March 15, 1991
By Yolanda Reynolds
The San Jose Redevelopment Agency Board (San Jose City Council) two weeks ago was told that “adjustments” were necessary to the Redevelopment Agency financing plan because of an anticipated reduction in Tax Increment (property taxes) revenues.
The City of San Jose is running out of money to conduct its business. This week, the City revealed that its General Fund deficit had soared to $24 million.
At this time, the City’s budget staff is proposing a number of cuts in order to present a balanced budget for approval of the Council in June.
Initial suggestions for balancing the budget are the budget cuts that reduce library hours, delay hiring of police officers, reduce the city’s street sweeping program, as well as, collect more money from its citizens by introducing increases in fees for the use of the City’s parks, to form “assessment Districts” in order to charge “assessments” (taxes) and to increase storm drainage maintenance fees.
Most likely there will also be layoffs of City Hall employees. There has been a hiring freeze for many years. Already, there are too few people available to conduct the inspections required by the City for approval of building and remodeling projects; among many outer serious shortages of personnel.
According to library staff, the library patron count has gone up noticeably since the recession (depression?) began. People are going to the library; to read about jobs opportunities, improve their skiIls, or to take advantage of the free time they have by reading library materials in between their job hunting.
The City and its citizens are facing a very trying future – jobs are scarce, there are few City funded recreational programs for youth who have no jobs, there is a woefully inadequate number of police and they are constantly asked to work: overtime (and then chastened because they have collected too many hours of overtime).
Now the Redevelopment Agency staff is recommending that the City not rely completely on tax increment financing (property taxes) for its projects that are proposed for the future. The Agency Staff is suggesting a number of options for increasing revenues which include; “More extensive use of assessment districts” and the refinancing the Redevelopment Bond debts among other options.
The Redevelopment Agency staff seems to favor extending the pay off date for retiring Redevelopment debt for beyond the year 2011. The Staff suggests that the Agency apply for lower interest rates and “use new 30-year bonds.”
Another possibility, they suggest, is to attribute property value increases to the presence of a nearby project area and then to use this as a reason to tax the properties adjoining Agency projects at a higher rate. Under this plan, properties lying in San Pedro Square would probably have their taxes greatly increased. Much of that property has been owned by the McEnery family since before Proposition 13. Interestingly, the staff offers the caveat that such property assessments would necessarily be applied on a case-by-case basis.
According to the Redevelopment Agency’s Mid year Capitol Budget Review for 1990-1991, the current imminent revenues (tax dollars to Redevelopment from property taxes) will be a little over $68 million.
If the City was not involved in Redevelopment, 15% of that amount would go to the City’s floundering General Fund Budget. The City desperately needs that money, which for years has been diverted to Redevelopment.
Were the City to receive this money, instead of the Redevelopment Agency. – for the fiscal 1990-91 year the city would have an additional $10 million In the 1995-96 fiscal year it can be estimated that the City’s General Fund contribution to Redevelopment will be over $14 million. Over the next 6 years the General Fund will lose more than $60 million to Redevelopment – not an insignificant amount.
According to recent reports, City Manager Les White says that, delaying maintenance causes greatly increased costs for repair if they are delayed too long. Already the City is many years behind in the maintenance of its city streets.
When last the citizens complained about the lack of street sweeping of the City’s streets, the city restored that service, but not without a quietly adopted fee increase for resident garbage fees. Now the City plans to reduce street sweeping and still collect the additional fees that the citizens pay each month for street sweeping.
The County could also be affected. In recent years, the County has been receiving money that it would normally receive from property taxes in areas that are now in San Jose Redevelopment areas. There is a “County Agreement” whereby the City pays the County the amount that it would otherwise receive from the Rincon South Project if the income did not go to Redevelopment. The Redevelopment Agency staff says that the $17 million they currently pay to the County can be withheld. This would increase the amount of money that the Redevelopment would have for its own projects. The County says that it is short by 49 million dollars. Rumor has it that the Valley Medical Center may have to close for lack of money.
The City is going full speed ahead with the construction of the San Jose Arena. Many people feel that it is still not too late for the City to change its mind about the arena. The City could instead build the planned new main library there or it could simply continue the cleanup of the toxics of the properties in and around the arena and complete the park that was originally intended for that area. Another project already approved and of dubious merit is the planned construction of a movie complex downtown for which the taxpayer will contribute a $12 million subsidy.
Some citizens who have studied the City and Redevelopment budgets feel that with such a desperate financial situation it is now time to reassess how taxpayer dollars are spent in this City. In San Jose, many dollars have gone to projects intended to enhance commercial and entertainment activities downtown for “upscale” people. Evidently that “upscale” population has not discovered/appreciated the City’s effort in their behalf.
Wednesday morning another “upscale” restaurant in the Pavilion, Leaf’s, is going out of business because, “it cannot make it there”. Leaf’s is the latest in a long list of businesses that have failed in downtown San Jose.
It is particularly unfortunate that Leaf’s is leaving because it was one of the few restaurants in that part of First street that had restrooms for use by its patrons.
In addition, the Fairmont Hotel in downtown San Jose has not had the anticipated and needed number of hotel guests. The owners of that Hotel were awarded a $30 million dollar subsidy, paid for by the taxpayer, to build that hotel in that location.
In recent months, the Redevelopment agency headquarters have moved to the new office building next to the Fairmont Hotel. That office building is part of the San Antonio Redevelopment Project Area which had been empty. ‘The Redevelopment Agency now rents the entire 15th floor.
Citizens interested in learning more about the budget are invited to attend the City’s budget hearings. They are scheduled for May 13, 9:30 a.m. at City Hall (Council Chambers), May 14, 1:30 p.m.: May 16, May 23, June 3, June 16, and June17, all at 9:00 a.m. in the Council Chambers at City Hall.