel was transformed from one that could have created more employment opportunities for San Jose residents—and, thus, much-needed revenue for the city—into something quite different. Although eliminating job opportunities may not have been the intention of those who voted in favor of the change, this may very well be the result.

As we move forward with future development in San Jose, I am hopeful we will review similar opportunities with a long-term vision that takes into account that San Jose has already done more than its fair share in providing housing for the region. We should focus more on the creation of greater and more diversified employment opportunities. This is particularly true when dealing with parcels that are large in size and/or strategically located within San Jose. Such opportunities are seldom, and the decisions we make can have far-reaching implications and repercussions that stretch well into the future.

Late Night Noise or Reduce Expenses

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The economic viability of San Jose’ airport (SJC) is in a precarious position. Bond payments are now due for the $1.7 billion dollar airport expansion, and, ultimately, the payment could fall to the general fund if airport revenue cannot cover what is owed. In order to avoid a bailout by tapping into the general fund, it is important to run the airport in the black. There are two ways to do this: either increase revenue or reduce expenses.

The airport has already reduced costs by laying off airport staff. However, more cost-saving measures are needed in order to make SJC more competitive with other regional airports.

Despite this predicament, the City Council has actually increased the cost of doing business at the airport by voting for “feel good” measures like the San Jose living wage policy, passed by the council in 2009. Airport staff and airline personnel both warned the council that this policy would make our airport less competitive. Surprisingly, I was the only councilmember that voted “no.”

This mandate required companies at the airport to pay private sector workers above-market wages. Placing such constraints on private business may win some votes for the politicos, but such actions also end up raising costs for the airlines and the airport itself, which must now oversee this policy. Higher costs for airlines at SJC can reduce flights in and out of the airport and, in turn, reduce airport revenue.

One way to cover the upcoming bond payments would be to increase airport revenue. This has already been done without undermining the curfew by expanding food courts, retail, rental cars and advertising within the airport. Further revenue growth could be achieved with the expansion and development of the airport’s west side. This possibility has been under discussion for years, and the majority of the council voted on April 3, 2012, to accept development bids for this land.

One proposal currently before the council would bring in $3 million a year for the airport: $2.6 million a year for rent, and another $400,000 from selling jet fuel. This development would house corporate jet aircraft, and would also be able to fuel and repair these planes.

However, most of these new airplanes would be exempt from the 11:30pm to 6:30am curfew and able to fly in and out of San Jose airport 24/7. Any potential airport expansion would assuredly increase the total inventory of curfew exempt planes, and thus increase the probability of more disruptive noise at night. In my view, this new revenue would bring with it the unfortunate by-product of greater noise pollution late at night and into the wee hours of the morning. This begs the question: How much is a good night’s sleep worth?

Another way to cover bond payments and ensure that SJC operates in the black would require reducing expenses. On Mar. 8, 2010, the council had a study session to discuss solutions that would both save money and also abide by FAA regulations. Airport staff proposed saving $9 million by outsourcing police and fire services like other airports across the country. However, the council, in my opinion, has not acted on this recommendation due to outside pressure from powerful union interests.

If the ultimate goal is to run a profitable airport, my recommendation would be to go with the concrete, “known” cost savings of $9 million over the $3 million revenue projections derived from expansion. The former requires that we work more efficiently with the fiscal resources that we already have. The latter requires that we blindly trust that the accompanying late night noise consequences will not get too out of hand, and that if they do, we will have an effective and foolproof way of addressing resident’s complaints.

Because of the lack of legal enforceability inherent in such arrangements, I, for one, am skeptical of such deals. No matter what anyone says, no municipal code or contract language can stop curfew exempt planes from flying from 11:30pm to 6:30am.

I voted against the expansion last year and again last week, due to the fact that there are other options to run the airport in the black without disturbing the traditional quiet time of our city’s residents. After all, why disrupt the sleep of thousands of residents when we can provide the same or greater cost savings from simply managing staffing differently?