INTRODUCTION TO CRR - PRESENTATION TO SAN JOSE CITY COUNCIL

On August 19, 2003, seven members of CRR gave a presentation about the group and Redevelopment in San Jose during the Open Forum of the meeting.

SPEAKER #1

My name is Loraine Wallace Rowe. I am the first of a number of citizens of San Jose who have come to city hall today to speak about the San Jose Redevelopment Agency. Many of us who are about to present are members of a citizen-based group called the Coalition for Redevelopment Reform, or CRR.

As the name suggests, the group was organized for the purpose of reforming Redevelopment Agency practices. The catalyst for the formation of the Coalition was the so called “40 Sites.” Over two years ago, a certified letter was sent to the owners of approximately 150 properties in the greater downtown area. Recipients of the certified letter were informed by the city government that their property had been selected for potential redevelopment by developers who would be selected by the Agency and that the power of eminent domain would be exercised if need be. The property owners organized. Lawn signs were printed with the message “Not For Sale by Owner” with the Redevelopment Agency’s phone number on the sign. As reported by the Mercury News, “City workers were sent out to remove some of the signs.” Let me repeat, “City workers were sent out to remove some of the signs.”

In San Jose, California, in the year 2001, a deputy director of the Agency instructed city workers to step on private property to remove privately owned displays of political speech.

Instructing the workers to do so was an abuse of government power. Stepping on private property was trespassing. Removing the signs was a violation of a citizen’s freedom of speech.

Such was our introduction to the government agency that so few citizens know anything about: The San Jose Redevelopment Agency.

SPEAKER #2

Our goal is simply this: To make the San Jose RDA work for, and answer to, the citizens of San Jose.

Our recommended reforms/demands are as follows:

If these changes require changes in state and/or local law, then let’s change the laws.
Our strategies and tactics are very basic. They are:

Just last week, an established San Jose business owner tried to bid on a Redevelopment Agency owned site. He was denied that request. Eric Sahn’s response to the Council/Agency Board was quoted by the San Jose Business Journal: “You shouldn’t pick and choose and micro-manage what goes downtown. That’s the Soviet system.”

He’s right. Council mandates are not a component of the free-enterprise system. That’s un-American!

If council/RDA will not protect the interests of the people of this city, then we will – we will promote the boycott of any and all businesses who obtain an unfair advantage at public expense.

As of this day, respect for the interests of San Jose residents and existing businesses is a cost of doing business in the City of San Jose.

SPEAKER #3

Most citizens of San Jose have, at best, a cursory understanding of the form and function of their city’s Redevelopment Agency.

What is RDA?

What does it do?

And how does it do it?

Redevelopment Agencies are established through state law and are funded through “tax increment financing.” “Tax increments” are generated through increases in property tax valuations that occur within designated redevelopment zones. What this means is that property in a “blighted” area has a low tax value. When the property is developed, the value goes up. The difference between the starting value and increased value is the Tax Increment – that amount goes to the Agency to finance development and to be used as collateral for bonds issued against future tax increment revenue. A familiar example is the North First Area in San Jose which now contains various high tech campuses including that belonging to Cisco. This property consisted of pear orchards when was declared blighted and put into a redevelopment area many years ago (Perhaps the only legitimate Blight found in San Jose to establish a redevelopment area was on those pear trees.) The difference between the value of the pear orchards and the high tech campuses continues to go to the Agency and not to the general fund or to schools or county services.

According to the “Citizen’s Guide to Redevelopment” published by the California Redevelopment Association (1994 edition) “Redevelopment is a process created to assist city and county government in eliminating blight from a designated area…” The Guide asks, “How does the law define a blighted area within a project area?”
“A blighted area is characterized by conditions causing a reduction of proper use of the area to such an extent that it constitutes a serious physical or economic burden on the community which cannot be reversed or alleviated by private enterprise acting alone.” (p.7)

Some would argue that by this definition there is little or no blight in San Jose.

SPEAKER #4

Is San Jose blighted? How can there be much blight in and around a city that is home to some of the most expensive real estate on the planet? Yet, through the Strong Neighborhood Initiative (SNI) plan, nearly one-third of the City of San Jose is classified as a redevelopment area and, therefore, by definition, blighted.
Some might remember the absurd example of homes in the Naglee Park area being included in a redevelopment project area after uncollected leaves were spotted on a resident’s tennis court. It would seem that in San Jose, blight is in the eye of the beholder and our city’s agency’s eyes are everywhere.

Can a business be blighted if it is thriving? It would seem that in San Jose the definition of blight is “that which is not sufficiently quaint” or “that which is not generating as much tax revenue as the city council would like” or “that which is owned by too many people to be easily controlled” as was one of the stated reasons for taking the Tropicana Shopping Center.

The Tropicana Shopping Center is perhaps one of the best examples of RDA excess. If the Tropicana is blighted, how come it is so difficult to find a parking space there on weekends?

Commercially successful businesses are declared blighted and displaced in the name of the “community” and “for the greater good.” But where in the United States Constitution is it written the communities have rights. “Communities do not have rights, individuals do.

$50 million would go to an outside developer over the objections of the merchants and owners. QUESTION: Why isn’t the $50 million offered to the present ownership? Why does RDA rather than the market define the type of commerce that is conducted there? What right does the redevelopment agency have to dictate the culture and commerce of a San Jose neighborhood?

Directly across the street from the Tropicana Shopping Center is a broad expanse of vacant land. Why doesn’t the RDA just build there?

SPEAKER #5

The title of the published guide to redevelopment was changed from the “Citizen’s Guide to the “Community” Guide. The language of the titles was changed to fit the times.

Cities have become communities; Citizens have become community members. Where citizens used to have responsibilities, community members have only demands that must be met for them by the state. The Redevelopment Agency is only too happy to oblige.

The definition of blight which is crucial to a legal understanding of where and when redevelopment activity should take place, is noticeably absent from the 2002 edition of the “Community” Guide to Redevelopment. The 2002 edition simply states that “Redevelopment can only be used in areas that suffer from adverse physical and economic conditions, defined in the law as blight.”

In addition to obscuring the definition of blight, the Community Guide to Redevelopment makes some rather bold statements and value judgments about redevelopment:

“Redevelopment enables communities to grow inward, not just outward.” Can anyone tell us what that means?

“Redevelopment…helps preserve the environment.” Only the Redevelopment Agency could support the conclusion that pouring concrete helps to preserve the environment.

“Redevelopment plans are locally created and adopted so they can respond to your community’s unique needs and vision.” Who determines the unique vision and needs of a community? The people of San Jose are not permitted to choose the director of the Agency nor do they get to approve the bonds issued by the Agency.

SPEAKER #6

While all of these aforementioned things might be worthwhile societal goals, the very important question remains: Is the Redevelopment Agency the governmental institution best suited to bring them about? Might other government institutions be more efficient in realizing these goals? Whatever happened to the private sector? Couldn’t tax incentives be extended that would encourage holders of private capital to put it at risk? The problem with Redevelopment money is that it creates an artificial demand. Economic decisions are made based on perceived wants rather than needs defined by markets. In terms of alleviating blight, why not enforce existing code enforcement laws and exact heavier fines and penalties for non-compliance?

-Enough questions for now. It’s time to share some facts about the San Jose RDA:
The San Jose Redevelopment Agency is the largest such agency in the State of California. The RDA has 130 employees and an operating budget in excess of $26 million. The current total indebtedness for the RDA stands at $1.9 billion (double that amount to arrive at the estimated total cost, including interest) This year alone, $116.4 million will be paid by the Agency to service its debt.

In Fiscal Year 01-02, the San Jose RDA received $188,500,000 in tax increment funds. The total revenue listed in the annual report for the San Jose RDA for fiscal year 01-02 was $280,879,047. That’s a lot of money! Are the citizens of San Jose getting their money’s worth?

Earlier this year, the METRO Newspaper reported on a city wide property inventory that was conducted by the City Auditor’s Office at the request of Councilmember Chuck Reed. “One of the most generous landlords is the Redevelopment Agency which, according to the report, manages a couple hundred thousand plus square feet of space and collects less than a quarter mil a year. That works out to under a dime a foot per month…”

SPEAKER #7

There is something wrong with a government agency where it is lawful to give money to an out of state corporation to open a nightclub, but it is against the law to spend that same money to improve San Jose schools.

Our group is under no illusion that any of the members of the council/Agency will be moved by anything that was presented here today. Such was not our purpose. Our purpose was, and is, to connect with our fellow citizens.

The RDA currently owes about $1.9 billion – which is nearly $4 billion with interest. If you apply that debt figure to the population of San Jose, every man, woman and child living in this city would owe $4,000!

It’s high time that the citizens of San Jose take responsibility for their lives, their property and their government. If we can get them to do that, our group will easily achieve its goal: to reform the Redevelopment Agency of this city.

Our contact information is:
Website: coalitionforredevelopmentreform.org
Telephone: (408) 817-5678