San Jose Funding Crisis Thwarts Code Enforcement, Historic Preservation
Submitted May 18, 2010, 11:49 PM
A $116 million revenue shortfall in the city of San Jose’s operating budget is unlikely to impact development services, in part because the operation already has faced big reductions. Last year, 100 positions were eliminated in three separate rounds as development activity plummeted.
“We have made cuts over the last 18 months, and we seem to be finding the bottom,” said Joseph Horwedel, director of planning, building and code enforcement.
The proposed budget preserves $260,000 to complete a general plan update expected to map San Jose’s development for the next 30 years. Horwedel says the expenditure reflects the task’s importance. But he cautions that the general plan is only a start.
The document contemplates 60 or so village and community nodes centered around public transit, retail centers and urban living, with shopping and work achieved mostly by walking and biking. Each of those nodes must be planned in more detail. “There are places where there is not an obvious route to build these villages, so we need to spend time with the property owners and developers,” Horwedel said. He expects to start planning five or six of these villages first. The general plan update is slated for completion by June 2011.
At the same time, code enforcement is expected to suffer under the new spending regime as will historic preservation. Poor code enforcement can lead to blight and lower property values and has been linked to higher crime rates. Twelve code enforcement positions are to be cut from the building services division, with two temporary slots added to pick up some of the slack. At the same time, code positions funded with federal Community Development Block Grant monies will be cut from 17 to ten, according to the city’s manager’s budget message. The redevelopment agency also will cut five of eight code enforcement positions. Proactive enforcement to mitigate the effects of vacant foreclosed properties in neighborhoods also would be discontinued.
The plan also is to suspend the city’s Historic Landmarks Preservation Commission, said Laurel Prevetti, assistant director of planning, building and code enforcement for the city. The commission oversees applications for landmark status at the state and local level and nominates potential historic landmarks. More important for property owners and would-be developers, the commission has actively identified potential landmarks in the past and processed them. Now the private sector must absorb that duty, she said.
“That is a pretty significant loss,” Prevetti said. “It shows the kind of choices that the council has ahead of them.”
This is the ninth consecutive year that San Jose has experienced revenue shortfalls compared to its projected spending. Including proposals for the 2010-11 fiscal year outlined in the city manager’s budget message, the city has cut its annual spending by nearly $600 million over the last nine years.
In a speech to approximately 250 Rotary Club members and their guests in San Jose on May 5, San Jose Mayor Chuck Reed traced the city’s current fiscal dilemmas to decisions made in the heady days of the Internet boom, including significant increases to public pensions led by the California legislature in 1999.
“We thought revenues would keep going up forever, and we were all going to be rich. We increased pensions by 50 percent. That turned out to be the greatest financial scam in the history of the state of California,” he said.
Next year, the city faces a $60 million increase in its pension fund payments on top of $140 million it is already paying, the mayor said. Employee count has dropped from nearly 7,500 full-time equivalent positions at the peak of the dot-com boom to 5,656 next year. Since 2001, the average cost per employee has risen 64 percent, even as city revenues have climbed only 18 percent. The average cost per city employee has risen from $73,581 a year to $120,418, a rise of over 63 percent. Police and fire fighters’ average pay and benefits annually per worker is $181,000, nearly doubling in the last decade, according to the mayor.
Even with cuts, deficits are projected to continue in the next five fiscal years. Moreover, those deficits do not address an existing backlog totaling nearly $450 million in deferred and unmet infrastructure requirements and ongoing maintenance, the mayor said.
Even with such difficult fiscal decisions confronting the city, Horwedel said he sees some signs of optimism in his department. While there are few zoning-related requests or proposed general plan amendments, and the city has extended the life of some development permits for a number of years, a few companies are pushing forward with projects. Federal Realty Investment Trust has started construction on a new apartment community with more than 100 units at its wildly popular Santana Row shopping and lifestyle center. The Irvine Co., developer of North San Jose’s huge North Park Apartment Communities, is making plans to phase development of a neighboring site, Horwedel said. “They are trying to build in more bite-sized pieces,” he said.
Meanwhile, smaller projects consisting of homeowner and tenant improvements as well as some larger work by the electronics industry and solar panel manufacturers are also pushed through, he said.
“In the building permit world, we are optimistic,” he said. “The last couple of months have been good in terms of activity and revenue. But this is traditionally a busy time, and we are going to watch to see if October is as robust.”
