Oliverio for Supervisor 2018

Independent - Transparent - Fiscally Responsible

Tax Base Erosion Night

By

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

By

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!

Decisions on Housing Types Affect Future Tax Revenue

By

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

By

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.

Arbitrator: Retired Judge or Out-of-Town Labor Lawyer?

By

At first glance, modifying binding arbitration back in July was not my first choice over new pensions for new employees. I support the Mayor on fiscal issues, so voting in favor of Measure V and giving residents the opportunity to support this measure is consistent with my line of thinking.

You can read more about the San Jose fiscal reforms measure here.

In a nutshell, Measure V would put limits on outside arbitrators. During the course of the campaign I have become more and more supportive of this measure.  There are two primary reasons why it is important, neither of which are getting much publicity. One, the passage of Measure V will mandate that binding arbitration for public safety unions would be held as public meetings.  Public meetings that the taxpayer could attend and see how tax dollars are allocated.

As it stands today, even Councilmembers that you elect are not allowed to attend these meetings.

Second, Measure V would require that the current out-of-town labor lawyer acting as arbitrator be replaced with a retired judge. Most people share the belief that a judge is more fair than a lawyer. Not every judge is perfect, however, I would pick a retired judge instead of an out-of-town labor lawyer to make a final financial decision under binding arbitration.

I have known many of our public safety professionals for more than 30 years. They are good people who do good work. However, the status quo of pay and benefits increasing faster then revenue actually results in less police and less firefighters for residents. The City has a legal obligation to pay pensions and does not have money left over to hire more police or firefighters.

I would suggest moving forward that the critics of Measure V explain the value of how the current closed-door binding arbitration process overseen by an out-of-town labor lawyer is better than Mayor Reed’s suggestions that would control costs and let taxpayers in the room. Instead, those against Measure V are attempting to mislead the voting public by sending out materials that are incorrect and contradictory as reported in a Mercury News article on Sept. 12 and again on Oct. 22.

As a side note, it was announced at the council meeting last week that the city paid out $14.6 million in accrued sick leave to retirees in July. It is a record breaking year that beat last year’s all time record of $11.7 million. Next year the potential sick leave pay out could be as high as $21 million which is equal to this years entire city wide library budget.

Also expected property tax revenues next fiscal year will be approximately $194 million while payments for pensions will be approximately $250 million!  Perhaps we all write “reform pensions to hire cops” on our check this year to the Tax Collector or better yet: Vote yes on Measures V & W.

Worst Roads, but Great Pensions

By

Last week, Council dove into a study session about street paving. As you may have heard, San Jose came in last on a national survey on road conditions. This survey was done prior to the $12 million in federal stimulus money that was allocated to San Jose for road paving this summer.

San Jose’s cost to maintain roads is high due to our suburban sprawl. Total lane miles in San Jose is double that of San Francisco, which came in second for worst roads.

San Jose has 2,370 miles of road (60 feet wide) that would stretch from here to Detroit!  (Could you imagine if we continued on the notion to build out Coyote Valley and increase our road network plus the sidewalks, sewers, street lights and signalized intersections?) Those 2,370 miles of road are split between 1,570 miles of neighborhood streets and 800 miles of major streets. State and federal grants for street paving (if you get them) typically only apply to the major streets and not the majority of neighborhood 25-mph streets where we live.

Staff presented us with the dilemma that as streets wear down they are more expensive to repair. For example, to “reseal” a street in good condition may cost $35K-$70K per mile, however if a street is in poor condition the price rises to $200K-$800K a mile. Complete rebuilding of a street is the most expensive at approximately $1.8 million per mile!  So transportation engineers do their best to with the limited dollars to try and keep streets from falling into poor condition.

Some streets are being left behind since they are so expensive to repair. So, thus a trade off: Do we fix one mile of a terrible street or instead 10 miles of streets that are in fair condition? Well, if you live on those 10 miles of streets it is great; however those on the one mile of terrible street are left behind.

Inevitably, the decision to repair, rebuild, etc., always turns to money. The city has lowered it’s road repair budget at the same time as other department budgets were being trimmed. As the structural budget deficit took hold and the portion of the pie chart for road paving got smaller, other portions of the pie chart, such as pensions, got bigger. One proposal on how to pay for the deferred maintenance backlog (streets only) of $250 million (which may swell to $1 billion by 2020) was an annual parcel tax of approximately $300.

A comparison is that many households pay $480 a year for basic cable TV or $600 for high speed Internet, so paying $300 for streets each year would be just be considered another household expense.  The other factoid cited in favor of a parcel tax was that the annual cost for car repair due to poor roads is $700 a year.

Of course this $300 parcel tax was preliminary, and other parcel taxes may arise based on different properties, or a Council decision to charge a big-box store more since their store generates many car trips. Cities alone do not have the ability to raise gas taxes so parcel taxes, sales taxes or utility taxes are the main ways to raise revenue for ongoing expenses. Gas taxes make those who drive on roads pay for them; however some of the biggest culprits for wear and tear on streets—buses, garbage vehicles and commercial delivery trucks—are exempt by state and federal law from paying a fee to cities for the damage they cause.

One of my questions at the study session was: “Since the city council policy exempts affordable housing from paying construction taxes which go towards road paving, how much money have we lost and/or could have had in the coffers for street paving from affordable housing?” Unfortunately, staff did not have the answer readily available. I am aware that the city has lost approximately $80-$90 million for our parks with a similar exemption for affordable housing developers. My back-of-the-envelope calculation is we have lost out on approximately $30 million that could have gone to road maintenance.

I think it is important that we know these things since a council policy has cost implications. If we raise your taxes for road repair but then make exemptions for something else, then maybe the tax should be called an affordable housing tax instead of tax for roads or parks.

Here is a link to the staff presentation on road repair. Click on Pavement Maintenance (Street Paving) Study Session Presentation-October 12, 2010