Oliverio for Supervisor 2018

Independent - Transparent - Fiscally Responsible

Tax Base Erosion Night

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It is that time of year again, with lobbyists circling City Hall in preparation for the General Plan hearings.

With the leadership of Mayor Reed, modifications to our General Plan (GP) have been reduced to once a year, for the most part. At the GP hearings, applicants make their case as to why current land-use designations should be changed to allow for the applicant to build what they want, regardless of how the land is currently zoned.

These “conversion” requests are typically for land that is industrial/commercial to housing.  Or it could be extending the urban growth boundary to allow for more suburban sprawl. By the way, San Jose currently has over 21,000 units of housing approved and entitled on land zoned residential that has not started construction.

With more conversions of our industrial, commercial and retail land, we are pecking away the tax base a little at a time, which narrows our future options down the road.

Either you view San Jose as a dead city with little chance of economic growth (so go ahead and convert each proposal put before you because it doesn’t matter), or you have the view that there is future potential for San Jose to bring more small business and large business. I feel San Jose has not reached it’s potential but will be severely handicapped if we allow death by a thousand cuts when it comes to land use. San Jose will be fighting for a smaller piece of the economic pie in the United States as globalization continues and our national debt reels out of control. San Jose should control it’s destiny by standing firm in not changing land-use designations to housing.

At the budget hearings on Nov. 18, I shared that I would have a very difficult time asking employees for wage concessions if the Council cannot hold the line on the conversion of employment land. Seems only fair: If you are going to ask someone for money to pay your utility bill, don’t leave the furnace on all day when you’re at work. The Council has had to tell residents and employees “no” this fiscal year because of past decisions. I cannot and will not jeopardize more city jobs that provide services with conversions that hurt our future tax base.

In one of my first votes on the City Council, I voted to rezone industrial land to housing. I later wrote about my regrets regarding this vote.

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. I wrote about this property the last time it came to Council.

Exceptions to our General Plan (tax base erosion) will be heard Tuesday, Dec. 7, not before 7:15pm. I would be impressed if more than one person, whether it be city employees or San Jose residents, would speak at the Council meeting and simply say, “hold the line—please do not convert our future tax base.”

Congratulations to the Willow Glen Rams winning the CCS Division 2 Football championship over Sequoia of Redwood City. An incredible season that rallied the school and neighborhood. The star quarterback is the son of my classmate and friend from Willow Glen High. Sadly, my friend passed away from cancer several years ago however his son is the spitting image of his father, which makes it a very special victory.

A Bartender’s Vantage Point

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The Public Safety, Finance And Strategic Support Committee took up the topic of unnecessary force in conjunction with drunk-in-public arrests. The police department along with the city auditor, city manager and Independent Police Auditor spent approximately 500 hours going through paper to pull out data. Inherently, a paper system is cumbersome and takes time to extrapolate data. Although we have a records management system, it is antiquated and unable to make queries that a modern system would, and it was not set up to manage certain historic data.

This issue is indicative of our city’s lack of investment in information technology.

There are many times that we ask for specific data sliced in a certain way and/or queried a particular way, yet the deliverable borders on impossible or extremely difficult. Then, if we are to get the data, the lag time is so long, it is sometimes obsolete. There is a legitimate need for upgrading information technology in our City—but there are few dollars. Staff put in a great effort but should spend their time on more pertinent public safety matters.

I never came out and accused the police of racial profiling or excessive force. Rather I walked our Downtown late at night and saw that club patrons did not mirror the San Jose population as a whole. Or put another way, the night time crowd did not match the Turkey Trot crowd. So if drunk-in-public arrests downtown did not exactly mirror the population of San Jose that made sense to me.

I was a bartender for more than ten years, as it was my second job on top of my day job.  I can say, with good authority, that when people drink excessively they have poor judgement. They may get silly, argumentative and sadly belligerent to anyone around them. It did not make a difference if the person was blue collar or white collar; I would see people transform over the evening and sometimes in a negative way. Several times at the end of the night I would see that problematic individual arrested for doing something dumb, in Downtown San Jose and Los Gatos. For the record, a majority of the belligerents in Los Gatos were Caucasian, which coincidentally mirrors the Los Gatos bar scene.

Also, if you are a police officer assigned to an entertainment district, you encounter different situations than you would in a neighborhood. Therefore, you make arrests that are different from other officers. If one officer has the Almaden Valley neighborhood during the day and another has the Downtown at night, it is completely different. So calling out certain officers that have too many arrests of a certain category or arresting a certain type of person does not make sense.  We have to take into consideration all other factors including demographics.

Most police officers I have met are polite, but when faced with a belligerent, intoxicated person, police need to manage the situation according to their training. Basic Rule: If you want to be treated with respect, show respect.

Good luck to the Willow Glen Rams varsity football team as they face the Sequoia High Ravens of Redwood City for the Division 2 CCS final championship game. Game time is 3pm Saturday at San Jose City College. Go Rams!

Budget Planning for 2011-2012

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Last Thursday, the council had a study session for San Jose’s 2010-2011 budget. The public meeting received little media attention. Perhaps, since the holidays are near, we only want to hear the good news…and next years budget is far from good. There is no dispute on the data—just the direction we shall choose to balance the budget.
Here is a link to the 88 page presentation given to Council by the budget office. (Click on “2011-12 Organizational & Budget Planning” to view the presentation.)

The Council was challenged by the grim financial data and gave direction to continue with the 10 percent total compensation cuts that was requested last year. This is not an additional 10 percent but rather a request to keep the current 10 percent concession that was already agreed to by some of the labor unions. The 10 percent concession that several of the unions agreed to last year were “one time only,” meaning only for this fiscal year (2010-2011) and not ongoing. The three largest unions did not accept the 10 percent reduction last year and one actually got a raise.

If the Council chose not to ask for 10 percent pay cuts and spare public safety we would layoff two of every five non-sworn positions. So two out of five librarians, attorneys, IT staff, finance, auditors, code enforcement, planning department, public works, department of transportation, economic development, community center staff, etc….This would result in 81 percent of the budget allocated to public safety. If however 10 percent total compensation cuts were achieved then 72 percent of the budget would be allocated to public safety. (Slide 32)

Outsourcing is back on the table as a way to reduce costs and keep other city departments from having more layoffs. Last year we outsourced janitorial services which resulted in a $4 million savings and the facilities are just as clean.

I made several statements from the dais that included:
• not converting employment land to housing
• eliminating discretionary funding of charities with Healthy Neighborhood Venture Funds
• not raising fees so we become uncompetitive with our neighboring cities,
• keep the jobs/revenue team in place for companies locating to San Jose,
• Council should be limited to how many memos (flavor of the day) for new policies they can submit in a year
• rank current staff workload on what is most important (selling Hayes mansion and getting out of golf business)
• allow for union negotiations to be done in public
• instead of closing fire stations or laying off police officers reduce staffing at the slower fire stations to the same staffing levels as our neighboring cities
• finalize a new retirement system for new employees
• new facilities not be opened with full staffing
• outsourcing park maintenance or look at outsourcing by attrition where we hire private contractors as people retire
• look at new revenues once Council makes the hard decisions
• over time look at taxes that have positive environmental results and not only focused on property owners like parcel taxes instead look at solid waste dumping fee and the utility tax (water, electricity & gas)

We are suffering from severe financial duress; however, we do have options, as I have shared above. Perseverance and goodwill are not dependent on budget numbers, therefore “this too shall pass.”

Libraries Provide More Bang for the Buck

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As city revenues have continued to decline, more money has been allocated to public safety both in real dollars and as a percentage of the general fund budget. Sixty percent of our general fund is allocated to public safety versus 40 percent 20 years ago. That 60 percent includes public safety pension costs and consumes our top four revenue sources combined: property tax, sales tax, utility tax and phone tax revenues.

In real dollars, San Jose spends $115 million more on public safety then we did 10 years ago, yet we have less personnel—while our population has grown from 950,000 to one million. One could contrast this at the federal level where our military budget (public safety) is dwarfed by entitlement programs like Social Security, Medicare, Medicaid and the interest on the national debt.  As this spending allocation has transpired in San Jose it is a struggle to pay for other services in our City Charter, such as libraries.

San Jose libraries have been delivering more with less for years. They have been doing so by restructuring how they deliver their services. If the libraries had not changed then residents would have fewer library services today. Our library system has used technology to become more efficient. Ninety five percent of library users use self-checkout. This has been a huge savings on the number of people needed to run a library, plus it has created a more efficient use of the library consumer’s time. I remember having to wait in massive lines at the library back in the day when checking out.

Several libraries have automated book sorting equipment where your item is scanned, sorted and transported down a conveyor belt so items get back on the shelf faster and with fewer people.  The libraries have implemented technology to augment their service to residents. The same way I believe photo radar or red light running cameras could augment pedestrian safety by issuing tickets 24/7.

Back in 1995 our library system loaned out 4,816,242 items with 288 full-time staff. In fiscal year 2009-2010 our library loaned out nearly 15 million items with 365 full-time staff. Triple the usage—plus new branch libraries—but we did not triple the employees. Was this the equivalent goal of outsourcing by using technology?

We see the value in libraries not only from testimonials at council meetings but also by the numbers. Last year 14,919,873 items were borrowed from the library and 7,642,747 visitors walked into our libraries (not unique visitors and not all San Jose residents). Six of our libraries loaned more than one million items during the year. Berryessa, Evergreen and Tully loaned out over 100,000 items a month. The most visited library in 2009-2010 fiscal year is Tully with 530,320 visitors and the least visited library was Almaden with 107,878 visitors.

The library is looking to stay ahead of obsolescence by offering technology like free WiFi at all branches, text-a-librarian service, eBooks with over 109,000 downloads, online magazine and newspaper subscriptions as well as subscriptions to 60 different research resources.  Ninety eight percent of new library card registrations and 62 percent of overdue fine payments are done online.

The Partners in Reading program, which provides literacy classes to adults, has been a catalyst for volunteers. More than 25,498 hours were contributed by volunteers which equates to $593,000 in cost avoidance. Fifty eight percent of this program is funded by the general fund with the remaining coming from grants.

The Library Parcel Tax was first approved in 1994 and renewed by over two-thirds of voters in 2004. That tax provided $7.2 million to the libraries this year which funded 47 percent of the materials budget and 41 full time library staff. The Library Parcel Tax is $27.80 for a single family home and displayed on your property tax bill. This parcel tax will expire in 2014 and would likely go back to the voters for their consideration in either June 2012 or November 2012.

Should San Jose voters going forward select any new taxes go to specific city departments? We have set up rules at the state level, for example, with Prop 98 and education funding.  Measure R in Palo Alto for example would have required a citywide election if a fire station was to be closed or a reduction in fire staffing but it was rejected, with 75 percent voting no.

The deficit going into next year is approximately $70 million. This means anything cut last year is not being restored and more cuts will have to be made.  Residents will lose services unless we deliver services differently asap. The Council will meet all day on Nov. 18 to discuss the deficit in public session.

Decisions on Housing Types Affect Future Tax Revenue

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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.

Annexing County Pockets

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During the past few years, the City of San Jose has annexed 42 county pockets. These annexations came about in two ways. First, the State of California changed the law that made county pockets that are under 150 acres unable to vote on whether not they wanted to be annexed. Second, the County of Santa Clara had wanted San Jose to annex county pockets for years. San Jose avoided the topic until there was a court settlement with the County where the City agreed to annex a portfolio of county pockets from west to east based on the “sphere of influence”—lines that have been drawn for decades that indicate which cities county pockets would be annexed into.

By default, county pockets are different depending on their location and needs. Some county pockets have a high crime rate and gang activity while other pockets have an extremely low crime rate and no gang activity. Some county pockets do not have storm sewers, streetlights or sidewalks while others do have such infrastructure. The more affluent county pockets have higher real estate values and therefore bring in more property tax revenue to cover services while less affluent county pockets have lower property values and thus lower property tax revenues.

Last week, the city voted to annex the last under-150-acre county pocket in District 9 that is surrounded by San Jose on three sides, a combination of commercial and residential which is just down the street from the Camden Community Center. The commercial properties are along Camden Avenue and Bascom Avenue while the residential is tucked away in a neighborhood of single family homes in the $800K range.  The majority of residents of this particular county pocket wanted to be annexed by Campbell instead of San Jose. They spoke at the council meeting to how they identified with Campbell and not San Jose since they liked a small-town feel and Downtown Campbell was closer then Downtown San Jose.

There was also a concern about response time for fire, so after further study it was concluded that County Fire, based on geographic location, would continue to better serve the residents. Therefore the current fee for the fire district on the homeowner’s property tax bill would continue to go to county fire so the service would not change.  Due to the higher property value of the homes and the commercial land this annexation resulted in positive revenue for The City of over $230,000 per year. While prior annexations will cost the city money due to less revenues from property tax this one was positive. So going against all the speakers at the meeting the council voted to annex the pocket.

On a personal note, it was tough a tough vote for me since my childhood friend was the neighborhood association president for this county pocket and did not want San Jose annexation. It’s important for me to separate what is best for the city as a whole. If at any time I was told I could pick and choose which county pockets to annex, then I may have voted no on the pockets that were going to cost our city money.

I think if we were doing it all over again it would have been wise to annex the higher property value pockets first so we could bring in the revenue to pay for city services. Sometime in the future, and it is not known when, the City may annex the very large county pockets such as Burbank in District 6, Cambrian Plaza in District 9, two in District 7 and the massive county pockets in District 5 which would make up about a third of the entire district.

Here is the presentation on annexation that was given to the city council by the planning department.