Oliverio for Supervisor 2018

Independent - Transparent - Fiscally Responsible

On Gangs and Doing the Right Thing

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Neighborhood Watch programs serve as one tool for communities to combat gangs. (Photo by hsivonen, via Flickr)

The Mayor’s Gang Prevention Task Force held its fifth annual community summit Saturday, and more than a hundred San Jose residents were in attendance. This task force started in 1993, spanning the terms of three mayors, three district attorneys and five police chiefs. The Department of Justice believes that the Mayor’s Gang Prevention Task Force is a model to be emulated by other cities across the USA.

The summit had four different breakout sessions. I attended the following three: promoting Neighborhood Watch programs, recognizing distinguishing characteristics of different gangs, and gang exiting strategies from a female, Latina perspective.

For me, much of the information presented at the meeting served as an unfortunate reminder of the havoc gangs create in our communities. From youth violence and drug trafficking to prostitution and other forms of organized crime, gangs represent one of the single most detrimental forces in society. Gangs rob individuals of their personal freedoms and introduce unwelcome violence into our neighborhoods. Organized crime impedes the legitimate economic activity that allows communities to prosper. This much I already knew.

What I was surprised to learn is that gangs use social media in a very effective fashion, sharing information and communicating across platforms, such as Facebook, with affiliates in different cities. This expanded reach ensures that gang-related activity does not stop at neighborhood, state or country lines. Indeed, countries and cities throughout the world struggle with this challenge. But the fact remains: Gangs are more organized now than ever before, and we must be organized in our efforts to curb their expansion and appeal.

To this end, I am hoping residents will join city officials in recommitting to crime prevention practices. This includes watching out for and reporting suspicious behavior, block by block, via the Neighborhood Watch program. For its part, the city will continue the good work currently underway by the Mayor’s Gang Prevention Task Force, including but not limited to community engagement and youth intervention programs. In addition, we should prioritize filling existing vacancies in the police department to augment gang suppression efforts.

The sad truth of the matter is that gangs will never disappear entirely, even from the most vigilant and proactive of communities. A city can never have complete control over the unpredictable nature of select deviants, or be held responsible for the unfortunate choices these individuals sometimes make. Fortunately, we have many hardworking and sincere people in San Jose who are doing their best to prevent young people from making choices that may lead to a life spent in and out of jail. This gives me hope, because—given the opportunity—I feel that most youth will see the wisdom in choosing the path of non-violence.

For those of you who were unable to attend the summit and want to learn more, click here.

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.

Park in the Sky or Pie in the Sky?

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Planning departments across the USA commonly create “specific plans” and/or “master plans” for certain streets and neighborhoods within a city. San Jose, not unlike other cities, has many of these same plans.

These plans tend to have colorful illustrations depicting what life in the future would be like, and almost always seem to be utopian in nature: happy residents walking with their animal companions in tow, people on bikes, massive parks that melt into the horizon, cafes filled with laughing people laughing, and my favorite … children with balloons.

Most of the time these plans are put together with the best of intentions, but they end up sitting on a shelf due to their inherent lack of practicality or feasibility. For example, many of these plans depict large parks that have no funding source—this is deceptive. If a plan calls for a large park, then many market rate housing units are required to fund that park. (Only market-rate housing, not affordable housing, pays 100 percent of park fees.) In one instance in my district, Cahill Park could have been larger. However, the City Council prior to my tenure approved a housing development that was less dense, and therefore a smaller park resulted.

Sometimes staff solicits ideas from the community, and in doing so propagates a false hope that can only exist in an alternative universe separate from our fiscal reality. For example, one idea involved building a park “in the sky” over the 280 freeway, which would have ended up costing approximately $100 million. This idea should have been eliminated instantly, due to the prohibitive cost. Instead, it was kept alive by the somewhat absurd notion that San Jose voters may someday tax themselves to support a nine-figure project.

In the past, staff and ultimately the council have limited the development potential in a specific plan area when it has been deemed that residents would prefer to maintain the status quo. Case in point, based on community feedback, the 1998 Alviso Master Plan limited the construction of any new industrial office buildings to one or at most two stories on North First Street.  The unfortunate consequence of the height limitation is that we have had to forgo market driven demand for taller, 5-8 story buildings. In effect, this specific restriction in the premier technology corridor of San Jose has limited the city’s economic development as a whole.

An alternative approach that would be more conducive to economic growth would involve first identifying a limited number of job creation sites in San Jose located within specific plan areas. We should then re-examine any existing limitations within these job creation sites and remove any restrictions that may block private investment, as in the Alviso example cited above.

Another reason these plans are often doomed to failure can be attributed to the fact that a private property owner may simply not want to develop their land. In other instances, residents will express a desire for a new park on land that is privately owned, and oftentimes this same parcel has an existing structure with tenants already in place. At the end of the day, America is a country that places high value, rightfully so, on private property rights. Thus, successful development is most likely to occur when the private property owners themselves initiate plans, not when an outsider who does not actually own the property injects impractical conceptual drawings into the process.

Currently, staff is planning the development of “Urban Villages,” with the goal of mixing residential and employment activities. Furthermore, the development of such villages would establish minimum densities designed to support transit use, bicycling, walking, high-quality urban design, revitalization of underutilized properties, and the engagement of local neighborhoods and private property owners in the process. Here is a map of the future Urban Villages.

Having attended three Urban Village planning meetings in October, it is my hope that the plans ultimately approved by council are realistic and allow for expedited development. However, I believe a disclaimer acknowledging private property rights should be on the first page of any proposed plan, and that ultimately development will be initiated on a timetable that government cannot control—especially if the plans are too far from market realities.

Sometimes, a proposed development is in harmony with a pre-existing plan, but just as often this is not the case. In either instance, my objective as a councilmember has always been to consider different points of view and support or oppose development based on the long-term economic benefits to San Jose as a whole.

Borrow or Pay Out of Pocket?

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The Council last week made the second SERAF payment to the state. SERAF is where the State raided all RDA coffers in California—again—in our case taking $75 million from San Jose.

The state allows payment of the SERAF to come from the housing department if a city chooses to do so.  This second payment of $13 million is due this week so Council had to decide to pay or perhaps not pay or even to cease RDA operations.  I have advocated paying the state with housing department funds.

What was decided, however, was to issue commercial paper to replenish the housing department as a way to finance the payment. Yet there is more than $13 million on hand in the housing department that would not require borrowing.

Ultimately the general fund is at stake for commercial paper, in the same way that the general fund is on the hook for the Hayes Mansion and golf courses.

I voted no, since I felt “Why borrow when you have cash in your pocket?” We do not get “miles” or some other reward for borrowing.

I understand that we would not be able to continue with two more affordable housing projects if we did not borrow, but felt that was OK since neither project will be paying property tax to pay for city services. I could contemplate borrowing if we were going to get something like road repair but in making a payment to the state I would rather just pay it and be done with it.

RDA was not meant to last forever but the recent settlement with the County of Santa Clara, which included the old city hall and was approved in closed session, makes closing the RDA even more complicated.

We Pay Twice for Affordable Housing

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In past blogs I have expressed my concern about the cost to our city of too much housing. Specifically, housing that does not pay its own share of revenue. One example I have pointed out—and constantly been the lone vote against—is affordable housing.

We run the daily operations of our city with tax revenue. The city does not write paychecks signed “goodwill” or “number-one provider of affordable housing,” but rather with dollars backed by tax revenues. So when we add to the housing stock by approving, for example, an affordable housing project that does not pay property tax, road-paving fees and only 50 percent of park fees, it is a net loss for our city. Therefore existing residents subsidize city services for the new residents.

Annual property taxes in San Jose are needed to pay ongoing salaries and benefits of employees. Road-paving fees go towards paving streets in San Jose. If you ride a bicycle or drive a car you know that we need every dollar. Park fees allow for new parks or increasing the size of current parks so we do not wear out the existing park infrastructure in established neighborhoods.  For years developers were exempted from paying park fees for affordable housing projects which created more residents but not enough open space. However last year with the support of the city council I managed to get it changed to where developers must now pay half the park fees that market-rate housing pays.

The other item of interest is that affordable housing generates extraordinary calls for service from our police.  Attached is a snapshot of data for eight affordable housing developments in San Jose and the calls for police service. Since there are more calls for service around these affordable housing projects, over time our police department may schedule more police in this area to manage those calls. This may translate to less police coverage in other areas of San Jose, perhaps where you live.  In addition, our fire department receives more medical-related calls, and again there’s no tax revenue to pay for the employees.

So we pay twice. Once, by exempting taxes and fees. Twice, by higher use of city services than existing residents. (Also, most of these projects were financed with RDA funds, and the State of California mandates that 20 percent of that money be spent on affordable housing. And many of these projects were put in places zoned for jobs and not housing.)

Out of the many suggestions I have made on this topic I believe affordable housing developments that have too many calls for service should hire an off-duty officer and/or ambulance to be there on site.

Here is a link to 730 police calls on eight housing developments, among some 11,000 units built.

On another topic, one of my favorite Downtown events starts Tuesday night, The Cinequest Film Festival. Check it out at Cinequest.org.

Related to cinema I obtained a documentary film about urban parks directly from the filmmaker called The Olmstead Legacy.  Monday, March 7 at 6:30PM will be the premiere showing in San Jose at City Hall. Find out more about The Olmstead Legacy here. The film will be followed by a discussion on urban parks. The event is near capacity; please email me if you want to reserve one of the remaining seats at Pierluigi.Oliverio@SanJoseCA.gov

Finally, the bipartisan Little Hoover Commission, an independent state oversight agency, made its recommendation to Governor Brown about pensions last week:

Read the Feb. 24, 2011 Little Hoover Commission Report here.

$1 Million in RDA Money

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In my opinion, the Council made two great investments two weeks ago for our tax base and jobs. The Council provided $500,000 of Redevelopment Agency (RDA) funds each to Sunpower and Maxim, totaling a one million dollar investment for economic development. These two companies compete globally, therefore they could have chosen any other location in the world.

Maxim, a billion-dollar semiconductor company, will consolidate its offices and relocate its corporate headquarters from Sunnyvale to North San Jose.  Maxim has design facilities all over the the USA and the world.

Sunpower will double its headcount to a payroll of approximately $75 million in San Jose instead of Texas. Texas offered Sunpower $4 million.  Sunpower could have also expanded its Malaysia facility and been exempt from taxes.

We can’t ignore that we are competing at a global level and the fact that San Jose was able to have these two companies call us home after the Great Recession is an accolade. Although I do believe RDA has lost its focus from time to time, this kind of economic development is right on target.

The County of Santa Clara is upset with these two investments, issuing a letter to the City of San Jose citing Sunpower and Maxim specifically. This is the same government agency that says time and time again that they want job growth in the County; especially green jobs. The saying “action speaks louder than words” comes to my mind here. The County will benefit from these investments as the majority of Sunpower and Maxim’s employees will have homes in the county paying property tax and sales tax, of which the County government gets a significant portion.

In contrast, the Council funded the construction costs for an existing charter school in East San Jose with $950,000 of RDA money.  So, is one million better spent for economic development or a school? Neither economic development nor schools are in the City Charter. Do they provide the same measurable return on investment?

RDA did fund the extensive remodel of the existing Horace Mann elementary in our downtown 10 years ago when there was more cash on hand. Horace Mann was an eyesore and is now a very attractive school. Part of the thought process was for downtown to have a good public school for young families. I think the Horace Mann PTA would agree it has benefited the school community. On the other hand, the money spent did not generate any new ongoing jobs or revenue for the City.

Council could have directed the million dollars to fund more affordable housing, since that is funded by RDA, or another million on top of the $73 million RDA has spent on the Strong Neighborhood Initiative, which benefits a fraction of San Jose.

Finally, important to note is that long ago RDA funded a bridge and light rail station in North San Jose next to then-small company that relocated from the Peninsula. That small company was Cisco and is now the largest private employer in San Jose.