Oliverio for Supervisor 2018

Independent - Transparent - Fiscally Responsible

Why I voted for a New School

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My parents were not born in the USA. Both emigrated to America from Italy when they were adults. For approximately 10 years, my family lived in an apartment on Willow Street in the largely immigrant neighborhood that has been known by many names over the years, depending on who you asked: Washington, Sacred Heart, Goosetown. My parents, both career teachers, made a choice to live on a tight budget during that time, which enabled them to make a down payment on the first and only house they have ever owned. Our family home is located approximately two miles away from the apartment, and it was chosen because of its location in a neighborhood with lower crime rates and an award-winning public school.

Looking back on my early years in the apartment, I recall the children living on our street made do by playing games in the driveway and on the roof of the carports, where laundry was hung to dry. Further down the street, there was a bar that, oddly enough, was located inside a house. Most noteworthy is the fact that there was no neighborhood park for residents to enjoy.

This same neighborhood was the focus of a land use discussion raised last week at the City Council meeting. The principal question before the council was whether or not a new school should open up in this neighborhood. Being familiar with this area, I believe a new school would benefit the community and interject a positive force into the neighborhood. A charter elementary school is being proposed; however, in the future the school could be a middle school, vocational school, etc. Thus, the rezoning allows for a school to occupy the land now and into the future.

The city of San Jose has no policy or budgetary role in the decisions concerning public schools, including charter schools. This is the domain of the state of California and locally elected school boards. The city provides auxiliary services—libraries, community centers and crossing guards—but this is the limit of our involvement. However, presented with the opportunity for a new school to be in this neighborhood, based on the land use aspect alone, I voted “yes.” A new school would offer an additional education option within the public school system, and having more choices as opposed to fewer choices is seldom (if ever?) a negative thing.

For those who voiced concerns regarding the negative traffic impact that a new school may bring to the neighborhood, I will not deny that this may indeed be the case. Thinking of the many schools that exist currently, it is doubtful most would have been approved if dependent on a positive vote from the City Council—all schools create traffic. And yet, in so many cases, schools make the neighborhood what it is today. It is common for neighborhoods with outstanding public schools to have higher real estate values, and sometimes these neighborhoods will even be named after the local school. What is actually more chaotic for a neighborhood is when a school closes, and hysteria engulfs the community concerning the future use of the school site.

I also acknowledge that the proposed school would be a smaller, urban-style school without the expansive lawn that we’d all like to see in an ideal world. However, a smaller outside play area would not change the quality of classroom instruction: students would still learn, a new recreational playground would be added to the neighborhood, and a strengthened sense of community would likely result.

After reviewing residents’ concerns submitted via email, phone and at the meeting, I empathized with the desire to open a middle school at this location rather than an elementary school. Unfortunately, the existing public school district has not moved forward with a new middle school for this area in 60 years, and it does not have any current plans in the works for any new schools. A charter school has the ability to adapt and modify its charter, and over time these schools may alter their use to become a middle school, or find another entity that can provide a middle school in the same location.

The proposed campus would open up as a Rocketship charter school, assuming a favorable vote by the county Office of Education’s board later this month. Rocketship currently operates several other charter schools in San Jose. Many of the students attending Rocketship schools come from disadvantaged backgrounds, and have struggled to keep pace with the higher test scores and academic performance of their counterparts living in more affluent neighborhoods. Some within the educational community believe that charter schools represent the most effective way to narrow this so-called “achievement gap,” and the impressive success achieved by many of the existing charter schools—as evidenced by the oversubscribed waiting lists and vastly improved test scores—seem to lend credence to this theory.

Charter schools are a subset of the public school system, yet they are exempted from a portion of the state’s education code and rules governing tenure. Charter schools must show that they have met stated goals in a valid, measurable way, and these schools are held accountable for their performance. Underperforming charter schools are shut down.
Charter schools can be a highly political issue for a variety of reasons. Whether or not one agrees with the underlying concepts of charter schools, for me this was ultimately a land use decision about a new school in a neighborhood that I am personally familiar with.


How to Save the General Fund $10 MIllion

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The city reached a deal with Jose Theater to extend the lease of the property, home to comedy club The Improv, for another 10 years. But a different item discussed at last week’s Oversight Board meeting could have a huge impact on the city’s upcoming budget.

Many of the historic buildings in the downtown area were purchased, renovated and brought to life by the now defunct Redevelopment Agency(RDA). One example of this is the $13 million restoration of the Jose Theater, which currently houses The Improv comedy club.

The Improv brings national comedy acts to San Jose, and with it an audience that animates the downtown district. The property was previously owned by the RDA and has now been transferred to the RDA successor agency, appropriately called the “Successor Agency Redevelopment Agency,” known by its acronym of SARA.

The City Council serves as advisory to SARA, but the SARA Oversight Board must ultimately approve all actions, such as the disposition of property or allocation of funds. Since the formation of SARA, I have attended the Oversight Board meetings in order to understand what options are before us as a city, and what impact any actions taken will have on the general fund.

Last week, the SARA Oversight Board, comprised of members from local tax entities as laid out by the state, approved a 10-year lease with the Improv. The terms of the lease allow SARA to charge rent and collect a portion of gross receipts on a monthly basis, and all proceeds go to pay off the debt. The county representative, who is not an elected official, stated that the city of San Jose was doing a good job in negotiating these leases, and that it was important to have this comedy club downtown as it draws more visitors to the area. I appreciated this perspective and positive feedback from the county board member.

Later at the same meeting, the Oversight Board discussed the Housing Due Diligence report. During the course of review, it was revealed that $10 million had not been allocated in a clear manner. In no time at all, a strong difference of opinion surfaced on how the funds should be spent: for building a specific affordable housing project or paying down the debt. Not surprising, the housing director, Leslye Corsiglia, wanted the entire $10 million to be dedicated only to the affordable housing project.

Bearing in mind that SARA has inherited over a billion dollars in debt from the RDA bonds that were issued over past decades, I could not support the “double whammy” outcome of yet another non-revenue producing project that simultaneously casts a blind eye to the city’s debt situation. (As an aside, I found it very interesting that when the subject of the $10 million was being discussed, the only other person present for this item—besides myself and staff members—was a representative from an affordable housing developer.)

As it turns out, the housing director has been lobbying the state Department of Finance (DOF), which oversees all of the oversight boards in California, for quite some time. The objective of the lobbying is to get a favorable opinion from the DOF that would exclusively dedicate the $10 million to the affordable housing project.

Such an action, with no further deliberation or input from the council, would fly in the face of flexibility, especially in situations that became available to cities when the state dissolved RDAs. Until the council has had the opportunity to weigh in on this issue, in the form of a public session, all lobbying efforts should cease immediately.

The flexibility reference above allows excess affordable housing funds to cover debt payments, or, in city speak, allows these funds to be “swept in.” If the city chooses to responsibly pay down the debt, it would have the additional benefit of avoiding any further hits to the general fund, which other city departments—police, libraries, etc.—draw from to provide services to residents.

This $10 million would minimize the hit to the general fund next fiscal year, which would permit us to pay down senior debt obligations and allow continued funding for other city services. As you may know, the general fund is currently covering the shortfall in SARA property tax revenue by paying the senior debt payments on the 4th Street Garage and Convention Center. Bridging this funding gap from the general fund means less money for day-to-day services such as public works, road maintenance, code enforcement, etc.

In conclusion, I feel strongly that the discussion of how the $10 million is allocated should go before the council for a decision in a public meeting. After all, it was already covered once at the public Oversight Board meeting, and I do not think this issue is one that would be best addressed in a closed session.

Furthermore, I disagree with the housing director’s viewpoint. It is shortsighted and untimely to advocate for an additional affordable housing project that would directly and negatively impact the general fund.

Ultimately, we all have choices and responsibilities in life, and we must work within the dictates of reality. The opportunity cost of allocating $10 million to an affordable housing project that doesn’t pay property taxes means we cannot simultaneously pay down our debt in the same amount. The money simply cannot be in two places at once.

By dedicating the $10 million to paying down debt obligations, it allows more funds to remain in the general fund and be directed towards vital city services.

Birds, Dogs and Debt! Oh My!

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All Nippon Airways will now provide a new direct flight from Mineta San Jose International Airport to Tokyo.

All Nippon Airways (ANA) hosted a reception last week in honor of a new direct flight from San Jose to Tokyo. The inaugural flight is scheduled for Jan. 11, 2013. ANA will also offer connecting flights to 22 cities worldwide. This is good news for SJC, because the new connection will create a positive economic ripple effect for San Jose and the region at large. A special thank you goes out to all those who advocated for a new direct connection to Asia.

While attending the event, I looked at the large ANA model of the 200-seat Boeing 787, and I thought about the council meeting from the previous day. The result of the discussion was to allow airport staff to shoot birds if they interfere with aircraft. When the time came to vote on this matter, one of my council colleagues expressed genuine concern and continued to question the best course of action.

It is very dangerous for birds to get caught in an airplane engine. Not only would such a scenario be fatal to the bird, but it could also cause the airplane to malfunction and potentially lead to a deadly crash. During council discussion, concerns were shared about the shooting of birds in vain and the net impact of such action as part of the grand bargain for airport safety.

It was also suggested that guns should be utilized only as a last resort, and that perhaps dogs could instead be deployed to scare away the birds. The suggestion of dogs being utilized in this capacity raised a whole new set of concerns for me, due to the potential cost and lack of practicality associated with implementing such a program.

I am a self-professed animal lover, and yet I still thought it was odd that a relatively lengthy council discussion would contemplate the life value of a bird over the potential death of 200 passengers on a plane. Human safety comes first in my book, plain and simple, end of discussion.

In the same meeting, the council reviewed the Comprehensive Annual Debt Report, which documents the total debt for the city of San Jose, currently a whopping $5.2 billion. This figure does not include unfunded liabilities for pension and health care, which would add an additional $3.6 billion to the total. At the Federal level, the national debt does not include unfunded liabilities like Social Security or Medicare. When unfunded liabilities are included, the National Debt catapults from $16 trillion to $70 trillion.

Once the meeting concluded, what struck me most was that the council discussion on the $5.2 billion debt was 15 minutes long, while the discussion on birds at the airport was 12 minutes in duration. Going forward, I am hopeful that the council will invest more time on the debt issue and, dare I say, less time discussing the fate of a flock of birds. Too bad we can’t shoot the debt.

There are many different forms of debt, but suffice it to say, we are tapped out. Onerous debt payments and servicing obligations take money away from the general fund, and therefore leave us with less money to pay for city services today. Whether we are looking into training a special service canine unit for avian abatement, or we are paying interest on our municipal debt, the money has to come from somewhere. This is why I take the role of a fiscal pragmatist seriously and advocate investing more time and effort on plausible solutions to reduce our municipal debt.

Affordable Housing Study Session

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The City Council had a study session last week devoted to affordable housing. The session covered how San Jose could build more affordable housing, even though it has already publicly funded and completed roughly 21,000 such units in years past and has 1,500 additional units currently in the pipeline. As a point of comparison, other cities have done little during the same time period.

Comments from the council included advocacy for the building of more traditional single family homes, potentially in the Almaden Reserve and Coyote Valley, with the objective of bringing down the average cost of such dwellings. The economist who was invited to speak at the meeting said any newly constructed houses in the urban reserve may indeed sell, but following this path would be contrary to the changing, age-based demographics of San Jose (more seniors, more young people). In addition, statistics indicate that committed couples are having fewer or no children today compared to past decades, which highlights a demographic shift that alters demand for single family homes.

Most economists and urban planners agree that suburban sprawl is bad for city revenue and the environment. The majority of homes in San Jose are single family dwellings, and the resultant suburban sprawl has contributed to the city’s economic problems and transportation woes. Building out houses across the valley in Almaden and Coyote would only magnify the pain.

It was mentioned during the study session that 4,500 units of market rate apartments are under construction in North San Jose. Had the council approved the construction of single family houses instead of high density apartments, the result would have netted roughly 300 houses or 4,200 fewer housing units overall.

I asked the economist, point blank, which of the two options he would choose: 4,500 apartments or 300 houses. Not surprisingly, he chose the 4,500 apartments. The 4,500 units in North San Jose would create more overall affordability by providing additional housing (supply and demand). Three hundred single family homes is a drop in the bucket when considering the over 175,000 similar units that already exist. In contrast, the creation of 4,500 market rate apartments would add significantly more construction jobs, aggregated property and utility tax revenue, and larger park and road paving remittances than the 300 single family homes.

Additionally, the development of density in North San Jose does not create conflict with traditional single family neighborhoods and enables more of an active urban community that both young professionals and seniors alike seek out. This is significant, because young professionals and seniors are the two fastest-growing demographic groups in San Jose. And not coincidentally, they are also less inclined to choose a single family home and all of the inherent maintenance responsibilities that come with it.

The Housing Department will return to council in February 2013 with further information to consider. One option is to look at borrowing money by issuing bonds that would provide funding for more affordable housing construction. This is the same method utilized to purchase golf courses and the Hayes Mansion. San Jose is already in debt for over $800 million for past bond issuances, and this figure does not include the $1 billion plus attributable to airport bonds.

Yet another option would be to make market rate housing developers pay an “impact” fee to fund affordable housing. The enactment of such a fee would increase the cost of market rate housing to the future resident. The theory behind this approach presupposes that for every new, highly paid professional, more demand is created for workers in the service industry who will also need housing.

Speaking of “impact”, we should consider the impact of affordable housing developments on our police officers. I wrote and shared data on this impact 18 months ago.

I was not supportive of the ideas mentioned above at first glance, so I asked if some alternative options could be considered. One course of action would be to follow the example of Santa Clara and Mountain View, and waive adherence to prevailing wage ordinances on affordable housing construction. Doing so would lower the cost of construction, which in turn would mean that San Jose no longer has to subsidize these projects by continuing to waive infrastructure fees for road paving and parks. To date, the city of San Jose has waived more than $100 million of infrastructure fees to promote affordable housing.

Another idea I suggested concerns the distinction of affordable housing that is built by for-profit entities versus non-profit entities. Non-profits build the majority of the affordable housing in San Jose and are exempt from paying property tax. For-profit construction results in property tax revenues being paid to San Jose and other government entities, such as schools, that need the revenue to pay teachers. Property tax revenues are the largest annuity stream payable for ongoing city services in San Jose, and each and every time the council approves another affordable housing development exempt from property tax, we move one step closer to laying off another police officer or teacher. I have written before about the consequences of this lost revenue.

At the end of the day, I believe in quality over quantity when it comes to affordable housing. Everyone—not just some—should pay property taxes and contribute to the costs of road paving and the creation of new parks. This provides a good example of equity and paying as we go for infrastructure and ongoing city services.

Youth Employment and Life Lessons

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I remember making minimum wage, $3.35 per hour, when I worked at Burger King during high school. Most of my coworkers were high school students, college students and very few were adults. Prior to my job at Burger King, I had a paper route that, according to my memory, netted out to less than minimum wage. In the case of the paper route, I had to pay for the newspapers, rubber bands, and bike expenses, not to mention my time to fold and deliver the newspapers. In addition, back then we had to go door to door to collect the monthly subscription.

Over time, I received raises at Burger King by passing tests on food preparation and positive performance evaluations. Merit-based raises of 10 cents were earned, and I achieved my top rate of $4.15 and a promotion to Production Leader. I recall enjoying the job except for the increased acne from working the fryer station and those ever-attractive brown polyester uniforms. Around this time, I actually contemplated quitting high school and pursuing a management position at Burger King. Instead, I stayed in school and went on to college like many of my fellow high school co-workers.

It seems like today that the opportunities for employment and taking on responsibility have decreased for our youth. The paperboy on a bike has turned into paperman in car. And Burger King-type jobs have changed from youth to adults, many of whom are recent immigrants.

I am voting “no” on Measure D, which would increase the minimum wage only in San Jose from $8 to $10 an hour. As a councilmember that represents a district that borders two other cities, I see firsthand how San Jose competes for retail sales, filling vacant commercial space and jobs. Westfield Valley Fair shopping center, for example, is split between Santa Clara and San Jose. If a new prospective tenant has a choice of space in the mall, they will choose Santa Clara should measure D pass, as I will explain.

Residents do not stop in their tracks when they reach the invisible border of a city limit. They shop based on convenience, quality and the big one—price. Measure D will put San Jose at a disadvantage just like the currently proposedHabitat Conservation Plan that Mayor Reed lampooned for over an hour at last week’s council meeting.

Measure D will create wage inflation. Workers that make $10 today will seek $12 tomorrow and so on. If a business only has so much money allocated for payroll, then the result will be laying off a certain number of employees or reducing hours to keep payroll in line with actual sales. I believe youth will comprise the majority of the layoffs and reduced hours. Measure D, which is a 38 percent increase in payroll (wages & payroll taxes) to employers who pay minimum wage, would not increase sales 38 percent nor even 1 percent.

A business in San Jose that employs minimum wage workers will simply have less profit margin and some of them will inevitably move. In the case of my district, these businesses will move just over the city border and those that remain in San Jose will increase prices. My dad, who grew up during the Great Depression, will drive to another city just to get a free plastic bag. When prices increase, my dad, who could easily win the game show, “The Price is Right,” will simply shop in another city.

Those that make $10 today instead of $8 are either performing well or have a more difficult job, which is why they make 25 percent more. Is it fair that the current $10 a hour worker would now be equal to a $8 hour worker? Does it create the expectation for future two-dollar wage increases through no effort of the individual? That is a debate in itself, however, the real problem is that San Jose is not a silo and we are surrounded by other cities.

Measure D would create retail vacancy in San Jose, especially near the border of other cities. Over time, new business will choose cities where payroll costs are lower and, most importantly, where their payroll is not regulated and audited by city government. For San Jose to comply with Measure D requires the hiring of people to oversee and regulate business for compliance with no revenue to pay for those new positions. I would much rather higher five new people in our planning department to expedite the process for industrial and commercial development than positions that add zero value, which Measure D would mandate.

The few cities that have raised the minimum wage are anomalies bordered by water or desert: San Francisco, Washington D.C. and Albuquerque.

To my original premise, I believe Measure D will result in less jobs for youth in San Jose. Employment for youth outside of compensation provides the opportunity to learn valuable life lessons.

On a related note, the majority of my council colleagues voted—but not me—to discuss and take a position on various State Propositions like the Death Penalty at this week’s council meeting. In my opinion this is a waste of timethat has nothing to do with the City Charter and we might as well discuss, how many angels can dance on the head of a pin.

How the Council Set Its Priorities

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The San Jose City Council met last week to discuss and prioritize certain ordinances the city should pursue in the coming year. Creating an ordinance requires staff time from the department that the ordinance will affect and, as always, time from the City Attorney’s office. In many cases, outreach for ordinances must be done to garner resident and stakeholder input which takes time and staff facilitating the public meetings.

The city is unable to move forward with every ordinance on the “wish list” much like any other organization public or private. Therefore, councilmembers are asked to prioritize by selecting their top choices and see which of those match their council colleagues’ preferences. An ordinance moves forward if it gets six votes, and those that don’t get selected remain on the list for next time, which is approximately one year. The council selected their top choices twice and was able to prioritize seven ordinances out of 30, which include:

● Converting Hotels & Motels to affordable housing.
● Closing Medical Cannabis Collectives that do not pay Measure U tax.
● Restricting Tattoo parlors near K-12 schools.
● Development Agreement Policy (Negotiate deals for Economic Development).
● Restrict burning of wood in residential fireplaces.
● Ban any construction within 100 feet of creeks.
● Survey vacant buildings to house the homeless and more to be discussed in detail at council study session on October 29.

Some of the other ordinances that did not make it include: limiting new Wal-mart stores; a healthy eating initiative; neighborhood preservation; liquor store conversions; downtown bars that provide music pay to fund police officers.

We could have had an extended discussion on each topic, however, the items selected will come back to the council for further discussion at least two more times.

Two items I voted for that did not make the list were liquor store conversion and distinctive neighborhoods. The liquor store conversion ordinance would have the potential to eliminate existing liquor stores. Liquor stores do not really add a lot of value in my view, and I would prefer to see alcohol sold at grocery stores, because grocery stores offer a variety of food. Over time this would allow for more grocery stores to open, which is seen by many as an essential component of a neighborhood.

Neighborhoods of distinction would allow private property owners to create their own zoning based on the majority of the property owners’ desires. So, rather than government mandating regulation, it is a tool that allows private property owners to make their own decisions. For example, an Eichler neighborhood may decide that it wants to maintain Eichler architecture (Post and
Beam) for any new construction within its neighborhood boundary.

One item that made the list was converting existing hotels and motels into low income housing. This seems like it would be an interesting discussion and would have a wide variety of viewpoints, depending on how it would be potentially implemented. More to come on this topic, for sure.

Prioritizing and ranking priorities is important for organizations. However, in the case of government, certain priorities may not always represent what constituents want. The only real way is through the election process, because we have a representative democracy where we choose to elect an individual to vote on behalf of a larger population. Maybe someday residents will vote by electronic devices from their homes to select priorities midstream. Until then, it is what it is.

This week the Council will again take up the proposed Habitat Conservation Plan. Personally, I have found it curious that most of the emails I have received advocating for the implementation of the HCP are from residents outside of San Jose.