Old City Hall Could Have Saved Jobs

On June 26, in the “Internal Affairs” column, the Mercury News reported on the San Jose City Councils’ decision to approve the transfer of the old city hall property site to Santa Clara County. Councilman Pierluigi Oliverio was the only member to vote No.  He said, “‘The old City Hall could have been sold to benefit the general fund.’”
Several weeks prior to the council vote, and after having learned that the City of San Jose was planning to eliminate a $106,000 subsidy to the Health Trust’s Meals On Wheels Program for needy seniors, I sent a letter to the Merc in an effort to bring attention to the fact that the money could easily be found if the city would simply re-examine the land swap deal with the County of Santa Clara. Here’s the letter:
Dear Editor:
In Sunday’s edition of the Mercury News, Patty Fisher, of the Health Trust, lamented the likely loss of a $106,000 from the City of San Jose.  Due to the budget crunch, the Health Trust’s Meals On Wheels Program will have its funding cut, and the seniors served by the program will simply have to do without.
Truth is, the San Jose City Council can easily reinstate this $106,000 Meals On Wheels subsidy.  In addition, the City of San Jose need not layoff the 100 police officers as planned.  The City of San Jose can obtain a $10 million influx to its general fund by simply reviewing the language of a 1996 ballot measure.  The Measure I Initiative, passed by San Jose voters in 1996, authorized the building of a new city hall downtown, “...so long as the costs are paid by using proceeds from the sale or lease of the old civic complex and other land…”  Several months ago, a deal was announced to transfer the old city hall property to the Santa Clara County Government as part of a negotiated debt settlement between the San Jose Redevelopment Agency and the county government.  (The city hall property was assigned a valuation of $10 million).  This $10 million valuation belongs to the citizens of San Jose.  The money should go to the city’s general fund, rather than the redevelopment agency.
Tell the seniors that the Meals On Wheels subsidy will not be cut.  And tell Chief Moore that not one San Jose police officer needs to lose his/her job.”
My letter was never published, and by e-mail, editor Barbara Marshman told me it would not be. Perhaps some other San Jose citizen will raise this question and submit a letter to the Mercury News.  Apparently, I’ve been banned!



  1. Right on point.

    Has anyone requested an accounting of how the new city hall was actually paid for?

    I too have submitted various letters to the editor questioning the Council’s actions, budget and imprudent efforts to not sell/transfer redevelopment assets to pay its debt as opposed to selling City assets which have never been published. It is just a fact the Merc News refuses to print anything that goes against their agenda to vilify public employees and blame them for all of the City’s financial woes.

    • After Measure I passed in 1996, it became apparent that the city council intended to pretend its financing authority (the actual name of an entity created by the city council) was a separate entity from the city council (even though the members of the city council and the financing authority were exactly the same people) and, by doing some financial manipulations, the financing authority was empowered to sell three series of lease-revenue bonds for each of the three stages (design, basement, construction) that were to be paid back from the general fund which pays an annual amount back to the bondholders to this day and probably for another 30 years at least, piling up more interest as it goes along.

      The financial manipulations were clever.  The city council leased the old city hall to the financing authority at X rate of rent, and the financing authority leased the old city hall back to the city council at X+Y rate of rent.  This generated a cash flow on paper from the general fund to the financing authority that satisfied the lease-revenue bondholders.

      Paying interest was made easy by simply adding it to the overall principal.  They called this “capitalized interest” but anyone can see it was irrational to pile up interest until the last year of Mayor Rpm Gonzales administration.  He wasn’t to blame for this, it was Mayor Susan Hammer’s administration that planned financing, site, and architecture.

      Peter should be sophisticated enough to know that the Merc kept these financial manipulations secret, including the series of three lease-revenue bonds and the capitalization of the interest.  The Merc has very dirty hands in the whole matter of the new city hall.  Only the Merc and three or four of us outside the finance department and former city council members know how dirty the deal was, and the Merc is determined to avoid lifting any piece of the carpet under which this mammoth scandal has been swept.

      I wrote more about this during my own campaign in 2004, and it still holds up very well.  You can see the entire essay at:


  2. Since when does this administration do what the voters want them to do? They feed the voters/taxpayers BS, the voters/taxpayers fall for the BS and this is what we get. The administration does what THEY want to do and as a result, this city has failed and is now flushing down into the sewer line. We have an administration in place that does not know how to run the city. For the first time in history, this city that SHOULD be a wealthy city, is broke. For the first time in history, this city has laid off its police officers. This is shameful. The pensions are not the financial failure of this city. The mismanagement of the taxpayer’s money is the cause of the financial failure of this city. Taxpayers need to start demanding to know where every dollar went. The taxpayers should demand to know how a city that SHOULD be a wealthy city, went broke. Don’t blame it on the pensions. That is the smoke and mirror game to point everyone away from the real cause.

  3. Pete

    The public safety ( police and fire ) layoffs were necessary to

    1) send a message to 2 strongest city unions ( POA, Firefighters ) and other weaker city unions who runs city and it is not unions anymore
    2) get all city unions to agree to giveback 35-45% over 3 years in pay, benefit and increased payroll contributions

    3) cut city employees headcount by retirements, people leaving and layoffs to a lower sustainable budget cost so that city taxes can pay both
    A) lower number of employees costs

    B) Council’s politician paybacks to insiders and cronies as we saw last month at 1 Council meeting when Council gave away $4 million

    • It seems that Reed’s “Nazi” ways reach deeply into the pockets of the Murky News.  I have been banned also from blogging by those idiots at the paper.  They are almost as bad if not worse that Eric who censors on SJI… 

      Old Frank

      • Well, Frank, Eric just posted your comment.

        As for Campbell, he is a whining political pool boy who has never served in any elected or appointed office.  A tanned cutey pie at the pickle barrel with no record of government service.  Who cares?

  4. Over the years I’ve heard countless times how RDA was separate from the City. Then all of a sudden everything is wrapped up together with last minute deals like the old City Hall transfer. The City staff and Council could have acted a long time ago to fulfill the terms of Measure I. Instead they waited, with no timetable or plan for the disposition for the old City Hall. They waited until the real estate market tanked. I don’t know how much more the City Council could possibly abdicate their fiduciary and voter mandated responsibility.

    Lesson learned – add a time table to implementation of voter initiatives.

    Why would Council members vote for this transfer? They really do need to explain (other than PLO), given the General Fund deficit and Measure I, why they would do this.

  5. Banned? I doubt that. Pete just found out what it is like to hold an opinion that is contrary to (1) His (former?) boss, Chuck Reed and his flock of sheep on the council (oh by-the-way the same council/mayor who are make up the RDA’s Board of Directors and (2) the editorial staff of the Mercury News – the mouth piece for Reed AND the RDA, Let me refer you to a post on this site by “The Fly”

    To quote the Joker, “This town needs an enema!”

  6. The Mercury news doesn’t print anything contrary to the propaganda out of the mayors office.

    This budget mess wasn’t caused by city employees, it was caused by irresponsible council members and gullible voters that believed that a 400 million dollar city hall could be built for “free”.  The airport spending is another item that the Mercury News never really goes into as a root cause of the current budget problems.

  7. Who benefited from New City Hall ?

    1)  Mayor Gonzales, Vice Mayor Chavez and Council members gave out $500 ++ million in city contracts for $400 million CH building, $45 million new furniture, computers, phones,
    new parking garages, TV studio and other city contracts

    2) Construction unions got 2-3 years of high paid union jobs during dot com recession from labor elected / controlled Mayor and Council

    3) City Hall Managers, department heads and administrators wanted fancy high tech City Hall –  the most expensive City Hall in US – to match their very high 6 figure pay, benefits and retirements

    a) during early years budget deficit when city didn’t have money pushed for new expensive City Hall that San Jose could not afford which increased by $30-40 million yearly budget deficit

    b) mislead Council about $45 million desks, high tech conference rooms,

    c) mislead public about total City Hall costs which exceded $500 million and could exceed $800 – $ 1 billion when interest and financing costs are included and long term ( 30-40 year ) budget impact

    d) mislead Council and public that city could stop leasing office space and savings would pay for new City Hall when they knew that many would remain in leased or city owner buildings

    e) mislead Council and public that they would sell old City Hall and other property to pay for new City Hall

    Who lost from New City Hall ?

    Resident / Taxpayers – higher taxes, fees and less services for next 30-40 years which increased budget deficits when an existing Sobrato downtown new building was available for $ 125 –150 million resulting in les and less services for higher taxes and fees

    Business / Taxpayers – higher taxes, fees, permits and planning / building costs for next 30-40 years for less services and longer wait times and more approval delays – San Jose is less competitive than other Silicon Valley cities and more expensive so business and their taxes go to other cities while more and more San Jose residents drive to jobs in other cities

    • Who Benefited:  You’ve overlooked the millions and millions of dollars funneled into the pockets of bond counsel, bond buyers, transfer agent banks, and other beneficiaries of finance capitalism (as distinct from entrepreneurial capitalism) who profited from the huge costs of each of three separate bond issues as well as interest payments on the capitalized interest. 

      These huge sums put into the shade any benefits to blue-collar workers or to city officials, unless there were private deals cut behind the scenes between bankers and city finance department personnel, union leaders, or council members in the ‘90s.

      This transfer of taxpayer cash to idle lenders continues to this day, draining cash from taxes paid for city services directly into the pockets of those who float above the mundane matters of city streets and public safety.  The losses of city services were predicted in 1996 and throughout the Hammer administration while these financial beneficiaries staked their unpublicized claims to your tax dollars.

      I can’t blame you for not knowing this….your lack of awareness is due to the Merc’s and the politicians’ silence to this day on this point.

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