SAN JOSE MERCURY NEWS - AUG 21, 2003

Redevelopment agency should drop bad idea

By Scott Herhold

Anyone who follows government closely is used to reading predictions that the sky will fall when budgets are cut. Sometimes, these predictions are right: People suffer from hunger, homelessness or disease.

But occasionally, just occasionally, a budget crisis can force government to its senses. Few better local examples exist than the San Jose Redevelopment Agency's plans for the Tropicana Shopping Center and a strip mall across the street.

You may know the general scope of this excess. Last November, the city council voted 9-2 to spend $60 million redeveloping two big parcels at Story and King roads, long one of the city's shabbier crossroads.

First, it's inherently elitist, assuming that government intervention -- and seizing land -- is essential.

While the Tropicana is hardly the classiest spot in town, it's improved from a decade ago. A makeover would almost certainly sap the authentic mom-and-pop flavor from its Latin and Asian shops.

The plan is to buy the property and turn it over to a Walnut Creek developer, Blake Hunt Ventures, which is promising in turn to create a Latin-theme shopping center.

This is such a monumentally bad decision that it's hard to know where to begin the criticism.

First, it's inherently elitist, assuming that government intervention -- and seizing land -- is essential.

While the Tropicana is hardly the classiest spot in town, it's improved from a decade ago. A makeover would almost certainly sap the authentic mom-and-pop flavor from its Latin and Asian shops.

Lawsuit heaven

A cadre of property owners, led by Tropicana landlord Dennis Fong, has taken the agency to court, where the litigation has become a full-employment act for lawyers.

Second, the project carries real financial risk. For part of the deal, a so-called ``Mercado,'' or group of shops, the agency is stepping in to lease space from the developer, guaranteeing a stream of cash and taking on the risk of heavy vacancies. Read another way, no bank was going to finance the project otherwise.

Finally, the whole Tropicana project is just too costly. In fact, the scope has grown partly by pique. Instead of doing a much less expensive deal with Fong, who has put an estimated $9 million into his property, the council enlarged the original deal for Blake Hunt Ventures.

Now there's hope on the horizon from an unlikely source, the state's budget crisis and the downturn in local property values. The agency's revenue is expected to decline some $37 million from expectations this fiscal year -- a $17 million hit from the state and an additional $20 million because of lower tax collections. Given the strange math of agency bonding, the impact is 10 times as large.

Mayor Ron Gonzales is expected to unveil his list of potential cuts today or tomorrow. Among the projects that could be affected are the mayor's Strong Neighborhoods Initiative (SNI), two downtown parking garages and downtown's CIM housing and retail development.

A modest proposal

The mayor didn't ask me -- sadly, he never does -- but I can give him one easy way to save money: Kill the Tropicana project, on both sides of King Road. Don't postpone it. Don't reduce it. Just kill it.

This would free up money for other projects. But most important, it would save the city from an expensive mistake. The failure of the retail pavilion downtown should be a warning about its ability in the Mercado business.

Councilman Chuck Reed, one of the dissenters on the Tropicana plan, offers a middle ground, suggesting that the agency should cut the plan on the west side of King and explore a more modest deal with Fong.

``This whole exercise has never made sense,'' says Fong. ``I think it's time for everyone to step back from the cliff and say, hey let's work together. Maybe we don't need a Mercedes-Benz.''