Is Redevelopment Really the Devil?

There has been much discussion on this blog, and elsewhere in California, about the state government’s so-called raid on redevelopment funds to help balance the budget. A couple of weeks back, Dan Walters, the longtime Sacramento Bee columnist, weighed in, pouncing on local redevelopment agencies (San Jose’s is one of the biggest) as the epitome of waste, and touting Gov. Arnold Schwarzenegger’s plan to take $228 million a year from redevelopment agencies.

Many associate me with the burst of redevelopment spending that rebuilt our Downtown in the ’80s, but my first familiarity with redevelopment came much earlier, in meetings that I went to in my teens. At that time, my father and many owners of small businesses were attempting to fight off a government Leviathan that was condemning properties, re-routing streets, savaging historic buildings, and destroying the heart of our city. Yep, that was my introduction to the big “R.” My father and so many others fought it back then, and hated its very name. And they were right.

Much was done wrong in San Jose in those days. By the time I became mayor, they had harnessed the vast riches of Rincon, the unassisted redevelopment zone to the north, and hitched it to Downtown’s star. But what many of the critics fail to notice is the simple fact that our highways, our low-to-moderate income housing, our museums, our theatres, our hotels and Convention Center, our Arena, our regional park and even our flood control system—things the citizens of San Jose had long wanted—were all created with the financial strength of that much maligned agency.

Can you think of many other city departments that have given you the bang for the buck that this department has given, and made more ordinary citizens happy? Projects that have expanded our tax base and provided much for our people were built with the help of redevelopment. Until then, all had been a pipedream for much of our lives.

It would be fair to say that a lot of projects did not turn out well. Okay—that is correct. But many exceeded our wildest hopes. Like the Tech, and the HP Pavilion. Only the most blind of critics would fail to note that, and be in a bit of awe at their successes.

In addition, with bonded monies, the money we have to spend on local projects today is ten times what the mere tax increment monies are, and tenfold in these tough times is quite an increase.

It is incumbent on the critics, as they exult in the taking of these funds by the feckless legislators in Sacramento, to remember that only the willpower, creativity and entrepreneurship of local government is able to make the investments and do the work necessary to move our city and state forward.

Those who gleefully savage this critical financial tool hurt every citizen of San Jose, and leave us naked to the darkening downturn in our economy.


  1. On this point:
    “only the willpower, creativity and entrepreneurship of local government is able to make the investments and do the work necessary to move our city and state forward.”

    I agree, but where is the creativity in the sense to push San Jose forward?

    Also it appear that there isn’t much transparency within the halls of the RDA, so it can come across as a government within a government, so when one is viewed to be corrupt,(ie the Gonzo regime) so goes the other.

  2. From what I’ve heard over the years from all manner of folks is the fact that the RDA spent billions in the downtown core and little elsewhere until SNI.

    Also, while old line businesses failed, especially during construction of the trolley that crawls through downtown, rich guys like the Swigs (Fairmont) and chain restaurants like PF Changs and McCormick & Schmicks got subsidies, putting old line restaurants like Eulipia on the outside in an uncompetitive position vis a vis the annointed few.  So, RDA punished locals who hung on through the lean years, and rewarded new cookie cutter chains. 

    So, yeah, Tom, in those instances RDA is indeed the devil.

  3. John Michael
    I couldn’t agree w. you more on Eulipia and the little guys – I fought for them before I was mayor and as mayor. I was sick about the destruction of the transit mall – those people wre the backbone of the city. As to the Swigs, no one, I mean NO ONE else, could have got a 100Mil. Bank loan in Downtown SJ for a 5 STAR hotel then. We, SJ, put in c. 37m. It was the jump start we needed and, except for the Arena, probably the most pivotal move made in that era. Footnote, they lost the hotel, and went bankrupt; Kim Small is a hero there too. So much happens to pioneers.  TMcE

  4. You’re right!  These blind critics don’t get it.  The redevelopment has been very beneficial to downtown San Jose.  Everything the redevelopment touched turned into gold except for Retail Pavilion.  The convention center, California Theater, the Rep, Museum of Art, Camera 12 and etc. have been successful in the long run. Good work, former mayors.  Downtown is now flourishing due to the redevelopment agency’s investment over the last 30 years.  These naysayers in the blog are prevelant everywhere, even cities with great downtowns such as Seattle, Portland, Denver, Minneapolis and Boston.  They all have these blog naysayers attacking their downtowns, and San Jose is not alone.  Just ignore these blog critics that downplay downtown SJ’s progress.

  5. I don’t buy into #5.  we have no downtown in the downtown sense of the word.  what we have is an entertainment district, thearers, resturants, museums and clubs in the central core of town.  the cucial missing element is the retail.

    the real downtown is adding two more major department stores, Bloomies, and I.Mag.  Our true downtown is Stevens Creek and Winhchester.  Santa Row was put up in 18 months all w/ private $$$.

    RDA has been wallowing around the old central SJ area for 30 years, spent billions of $$ and there is not even a place to buy a pair of socks!

    If we insist on calling it a “downtown” there should be a disclaimer for new arrivals and visitors informing them what “downtown” means in San Jose Speak.  Because any other city in the US, North America, the world – downtown refers to the section of town includes entertainment, hospitality AND commercail/retail business.

    Heck we don’t even have Woolworths anymore, not that they had great socks anyway.

    Hugh Biquitous
    SJ – central core

  6. I realize i am going to sound—to regular sji readers—like a broken record (or should I update the simile to say ‘stuck cd’?) but I have the same question for people in the Redev debate as I do for the the folks in the BART debate: Is there an agreed-upon success metric used in the city gov’t community that can act as quantifiable figure that taxpayers can look to and say, “yes, this $XX investment resulted in XX, so we can say it was a good (or bad) investment.”  With BART, the debate always devolves into a Public Transit is Good vs a BART is too Expensive debate, but nobody really gives a success metric to support their argument. Similar with RDA. Tom, anybody, is there a success metric or is it in eye of beholder? Thanks

  7. 3 well recognized city or state government metrics for tax subsidized economic development projects are:

    1) Tax subsidy given / Taxes generated per year for government spending taxes

    2) Stated number of years for tax subsidy payback of taxes received

    3) Number of good jobs generate with average $ salary high enough that new workers are not minimum wage jobs that require more tax subsidies to company or for low income housing or social services as frequently happens with big box stores or some manufacturing jobs

    An example is Grand Prix $4.2 million tax subsidy + 2-3 million free services / labor = $6-7 million invested by San Jose and $300,000-$400,000 received in sales taxes , ticket fees ( $1 per paid ticket / not free tickets and city parking garages )

    You can tell when government has weak financial justifications – they talk about
    “economic benefits”  ( Fake Numbers ) or how spending taxes on non city services is “good for our city ” but don’t tell you the tax and jobs metrics while giving the taxes to businesses, team owners or developers

    Grand Prix $4.2 million taxes spent and got $42 million economic benefits per San Jose economic development later revised to $24 million per year  

    Really who believes 6- 10 times multiplier per year for any government project except government economic development people and naive Council members and uninformed public

    Economic benefits can be any number you want your economist Phd consultant to tell you –

    If you want high $ “economic benefits” hire Phd economists that do sports teams economic benefits for team owners looking for tax subsidies.

    Want medium $ “economic benefits” hire many of other economists

    If your opponents want low to zero “economic benefits” hire Professor Roger Noll from Stanford as Mercury did for 49rers Stadium not economic benefits number

    San Jose fakes many tax subsidy project and city government service metrics

    Remember that any time that San Jose spends taxes on tax subsidies that do not return taxes spent that means we have less city services – public safety, streets, parks, sidewalks, traffic calming, libraries, sewers, community, youth and senior centers

    You will almost never see local city service comparisons because ours are worst / lower than local cities

  8. Tom,

    You make a good point about the RDAs good works relative to public infrastructure.  I think, however, there are many folks like me, who would like to better understand the underwriting of subsidies to private entities. 

    Were there an in-depth annual accounting of RDA activities – tax increment funding, bonded revenues and indebtedness, costs by project, expected monetary benefits, employee salaries and benefits, etc. – I, for one, would feel much better about supporting the RDA.

    All of this data already exists somewhere within the RDA in the form of required financial statements – balance sheet, P&L and cash flow statments.  I just don’t know if it’s made public and, if it is, where to find it.

  9. Tom

    My point is not that the Fairmont would have been built in the same location in 1985.  It’s that it would have been built somewhere. 

    And I don’t care where.  I certainly don’t care so deeply that I want different cities offering competing subsidies with my tax money.

    I’ve lived in 8 different cities, four of them in the bay area.  They’re all nice.  Why on earth would I want them spending tax money to outbid each other for a hotel?

    This is what I meant by fix the tax code.  Give most property tax to cities, and let the state take TOT and sales tax.  That will end the incentive for beggar thy neighbor hotel subsidies.

  10. The trouble with most RDA success stories is that they assume the world would have been frozen in time without the RDA. 

    RDA spends 20 million dollars to get some big name project.  That project pays taxes.  This is a success story.

    But it isn’t.  Hotel companies would still have built hotels, and paid taxes, with or without the RDA.  People travel because they have things to do, not because cities offer subsidies. 

    At most, the RDA changed where a hotel got built.  One city gained hotel tax, and another lost it.  There was no net gain for citizens in general.

    It would be much cheaper to fix our tax structure and skip the corporate welfare.

    The same applies to convention centers, music halls, car races, and the rest of it.

  11. Tom,

    Do you have any idea where I can get the information I posted in #1 above? 

    It really is quite important that our residents and voters have some idea of the success or failure of the RDA as measured by statistics.  The “Carl Guardino Feel Good Barometer” just doesn’t cut it with me. 

    Thanks for any assistance you can provide.

  12. Greg – ask your Council Rep to get you a copy of the RDA budget – much is on line, but he/she can get you more current, items on point.

  13. San Jose Redevelopment Financial information is at

    108 page – 2007 Annual Report

    Very difficult to get redevelopment project list, RDA taxes spent, people who got money and what public got for taxes spent other than more ” Feel good RDA BS”

    Well hidden from public probably for Council and RDA political reasons

    Anyone know where RDA project spending list is so we can see who got tax millions?

  14. #6 Hugh, we have plenty of retail downtown as follows: On First, Purist, Connoissuer 533, Ozuki, Mosher and Chic Chataeu.  Don’t forget Target and Marshall at San Jose Market Center.  Like I said, there are so many naysayers everywhere, even in New York.  Santa Row and Los Gatos compliment downtown SJ.

  15. Greg
      What color is the sky in your world? and do you know anything about SJ history? The Fairmont would have been built in 1985 -yea, right!  The TECH, HP, Children’s Museum, or the thousands of low-mod housing units – not a chance!  One type of redevelopment ruined the downtown, and another more thoughtful, directed one saved it. Don’t toss in the Grand Prix or the other recent fiascos, those were absurd – look at the central good it has done restoring a sense of pride – even the recent moronic years could not spoil that. TMcE

  16. OK, Tax Received supplies some reasonable-sounding success metrics for RDA spending, anybody (tom included) care to argue with those metric sand analyze how current RDA spending stacks up to those metrics? Or provide some new metrics?

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