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County Sentences Santa Clara Convention Center to Death by Bureaucracy

Last week Santa Clarans learned what’s important to the Oversight Board of the Santa Clara Redevelopment (RDA) Successor Agency (SA): paying lawyers. But paying workers and bills doesn’t make the cut.

That’s the message of the Board’s March 3 meeting where it approved a Recognized Obligation Schedule (ROPS) that increased the lawyer’s fee and eliminated funding for essential Santa Clara Convention Center support operations – jobs and vendors. It may be the first time the Oversight Board ever added anything to the ROPS, since every dollar paid out means less money for their agencies – Santa Clara County, and the Water, Community College and Santa Clara Unified School Districts.

Recent Board appointee Debra Cauble, representing Santa Clara County, raised the question asking, Whether the item in the administrative budget for [the Board’s] counsel is an adequate amount? The Board spent several minutes determining that $10,000 was budgeted, and that it should be increased to $15,000.

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The attorney in question, Hilda Montoy of Fresno – counsel to several RDA SAs including San Jose, Fresno, Merced, Milpitas, Orange Grove and Glendale – came prepared with a revised ROPS based on Santa Clara County Finance Director Emily Harrison’s eight-page March 4 letter objecting to the proposed ROPS. This new version appeared about 15 minutes before the end of the meeting, and no copies of the County’s letter, nor the revised ROPS that was voted on, were available at the meeting.

Previous discussions have made clear the Board’s position that funding Convention Center operations is a City responsibility, at the same time County is appropriating all the income. The City’s position is that because the SA is a legally separate entity (even if City is also the SA) and will be holding title to the property on April 17, the City can’t continue to pay the bills without receiving the revenue.

Created by the law shutting down redevelopment, Successor Agencies are legal entities for unwinding RDA operations. Successor Agencies are in theory governed by an Oversight Board made up of representatives appointed by county taxing entities.

In practice, the five non-Santa Clara Board members merely execute the County Finance Department’s orders in recommending the ROPS to the State Dept. of Finance for approval. City staff doubles as the SA’s staff and prepares the ROPS, which is then reviewed – nit-picked would be a better description – by the County Finance Dept., which gives the Oversight Board their marching orders.

The County nixed funding for the Convention Center’s cash flow, emergency operating reserves, maintenance and capital improvements – for example, replacing 20 year-old chairs – and marketing, as well as denying reimbursing the City $7 million it has spent operating the Convention Center for the last four years.

Harrison allowed half the maintenance district assessment of $600,000 and $3.2 million for interim operations from June through Dec., although there’s no funding to operate the Center between the City’s court-ordered turnover to the SA on April 17 and June 1.

What they want to have is the ability to retain our asset but not invest any money in it, said Santa Clara Mayor Jamie Matthews. You can’t say ‘we’re going to deprive you of the revenue and say you’re not going to close it down.

The reason, according to Harrison’s letter, is that the majority of the documents regarding the actual operation and management of the Convention Center are between the City and third parties, without including either the RDA or the Successor Agency. Therefore, these contracts do not qualify as enforceable obligations.

Two of those contracts are on the City’s website (sanntaclaraca.gov/index.aspx?page=2531). One is the original, long-expired 1984 contract. The second is a 2014 contract, which couldn’t be with anyone but the City because there was no longer an RDA.

While the County agencies and SCUSD are counting their money, other people face unemployment come April 17.

A Convention Center cannot be run on the budget the County proposed, said Steve Van Dorn, President and CEO, Santa Clara Convention Center and Visitors Bureau. The summation is that the County is interested in turning the Convention Center into the county fairgrounds. By not funding it, we’ll lose business. We’re getting calls everyday. The media is asking about the Super Bowl. You have to market and sell the Convention Center. Otherwise you’re not going to fill it.

The immediate impact will be cuts of at least 17 jobs, according to Annette Manhart, Convention Center VP of Convention Center Sales, Marketing and Services. Manhart is one of the 17 whose jobs are slated to disappear on April 17.

The county’s at risk in losing $109 million in economic impact, she said. The Convention Center and Visitors Bureau brings in 120 conventions. This feeds the entire county [by] eating in our restaurants, sleeping in our hotels, shopping in Santana Row, visiting our entertainment attractions. We’re not a liability. We’re a necessity. The Convention Center’s marketing budget is about $900,000.

The County has stonewalled the City about a Convention Center buyback. It was clear from the discussion that the County is looking at selling the property for a lot more money than the City has offered – revealed during a discussion of $25 million in unspent 1999 bond proceeds. (The Board decided it had the authority to use the money to pay off bond debt, despite the law’s provision that pre-2011 bond proceeds be used for the purposes they were intended).

The Board speculated that the purpose the City had in mind for that money was buying back the Convention Center. The purpose in 1999 was not the purchase of the Convention Center, said Gage. You’re talking about property value at $400 to $500 million.

Maybe you’ve seen something I haven’t, replied Santa Clara RDA attorney Karen Tiedermann. I do not know of any appraisal of the Convention Center property.

Shutting down the Convention Center is a pebble in the pond and its ripples will have lasting consequences for the whole county, warned Matthews. If they [the County] simply want to embarrass us for the Super Bowl, this is their opportunity to do this. But as a result, San Jose airport will lose a lot of flights. VTA light rail, rental car companies would all be hurt. I would hate to be in the situation where we argue about what the meaning of is is, and the only ones who get fed are the attorneys.

This essentially puts the Convention Center out of business, said former City Council Member Dave DeLozier. This puts people out of work, including contractors, union workers who service the center. It puts the Hyatt lease in jeopardy. Instead of protecting the asset you extorted from us, you’re playing craps with it.

The clawback in the law has given the state and county taxing entities the legal right to extort and steal assets and revenues that legally belong to our citizens, he continued, and issued a warning. I, for one, will be front and center at election time to remind our citizens what their State and County representatives have cost them in dollars and services. I will also be reminding our City officials that they control the zoning.

In upcoming weeks, the WEEKLY will be taking a close look at the people on the Oversight Board, the elected officials that appointed them – the only people in this story accountable to Santa Clara voters – and how some proposed changes to the RDA dissolution law may be behind the County’s refusal to negotiate.

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