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City Desk: Mar. 12, 2014

Ericsson Considering a Move to Irvine’s Santa Clara Technology Campus

Telecom giant Ericsson is reportedly considering a 440,000 sf lease in the Irvine Company’s Santa Clara tech campus, presently under construction, according to a report last week in the San Jose Business Journal. Ericsson’s Silicon Valley media relations office said that it wasn’t company policy to comment on “speculation.”

The 30.69-acre Santa Clara technology campus will occupy a prime Silicon Valley location, at Bowers Avenue and Highway 101. When built out, the campus will include 1.2 million sf of office space, 35,000 square feet of retail space, four 6-story buildings, two 8-story buildings and a parking structure.

The goal of the design is to create a community that is a “pedestrian-oriented…community space,” project architect Michael Bischoff, Partner, Pei Cobb Freed & Partners told the Santa Clara City Council last summer.

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Ericsson is one of the world’s largest and oldest telecom companies. Based in Sweden, the company provides infrastructure for telecom service providers, and has the leading share of the 2G/3G/4G mobile network infrastructure market, according to industry analyst Gartner Group.

The Beginning of the End for Santa Clara RDA Dissolution

It looks like Santa Clara may be seeing the light at the end of the RDA dissolution tunnel.

At its meeting last Thursday, the Oversight Board of the Santa Clara RDA Successor Agency, signed off on the current Recognized Obligation Payment Schedule (ROPS) and received an update on the city’s negotiations with the State Department of Finance DOF), which is making steady progress on resolving disputes with the county about $240 million in County “clawbacks” of city real estate, and revenue managed by the defunct RDA.

Since the last meeting of the Oversight Board, Santa Clara has resolved part of the dispute in a deal with the DOF, reducing the amount owned to $45 million from $64 million, the city’s RDA Attorney Karen Tiedermann told the board last Thursday.

In Nov. 2013, the city transferred $37.9 million to the County for distribution, and will forego its share of that money (10 percent, $3.79 million), and continue to do so until the $45 million is paid off.

“We’ve scheduled a meeting with the county to discuss a settlement,” said Tiedermann, “and we have been in discussions with the DOF.”

In the meantime, the county’s lawsuit against the city has been set for a hearing on Oct. 31. On Aug. 29, 2013, the court issued an injunction preventing the city from selling or spending the disputed assets and lease revenues. These include the land rents from Great America, Techmart, and the Hilton and Hyatt Regency hotels. The land was bought by the city decades ago, but was managed by the RDA. The case number is 34-13-80001396. Find the court documents at tinyurl.com/rda2013docs.

The other piece of business last week was regarding a “private letter”* IRS ruling the Board requested last August on using unspent proceeds from 1999 and 2011 tax-exempt bond sales – rather than property tax revenue – to pay the $30 million debt owed for Levi’s Stadium construction. Santa Clara’s tax counsel David Walton advised against the request.

“The IRS will want to know how come the money wasn’t spent…in 14 years [the 1999 bonds],” he explained at the time. “That may generate an audit…and that’s a risk I wouldn’t advise you to take.” The risks include hefty penalties and fines, plus back taxes for the time the money wasn’t being used for its stated purpose.

This isn’t an idle speculation. Last September, when the County Office of Education amended its quarterly payroll tax returns, it alerted the IRS to taxes overdue payments and were levied $200,000 in fines, according to a story that broke last week in the Mercury News.

However, the Oversight Board went ahead with its request, but the IRS declined to rule on the question for several reasons, according to Walton’s report to the Board.

“The dissolution of California redevelopment agencies and the relationship between the successor agencies and the various parties involved (the City as the governing entity of the successor agency, the Board and DOF) is evolving and the IRS does not want to get into the middle of interpretations of state law,” Walton wrote. “The IRS is most likely concerned that other California successor agencies would rely on a favorable ruling based upon the 2011 bonds and take positions that the IRS would not approve of.

*A private letter IRS ruling applies only to a specific question from a specific taxpayer, rather than a ruling that applies to all taxpayers.

New County Parolee Reentry Program Aims to Reduce Recidivism and Keep Community Safer

Last month, the Santa Clara County Board of Supervisors inked an agreement with the California Department of Corrections and Rehabilitation’s (CDCR) Division of Adult Parole Operations to provide a one-stop shop for programs and services to get parolees back on their feet. The new Parolee Reentry Services Program will be funded through a $2,581,000 grant from CDCR, for the next two years.

“We’ll all be safer if these individuals are helped to stay out of trouble and successfully reintegrate into the community,” said Santa Clara County Supervisor Cindy Chavez, Vice Chair of the Board’s Public Safety and Justice Committee, and Chair of the County’s Reentry Network, in a Feb. 26 news release.

Each year, the program will serve about 200 offenders in Santa Clara County, who have been referred by a parole officer. They’ll get services for six to nine months that include substance abuse recovery; mental health treatment; legal assistance; training; employment opportunities; and one-on-one help from a trained mentor. After leaving the program, parolees can continue to get support through the Reentry Resource Center and its Multi-Agency Program.

One impetus for the program is the Public Safety Realignment Act of 2011, which shifted a variety of non-violent offenders to California counties to serve their jail sentences. At the same time, it also reduced probation for prisoners who have completed their sentences.

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