La Oferta

November 30, 2023

New Redevelopment project endanger federal funds and City’s budget

June 7, 1995

By Yolanda Reynolds

La Oferta Newspaper.

Mayor Hammer has convened “The New Realities Task Force,” a group made up of 28 Valley residents, whose charge is to determine City priorities, and how to fund those priorities. The Task Force was told that the “reality” facing the City is a constant budget shortfall since 1990 while, at the same time, the mayor has proposed a five year capital (building) construction program that could increase that shortfall by many, many millions for years to come.

The City’s General Fund, already had to make up a total budget deficit of $113 million. For almost the last ten years the City has had to make cuts. Just this last year, the City library was in such need of funds that the voters approved a special $25 parcel tax to support the City’s libraries.

Mayor Hammer admits that there is a problem and says that the problem is that the, “City’s tax base does not generate the resources that we need to maintain both our current day-to-day services and our economic infrastructure.”

This Task Force convened by the Mayor determine if the City “must offer fewer programs (to the residents)” and whether “it is necessary to raise fees or taxes” along with the consideration of several other strategies or combination of strategies. Not mentioned at these meetings is the current proposal to borrow large sums of money, which will enhance the fiscal problems of the City at many years — into the future, just in order to continue controversial Redevelopment projects.

According to City records, fees have been increased each year since the budget gaps first appeared, in the 1991 Factsheet prepared by the City Manager’s office, the City is shown to have collected $25.3 million in licenses and permits which then amounted to 6.1% of the City’s total revenues.

The 1994 Fact sheet indicates that licenses and permits produced $44.4 million, amounting to 9% of the City’s revenues.

Within this same period, property tax revenues dropped by 4.4% and sales tax revenues dropped by 4%. Overall, General Fund revenues increased to $471.3 million in 1994 from $414 million in 1991. However, each year it has seen reductions of the services it once provided.

In that same period, San Jose’s population grew by almost 50,000. Between 1991 and 1994, the median family income remained the same – $54,000. Meanwhile, the inflation, for those four years, went up by approximately 4% per year.

The current problems were predicted several years ago by the City’s former Deputy City manager and Finance Director, Susan George.

In a memo, dated January 1988 from George to then Mayor Tom McEnery and the City Council, she wanted that the “City’s “existing resources (are) inadequate to either support its construction or acquisition of new and projects or to provide adequate maintenance of these new projects.” She adds, “If no maintenance funds can be identified, it is the administration’s recommendation that new project commitments not be made.”

Since that date many new projects have been added. These include the Fallon House, the Arena, and a number of community centers – Evergreen, Berryessa, and Camden. Now the City is considering building the Repertory Theater. The Mexican Heritage Gardens, (the permanent site for) The Tech Museum of Innovation, Villa Torino, and the Nohonmachi in the Jackson Taylor area.

According to projections, the Tech Museum will continue to require at least an annual operating subsidy of $1.3 million. The Mexican Cultural Heritage Gardens will require $200,000 to begin operations and by 1998-99 costs will increase to $700,000 a year. The Guadalupe Gardens already require an annual operating budget of $137,402 and will need an additional budget of $244,824 to complete this and next year’s work at the garden. In the meantime, neighborhood tree trimming has been adjusted to a 24-year cycle. The operating subsidies come from the City’s General Fund the source of money for police, fire protection, street maintenance etc., etc.

ln 1988, George said that the City had several options that could change her projections, to cut out new projects, or raise taxes or fees, in order to meet the City’s unfunded capital needs.

At that time, the administration’s concerns capital needs were up keep of street repairs, installation of traffic control devices, the maintenance of libraries and park facilities.

Now, in 1995 City Manager Regina Williams is again cautioning the Mayor and the City Council that, in proceeding with the intended capital projects for the next five years, City officials must proceed to take care to protect the City from any risks that will endanger the City’s General Fund.

At the recent Redevelopment Agency Board (City Council) meeting the Mayor grandly announced that the five year capital program that she was seeking would generate many jobs and the necessary revenues to meet the loan payments on the money borrowed to build the new projects.

District 5 Councilman Manny Diaz urged the Mayor and City Council to carefully read the information that Regina Williams has presented in her memo to the Council.

District 1 Councilwoman Trixie Johnson remarked that the “Wolf Report revealed serious issues regarding the proposed Mexican Heritage Gardens” and asked that her Council colleagues “discuss” the report in greater detail. The Wolfe report analyzed the viability of and community support for the Mexican Cultural Heritage Gardens.

Councilmember David Pandori and the newly elected member Pat Dando expressed concern for the impact that these proposed projects would have on the City, since the General Fund would now beats serious risk.

As the Council voted by 9 to 2 vote to adopt the Mayor’s five year capital package, she agreed to hold a 5-month review of the financing plan and of the advisability of pursuing the just approved five year capital project plan.

At the June 1 Agency meeting, last Thursday, a number of San Joseans protested the financing plan proposed by the Mayor.

Artistic Director for El Teatro de Los Pobres, Felix Alvarez, urged the Council to reduce the number of theaters that the Agency plans to build. He pointed out that the last city council (which included Susan Hammer) had said that it would build a performing hall that would be used by the entire community and would be recognized as a “multi-cultural” performing arts hall.

Alvarez’ proposal would not deprive the Repertory Theater Group of a special place for presenting their work but since they do not perform every night, the theater would be available to other groups as well.

One of the criticism regarding the Mexican Heritage Cultural Gardens (among several other serious problems) identified by the Wolfe Report is the identification of other groups with the proposed cultural and performing arts center.

That was evident at a previous hearing, where other ethnic groups came to support the Mexican Heritage Cultural Gardens – some were saying that they would use the facility but all commented that they wanted the City to build them their own similar cultural and performing arts center.

Alvarez says that building one downtown performing arts center would bring all of the various groups together. Alvarez had been a leader in an organization of multi-cultural performing arts groups that made the Council take notice that there was a pent up need for more performing arts space in the City, in particular for the diverse cultural performing arts groups in the City.

It came as a surprise to many when the City agreed to build a performing arts center outside of downtown San Jose and in the area where, originally, there was simply to be a garden of a design reminiscent of those famous gardens found in old Mexico.

The Wolfe Report and the City administration memos, from 1988 and 1995, contain information that should cause the Mayor and the City Council to heed the advice of Kathy Chavez Napoli and others who testified at the last Agency hearings. Napoli advised the Mayor, “it is time that the Council live within its means and tighten its belt live all the rest of us have had to do.” Napoli reminded them that it is unwise for anyone to borrow money for things that “are not necessary.”

San Jose resident Ray Bowdle reminded the Council and Mayor of their solemn promise of “fiscal responsibility” and of their promise to accept accountability for their actions.

Rick Burress speaking on behalf of Operating Engineers Union Local 3, reminded the Council of the dangers and problems inherent of the Mayor’s proposal to use the “Workers Compensation” funds to raises some of the money necessary to pay for the proposed five-year capitol program. These funds are already short of money to meet contractual obligations to City workers.

City Manager Regina Williams warned that borrowing money from HUD is very problematic due to Federal restrictions and regulations and, as well, because it would jeopardize the CDBG (Community Development Block Grants). These are Federal monies that provide many community based organizations in the City with the resources to provide many needed programs in the City.

The issues facing the residents of the City are complex and serious. According to the City’s own reports, the incomes of the City’s residents is stagnant and California is having a difficult time with increasing unemployment. The population growth in the City is largely due to births not newcomers. That means that the City will need more programs for the Citys youth, not less an area already seriously underfunded.

To learn more about the City s financial problems attend the City Council meetings, the Finance Committee meetings, and the Agency Board meetings. For dates and times of these meetings contact the Mayor’s office at 277-4237 or contact your City Council representative. Their phone numbers are individually listed in the government pages of the telephone directory. © La Oferta Newspaper.