Next Steps for RDA

As you may have heard, last month the California Supreme Court terminated all Redevelopment Agencies (RDA) in California. As a result, they will be dissolved by Feb. 1, 2012.

The first step is for each RDA to form a “Successor Agency.” This agency will enforce any and all obligations and agreements that are currently in place. In addition, it will dispose of assets and properties as well as oversee prior agreements to manage specific redevelopment projects. Finally, the agency will prepare an administrative budget every six months. The city may act as the “Successor Agency,” and I assume most cities will do so.

The checks and balances of the new agency will be done so by an oversight board. This seven-member board will include many different officials.  Each of the people and groups listed below will have one appointed representative.
● Mayor
● Country Board of Supervisors,
● Santa Clara Valley Water District
● County Office of Education
● Chancellor of the California Community Colleges
● Labor Union

A final member will be added from the public as a private citizen. The Board of Supervisors will appoint the private citizen. It will be interesting to see who the board picks. I hope they choose a certified public accountant, because this really is about managing finances.

This oversight board directs the dissolution of the former RDA, including selling land and repaying debt. The board establishes payment terms, refunds outstanding bonds and allows cities to buy RDA assets at fair market value,etc…

Another topic that will be discussed by the oversight board is continuing to have a Housing Department. The Housing Department employees have been funded by RDA funds and/or grants. Since RDA will no longer exist, the future of the housing department is now under question. 

RDA was not meant to last forever, but the way the state chose to end the RDA caused unnecessary harm to local governments. The state raided millions of dollars from San Jose’s RDA without any regard to cash on hand or how RDA would be able to pay existing debt obligations. The city of San Jose will now inherit a portion of the total debt that comes from decades of accumulated spending by the RDA. For example, although the Fourth Street garage was completed in 2004, its debt was to be paid over 30 years. As a result, the general fund will pick up this debt payment. Perhaps San Jose State would like to lease a floor of parking in the Fourth Street garage to help out?

On another note, the Rules Committee unanimously approved sending my memo regarding allowing volunteers at the library through the meet and confer process. This starts the conversation about allowing volunteers to augment library staff to possibly extend the current hours of operation for our libraries without any layoffs. Stay tuned as the discussions with the union may take some time; however, I am hopeful.

And on a final note, special thanks to the 400 volunteers who contributed to the winter pruning at the Municipal Rose Garden on Saturday morning.


  1. As a citizen of San Jose I have been outraged for several years on the way this City Council, Mayor and City Manager have mismanaged the City funds.  I have mentioned on several occasions that the RDA was “borrowing” money (millions) from the General Fund and the concern about the RDA’s ability to repay those funds.

    So PO and the rest of the clan. You were playing a game of high stakes poker with the City’s money.  You went all in and you lost.  Ya right, you didn’t loose.  The citizens lost.  You were using General Fund money to pay for pet projects (i.e. McEnery’s San Pedro Market) for the Mayor’s buddies.  All the while closing down fire stations, laying off police officers and closing libraries.  Then playing the Pension blame game. 

    I love how you are trying to get ahead of the ball on this one.  It’s a snowball you knew about years ago.  If you had any care in the world you would be yelling at the top of your lungs to return the “Stadium Land” to the RDA fund so that it can be sold to the highest bidder.  That sale should then be used to repay the General Fund so we can get back to a safe city and one with open libraries.

    Figone, Reed and even Oliverio will be gone soon enough and we the citizens will be paying for these people’s fraud for years.  We need to elect people who care. 

    The Positive… looks like this slush fund has dried up.

    • <i>Just Anon 4 now Mon, Jan 09, 2012 – 11:16 am : Ya right, you didn’t loose.

      loose [loos]<i>adjective, loos·er, loos·est, adverb, verb loosed, loos·ing.
      free or released from fastening or attachment: a loose end.
      free from anything that binds or restrains; unfettered: loose cats prowling around in alleyways at night.
      uncombined, as a chemical element.
      not bound together: to wear one’s hair loose.
      not put up in a package or other container: loose mushrooms.

      For your crimes against the English language, you are subject to a public lashing. Sentence served.

      • SJ Grammar Police:

        Thanks for the lesson.  You wouldn’t know any Fraud Police would ya?  This council is playing fast and loose with our money. 

        (Look Mom.  I used it in a sentence.)

    • As to your statement, “The Positive… looks like this slush fund has dried up.”
        The “slush fund” you so aptly referenced is changing its’ name to “public-private partnerships.”
        You must always remember, the RDA is the Mayor and Council. For now the RDA has been somewhat neutered but, there is still a whisper of life in these blood suckers. Vigilance is required here.
        As to your comment, “Figone, Reed and even Oliverio will be gone soon enough and we the citizens will be paying for these people’s fraud for years..” Fraud is not accurate. Also, the City Manager has nothing to do with this level of decision making. As to the time frame for paying the accursed debt of the RDA, “years” is truthful but paying the RDA debt for “generations” is more accurate.
        The stadium land deal of the century can still be thwarted by the voters but also the ending of the political careers of Council members who will keep this type of decision making alive is just as important.
        Also, the General Fund was not used as you state, “You were using General Fund money to pay for pet projects (i.e. McEnery’s San Pedro Market) for the Mayor’s buddies.” It was RDA money used to “freshen up” the alleged “Blighted” properties surrounding the property owned by the former Mayor and his investment partners. Councilmember Nora Campos was the only vigorous dissenter on this topic.
        I hope I was helpful.
      David S. Wall

      • Mr. Wall:

        Your comments are helpful.  Your many hours at City Hall has served you well. We see the same thing but you see it in a different light.  For that I adamantly disagree. 

        First off, Figone is the City Manager.  She full well knows what is going on and so much so she has been named the Executive Director of the Diridon Development Authority (as far as I can tell).  She knows and must be approving General Funds to be “loaned” to RDA while her City Departments struggle with budget cuts.  Sure there are players above her making decisions. (i.e. City Council, Mayor Reed, former Mayors and businessmen) but make no mistake about it; she is also playing this deceitful game. So you see Mr. Wall she does have something to do with it.

        Secondly, General Fund was indeed used as I state.  You might not see it that way but I surely do.  Money from the General Fund was “loaned” (without interest I’m told) to the Redevelopment Agency.  The Redevelopment Agency then purchased stadium land just to turn around and allow Lew Wolff to purchase the land at a discount.  In my book these are public funds being used to procure a baseball stadium.  It is a shell game and a form of money laundering in my opinion.  As I said in the other post, fraud.

        Once money is “loaned” to the RDA from the General Fund then the waters are tainted.  The water became toxic when General Fund money was “loaned” to a former Mayor for financial gain.  That being the San Pedro Square Market place and one of his companies called Urban Markets LLC.  (I can’t prove financial gain but why else would they do it? I forgot “Freshen up” the “Blight” hehehe)

        It is a deceitful act and a misappropriation of city funds by City leaders that we have entrusted to conduct business honestly and trustworthy.

        Thanks for reading my rant.

    • The total RDA debt of enforceable obligations is in a range of $4.8-5.2 Billion dollars.  The amount the General Fund could be liable for is all of it save the monies generated from the revenue these projects are supposed to bring in.

      David S. Wall

  2. Back-to-back “spare the air days,” on the brink of severe water rationing, roads in worse condition that those in combat zones, grossly deficient in neighborhood parks and services – I don’t think that continuing to build affordable housing, thereby welcoming thousands more to our City, will do anything but further degrade the quality of life around here.

    • Amen to that!  Whatever happened to market forces dictating things.  If you can’t afford to live here, then don’t.  Simple as that.

    • Amen to that and Amen to Amen to that.
      Not only does affordable housing degrade the quality of life around here, it suppresses the property values of homes owned by pay-your-own-way types who were counting on natural market forces buoying the equity in the homes on which they were counting to fund a portion of their retirements.
      Thanks a lot San Jose RDA for f**king that all up.
      Good bye and good riddance.

      • Don’t forget the patron saint of “Inclusionary Housing, Councilmember Liccardo.”

        Also, CM Liccardo’s quixotic mantra of pandering to “illegal aliens” and allowing all forms of gangsters and other social deviants yet to be determined into these government subsidized housing slums.

        Your point is well taken.

        David S. Wall

        • Anybody been to Oakridge Mall lately?  Mass transit coupled with several low income housing projects within walking distance of Oakridge Mall have certainly driven away normal shoppers.  I drive past Oakridge on my way to Valley Fair to shop as a general rule.  It is too bad as Westfield seems to have gotten the mall formula down pretty good.  But, I’m not going to stroll along with my family being ogled by gang bangers hanging out waiting to shoplift when I go shopping.

  3. ” The city of San Jose will now inherit a portion of the total debt that comes from decades of accumulated spending by the RDA. For example, although the Fourth Street garage was completed in 2004, its debt was to be paid over 30 years. As a result, the general fund will pick up this debt payment.  ”

    What is the upper and lower range of millions or billions that city General Fund have to pay ? 

    Yes, we know the exact number can not be estimated but Council / RDA should have a range of RDA debt not covered by future property tax increments that taxpayers should be told not hidden from public as has been Council/RDA past practice

    Thanks for answer

  4. Bad news continues while Council and City Hall does little or nothing.

    Way way past time to take substantial reductions in city government management, reduce number department and admin costs

    Closing Housing Department should happen immediately.

    Additional immediate cost reductions / senior management retirements:

    a) high paid senior city departments and high paid department managers / staff to save workers jobs,
    b) layoff 1/2 Assistant City Managers
    c) consolidating by 1/3 – 1/2 city departments

    All cost reductions should happen in next 60 days or voters will see clearly who on Council is not doing their job and demand action, not more talk while not telling taxpayers what are ALL city financial problems

    There are already voters who have said they will not vote for any sitting Council to ANY future political office

    Without immediate cost reductions and telling voters ALL city problems,  there will soon be voter majority who will not vote for ANY sitting Council member or ANY tax increase

    • With reference to your comment, “b) layoff 1/2 Assistant City Managers.”

      This would be hard to do since there is only one (1) Assistant City Manager and two (2) Deputy City Managers.

      What is needed is first, “Regime change” then reformulation of thr organization’s command staff by eliminating the Assistant Manager position all together.

      As to the administrative fate of the two (2) remaining Deputy City Managers, their departure could just be as swift for neither one stopped the scandal at Fire Station #19.

      David S. Wall

  5. PLO , You are so funny (in a stupid way) . Are you trying to get the residents of San Jose to feel sorry for you?  it is individuals like you and this Corrupt Mayor and Council that have destroyed this once promising City. You have all had a part in ruining this City and you used RDA to do it.RDA was nothing more than a slush fund for Mr. Burns Developer Buddies. You ca try and say that RDA did this and it did that , truth is , it did what you (Politicians) wanted it to do. it repaid your owed favors and passed along its debt to the citizens of SanJose( Via the General fund). Now the great Idea is to name “The City of San Jose ” the “Successor Agency” .  with get this an oversight Board that consists of the Mayor and other Politicians , a labor rep, a private citizen. are’nt these the same individuals that put us in this mess????
    As far as the Housing Dept , Are you F’n kidding me ?? We dont need anymore housing in this City………WE NEED MORE JOBS! this City is quickly becomig Oakland west , enough with the low income housing. we already dont have the services that a city this size needs. services that you and the Mayor have helped to Decimate. Public Safety anyone?? Do you think that anyone in his/her right mind feels safe here??
    Its beyond funny how you want people to feel sorry about the State “raiding” the the City’s RDA. Maybe if this City had used RDA money for what it was intended , we wouldnt be in this bad shape. if you knew that RDA wasnt going to last forever then shouldnt you have planned better?? This Citys biggest affliction is its insanely poor leadership and corrupt politicians

    • What low income housing? unless you consider $500,000 for a Single Family Home; $350,000 for a condo, low income? Besides, what the heck does a city need a housing dept anyway? I thought that was the job of the Federal Govt?

      Good bye RDA! and good riddens!

      • The Low income housing that is being built is mostly on the Eastside……..where most residents of san jose dont see it or care about it , and thats the way the politicians like it. They can continue to build and nobody cares . The problem is this city doesnt have the resources (roads,schools,public safety,jobs..etc..)to accomadate all the added residents

  6. No reason to panic over those hundreds of millions in RDA debt, folks, provided Mayor Reed treats these obligations as he did those held by pension fund members. Just wait until our heroic mayor condemns those institutions holding the debt for their greed, brands the agreements the work of strong-arm tactics, blames financiers for the reduction of city services and insults them for what he calls riding the “gravy train.” You watch; the mayor will demand debt holders excuse some debts and reduce rates on others, then, when he’s got ‘em bent over and quivering, he’ll announce his intentions to rewrite all the RDA contracts—on his terms! Chuck Reed’s not afraid of no stinking bankers. He’ll show those bastards that he puts the City first and his political career second…


    • As to your comment, “No reason to panic over those hundreds of millions in RDA debt, folks, provided Mayor Reed treats these obligations as he did those held by pension fund members.”

      “Hundreds of millions” can be used but the debt iis in the “billions” and it is true the debt could have several “creditors” all standing in line to see how much money they will get.

      David S. Wall

      • David,

        Your estimate of the debt being approximately 5 billion dollars is terrifying.  Was no firewall established between RDA debt and the City of San Jose?  Essentially, does the City guarantee repayment of RDA debt?  The lure of RDA bonding likely carried with it a premium yield, recognizing the risk of default.

  7. The Redevelopment Agency (RDA) commenced activities in 1956 and was limited to 50 years, so it really should have ended in 2006.  Closure in 2012 was just a six-year bonus for the profiteers empowered by RDA.

    When I ran for District Four against incumbent Chuck Reed in 2004, a large part of what I wanted to do was get RDA out of the district and keep the property taxes for schools and the county. 

    Candidates for city council were invited to a meeting in April or May 2004 at city hall to meet with high city officials, and I’ll never forget the look on Harry S. Mavrogenes’ face when I told them I wanted to get redevelopment out of District Four.  He had been named Interim Executive Director of RDA in December 2003, but didn’t become the actual Executive Director until November 2004.

    That moment might have been worth the hassle of the campaign…I don’t think he or the other high city officials were accustomed to uppity council candidates.

  8. “The city of San Jose will now inherit a portion of the total debt that comes from decades of accumulated spending by the RDA.”

    It sounds like the City and the RDA are two entirely different entities, but are not the exact 11 people that sit on the Council also the board of the RDA ?!

    And those are also the same eleven that are the Board of the “son of RDA” Diridon Development Authority ?!

    • erw, it’s worse than you think.  The same 11 people serve on the city council, on the RDA board, on the Financing Authority, and on the Diridon Development Authority.

      They claim the power to contract between any two of the boards to issue “lease/revenue bonds” for almost any purpose at all as long as they can point to a cash flow to pay off the bonds and interest.  An example was the financing of the new city hall.

      To generate funds to build the new city hall, the eleven member city council leased the old city hall to the same eleven member Financing Authority at a certain rate, and then the Financing Authority leased the old city hall back to the city council at a higher rate.  This generated a “cash flow” (believe it or not) that persuaded investors to buy “lease/revenue bonds” used to build the new city hall.  No vote by city residents allowed. Yes, Chuck Reed supported this financing scheme.

      Eleven people on the city council contracted to the same eleven people on the Financing Authority to issue bonds based on a fictitious cash flow. 

      The San Jose Diridon Development Authority is a joint powers agency of the city council and RDA to “develop” the Diridon Station neighborhood, presumably for a sports facility.  It has bond issuing powers without vote of residents.  Article Five of the joint powers agreement does provide that its board is made up of the city council members. Yes, Chuck Reed supported this financing scheme.

      • Dale thank you for enlightening us with that bit of “disturbing news” is there any more info that Mr Burns and the clown brigade are hiding from the residents of San Jose?? thanks again

  9. PO,

    Scott Herhold column today listed 3 RDA deals that will require San Jose’s General Fund to pay $1.96 million in interest this year:

    –  3 downtown historic restoration projects – Who are the 3 project buildings and owners ?

    –  88 Residential tower on San Fernando Street – Who are local investors , builders owners ?

    –  Story and King Road shopping center ( cost over $590 million )  – – Who are local investors , builders owners ?

    So what is the total RDA debt and how long will city general fund have to pay before paid off ?

    Also why don’t you routinely answer questions from SJI comments ?

    Thanks –  PO for your answers

    Anyone know or want to give educated guess who are the local people involved in these deals ?

  10. The names of government agencies, authorities, advisory groups etc change from time to time but those who control city politicians and city government are same insider good old boys and gals – ex mayors, politicians, city bureaucrats, city managers, lobbyists, friends and families

    The same 1% multimillionaire / billionaire sports team owners, developers, corporate executives, Chamber ,Silicon Valley leadership Group and unions cronies will continue to buy city politicians for their own benefit and divide up city tax money as we have seen for decades

  11. Hate to say, “I told you so.”  The whole redevelopment of downtown is a total failure with nothing to show for.  There are still vacants storefronts, vacant lots, abandoned buildings, few pedestrian traffic and homeless people with mentally ill issues walking the streets.  The prostitutes are still in downtown by Second St.  You see, not much have improved since 1977 with the exceptions of few more buildings.  Now, it’s time to pay up, folks!

    • failure ?? what are you talking about?? McEnery, Swensen , Wolfe have built up their respective portfolios!!!! Thats a plus ………..isnt it? who cares if this city is falling apart? who cares if our Public Safety is stretched beyond comprehension,Who cares if we continue to build Low-income housing that does nothing more than deplete city resources(but hey the Developers get paid), who cares if this corrupt Mayor pushes for a ballot measure that is ILLEGAL, who cares about P.Constant grandstanding about giving up pensions(AGAIN ILLEGAL),who cares about our crappy roads, who cares if the Residents of SanJose are Being fooled again by Mr. thing to do is educate yourselves! PLEASE.

  12. The heftiest little piggies who ate most greedily at Redevelopment’s trough are squealing the loudest now, simply because they are being made to grow-up and be the actual business- and property-owners that they always should’ve been. 

    For politicians: no more hand-outs, no more bail-outs, no more pet projects wrapped up in pretty little bows.

    Might as well melt down those silver spoons that you’ve all been eating from too, because while you’ve been whining, your soup’s gone cold.  Welcome to the real world.

    • So why is it that Mr burns wants public safety to prefund their retirement in 5 yrs (giving up 5% for pension and 1 1/2 medical per year =more than 30% total) yet the 2. 5 Billion is not a priority. somebody better do some research because public safety is leaving the city of san jose in droves.they are already the lowest staffed in the nation…………as more and more leave this city . we are going be less and less safe.  there are no plans for more hires( and if there were , all the good candidates choose to go where there is a better compensation plan/are not mistreated by their employers)I no longer feel safe in this city, I fear for my wife and kids. the priorities of this Mayor and Council are backward. we should not be giving away real estate, we should not be building a ballpark, we should not be accumulating more debt , we should not be moving forward with an illegal ballot measure that will be tied up for years and cost millions upon millions of dollars only to lose , we should instead begin negotiating with the workers of San Jose in an “Open to the public Forum”. we should be focusing on jobs and public safety, we definetly do not need more low-income housing. This city needs new direction and new leadership before we become Richmond west

  13. I am disappointed in Mayor and entire Council for not properly managing city fiances for many years

    You have tried but are unable to stop Council majority or get majority to support reforms and wasteful city and RDA spending that now General Fund and taxpayers are being told they have to pay for with proposed new taxes  

    Not going vote for any new taxes until reforms are done by current Council or we get a new Council who as least starts reforms and has written reform plan that we can trust to be done.

    Not more broken promises, 1/2 truths and outright lies

    Council is not telling residents

    – where our taxes are actually being spent,

    – why our taxes are being spent on anything except basic city services, no spending on anything else for any reason because we have seen too many 1/2 truths and outright lies to believe any projected benefits, staff reports or reasons

    – how much city owes in total debt and future city obligations for pensions, bonds, RDA debt etc

    More excuses, blaming past Councils and avoiding or not telling residents the whole truth has resulted in us not trusing our elected Council representatives and worst senior city administration in memory

    Council and senior administration always do what helps themselves not what they are supposed to do – what is right for residents, city employees and City of San Jose taxpayers

    • The entire Council needs to be replaced as well a material overhaul of the City Charter with the elimination of the Office of the City Manager…for starters.

      David S. Wall

  14. Dale Warner we need you to run again. Mayor Burns is termed out. Public Safety needs your support since this council could care less about our safety!Lets get SJ back on track! You have my vote!

  15. 2.7 Settlement with Applegate Johnston, Inc.
    Recommendation:  Authorize the City Attorney to execute a settlement agreement and release with Applegate Johnston, Inc. waiving the City’s liquidated damage claim on the Fire Station No. 19 project as consideration for Applegate Johnston’s making certain modifications on the Environmental Innovation Center project. 

    The construction contract for Fire Station No. 19 provided for the assessment of liquidated damages if Applegate Johnston did not complete the project on time. In the engineer’s final estimate for the project, the City claimed that Applegate Johnston was
    late in completing the project and sought $282,000 in liquidated damages.

    During May 2011, the City awarded Applegate Johnston a contract for construction of the Environmental Innovation Center (“EIC°’) valued at approximately $11,000,000.

    Concurrently, the City was also negotiating a New Markets Tax Credit (“NMTC”) financing for the EIC project in the amount of approximately $4,500,000. e project and awarding a construction contract

    However, the NMTC lenders put the City in a difficult position by notifying the City of additional insurance and bond requirements after the execution of the construction contract with Applegate

    Staff explored other alternatives to satisfying the additional insurance and bond requirements, …. having the City purchase the necessary insurance and bonds. The NMTC lenders refused to waive the requirements.

    Moreover, staff estimated that it would cost the City at least $300,000 to purchase the bonds and insurance – although the cost for the contractor to obtain what was necessary to comply with the requirements was likely substantially less. Moreover, it was unlikely that the City could have achieved the purchase of the bonds and insurance before the October 31,2011 close date.

    In short, waiving the disputed liquidated damages claim on the Fire Station No. 19 project was the City’s most reasonable alternative.

    … the Environmental Services Department proposes to transfer $250,000 to the Fire Department to partially replace the waived liquidated damages on the Fire Station No. 19 project. The proposed source of the funds would be a $250,000 “developer fee” that will be paid to the City next fiscal year upon completion of the lien-free construction of the EIC as part of the NMTC funding program

  16. It sounds like a bunch City Hall amateurs not what taxpayers are paying for professional management

    Hard to believe City Hall did not know they needed additional insurance and bonds

    Did they even ask what was required when they decided to negotiating a New Markets Tax Credit (“NMTC”) financing ?

    Why give out a construction contract without knowning contract requirements or at least putting in contract contractor was responsible for all construction bonds and insurance ?  Construction companies before bidding would have checked with NMTC lenders or known that additional bonds and insurance were needed and put in bid

    We expect Council members who’s only qualifications are city residents, they go more votes than other candidates, and made promises to voters, special interests, developers and either Chamber or Unions to raise money to run campaign to look like a bunch of amateurs but not very highly paid so called professional City Hall management or city consultants

    In most governments or companies people would be fired for $300,000 mistake

    • Remarkable!  But it is true that anytime the going gets tough (the least bit complicated), the City hires an outside consultant who knows the ropes.  Ergo, I don’t know why we pay more than minimum wage to our City administrative employees.  I guess our crack City Attorney and his staff must have been out playing golf the day the contract was let.

  17. So let me get this straight, The same people who got us into this mess , are the same people that are going to over see “disposal of assets and properties and over see prior agreements” Are you serious?? Isnt this the same Mayor and Council that is unwilling to negotiate with city workers, Isnt this the same Mayor that is trying to break agreements/contracts approved by him? Isnt this the Mayor who is willing to give away real estate to a Billionaire, Isnt this the same Mayor who decimated and villainized public safety,Isnt this tha same Mayor pushing an Illegal Ballot measure that will cost millons upon millions only to be defeated, Isnt this the same mayor who continues to assist his developer buddies with subsidies and favors . This city needs a mojor overhaul that does not include this Mayor,City Manager,and Council

  18. Last week Los Angeles decided not to become the successor agency for their RDA. The reasoning was that if they did, they would expose themselves to $109 million additional expenses against a budget that is already $70 million in the red. The way the RDA dissolution law, ABx1 26, is written, the city does not necessarily have to be the successor agency. The successor agency can be the County or ultimately the State. Like Los Angeles, San Jose should let our bankrupt RDA go and not subject the General Fund to more drain from the RDA by becoming the successor agency. The City Council is scheduled to vote on the matter as agenda item 9.1 on Jan. 24th. Hopefully, our City Council will take a cue from LA and just get rid of our RDA, by voting to decline becoming the successor agency. Let the State dispose of the San Jose RDA and help protect our General Fund from 30 more years of RDA bond-payoff pillaging.

Leave a Reply

Your email address will not be published. Required fields are marked *