Did you know the city has a central warehouse that costs over $850,000 a year to operate?  (Yes, we do. We really shouldn’t be surprised; this is the same city that spends over $30 million on three public golf courses.) Back to the warehouse: It stocks items like toilet paper, batteries, landscaping materials and cleaning products. The $850,000 is the annual cost of the seven employees and running the warehouse, and does not include the cost of the actual inventory.

The council discussed the possibility of “exploring the idea” of contracting out the services of the warehouse last week. However, after some discussion, the council decided to defer this item until August/September to allow for additional input from the labor unions.  The city is investigating if it would be cheaper to manage the warehouse via a contracted company under its public-private competition policy from 1997.

The idea is to take advantage of what other large organizations do.  For example, many of them have “just in time” (JIT) delivery of their supply chain needs. In fact, many high-tech companies have vastly more complicated global supply chains then the City of San Jose. These companies have gone “virtual” with their manufacturing and warehousing via third party logistics providers who execute the JIT programs.

One of the benefits is not having carrying costs of the actual inventory.  By using a JIT program we would only pay for the toilet paper once it has been delivered to City Hall, instead of when it is in the warehouse collecting dust.  You should not fret about bathrooms running out of toilet paper as the chosen company will be required to have additional local inventory that is deliverable to the specific city facility within a certain amount of time.

We could redeploy the seven warehouse employees to other jobs at the corporation yard, City Hall, civilian positions in our police department, or the sewage treatment plant, for example.

Union leaders assert that the warehouse and the seven employees are strategic resources for the city in case of an emergency—two good points. However, the city is not going to actually sell the warehouse property and all city employees are asked to help out in case of an emergency, not just these seven.

The residents of San Jose want us to look at areas where the city can be more efficient and save money.  Therefore, I believe we owe it to the taxpayers to explore ways we can do so. I just hope that city staff and the labor unions will have a truly open dialogue on this topic so all issues are vetted fairly before it comes back to council later in the year.

In a prior column, I wrote about taking advantage of the great San Jose weather by having events at City Hall Plaza or at the Circle of Palms. At last week’s city council meeting, there was an item that pertained to sidewalk cafes at night. I support outside settings and made a motion at the meeting proposing to extend hours at sidewalk cafes until 2 a.m. A majority of the council supported the motion.

My background and observations of downtown led me to propose the extension. I graduated from SJSU and lived downtown for ten years. I worked in the restaurant industry as a waiter and bartender for 20 years. I worked nights at restaurants even though I had a full time job during the day after college.

Since being on the council, I have attended many meetings on downtown nightlife chaired by my council colleagues Liccardo and Williams. In addition, I spent many evenings observing downtown on foot—many times with police, and alone at other times, mixing in with the crowds (picture “Where’s Waldo?”).

I believe most of the problems downtown are not caused by patrons, but, rather, people who do not spend money in our establishments and linger around on the streets. They might be kids who should be at home out tagging property, or drug dealers who hang out at fast food restaurants. Every major city has this element, and until we have caning for graffiti or public hanging for drug dealing, it will always be around. Downtown also continues to get negative PR on days like Cinco de Mayo and Fat Tuesday, mostly because of troublemakers from out of town.

I believe sidewalk cafes, with certain restrictions, will work well and enliven the downtown. Having a partitioned area with people just standing around leads to a big fraternity party. However, having tables and chairs that restrict customers to being seated will provide a spacious and relaxed environment. I am sure bar owners would like to allow more people out on the sidewalk area, but that will not be allowed. And if owners do not follow the rules, the police will have justification to remove the privilege of the sidewalk café.

In addition, limiting the number of people outside reduces noise. Requiring food service is also a good rule. I have been to countless sidewalk cafes locally, nationally and internationally where ordering food is mandatory, and then you have the choice of “hanging out” after eating.

The police will still retain the right to close down problem venues. Having a sidewalk café is a privilege and not a right. Give the proprietors a chance. If customers violate the law by passing a drink to someone out on the sidewalk or to a minor, then they should be punished accordingly. Restaurant occupancy does not change with the sidewalk café. I believe police walking the downtown beat will have an easier time observing behavior outside on the sidewalk instead of having to enter an establishment.

This is a small but important change for a city of 989,000. Please look out for and patronize sidewalk cafes this summer.

A month ago I drafted a memo that would expand the city’s ordinance to allow Community Benefit Improvement Districts (CBID). This is not an original idea, nor is it cutting edge. In fact it’s embarrassing that the City of San Jose didn’t jump on this opportunity sooner. Other major players who have implemented CBIDs successfully include, but are not limited to, San Francisco (Japantown), Oakland (Koreatown), Los Angeles (Chinatown) and San Diego (Little Italy). CBIDs are similar to a Property and Business Improvement District (PBID), where landowners vote to assess themselves to pay for services in a geographic area. Downtown San Jose just formed a PBID to provide cleaning services. Recently, the Mercury News published an article about the guys on machines cleaning the sidewalks in the downtown as a result of its newly implemented PBID.

CBIDs provide greater flexibility in the formation and operation of such predefined business and residential districts. They allow commercial and residential property owners to participate, and allow for longer initial terms for assessments so that CBIDs may borrow much like cities borrow on bonds.

In the paradigm of restricted resources, where municipalities (like San Jose) do not have budgets to take care of value added services to business districts, the least San Jose can do is provide options where property owners may organize and take care of their own needs. I am a firm believer that the city needs to provide options that allow property owners to assess themselves so that they can raise funds by “taxing” themselves appropriately in order to provide for themselves.

Many people may not realize this, but Lincoln Avenue, the “main drag” for pedestrians in Willow Glen and one of the city’s famous destination points, does not receive annual funding from the Redevelopment Agency (RDA).  Lincoln Avenue is currently home to the Business Improvement District (BID), where business owners pay a yearly fee to fund for Founders Day, Dancing on the Avenue and other expenses they pay on their own.  However, that may soon change.

Property owners on Lincoln Avenue have been waiting for over three years to implement a CBID, and they are moving forward with forming their CBID as I write this. A CBID can be formed anywhere in city of San Jose, now that the council has approved the new ordinance. With CBIDs, even residential areas may “tax” themselves for funding items like antique lights, landmarks, signage, and tree plantings among others things.

Adopting another option for our small business districts is a good thing and it does not cost the city money. In fact, CBIDs might just save the city money and generate tax revenue. With districts able to raise money to keep their streets clean, market regularly and provide other amenities to their area, more people will come and shop. With people spending money on items (physical objects), a portion of sales tax revenue will go directly to the city’s General Fund.

CBIDs will not fix the structural deficit, but providing property owners another option that has been successful in other major cities across the United States just might be a good thing for San Jose as well.

The council meeting last Tuesday evening lasted until almost midnight. The council discussed and voted on the Mayor’s Budget Message, San Jose Medical Center and Mexican Heritage Plaza. I was happy to see the budget discussed at night so more people were able to attend.

San Jose Medical Center (HCA) has been closed for several years and sits on 10 acres in downtown San Jose. HCA, a nationwide hospital provider, would like to knock down the buildings and sell the land (which they own) for development.  (Incidentally, this was the hospital where I was born and it has served many of our residents). San Jose is not in the hospital business, however; we are in the zoning business. I voted yes to maintain the land for healthcare uses. Land is precious and becoming increasingly rare. Once land is built on, it’s gone forever. As more living units are built downtown, the need for a medical facility will only increase. In addition, public transportation in our downtown enables more people to access healthcare at this site then other places in San Jose.

Mexican Heritage Plaza and the Mexican Heritage Corporation (MHC) have been questionable for years. Their stability and revenue issues have been deteriorating, making the city their main financial provider because private donations have not backed this non-profit. I have attended several theater events at the Plaza and one of the community meetings regarding the future of the Plaza. Many community members and numerous city staff attended the community meeting also.

Although the intentions of the Plaza and MHC are noble, good deeds do not pay rent.  With the city spending millions on various non-profits every fiscal year, I think that San Jose needs to make sure that these non-profits are able to sustain themselves. It is clear to me that the MHC and Mexican Heritage Corp. have many issues. Therefore, I voted no on the proposal put forward that night.

My preference would be to just start over, let MHC go bankrupt, and the city takes over maintenance of the taxpayer-funded Plaza in the interim. I don’t want to sound too simplistic, but I think the possibility of contracting an individual to organize and oversee the Mariachi Festival, and another to run some limited arts programming at the Plaza, would meet the overall needs until a new organization could emerge to fulfill the mission of the Plaza. I hope they can make it work, but it will take more city funding and a lot of city staff time either way. I am not sure it is fair to other non-profits who offer good services to the community and maintain their books

Also, on last week’s blog I was asked how much accrued sick pay the City of San Jose pays out each year to employees. Here is what I found out:

Yearly Totals
2007 $5,521,043.53
2006 $4,608,181.67
2005 $6,900,550.27

Breakdown
2007
$2,284,709.02 Non-Sworn
$2,703,006.37 Police
$533,328.14 Fire

2006
$1,769,950.33 Non-Sworn
$2,290,894.69 Police
$547,336.65 Fire

2005
$2,880,819.10 Non-Sworn
$2,966,035.61 Police
$1,053,695.56 Fire

Sick time should be used for illness and not a large payout at the end of a career. Based on the rolling average above, this money could be have been used to hire additional police officers or other needed personnel to pave roads.

Last week I wrote about exploring furloughs instead of layoffs to balance the budget.  Part of my job is to come up with ideas/solutions to issues/problems. There are lots of departments in a city our size and lots of different opinions. What one department sees as black, another may see as white, and yet another, grey.

When it comes to the question of the December shutdown of City Hall (200 East Santa Clara), the reality is that it is not the same as a private sector shutdown where employees simply do not get paid regardless of accrued vacation hours.

During our shutdown we don’t save much money since 90-95 percent of employees use their vacation hours or personal leave hours. However, we do save indirectly by clearing the vacation hour liability off our books.  Both public and private accounting view vacation hours as a liability since they must be paid when people leave or retire.

In private companies, there tends to be strict limits on the amount of hours that may be accrued—say 160 hours for example. When one reaches this point, there are no more hours that can be saved, so one needs to take time off or misses the ability to accrue. Our city is generous and allows twice the annual amount of vacation hours to be accrued. So depending on the bargaining unit and years of service, a city employee may save between 240-400 hours.  Historically the city has made large monetary payouts when people leave or retire, especially those whose incomes exceed $100,000.

Whether it is a city’s budget director or the CFO at a company, shutdowns that use vacation hours still require an outlay of capital on payroll. If you talk to a human resources department, it is viewed from the benefits side on whether or not one may use vacation hours during a shutdown.

A true furlough, or a single day off per year “without pay” for ALL employees, would save San Jose $3 million. That money would avoid many layoffs and continue to give services to the residents of San Jose.

I still propose that the city meet and confer with unions to explore a true furlough that avoids layoffs. In addition, we should examine the amount of vacation hours that can be accrued.

A blog should be an exchange of ideas—some interesting, some thought provoking and some with another adjective that you can insert.

In the end, the budget leaves tough choices that will be upsetting to both residents and labor.  The goal is to come up with ideas that leave both intact.

The budget will be discussed at City Hall tomorrow, Tuesday March 18, after 7:15pm.

This past Wednesday night I hosted a community budget meeting for my district. Between City Hall and my meeting I stopped at home to pick up my laptop. As I left, I saw my neighbors out in front of their homes. My next door neighbor was tossing a ball with his son. Other neighbors were working on a car, fiddling with sprinklers and carrying groceries into their home.  I thought to myself: no one is going to show up for this meeting.

To my relief, approximately 25 people attended from eight different neighborhoods.  However, with over 1,000 people showing up twice for the “Little Saigon” issue, I was hoping for more than 25 for a budget meeting.

I prepared a budget presentation that included where city funding comes from and how it is allocated.  I presented specific examples like a downtown surface parking lot from which the city received $1,170 each year via property tax—in 1985. The RDA invested in this property and brought in the Fairmont hotel. Today the city/RDA receives $460,000 each year via property tax on the same piece of land plus TOT tax from the hotel rooms. This is an important point since specific examples show the importance RDA has played in San Jose. Other topics included spending choices made on the council, breaking out what percentage of certain taxes go to San Jose, as well ideas discussed at weekend meetings hosted by the labor unions, which I attended.

Attendees of my meeting shared that the city should do a better job maximizing rents and/or liquidating city property, selling the old city hall, and the possibility of implementing 401K’s for new city employees. However, no one wanted service cuts or to raise taxes, but layoffs and shutting down facilities were put forth as possibilities. We know that layoffs would be tough on employees’ families and service cuts would be tough on the residents as well.

An idea that I raised was: why not ask if city employees could take one day off a year without pay?  If every city employee took a day off without pay, we would save $3 million. $15 million would be saved if they took a week without pay. When City Hall shuts down in December for two weeks, everyone gets paid for those days not worked. Perhaps the city should consider meeting and conferring with the unions to see if we could remove just one of those days so the city could save money. I bring this up because it includes ALL employees—management, council, etc., not just a few.

A few people expressed that they are afraid of special interests groups taking over the budget process, including business and labor. Others felt that city council meetings are a challenge since they are often held during the day when they work and that waiting 3-4 hours to speak for 2 minutes is painful. (Knitting and reading a book while waiting to speak were also suggested.) I have asked that the Mayor’s Budget Message on March 18 be heard in the evening so residents have an opportunity to comment.

I hope my neighbors can break away from family and TV for just one night to give feedback to the council on the priorities of San Jose taxpayers.