Hopes rise for music hall at fairgrounds

Hopes rise for music hall at fairgrounds
COUNTY, CITY OFFICIALS TO MEET WITH MEDIATOR ON LEGAL DISPUTE

By John Woolfolk
Mercury News
April 26, 2005

A month ago, Santa Clara County's troubled effort to revitalize its fairgrounds with a new concert hall looked grim.

The company expected to run the 7,000-seat theater, House of Blues, was entertaining purchase offers for its concerts division. Then a judge threw legal quicksand in the theater project's path by refusing to throw out San Jose's lawsuit challenging the approval process.

Uncertainty still clouds the concert hall's future, but its prospects may have brightened. House of Blues recently spurned purchase offers and affirmed its commitment to the county venue. And city and county officials now are hopeful they can settle their legal dispute so the project can finally break ground.

Open to talking

Lawyers for both sides are scheduled to meet today with a state appellate court mediator. Though city and county officials may not walk out holding hands, both sides say they have something to talk about.

``I don't want to be overly optimistic,'' said San Jose City Attorney Rick Doyle. ``We're open to having a discussion. We're willing to have a more general conversation on a whole host of issues. The fact is that we still have a lot of old stuff out there that needs to be resolved.''

County Counsel Ann Ravel said the city seemed ``very interested in settling,'' and that the San Jose Downtown Association, whose lawsuit over the concert hall was rejected by a judge, would consider forgoing an appeal to discuss ``issues of mutual interest.''

Doyle said discussions probably will encompass San Jose's desire to extend North San Jose's redevelopment district, which has proved profitable for the city's revitalization efforts but will expire in 20 years because it no longer qualifies as blighted.

San Jose has asked state lawmakers to pass two bills to that effect. One, by Assemblyman Joe Coto, D-San Jose, gives redevelopment areas a 10-year extension. Another, by Sen. Tom Torlakson, D-Concord, would create new redevelopment zones within a quarter-mile of rail stations, such as those in North San Jose.

County officials oppose the bills, arguing redevelopment diverts tax money from basic government services to cover local improvement projects that could be funded through other means. They say that over the past decade, more than $2 billion in property tax revenue has been diverted to the nine redevelopment agencies within the county.

2001 pact

County officials initially felt burned by San Jose's effort to seek redevelopment legislation this year, noting in a recent memo that a 2001 pact between the city and county called for them to work together on such matters.

The same pact is at the heart of the city's lawsuit over the fairgrounds concert hall. San Jose contends the deal required the county to obtain city land-use approval for such a project at the county-owned fairgrounds, which is located within the city.

Doyle said it appears the two sides have different understandings about a host of things they thought they had agreed to four years ago, redevelopment among them.

``I thought we'd resolved that in 2001, but we need to revisit it,'' Doyle said. ``We think redevelopment has done a lot of good. But the county thinks we're taking money out of their pockets.''

How redevelopment matters could be worked into some sort of settlement on the proposed theater at the fairgrounds is unclear. Attorneys for both sides declined to speculate out of reluctance to negotiate through the press.

But any settlement would have to be approved by the city council and county board of supervisors. Supervisor Jim Beall flatly rejects any suggestion of trading county support for the city's redevelopment bills for city support of the theater.

``We're not interested in talking like that,'' Beall said last week. ``The fairgrounds issue is under litigation. I don't think there's a relationship between the two in my mind or in anybody's mind.''

San Jose's chief objection to the county's fairgrounds music hall is that the city wants a similar venue of its own downtown, and industry experts widely agree the market can support only one.

But Doyle acknowledged that efforts to propose a rival theater downtown haven't gained traction.

``I don't know if it's been abandoned, but we don't have a proposal now before us,'' Doyle said. ``The trick in all these things is financing.''

Money needed

San Jose's redevelopment agency announced in October that it doesn't have $20 million to help fund the city's proposed venue, estimated to cost between $80 million and $90 million. The San Jose Sharks also had pledged to kick in $20 million, with the remaining $40 million to be paid through bonds. The agency had given the Sharks until February to raise enough private cash to float the project, but so far nothing has materialized.

Adam Friedman, executive vice president of House of Blues Concerts, said the Los Angeles-based music promoter had rejected a downtown location because there wasn't a site with enough parking and space for concert seating.

Since House of Blues has spurned merger and acquisition offers, the promoter is eager to move ahead with the fairgrounds project, even though last year was disappointing for the concert industry. Rising ticket prices pushed revenue to a new high, but made many fans stay home, leaving empty seats that cost promoters.

But Gary Bongiovanni, editor in chief of Pollstar, a leading concert industry publication, said this year looks more promising, especially for mid-size venues like that envisioned for the fairgrounds.

Friedman said he recently reviewed House of Blues' estimates for number of bookings, ticket prices and sales at the fairgrounds project, which were based on results at similar venues in Los Angeles, and said they are still sound. The county expects to book about 94 shows a year at the $57 million venue with 4,620 tickets sold at $64 each.

Friedman said he isn't troubled by the legal delay for the project, which was supposed to break ground last fall, because the company had already budgeted for delays.

And there is no other project in the works competing for House of Blues Concerts' attention.

``We're focused on this project,'' Friedman said.

http://www.mercurynews.com/mld/mercurynews/news/local/11491070.htm

Posted by Coalition Webbies at April 26, 2005 05:07 PM