GNATS Newsletter - April 2005

The April edition of the GNATS newsletter has been posted online!

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EBay moves gala from S.J.

SANTA CLARA GETS CONVENTION EVENT

By Tracey Kaplan

Mercury News

A gala dinner for 5,000 people that will cap eBay's huge trade show this summer will be held in Santa Clara, not in downtown San Jose like the rest of the convention.

The loss of the Saturday night event, originally set to take place in the enormous tent being erected behind San Jose's convention center, is a slap to downtown San Jose business owners who were counting on spillover traffic from attendees eager to keep partying. The June 25 dinner will be held instead at the Santa Clara Convention Center, a competing venue.

But San Jose boosters said the good news is the tent will now be used for three days as a backstage area, including child care for the conventioneers, rather than just for one gala dinner. And they pointed out that many of the up to 10,000 eBay Live! attendees will still rent rooms in San Jose hotels, the source of the most revenue from the event.

``It's no comment on the tent facility,'' said Jim Cunneen, president and CEO of San Jose Silicon Valley Chamber of Commerce. ``That tent is going to play the role it was intended and attract new conventions. But is it going to attract every single social event? No.''

Largely because of the expense, the $6.77 million tent has been controversial ever since Mayor Ron Gonzales proposed it last year to capture big trade shows the city has missed because of the limited size of its convention center. Rumors circulated Friday that the tent was too austere for eBay's taste.

But a spokesman for eBay said the firm decided to move the dinner solely because the tent turned out to be the only place available nearby to stage the convention, hold meetings, and feed about 3,000 employees. EBay has never faced the problem before because for the past nine years, its annual trade show has been held outside the Bay Area and attracted fewer employees, said eBay spokesman Henry Gomez.

``The problem we were having is we could not find a place to house these employees in San Jose,'' Gomez said. ``So we thought, `Why not use the tent? It's perfect.' ''

But as positively as city officials tried to spin the change, it means San Jose convention center officials are going to have to work far harder to convince eBay attendees to come back from the dinner in Santa Clara and spend money at San Jose bars and nightclubs downtown.

Dan Fenton, president and CEO of the San Jose Convention and Visitors Bureau, said the bureau will run free shuttle buses staffed by workers who will hand out coupons for free drinks and other deals, and promote downtown venues like the Improv over bus microphones.

The city could also host an after-dinner party at San Pedro Square or the South of Market Street area, Fenton said.

``It's almost like what we're going to do is give them a plan to continue partying after the gala dinner,'' Fenton said. ``The tradition, according to eBay, is people keep going.''

The head of Santa Clara's convention center, Steve Van Dorn, said the city is sympathetic to San Jose's predicament and will not try to get conventioneers to stay in Santa Clara.

``We're going to host the dinner and get them bused back so they'll go and party in San Jose,'' Van Dorn said.

But Santa Clara Councilman Jamie Matthews couldn't resist rubbing a bit of salt in the loser's wounds. He said he hopes some eBay folks will stick around.

``I hope they go right across the street to Great America,'' Matthews said, ``and have a wonderful time.''

http://www.mercurynews.com/mld/mercurynews/11531557.htm

S.J. Redevelopment Agency wins one, loses one in court

JUDGE FINDS BLIGHT IN NEIGHBORHOODS PROVEN, BUT NOT IN DOWNTOWN PARCEL
By Janice Rombeck
Mercury News

San Jose's Redevelopment Agency successfully proved that blight exists in some of its neighborhoods, but didn't prove that it exists in a 30-acre area of downtown.

Those are the findings of two recent court decisions brought on by San Jose property owners. Both decisions could be appealed.

In the first case, 6th District Court of Appeal Judge Patricia Bamattre-Manoukian upheld earlier court rulings that the agency's Strong Neighborhoods Initiative area fulfilled the legal blight requirements to have redevelopment money spent there. Downtown property owner Elaine Evans had filed a suit in 2002 challenging the initiative. SNI was designed to pump millions into 19 areas covering one-third of the city. The judge's order was filed Thursday.

``It's a big victory because that's been the major project in this city for the last five years,'' said City Attorney Rick Doyle.

The redevelopment agency has spent at least $20 million so far on projects ranging from community centers to sidewalks and streetlights, with an additional $50 million promised to the neglected neighborhoods. Each of the 19 SNI areas has been represented by neighborhood advisory committees that created improvement plans for those areas.

While Evans challenged the definition of blight, Doyle said the motivation for the suit was her opposition to eminent domain, the power of the city to force an owner to sell property for a public project.

Evans' attorney, William Brooks, said Friday he was planning to ask the state Supreme Court to review the decision.

In the second case, Santa Clara County Superior Court Judge Joseph Huber on Monday overruled the city's objections to a decision he made March 31. He ruled then that a 158,000-square-foot piece of property that holds the Victory Parking Lot, called the Mitchell Block, and an area around St. James Park -- totaling about 30 acres -- could not be included in a redevelopment area because the city had not successfully demonstrated the areas are blighted.

The city has wanted to expand its downtown redevelopment area, and considers the Mitchell Block a key parcel.

Greg Mitchell, one of the owners of the Mitchell Block, was happy with the ruling. He said he has been talking to developers and hopes to turn the land into housing.

http://www.mercurynews.com/mld/mercurynews/11531553.htm

North San Jose project hits snag

ASSEMBLY PANEL DELAYS CONSIDERATION OF CHANGES IN REDEVELOPMENT RULES
By Tracey Kaplan
Mercury News
April 28, 2005

A plan to turn North San Jose into a second downtown with 83,300 jobs hit a snag Wednesday.

A state lawmaker whose committee's approval is key to the future of the project announced that no action would be taken this year on a city-sponsored proposal to use tax dollars that would normally go to schools and other local jurisdictions to pay for traffic improvements essential to the new development.

San Jose's proposal to spur the creation of new jobs and thousands of housing units in the North San Jose redevelopment area by extending the life of the project is not dead.

But the decision by Assemblyman Gene Mullin, D-San Mateo, to study the issue along with a flurry of similar requests for redevelopment extensions by other California cities means another anxious year for proponents of the North San Jose plan. Mullin chairs the Assembly's Housing and Community Development Committee, which is reviewing a bill by Assemblyman Joe Coto, D-San Jose, as well as proposals by other cities including Long Beach, El Monte and Berkeley.

San Jose and the other cities want the state to extend the authority of their redevelopment agencies (San Jose's is due to begin expiring in North San Jose in 2025) and to loosen the rules by which those agencies can use tax money to create new jobs and housing.

In contrast to city officials, Santa Clara County officials who oppose the extension are pleased by the delay because they say the tax diversion would take money away from health and other county services. They stressed they do not oppose development in North San Jose, just funding the infrastructure improvements with public dollars.

``The fact that the head of the committee took that action is a really good sign,'' said County Counsel Ann Ravel. ``There's an awareness in Sacramento that redevelopment agencies are out of control.''

Agency chief confident

But San Jose Redevelopment Agency Director Harry Mavrogenes said he's confident the city's plan is still on track.

``We're very encouraged that Assemblyman Mullin is taking this comprehensive view and getting everyone together in one room,'' Mavrogenes said. ``It's going to allow for a good healthy debate.''

The debate is likely to be fierce because redevelopment, long a hot-button issue in municipal circles, has become even thornier in tight budget times.

Redevelopment agencies are funded by extra property taxes generated by new development within a designated zone. In a designated redevelopment district, the redevelopment agency gets that money. Absent that designation, the state, county, schools and special districts, such as water districts, get more of it, and they are in no mood to pass up money as the economy has slowed and other revenues have dried up.

In 2001, state lawmakers adopted legislation that allows redevelopment agencies to extend the life of a project area for 10 years under certain conditions. Among the conditions: The project area must have both physical and economic blight; the tax increment must be spent only in that particular project area; and 30 percent of the increment must be used for affordable housing, rather than the usual 20 percent.

Only one area -- in Sacramento -- has met the stringent extension conditions so far, said Peter Detwiler, a staff consultant to the Senate Local Government Committee.

Now, several cities are seeking to avoid those conditions. In Berkeley, for example, city officials are seeking a 10-year extension of the life of the Fourth Street project area, a ritzy, formally industrial area that generates about 90 percent of the agency's redevelopment revenue. In exchange, the city promises to spend all of the new tax revenue on low-income housing. Alameda County has come out against the proposal, but the delay by the Legislature allows the city and county to negotiate, said Steve Barton, Berkeley's housing director.

Vacancy rate high

In San Jose, officials are proposing that extensions be allowed if there is just economic blight, which could be broadened to include a high vacancy rate in office space, such as the 23 percent vacancy rate that now exists in North San Jose.

Mavrogenes said the county would actually reap more tax revenue by allowing the extension.

County Administrative Officer Pete Kutras agreed that the county would net $186 million more by fiscal year 2052-53. But he said more of the redevelopment funds would have to be spent for bricks and mortar under state law and less for services than if the redevelopment project expires.

http://www.mercurynews.com/mld/mercurynews/news/local/11510601.htm

AB 1472

http://info.sen.ca.gov/pub/bill/asm/ab_1451-1500/ab_1472_bill_20050420_amended_asm.html

"Notwithstanding these limits on the
effectiveness of a redevelopment plan, existing law authorizes an
agency to amend that plan to extend the time limit on effectiveness
of the plan for a maximum of 10 additional years if the agency finds
that significant blight remains within the project area and this
blight cannot be eliminated without extending the effectiveness of
the plan and the receipt of property taxes."

So, if a redevelopment agency couldn't eliminate blight in 40 years..........what makes them think another 10 will help. The only think it will help is to keep the property tax money flowing to the redevelopment agencies bank account rather that to the county, state and other agencies that would normally benefit from property tax increases.

Unfortunately this bill is still active. Contact your senator and tell them NO on AB 1472.

http://www.senate.ca.gov/~newsen/senators/senators.htp

SB 521

Thankfully this bill has been placed in the suspense file for now. It will come up again at a later date, so keep your eyes open. If you want to learn more about SB 521 go to: http://info.sen.ca.gov/cgi-bin/postquery?bill_number=sb_521&sess=CUR&house=B
or
http://info.sen.ca.gov/pub/bill/sen/sb_0501-0550/sb_521_bill_20050412_amended_sen.html

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

San Jose officials say state had signed off on bid problems

Creative approach, lack of 2 documents doomed city's plan
Timothy Roberts
April 15, 2005
Silicon Valley/San Jose Business Journal

San Jose city officials say that they knew their proposal for hosting the headquarters of the California Institute for Regenerative Medicine bent the rules a little when they turned it in before the March 16 deadline.

They say that they knew they had not included a required letter that says there is no conflict of interest between the owner of the office building that would house the institute and any potential grant applicant. And they knew that they had left out a letter stating that the building would be available within 30 to 90 days.

They say they had spoken to the staff real estate officer in the California Department of General Services, which would make the preliminary evaluation of the bids, and she had told them that San Jose's plans were fine.

On April 13, the Site Search Committee of the California Institute for Regenerative Medicine officially realized San Jose's worst fears when it voted 6-1 to leave San Jose off the short list. That was the recommendation of the Department of General Services.

The hopes of San Jose and five other cities were dashed, mostly for technical failures. Long Beach and Richmond each left out one of the same letters that San Jose had omitted. Los Angeles lost out because it didn't show that its site could meet the requirements of the Americans with Disabilities Act.

The cities still in the running are Sacramento, Emeryville, San Francisco and San Diego.

All these cities have been competing for the headquarters for the $3 billion program to stimulate research using stem cells that might lead to cures for diseases like Parkinson's and diabetes. The headquarters is expected to draw a lot of attention to the city finally chosen, along with visiting officials and Ph.D.s from around the world.

And San Jose thought it had made the best case of all.

It was offering about 16,963 square feet of space at the Concourse, owned by Equity Office Properties, at 1731 Technology Drive in the First Street tech corridor rent free for 10 years. It also offered as an alternative 19,853 square feet in the Fairmont Plaza, also known as the Knight-Ridder building, at 50 W. San Fernando St., space now held by the San Jose Redevelopment Agency. That, too, came rent free for 10 years.

"We had an excellent, excellent proposal," says Vice Mayor Cindy Chavez, who went to San Francisco April 13 to plead the city's case. "I think the staff [of the DGS] chose to take a creative solution and put it in the box of can't be done, and that's very disappointing."

Ultimately the directors of the institute will make the final selection of the site for their headquarters. But the first stop was the Department of General Services, which handles bidding and real estate and similar services for the state. The DGS issued the Requests for Proposals, which included the requirements for the conflict of interest letter and the statement of when the property would be available.

The conflict of interest statement was required because of the complicated way that the DGS wants to structure the deal. According to the request for proposals, the institute would have a contract with the host city, and the DGS would have a separate contract with the building owner. In this way, a building owner could invest in a biotech company that would come to the Institute seeking a grant for stem cell research and avoid a conflict of interest.

San Jose had a different, simpler idea: have just one contract with the city, which would then lease the office space and ensure that it met all standards. The city could not invest in a biotech company and create a possible conflict of interest.

But would this pass muster in the state bureaucracy?

Yes, according to Michael Schuppenhauer, vice president of Fleischman-Hilliard and a consultant for the city. He says he talked with DGS staff real estate officer Rebecca Donnachie about the structure of the San Jose's proposed deal. He says she signed off on it during two phone calls that took place March 8 and March 9, a week before the deadline for the proposals to be submitted.

Cheryl Gates, Ms. Donnachie's supervisor, attended the meeting of the search committee on Wednesday. She declined to answer questions. "I can't talk with the press," she said. She referred a reporter to the DGS press office, where spokesman Matt Bender confirmed there had been a discussion of the lease arrangement. However, he said, "The letter never came up."

There is no written record of the contact between the city and the DGS before the March 16 filing deadline, although Rebecca Dishotsky, the mayor's chief of staff, says she responded to some questions from the DGS about details of the proposed contract after the filing deadline. She replied by e-mail, she says.

Vice Mayor Ms. Chavez gave the search committee copies of the e-mails at the April 13 meeting.

Asked about the city's claim that it had approval for its proposal from the very state agency that later rejected it, CIRM chairman Robert Klein says: "Without the benefit of having heard the conversations, we need to rely on the Department of General Services."

Had the San Jose proposal been accepted, how would it have stacked up against the others?

It would have come in first, says Fleischman-Hilliard's Mr. Schuppenhauer.

The DGS scored the proposals, giving points for things like having residents employed already in biotechnology, an international airport within a 45-minute drive and the presence of conference and hotel facilities.

Using the ratings for the final four cities as a guide, Mr. Schuppenhauer added up San Jose's numbers. His total was 174. The official tally: San Francisco: 158; Sacramento: 133; San Diego: 116; and Emeryville: 113.

http://sanjose.bizjournals.com/sanjose/stories/2005/04/18/story4.html

Balancing Values in Eminent Domain Cases: A Look at Private Property Rights and Public Benefits

March 9, 2005
Paul Malmfeldt
The Journal of the Business Law Society

Driving through Chicago, it is a virtual guarantee that one will be stuck in traffic at some point, no matter what time of day or night. It is hard to imagine how bad the traffic would be had the interstate highways never been constructed. And without the ability of the government to condemn private property through the power of eminent domain, most major American transportation projects could never have been undertaken. While the right to control private property is a deep-rooted American value, most of us would agree that we are all better off as a result of the government's ability to assert eminent domain in cases where there is a pronounced public use benefit.

The drafters of the Fifth Amendment had the wisdom to afford our governments the power of eminent domain. Yet, it is hard to imagine that they would have approved of the condemnation of well-maintained seaside houses so that luxury condos and a hotel could be constructed. After all, the drafters chose the clear-cut language “public use” rather than such language as “when the government wishes to spruce up a neighborhood and/or hopes to appease a powerful corporation.”

The later appears to describe New London’s primary motivation in Kelo v. City of New London (please see my post under Real Estate from February 24th). In the American Planning Association’s amicus brief in support of condemnation, the authors argue that to require a city to demonstrate a greater public benefit than vague promises of economic development and increased tax revenues would be to hinder urban redevelopment efforts. They further argue that since land in downtown areas is harder to acquire than land on the periphery, to prohibit governments from condemning "obsolete", though otherwise safe and useful private property in desirable locals would be to encourage sprawl.

Urban renewal and the prevention of sprawl may be desirable goals. However, it is inappropriate for a government to achieve these goals by condemning private property that is safe, well-maintained, and useful. In these instances, the potential for abuse in distinguishing between obsolete and productive property is limitless.

Furthermore, the right to own and control property is a significant component of one’s individual liberty, a core American value. One interpreting the Fifth Amendment in good faith should find that the value inherent to respecting private property rights greatly outweighs the value to the public in this instance: those primarily benefitting would be out-of-town Pfizer executives hoping for views of the Atlantic from hotel rooms and a prospective hotel owner, rather than the public itself.

YOUR URGENT RESPONSE NEEDED

SB 521 moves on Monday, April 25th to the State Sentate Appropriations Committee. Below is a sample letter and a list of email addresses for the Senators. Please send emails or call to let the Senators know you do not want SB 521 to pass. Thank you!

Dear Senator :

I am asking you to vote NO on SB 521 (Torlakson), soon to be reviewed in the
Senate Appropriations Committee. SB 521 creates another condition of development blight, "the lack of high density development within a transit development district," and it extends the areas around the transit district that are targeted for high-rise development. This would increase the vulnerability of neighborhoods all along the transit corridor to displacement by redevelopment eminent domain.
Redevelopment agencies can use eminent domain powers for any purpose (property need not be blighted in any real sense of the word) to transfer property from current owners to corporate developers. Economic underutilization can be the excuse to use eminent domain to seize any property, even well-maintained houses and businesses. What wouldn't be underutilized compared to a high-rise?

Any city can decide to create or extend a redevelopment project area into any residential neighborhood. This decision can be implemented within a year without a public vote. Please protect these neighborhoods from economic> exploitation and real estate speculation.

Vote NO on SB 521.

Contact Information for the Senators:
Senator Tom Torkalson
Senator Carole Migden
Senator Elaine Alquist
Senator Roy Ashburn
Senator Jim Battin
Senator Debra Bowen
Senator Bob Dutton
Senator Martha Escutia
Senator Dean Flores
Senator Kevin Murray
Senator Deborah Ortiz
Senator Charles Poochigian
Senator Jackie Speier

Vice Mayor Cindy Chavez Invites You to the 2005 Neighborhood Summit!

Date: Saturday, April 30, 2005
Time: 8:30 AM - 12:30 PM
Place: City Hall Council Chambers
Topics: Budget Challenges, Public Safety Report, Traffic Calming Strategies, Strong Neighborhoods Initiative: Five Years Later, & Other Neighborhood Projects

To register go to: http://www.ci.san-jose.ca.us/council/dist3/default.asp or phone 408-277-8824

Council reconsiders parkland-housing link

REACTIONS MIXED TO FEES FOR OTHER RECREATIONAL USES
By Janice Rombeck
Mercury News
April 18, 2005

San Jose is 137 acres richer in parkland thanks to two city ordinances that for almost 20 years have required housing developers to either build parks or pay fees to the city to build them.

But park-poor San Jose now is considering changes to those laws that could allow home builders to pay for recreational uses other than parkland. Included are trails, dog runs, community and roof-top gardens, plazas and sports fields on school grounds.

While the proposed changes would give more flexibility to developers, the plans are getting mixed reactions from residents, officials and home builders.

The city council will discuss changes to the parkland ordinances at its evening session on Tuesday. A public hearing is expected on May 17, with a vote likely in June. The final vote also likely will include an increase in developers' fees.

For some San Jose residents such as Robert Solis, the non-parkland uses seem to be a good idea, but not for his park-starved Burbank/Del Monte area.

And in Berryessa, resident Kerri Hamilton questions money spent for trail development instead of parks. ``I don't think they should be used as a substitute for parks,'' she said.

In downtown San Jose, where open space is scarce, officials said it makes sense to allow such alternatives as roof-top gardens, plazas and streetscapes that would be open to the public. Developers also could spend money on non-public amenities such as swimming pools, spas and recreation rooms.

``In more urbanized areas, we have to think about recreational opportunities,'' said Councilman Chuck Reed, who supports some of these changes. ``I don't see us ever knocking down a bunch of houses to build a park.''

Beverley Bryant, executive director of the Southern Division of the Home Builders Association of Northern California, said her members support the flexibility proposed in the revisions.

``It's good that the city is looking at new alternatives,'' she said. But the group will look closely at a proposal to raise fees the developers pay to the city in lieu of dedicating land. ``Fees make houses more expensive, period,'' said Bryant.

When the city council first approved the Parkland Dedication and Park Impact ordinances in 1988 and 1992, it was a way to help the city's park system keep up with population growth. At the time, developers were charged a flat fee. But in 1998, that changed and developer fees were tied to land values.

The 1998 ordinance also mandated that developer fees be reviewed and adjusted each year based on land values.

But no adjustment has been made by the city since 2002, because of the sour economy, rising building costs, and an urgency to respond to a critical housing shortage. In 2002, fees were set at 70 percent of land value, meaning that the developer who pays fees instead of building a park pays 70 percent of what the land would cost if the city purchased the land for a park.

But San Jose, which has been facing budget deficits for several years, can't make up the 30 percent as it tries to keep up with development and population growth.

``The fees need to go up,'' said Reed, who represents Berryessa, North San Jose and Alviso.

``There's just no way we're ever going to have enough money to buy land to meet the standard that exists,'' said Scott Reese, the city's park development manager.

Helen Chapman, chairwoman of the parks and recreation commission, a citizens advisory board, agrees. ``We are behind and we've been behind for several years now.''

Her commission recommends the fees be adjusted to 85 percent of land value beginning July 1, and bumped to 100 percent of land value starting July 1, 2006.

There's no question that San Jose has a long way to go to provide park and recreational space for a growing population. Overall, the city needs 930.6 acres added to its 3,500-acre inventory of park space, according to the Greenprint, a comprehensive study of the city's parkland and recreational needs done in 2000.

Based on a goal of 3.5 acres per 1,000 people, all council districts except District 8 (Evergreen) will need more parkland by 2020, the report says.

Since 1989, $56 million has been collected to create 24 new city parks, including 15 parks in the works.

Only 22 acres have been purchased directly by the city, an expensive venture. A 27,000-square-foot park in the works at 6th and William streets, for example, cost the city $1.2 million, the price of buying three parcels from several owners.

--------------------------------------------------------------------------------

The San Jose City Council will discuss parkland ordinances at its 7 p.m. meeting Tuesday at City Hall, 801 N. First St. More information can be found at www.sanjose ca.gov/prns/ParkPlanning.htm.

http://www.mercurynews.com/mld/mercurynews/news/local/11422771.htm

Community groups lament ballpark talk

By Barry Witt
Mercury News
April 14, 2005

San Jose city officials said last fall they were forced to delay spending in some of the city's poorest neighborhoods because of a decision by state leaders to divert some city property taxes to the state budget.

Neighborhood leaders, who depend on that funding, had to accept that.

But now, as Mayor Ron Gonzales and city council members consider paying from $20 million to $40 million to buy land for a major league baseball stadium, those same neighborhood leaders want to know where they fit into the new game plan.

``The disappointing thing is to feel that there's money for other things when something like projects in the neighborhoods can be delayed, especially in the areas that have been underserved for decades,'' said Judy Purrington, a leader in South San Jose's Edenvale/Great Oaks neighborhood, where promises for a new community center remain unfulfilled.

``It leads you to believe when you're told there's not money for something, you're not high enough on the priority list for them to make sure you're getting it.''

In a closed-door meeting Tuesday, the council authorized officials from the San Jose Redevelopment Agency to pursue acquiring 10 properties just south of the Diridon train station as a potential home for a ballpark. The council has yet to hold a public discussion about the plan or how it fits into the city's spending priorities.

``The city of San Jose is big enough to have lots of priorities,'' said Councilwoman Cindy Chavez, one of the council's baseball boosters. ``I don't think one is higher than another. Timing is an essential ingredient, whether we're talking about housing or strong neighborhoods or major league baseball.''

Chavez would not elaborate on what the timing should be for those priorities.

It's unknown exactly how much the land purchases would cost, but based on past downtown-area land acquisitions and the complexities of relocating active businesses, including a Pacific Gas & Electric substation, the cost for the 13.9-acre area could be $20 million $40 million.

The city plans to buy the land without seeking voter approval, despite a city ordinance that requires spending on sports facilities with more than 5,000 seats to go on the ballot. The ordinance was adopted in 1988 in the face of a referendum drive related to plans to build the downtown arena.

City officials say the plan is legal because stadium construction is only one option for the land, which could also be sold to a housing developer if San Jose fails to attract the A's from Oakland. Major League Baseball officials say the A's would not be allowed to move to San Jose because the San Francisco Giants hold territorial rights to Santa Clara County.

``Here you have a site that's always been identified as future housing, but if we decide to go forward with a proposed ballpark with some or all of this land, then that's what needs to be identified in an environmental review and that's what you have to get authorization from the voters for,'' City Attorney Rick Doyle said. The attorney said that before any measure could be taken to voters, the site first has to be identified and an environmental study completed for it.

Kathy Chavez Napoli, a former mayoral candidate and longtime critic of public spending on professional sports facilities, said the mayor's recent public statements about getting a baseball team makes it clear the property is being purchased for baseball.

``That is misleading the citizens to think it's really a general kind of effort to get more land for redevelopment,'' she said, adding that the city has ``a problem with the intent and the wording'' of the 1988 law.

The 10 properties include the former studio of KNTV on Park Avenue, the Stephens Meat Products plant, an SBC field operations center, and the substation. PG&E officials are evaluating what it would take to relocate that facility, which provides power for much of downtown. City officials said one possibility was to reconfigure the electrical facilities on the existing property.

For now, San Jose can acquire the properties only if the current owners are willing to sell. The city could use its power of eminent domain -- which allows it to buy property from unwilling sellers -- only if it has identified a specific use for the property, which the city isn't ready to do in this case.

Joe Guerra, the mayor's budget and policy director, said the redevelopment agency has the financial capacity to buy the Diridon-area properties by raising cash from selling existing land holdings. He said a decision to actually spend money on the land has yet to be made.

Pursuing a ballpark makes sense to some neighborhood activists, even if it comes at the expense of projects that had been planned in their neighborhoods.

``The city has put a lot of things in our neighborhood,'' said Mark Lopez, who is active in the Washington neighborhood just south of downtown. ``I know there are other things on our wish list, but it's more than we expected. If they want to pursue baseball, I'm for it.''

http://www.mercurynews.com/mld/mercurynews/news/local/states/california/the_valley/11390934.htm

S.J. quits discussions on cannery

OFFICIALS RULE OUT PROPOSED HOME FOR BALLPARK BUT WILL PURSUE OTHERS
By Barry Witt
Mercury News
April 1, 2005

San Jose has pulled out of talks to acquire a closed cannery near downtown as a potential home for Major League Baseball, the developer who controls the property said Thursday.

Mayor Ron Gonzales met last week with Robert Freed, regional general manager of KB Home, which has an option to buy the former Del Monte cannery, and told him the city ``intends to look at other sites and we're not going to continue to negotiate'' for the property, according to Freed's account of the meeting at City Hall.

Gonzales on Thursday would not discuss his meeting with Freed.

``Unfortunately, I can't share the details of that because it's something the council has discussed in executive session,'' Gonzales said, referring to a closed-door city council meeting March 22.

The 13.7-acre Del Monte property on Auzerais Avenue had long been considered by baseball boosters as an ideal location for a ballpark because of its proximity to downtown and access to a new light-rail extension. It also is vacant, meaning the city would not have to deal with relocating residents or businesses, and it has a single owner, making real estate negotiations simpler.

At the secret council meeting, council members heard from city negotiators, including Gonzales aide Joe Guerra, on the status of talks with KB Home over a possible swap of KB's interest in the Del Monte property for eight acres of city-owned land on North San Pedro Street.

KB Home holds a $29.5 million option to buy the cannery and has invested about $5 million in attempting to secure city approval for its development as a 275-unit condominium and townhome project.

When the city solicited bids last year for development of the North San Pedro property, the highest offer was just $9.8 million, suggesting there was a large gap the city would need to fill if it wanted to exchange properties.

Gonzales has said the city's budget outlook remains poor, with no raises being granted to city workers and cuts in city services pending.

The cost of acquiring Del Monte ``was one of the considerations'' in deciding to look at other options, said Councilman Dave Cortese, a founding member of the Baseball San Jose group that is promoting the effort to get the Oakland A's to move to the South Bay. Major League Baseball officials say the move will never happen because the San Francisco Giants hold territorial rights to Santa Clara County.

San Jose is expected to begin focusing on another site just south of the Diridon train station, east of the railroad tracks, which has the advantage of being even closer to downtown and transportation lines. The downsides include the fact the 13.9-acre site has multiple businesses and property owners, some of whom are ready to sell but several of whom could be problematic. Among the properties are parcels on South Montgomery Street held by SBC, the naming rights sponsor of the Giants' ballpark, and a PG&E substation. The Diridon site also is close to several new housing developments, where residents could object to the late-night lights and noise associated with ballparks.

In his State of the City speech in February, Gonzales promised that he would ``submit a proposal to Major League Baseball to bring a team to San Jose.'' On March 20, he held a news conference in Arizona to try to drum up media interest in San Jose's efforts. To date, the city council has not had a public discussion involving a ballpark or baseball other than to pass a resolution last year asking for the Giants' territorial rights to be revoked.

Baseball boosters hoped that the Gonzales proposal would include a ballpark site, but without Del Monte, that appears less likely to happen.

Gonzales said that even without the cannery, he remains undeterred.

``I think there are some other opportunities which we're looking at,'' he said. ``Every site will have its pluses and minuses. We know that from past experience.''

But some boosters say they have no idea what the mayor plans to do now and believe he may be pursuing the wrong strategy in attempting to throw an unsolicited pitch to baseball's leaders.

``I don't know what good it is to make a stadium proposal to Major League Baseball without the other parties at the table,'' Cortese said.

http://www.mercurynews.com/mld/mercurynews/11284520.htm

Prime lot excluded from redevelopment zone

By Janice Rombeck
Mercury News
April 1, 2005

A prime parcel of downtown San Jose real estate cannot be included in a redevelopment zone because the Redevelopment Agency did not prove the area is blighted, a judge has ruled.

Santa Clara County Superior Court Judge Joseph Huber issued a tentative decision on Monday in favor of Gross and Holmes Properties, owners of the Mitchell Block, once viewed as a key parcel in downtown revival efforts. Officials had envisioned offices, housing, restaurants and shops on the block bounded by Santa Clara, Market, St. John and First streets.

The 158,000-square foot piece of property now holds the Victory Parking Lot and a 30,000-square-foot empty building. There currently is no private or public development project for that site, but Greg Mitchell, one of the block owners, said ``we have been and continue to work with various developers.''

The lawsuit filed in 2002 claimed the redevelopment area expansion was illegal because San Jose did not demonstrate that the area is blighted -- a necessary step before redevelopment money can be spent. If it had been included in the redevelopment area, the city also would have been allowed to take control of the property through eminent domain.

Redevelopment Agency Director Harry Mavrogenes said the block ``is a very small part of downtown'' and ``really doesn't affect our five-year plan. I don't think it's going to affect our ability to do projects downtown.''

He said he didn't know yet if the city would challenge the decision, but said he would take the issue back to the San Jose City Council, which also is the agency's board.

Vice Mayor Cindy Chavez, who represents the downtown area on the council, said Thursday she had questions about the decision, but declined to comment further.

San Jose City Hall was closed Thursday in honor of Cesar Chavez Day.

The Mitchell block was considered a key piece of land for the Palladium Co., which had planned to build shops, a 350-room hotel and 1,000 condominiums on five blocks north and south of Santa Clara Street. The billion-dollar plan failed when the dot-com economy plunged in 2000, but in 2002, the city still considered the area valuable and took action to include it in the redevelopment zone.

At the time, only Councilman Chuck Reed voted against expanding the redevelopment area to included the property, expressing concerns that the property owners could sue over an alleged faulty blight analysis.

``The judge agreed with me,'' said Reed.

Not only did the judge rule that the agency did not prove blight, he also accused the agency of deciding an area was blighted, and then asking consultants to prove it.

``This contract provision creates a strong inference (if not direct evidence) that defendants already came to the conclusion that the added area was blighted and simply wanted the factual evidence to justify that decision,'' Huber wrote. ``The defendants' overall course of conduct ... strikes this court as a post hoc rationalization form of decision-making found.''

http://www.mercurynews.com/mld/mercurynews/11280818.htm