San Jose’s RDA Misfires Could Lead to Safeway’s Closure

Scuttlebutt among San Jose’s downtown dwellers has centered on whether the city core’s largest grocer, Safeway, will fold after losing its validated parking hook-up under “The 88” high-rise. Concerned patrons have bombarded District 3 Councilman Raul Peralez’s office with queries over the store’s fate, but City Hall has no control over the price of parking ever since MVP Realty outbid the city with a $3.6 million offer for the adjacent 330-space garage, which San Jose’s Redevelopment Agency (RDA) funded for $12.5 million just before the real estate bubble burst in 2009. Richard Keit, head of the successor agency tasked with selling off RDA assets to pay back the state, says the city had three chances to avoid losing the garage—granted, the last two were long shots. But had San Jose kept the lot, it would have preserved a two-free-hours validation deal that accounts for 75 percent of parkers and reportedly keeps the attached Safeway afloat. The city could have claimed the garage for a steal last year when an appraisal put the site’s value at $850,000. But the successor agency’s oversight board, in a charge led by retired Santa Clara County finance exec John Guthrie, called the estimation dubiously low and demanded a second opinion. That next appraiser pegged the value at a staggering $13 million—impossibly over the city’s budget and a sum Keit calls “ridiculous” and “absurd.” The last-resort option, per Mayor Sam Liccardo’s spokesman David Low, was to put the garage up for an open bid. San Jose’s $1.5 million pitch stood zero chance against MVP’s. While the successor agency rid itself of a $7,000-a-month moneysuck, the sale could spell the end of downtown’s flagship grocer. And this is after the city helped Safeway build the garage, which led to the demise of the Zanotto’s grocery store—also funded with RDA money—in 2011.

Below is a list of bidders and the amount offered by each one.

Source: City of San Jose

Source: City of San Jose

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45 Comments

  1. Why did Safeway need “help” from the city anyway? Why are we “helping” corporations? If they can’t make it here, they need to move!!! I’m sick of helping these corporations that take tax-payer money to help them stay afloat! What are we running here a charity for Safeway?

    Seriously Bubble, back me up here will you? If grocery stores can’t make it…they should just move!!! Right?

    • > Seriously Bubble, back me up here will you? If grocery stores can’t make it…they should just move!!! Right?

      Jill:

      As a general principle, yes.

      But, I don’t know the whole story, and the problem with making judgements based on stories in political blogs is that such sources have been known to leave out important, relevant details.

      A “free market economy” ought to be based on “profit and loss”. And losers should move or go out of business.

    • “Why did Safeway need “help” from the city anyway? Why are we “helping” corporations? If they can’t make it here, they need to move!!! I’m sick of helping these corporations that take tax-payer money to help them stay afloat!” Jill, perhaps you are too young to remember, but this all started when Tom McEnery was mayor back in the 80s. His family owns San Pedro Square, and as an ardent capitalist, he rightly desired to maximize the value of that property. So, he and Frank Taylor, the RDA Director, decided that making DT SJ a “24 hour downtown” would enhance the family property value. Thus began a series of giveaways to wealthy folks to build things like The Fairmont, and rent subsidies for places like PF Changs, Hawg’s, Billy Berk’s, and Safeway which was the only way to try to get businesses to open in DT SJ. 35 years later, DT SJ is still more like Skid Row than a vibrant, welcoming downtown, but we do have some new buildings nestled among the shuttered, graffiti ridden storefronts.

      • “ardent capitalist” and “rent subsidies” should not go together, right? I’m trying to make sure I am understanding you correctly. It sounds like Tom McEnery was anything but an ardent capitalist if he was handing out rent subsidies.

        • JILL:

          The word you’re looking for is “crony capitalist”.

          I wouldn’t be surprised if McEnery also held Solyndra stock.

        • He handed out subsidies to bring more people to the moribund DT SJ, where a rising tide would lift all boats, especially San Pedro Square. Interestingly, building the Shark Tank did more for the fortunes of San Pedro Square than all those rent subsidies. McEnery championed the bond measure that built the tank, and is a part owner of The Sharks. Giving away taxpayer money increased the value of his holdings. To some that may appear to be socialism, but it is in fact vintage capitalism.

    • Sometimes, the help is not provided to help the corporation make additional profits. Sometimes the “Help” is to encourage those corporations to stay in a place where the services are needed, but the costs in that area have been artificially raised.

      Ask yourself this. If you were a resident in that area, and the only grocery store in the area closed, and you now had to travel 10 miles to the next closest store, would you be happy, or would you be petitioning the government to help Safeway stay in the area? Would having no car change your reaction? If you had to walk or use public transportation, would your opinion on this change?

      Remember, there are always at least two sides to every issue. Sometimes you need to take a step to the side to see things from a different angle.

      • So you are saying that sometimes rent subsidies to corporations using tax payer money is a good thing in certain situations? I just want to be clear.

        • Even in business, you sometimes spend money to make money…If attracting big business to attract a lot of people is part of your business model, sometimes you give the big business concessions. or you can continue to have a downtown area that is all but desolate, and stagnant.

          • So, just out of curiosity…are there any other examples of rent subsidies using tax payer money that could be a good thing in certain situations, say like, paying women to stay home and raise their children or paying for day care for all children while parents work? Just trying to get an idea of where you and others on this site draw the line on which “rent subsidies” are acceptable concessions. You see, I don’t think corporations need ANY help, whereas I DO believe women are at a particular disadvantage when trying to work, pay for child care AND pay taxes to help out SAFEWAY!

            Just wondering if there are two sides to every story or just the ones that suit those in “business”.

        • Jill, it sounds like you have mommy and daddy issues. Perhaps this is not the right forum to vent your anger.

          • Yes, I am venting my anger on this forum about corporations getting a hand-out.

            And I assure you, my anger comes from having local government issues. Local government thinks it is my mommy and daddy these days…so in a way…I guess your right Dr. Phil.

            As Dr. Phil would say, “how’s that local government workin’ for ya?” Well…it’s NOT working and YES I’m angry.

            No corporate hand-outs. Period.

        • Jill…since when is it the government’s responsibility to “pay[sic] women to stay home and raise their children or pay[sic] for day care for all children while parents work” And as far as the latter, at the very least, the money used to pay for day care is used as a deduction when doing taxes.

          As far as drawing a line? If the situation does not meet the needs of a corporation, they will leave. Safeway doesn’t need a store in this downtown San Jose area. The residents of the area will lose out. I guess in your socialistic view, they should be forced to stay?

          • Jill: People need to stop having children they cannot support without taxpayers picking up all or part of the tab. Every time I turn around there is some appeal on a local, national, or international level to pony up money for kids that don’t get enough to eat, don’t have school supplies, school clothes, and on and on and on.Too many people have too many kids they cannot afford to feed, house, and clothe properly. Every taxpayer funded program and every NGO that doles out money or stuff for kids should require their parents to take family planning classes and use condoms or other forms of birth control.

          • “I guess in your socialistic view, they should be forced to stay?”

            Huh? You make no sense. I DO NOT want tax-payer money given to Safeway. Yes, they should go out of business if they cannot make it there. This is not a socialistic point of view. No tax-payer money to Safeway or any other corporation. Period.

            Why are you twisting my point of view? No corporate hand-outs. Ever.

          • “…since when is it the government’s responsibility to “pay[sic] women to stay home and raise their children or pay[sic] for day care for all children while parents work…”

            It’s not. That’s what I’m saying. SO – since when is it the government’s responsibility to pay for you and your neighbors to have a Safeway near you?

      • That’s one way to look at it, Mark. But as I told McEnery and others more than once back in the 80s, the RDA did it exactly backwards.The RDA put the cart before the horse. If you want stores to come to and remain somewhere, there has to be an “indigenous population.” If there is a concentration of employed people living in DT SJ, the stores are far more likely to come. The RDA never got it. Private developers are now building high density housing in DT SJ.That is the true “critical mass” the RDA never grasped, and is the only way in which businesses can survive in DT SJ without subsidies. .

    • The question is…did Safeway need downtown San Jose….sometimes arrangements are made on a “win-win” basis. The area needs a supermarket. I am sure it created a certain amount of jobs for people in the area. Now, the area suffers. Also, remember, people with cars can travel elsewhere, to another Safeway if desired and would be unaffected by this change. I think you have it backwards.

  2. > an appraisal put the site’s value at $850,000.
    —That next appraiser pegged the value at a staggering $13 million—

    Well, so much for “expert” opinion.

    I wonder if these are the same guys who have the computer models on “global warming”?

  3. “I wonder if these are the same guys who have the computer models on “global warming”?”

    LOL

  4. JMO is absolutely correct. McEnerey, Taylor, et al pumped downtown in every way possible and the RDA was flush with taxpayer money so it was used to make a desolate sh*thole into much more than it was. Remove the subsidies and downtown returns to what it once was… a desolate sh*thole.

    • DT SJ has been slipping backwards for at least the last 7-10 years. I watched it from my office in DT SJ, and as I walked around DT SJ 5-6 days/week over that time. Zanotto’s couldn’t make it even with taxpayer funded rent subsidies.The interior had the worn and tacky look one expects for a Skid Row location, like The Tenderloin in SF, but their prices were as high as its Rose Garden location. When it closed in DT SJ, the walls and windows immediately became covered with graffiti. At first the city tried to remove it, but they couldn’t keep up, and eventually gave up trying. The Grounwerx people are fighting a losing battle, but they do provide a few jobs for unskilled folks. I retired and closed my office at Third and St. John two years ago. I come DT for lunch once or twice a week, but never hit the streets of DT after dark. My son lived in an apartment above Fahrenheit at Third an San Fernando for a few years, but got tired of the homeless sleeping and urinating there, and the violence, so he moved out of state.

  5. Keep in mind those government subsidies made a lot of rich people richer, like mayors, councilmen, congress critters
    etc.
    This is an opportunity to move in Whole Paycheck Foods, or maybe we should put in a non stop high speed rail line to Santana Row House!

    Who lives downtown anyway?

  6. And they blame all of it on pensions. Scapegoating. Big business and big real estate got that RDA slush fund.

    • > Big business and big real estate got that RDA slush fund.

      Interesting point, Anon.

      Your comment made me realize that the $950 million Santa Clara County Affordable Housing bond is just another “big business and big real estate” slush fund.

      The insiders never change their behavior, They just invent new names for things.

  7. > Just trying to get an idea of where you and others on this site draw the line on which “rent subsidies” are acceptable concessions.

    JILL:

    Many people think (and have written books) arguing that all subsidies are or ought to be UNacceptable.

    Subsidies are just privileges granted to special interests by people who have gained some power in the political process.

    What happens is that over time, subsidies/privileges accumulate on the political and tax system like barnacles, and the whole system becomes inefficient, unstable, and begins to sink.

    You’re favorite “subsidy” is a tax on someone else or a barnacle on the tax system which just contributes to making the system worse for EVERYONE else.

    At this stage, is probably a political impossibility (short of a revolution) to eliminate all subsidies,but it is pretty clear that reducing subsidies is better than adding subsidies.

    I think eliminating all subsidies for corporations would be a great idea (along with eliminating corporate taxes), but the reality is that subsidies are diabolically connected to the supper dishes of powerful voting groups.

  8. > At this stage, is probably a political impossibility (short of a revolution) to eliminate all subsidies,but it is pretty clear that reducing subsidies is better than adding subsidies.

    I’m READY for a REVOLUTION.

    The United States has become a place where old people and children are looked at as a liability, not as family to be cherished and cared for. Corporations are hell bent on turning families into peasants to work for them and buy their goods and pay their ungodly rents, and governments now look to these same corporations to keep themselves alive.

    Who is looking out for the average citizen? Who among us is able to face each morning with joy and spread it to those around them? Who is thinking, wow…isn’t this experience of being human grand? Instead, we are all just barely getting by, being fed icky food, icky advertising, icky violent media content, icky news, and constant changing technology that is going to save the world somehow but doesn’t seem to be doing a damn thing to inspire us to take better care of one another.

    How free are we if we must face this anxious money hungry daily existence that throws away its seniors and children like garbage.

    So yes Bubble, I’m ready for a revolution. You and I may want to go in different directions at the end of it, but I’ll take ANY change at this point. We are folding in on ourselves and I think deep down we all know it.

    • > The United States has become a place where old people and children are looked at as a liability, not as family to be cherished and cared for.

      We’re not all the way there, yet, but it is “truthy”.

      But your essential point is that the central role of families on our society has been severely diminished.

      I agree, and I believe it is a very bad thing.

      The question is: who do you believe caused the problem, and whose army do you join to fight the back?

      I’ve given my analysis several times.

      Primitive humanity was organized around “tribes” and not “families”. Social practices and mores probably resembled a hippie commune. The alpha male had sex with whoever he pleased whenever he pleased. It didn’t matter who fathered a child. It was Hillary Clinton’s dream: the “village” raised children.

      Herding and agriculture (9,500 BCE) created private property, which created wealth, which required inheritance rules, which created marriage, which defined families.

      Look around you. Who is for “free love”, abolishing private property, and villages raising children? And who is for private property, marriage, families, inheritance, and providing for future generations?

      If you like families, it should be obvious which army you need to join..

    • Who is looking out for the average citizen, Jill? The average citizen, and indeed all citizens, should be looking out for themselves. It is not the proper function of government to fill in the gaps for every millenial who whines that something be taken away from one person to take care of him or her. In a scant 50 years this country has gone from the land of opportunity to the land of handouts, with the major result is that more people keep demanding more handouts. And now, folks like Jill say that if they don’t get more handouts, there will be a revolution. Pathetic!

      • I totally agree that citizens should be looking out for themselves. I try to do that daily. That is one reason I am quite irked that our local government continues to give hand-outs to businesses and corporations. (Air China subsidy is killing me) It is entirely possible that perhaps it has become reflexive for you to simply dismiss hand-outs for any reason as being bad, but when it comes to businesses getting a hand-out, you are in line with the thinking…”well, we need to encourage businesses to…blah blah blah”.

        I’ve seen it time and time again. Corporations get subsidies, developers get tax breaks, and citizens are getting screwed. I’m sick of it.

        You don’t want to help individuals for any reason. I get that. I don’t want to help corporations for any reason.

        By the way, I NEVER said I wanted a hand-out for childcare. Read my post carefully. You jump to conclusions very fast.

        • Jill-” I am quite irked that our local government continues to give hand-outs to businesses and corporations.” You and me both, but I’ll go one step further and say ALL government who give handouts to big business/corporations period. They get all these hand outs, tax breaks, subsides, and never pass on their savings to the tax payers, who in reality, are the ones paying for them in the first place. (Politicians are well funded by these groups, and lobbyists work hard to get what they want from them. I read that corporations spend a million dollars A DAY, lobbying Congress and Senate to get tax breaks, subsides, bailouts, and to change laws to benefit themselves.) All you have to do is look at the profits these corporations get, and compare the prices of what we are paying for things to figure out who’s being screwed, and it is NOT them!
          Secondly, if you look at the wages of Safeway employees, you’d scream and claw your eyes out! They don’t even pass their savings on to their employees, as a matter of fact, none of these huge corporations do, unless they are an executive.
          I do think business deserves a fair profit, but gouging consumers seems to be more the norm than not. I make a concerted effort to shop at small businesses whenever I can, including renting from Mom and Pop owned rentals because these businesses are the backbone of what made America great. Also, they don’t get bailouts, or tax breaks like huge corporations do.

      • JMO- If corporations weren’t “whining” and lobbying government, at the cost of a million dollars a day mind you, to get handouts, tax breaks, handouts, subsides, and laws changed to benefit themselves, we tax payers would have more money in our pockets. They don’t pass any of their profits or benefits to consumers who are actually the ones paying for all these kickbacks, nor do they pay their employees a living wage either. They just send American jobs overseas, or bring in HB1 workers, and continue to rake in enormous profits, laughing all the way to the bank. You know, banks overseas!

        The costs of medicine, health care, and basic necessities are off the charts. When the big crash happened in the 2000, big business made HUGE profits while the working citizen lost their jobs, their homes, and yes, their businesses. Small business is practically non existent anymore. It is really sickening when you think of it.

        And Jill is 100% correct! People are revolting against getting screwed. All you have to do is look at the Presidential election. More people are supporting Trump and Sanders because they are sick to death of what has been happening. Our politicians are bought and paid for and everyone is sick of it. I know I am.

        • Kathleen: I agree with you that corporate welfare is a huge problem. However, using Safeway is not a good example. Supermarket profits hover around 3%. The competition is tough and the margins are thin, as opposed to Apple, whose gross margins are 40%. As to your statement that “small business is practically nonexistent anymore” you are dead wrong. Small business remains the backbone of our economy and provides far more jobs than big business, despite the fact that small business gets few breaks from the tax code and almost no subsidies from government. Small businesses can’t afford the tassle loafer lobbyists.

          • JMO says, “Supermarket profits hover around 3%. The competition is tough and the margins are thin, as opposed to Apple, whose gross margins are 40%.”

            Sounds a bit like you support corporate welfare for those corporations that have less profit margins than other corporations. That’s funny. Whenever someone on this site argues that a low wage earner needs a subsidy to pay rent here in San Jose’s ungodly rental market, you’re you’re the first one to scream out, “MOVE!, get a better job, stop mooching off of me!” Yet, when Safeway (now defined by you as a low earning corporation) needs a subsidy to stay here, you say….”maybe, um, wait…they are so poor, they have such low profit margins…um ..let’s think about it for a minute”.

            What the heck JMO? You’re pro-rent subsidy’s for low-earning corporations. I’m NOT. They need to JUST MOVE if they can’t make it here. Just like the rest of us.

  9. This is devastating. Safeway validates 2 hour parking. Such a better deal if you have to make a quick stop downtown to do a little grocery shopping and get free parking.

    • That’s what I keep trying to say…I don’t think Safeway needs the site, and if people have to pay for parking, they will shop elsewhere. As a result, Safeway will just close, depriving the neighborhood of their service. If you have a car, why would you pay $2 for parking to shop at a Safeway when there are plenty of options that do not charge parking. And why should Safeway pay for it? Sorry…I think having Safeway there is supposed to be helping the area.

  10. “If you have a car, why would you pay $2 for parking to shop at a Safeway when there are plenty of options that do not charge parking.” Well, you wouldn’t. But Sam Liccardo has been trying to get the car OUT OF DT SJ for years–bike lanes everywhere. Many streets now have the bike icon in the middle of lanes designed for auto traffic where the speed limit is 25mph or more; but few bike riders ever exceed 10 mph, causing extreme frustration for car drivers DT and elsewhere throughout the city. Sam’s idea is that everyone who lives in DT SJ will walk to the DT Safeway, thus there is no need for car parking.

    • I do think that it is viable if you work and live near VTA to live w/o a car (and rent when needed for road trips) even in San Jose.

      Downtown SJ has everything you need. Even if Safeway leaves, Instacart serves San Jose and the incremental cost is less than car ownership.

      Personally I can’t deal with being sweaty all day so biking to work never seemed viable (business casual is pretty stuffy to bike in). I’ve worked with people who do it so may be my own idiosyncraticies.

      • “Downtown SJ has everything you need.” Boy, are you in the minority, Associates Only. For 98% of the residents of the entire county, DT SJ has nothing they need. That’s why it’s such a ghost town at night, except for the homeless and Eastside thugs who come downtown to party and cause trouble. If enough apartments and condos are built, that may change; but until then, 99+% of the people who work DT leave after work and do not return until the next day when they return to work.

  11. I’m for eliminating all subsidies, unless they’re directly related to a declared war (with a sunset clause), and… and… well, I can’t think of any other exceptions. Let the market decide.

    Any subsidies should require at least a two-thirds vote, the same as for tax increases. That would take care of the problem, because subsidies always benefit a minority at the expense of the majority.

    How many people would vote for those very inefficient, unsightly, bird-chomping windmill subsidies that produce electricity (if there’s wind) that costs ten times more than NatGas or hydro? The huge windmill subsidy benefits General Electric — at the expense of the taxpaying public. But did we vote on that subsidy? No. Like almost all subsidies, the public didn’t get a say in the matter. Our job is to just shut up and pay for the deal.

    Regarding bicycles, I’d like to see an annual vehicle tax applied to bikes. They get their own special paths on our streets set aside, but at no cost to them. Why?

    I suggest an annual fee equal to half the average fee for cars. Or even for motorcycles; I’m willing to negotiate. But free? Why? Can anyone explain that?

    So let’s vote on that, too! Why are bicycle riders treated ‘special’? They should carry their weight, just like everyone else. They could even have cute little round license plates, like I had to get for my bike when I was a kid. And back then they didn’t even have bike paths — those didn’t come along until after the Civil War.

    So I would like to see a ballot proposition that requires bike riders to pay a fair share of the cost of maintaining our roads — and along with it, a requirement that cities, counties, and the state must use all such income exclusively for its intended purpose: to build and maintain public roads and freeways.

    I know, that’s already in the law. But the Legislature has managed to ‘borrow’ a lot of that money. Except it never seems to get repaid…

    …so no wonder our roads are full of potholes. Last summer my wife and I drove across the country. We noticed two things: there are giant windmills all across the fruited plain (often not turning at all), and as soon as we crossed the state line out of California, the roads became much better.

    The roads in some states were very good; many were excellent. But California is in a class all by itself. No other state on our route had roads so badly in need of maintenance as California.

    Sufficient money is being collected. California used to have the country’s best roads. But over the years elected connivers have figured ways to divert the road money into special interest pockets.

    Once again: The taxpayers who pay the cost should vote on it! We see what happens when we give that authority to some elected jamoke: his new BFF’s are special interest lobbyists, and all the taxpayers are good for is paying the freight.

    Remember that, when they come begging for us to support their new bond issue. They’ve already spent the money on high compensation for bureaucrats, unnecessary consulting contracts, etc. Now they want bond money, to pay for what the money was originally collected for. Don’t give it to them! We’ve already paid for it once… Just Say No!

    Taxpayer Tough Love. Send them a message: Vote NO on bonds.

  12. Looks to me like the central planners down at the city ministry of grocery stores were passing out LOTS of taxpayer cash to corporatons:

    > Zanotto’s opened in 1996 with help from a $1.65 million loan from San Jose’s Redevelopment Agency.

    The store was forced to close temporarily in 2003. With a restructured loan from the redevelopment agency, it reopened in 2004 as a downsized market.

    Zanotto’s years-long struggle to survive in downtown San Jose will finally come to an end on June 30, when the grocery will close its 14,000-square-foot store on South Second Street, its owner said Friday.

    But the economy soon soured, and in 2009 Safeway moved in down the block at 100 S. Second St., where the redevelopment agency had spent $1.85 million on a new parking garage attached to The 88, a sleek new condominium high-rise. Safeway customers can park in the garage for hours for free with validation.

    • SJ Bubble: Your comment makes it seem like Zanotto’s at 38 S Second closed recently. it closed over five years ago, and “re-opened” as a small sandwich shop on S. First. The location was never a good one–just across the street from Fountain Alley, aka Crack Alley. The store was always shabby, it’s employees were mostly shabby, but it’s prices were high–all in all a bad combination. Yet another failure in the vain attempt to make DT SJ attractive to those who don’t live there. The retail space on the ground floor of the nearby Globe Apartments has never been leased. Both storefronts are littered with graffiti, much of it etched into the glass. A true Skid Row block, occupied at least 18 hours/day by drug dealers, who appear to add up to about 20% of San Jose’s black population.

      • > Your comment makes it seem like Zanotto’s at 38 S Second closed recently. it closed over five years ago, and “re-opened” as a small sandwich shop on S. First.

        Ooops.

        I was quoting from an article. I need better quotational skills.

        I should probably go into quotesmanship rehab.

        Maybe I could combine it with sensitivity training and get a package deal.

  13. Boy, Jill, did you get it wrong in your July 28 post. There was no “reply” button beneath it, so I must respond here, a long way down. I absolutely do not support taxpayer subsidies for anyone. I was merely responding to Kathleen’s July 22 post that showed she was unaware of the reality of the low profit margins in the grocery store business and incorrect in her belief about the volume of small business in this country. read the 2 posts together, Jill, and perhaps you’ll get it.