The San Jose McEnery Convention Center is in dire need of an upgrade to avoid losing business to rival venues in San Francisco and Santa Clara. The cost of just the most urgent improvement is $26.5 million. It’s money that the city doesn’t have—what the city does have is a $105 million deficit. On the other hand, the Convention Center brings in about $12.5 million to Downtown businesses, and this could be lost if no upgrade takes place.
The City Council tackled the problem last night, and voted unanimously to approve bond financing for a full-blown, $120 million Convention Center renovation. Two City Councilmembers, Ash Kalra and Pete Constant, were out of town during the vote.
Mayor Chuck Reed was among the first to recognize that the decision to approve bond funding was a gamble, but argued that, “the amount of risk we’re taking is less than the risk we take doing nothing.”
The bond funding is based on certain economic assumptions in uncertain times. If these assumptions and safeguards do not hold true, payments to bondholders will have to come out of the general fund.
For example, the assumption is that $88 million will be generated through the 4 percent hotel tax, but if that tax fails to generate the revenues, the city’s beleaguered general fund will be used to cover the difference. This could come at the expense of other vital services, like police and firefighters, education and libraries.
The City Council also approved $3.6 million in severance pay for the remaining staff members of the San Jose Redevelopment Agency in the event that the agency is closed. Another $2.1 million was approved for the Healthy Kids program.
Read More at The Mercury News.