This past week, the San Jose City Council gave its preliminary approval for a $300 million expansion of the San Jose Convention Center. The cost-benefit analysis upon which the council leaned to make its decision raises more questions than answers about the utility of the project. Is the convention center expansion designed to meet the needs of the people of San Jose, or the needs of the San Jose Redevelopment Agency?
The “Economic and Fiscal Impacts” report released by the City indicates that the convention center expansion will bring very little to the City’s General Fund: “After construction, annual net positive General Fund impact of $261,000.” And in terms of costs, the report indicates that there will be annual costs of $592,000 per year to relocate 209 city workers who have offices in the old King Library building.
Here’s where it gets interesting. “Given the City’s budget shortfall, it is anticipated that a significant number of City employees will be laid off and that 50 percent of the MLK employees will be relocated to space at City Hall.” “...It has been determined that the most cost-effective relocation solution is to lease space within exisiting privately owned buildings in the City…through natural attrition and contemplated additional reductions in City staff, it is expected that there will be sufficient space at City Hall within 5 years to accomodate 100 percent of the space needs of the relocated employees.”
No, this isn’t the “most cost effective” relocation solution. Moving these employees to the former city hall site would be the most cost effective solution. (The proposed $3.2 million to lease private property over a five year timeline should be billed to the previous administration which ignored the expressed requirements of Measure I to “consolidate” civic offices in the new civic center.)
Bad decisions are often made on flawed assumptions. The so- called “Economic and Fiscal Impacts” report makes the grand assumption that “the economy will recover and grow at a moderate rate.” It’s not unreasonable to predict that the economy will recover in the short term, but how can anyone predict that the local economy will grow at a moderate rate? And, while the economy may recover, there is no gurantee that the trade show and convention business will expand. In fact, recent evidence suggests otherwise, as demonstrated by the number of conventions reported to have cancelled in San Francisco.
Is the San Jose Convention Center a “cash cow” or a “loss leader?” My concern is that the Redevelopment Agency stands to gain more than the city itself. Shouldn’t it be the other way around?
Pete,
I’m certainly no believer in spending wads of cash on relocation issues related to the convention center expansion. In times like these, cash beats out flash and frugality should be the watchword.
Please tell me more about how the RDA might benefit from the undertaking. It’s been my understanding that the RDA, by law, is not permitted to participate in city-owned projects.
Wow!
Some people in San Jose would like to spend $300M to expand its TMcE Convention Center.
Currently Silicon Valley is without a single urban “youth” hostel that would attract young international visitors as well as those convention attendees not being sponsored by their companies (as well as families, school groups, scouts, athletes and their teams, bicyclists, sightseers, seniors, company interns and trainees).
Why not direct a tiny part of these funds to open a high-tech hostel? It would showcase local Silicon Valley products and services so every Geek and Nerd around the world would want to visit San Jose, stay at this hostel for a few days and visit the many museums and other Valley attractions.
TMcE and other fancy hotel interests should not worry about competition since none exists. Hostelers would never consider paying the kind of money they are charging. Why spend more than $3/hour for 8 hours of sleep? Hostellers don’t need plasma TVs, high-count linen, sealed toilet seats, concierge and room service, valet parking atc. Bathrooms at the end of hall are just fine. Hostellers do spend money on travel, dining, entertainment, and souvenirs. The hostel should be low cost, clean, safe, with a friendly social environment. The self-help kitchen, common and dining room is where one meets fellow travelers from around the world; a much more interesting environment than a fancy hotel room with TV set. Most hostels offer private family rooms for slightly more. All ages are welcome.
Hostelling International affiliated hostels limit the number of overnights that travelers may stay so hostels don’t turn into homeless shelters.
Currently most young international travelers don’t set foot in Silicon Valley, they instead travel along the Coast, staying at hostles in LA area, Santa Barbara, SLO, Cambria, Monterey, Santa Cruz, Pigeon Point and Montara Lighthouses, or the many hostels scattered around San Francisco. Most younger travelers come on public transport (under 25 it’s tough to rent a car) but they don’t get off the bus in San Jose (or Silicon Valley) because there’s no hostel.
Here in Santa Cruz we’re glad to have these travelers stay at our hostel, just couple of blocks to Main Beach at some historic buildings in a City park. However we only have 45 beds and are forced to turn many away during the busy summer season.
Too bad San Jose is not located on the Coast.
For the privilege of making a lot of money the Coastal Commission recently required a proposed 800-room luxury hotel at the former Navy base in San Diegeo to also construct a 400-bed non-profit hostel (or pay $6 Million mitigation fee for someone else to open it).
San Diega already has a fair number of hostels. Many international travelers make this city their final West Coast destination. San Diego is “world class” while San Jose remains “provincial”.
Silicon Valley used to host a Computer Gamester’s Convention utilizing both Convention Centers, but got too large with 60,000 attendees that a few years ago the organizers moved this venue to San Francisco’s Mascone Center. With many inexpensive SF hostels it’s doubtful Gamesters will return to Silicon Valley even with expanded convention facilities.
Pray tell who’s going to fill up this $300 Million Palace when there are no affordable places for younger people to stay anywhere in Silicon Valley?
I’m VP of Santa Cruz Hostel, freely offering SJ RDA (or some local visionary company that needs marketing exposure) advice to open a non-profit hostel. Looking at the dire projections of Intel, Sun Micro, AMD, HP, even Apple without its CEO, there are any number of large local based international outfits that could use marketing exposure that a SV Hostel would provide. Where are the “visionaries”??
pgp3
Would be nice to hear Team San Jose’s perspective on this. Why don’t they write up why this is such a good idea.
Greg:
The RDA’s tax increment cap will be increased to allow for the project’s funding. The RDA will provide for half of the funding ($150 million, $90 million of it in new bonds) with the other half funded through a 4% hotel tax.
Here’s the biggest question for San Jose residents….If the convention center expansion will generate significant revenues, shouldn’t that money go to the General Fund rather than back to the RDA to pay back bonds? If it’s such a lucrative deal…why doesn’t the city enjoy the profits? The convention center should generate cash for the city, not for paying back RDA bonds.
This project should really be called, The Redevelopment Agency Expansion Project!
Pete Campbell
Pete,
Thanks for the info but you perplex me. Remember Al Ruffo’s lawsuit wherein he challenged the RDA regarding their early study efforts related to the new City Hall. As I recall, the RDA kicked in $50M and the courts ruled that the City had to reimburse the RDA for crossing the line.
That being the case, how can the RDA participate in the expansion of the Convention Center. Who or what beyond the City owns title to the property?
As for directing tax increment bond proceeds, I believe the law is clear that such monies are returned to the RDA and cannot be funneled into the City General Fund.
I’ve said this before and it sounds mean spirited, but there’s more to it than that – I wish that the State would simply do away with RDAs. They waste money that could otherwise be spent on the needs of the people, not just a “blight-challenged” neighborhood.”
A quick web search on “convention center deficit” turns up 328,000 hits.
It’s a very nice long list of cities that thought they would be more important if they built or expanded a convention center.
As of this morning, San Jose is #5.
Charlotte NC, Baltimore MD, Pueblo NM, and Lancaster PA are beating us. But we’re ahead of Riverside, Pittsburgh, Ontario, and Nashville.
Maybe if we spend another 300 million, we’ll move up in the rankings.
Pete, wouldn’t the sales tax generated by convention users go back to the general fund? Conventioneers spend a huge chunk of money at restaurants & hotels as well as generate quite a bit of air travel, supporting the airport. upgrading and replacing a tired convention center is an investment that needs to be made to keep those dollars in san jose instead of santa clara, etc.
#7 Yes, you’re right, and the report does provide forecasts on “indirect” revenue generation. (please remember, the city only gets 1 penney of sales tax).
#5 frankly, I don’t know who owns what, and what can be done with which dollars, and what about Team San Jose, etc. (perhaps that’s part of the problem!) (Unfortunately, we don’t have any full-time journalists covering these issues for us).
Let me be clear…I am not against the expansion of the convention center. I am against making such a big, expensive decision without proper information and research. Again…if the deal is a lucrative one, why doesn’t the city council ask the voters (again) to approve the issuance of city bonds to fund the expansion?
Revenues generated by the convention center expansion should pour into the General Fund, not into the RDA’s bond payments!
The San Jose City Council and all public speakers strongly supported the convention center expansion at the 1/13/09 council meeting. Did they “weigh simultaneously where else scarce public funds could be spent to boost the economy”? Is this a wise investment?
Haywood Sanders would probably have something to say…
See http://www.brookings.edu/reports/2005/01cities_sanders.aspx and download the full report.
Wow,…we have no money to hire police officers but we have 300M to update our CC! Amazing,…another pathetic statement by our city leaders and the emphasize they place on public safety.
San Jose’s convention center has lost trade shows to larger venues, particularly Moscone Center, because it is too small.
But on the other hand, a lot of trade shows are really scaling back at present. So we may not need a bigger convention center right now.
Ideally the expansion would be ready just when the economy really starts to get going again—whenever that will be.
#9,
SJPD is currently hiring, so what the hell are you talking about?!! There’s also a nice, new police sub-station going up in south SJ.
#12
Carl Gardino, is this you ? Please let us know!
As a city employee at the PD, I for one am tired of getting emails about supposed layoffs that will occur within the city. Then to read about a 300 million dollar expansion on a building that is PLENTY large and not run-down by any means is sickening. Do we know how many jobs could be spared with $300 million??? I just don’t think this is correct at all. Shouldn’t we be concerned most about PEOPLE before buildings? especially buildings that are huge and in good working order…
#14-D.K.,
Yes, we should be more concerned with services and not buildings. I don’t get it either. Thank you for your hard work and dedication to we sometimes thankless citizens.
Mr. Campbell informed us:“And in terms of costs, the report indicates that there will be annual costs of $592,000 per year to relocate 209 city workers who have offices in the old King Library building.”
When the city sold us the bill of goods to approve The Taj Gonzal, it was on their assurance that it would consolidate all city workers into that building and thus save tons of $$ over time. There are 209 in the old MLK Library alone?! Boy, were we screwed, or what?
Pete continues:”.” “…It has been determined that the most cost-effective relocation solution is to lease space within exisiting privately owned buildings in the City…through natural attrition and contemplated additional reductions in City staff, it is expected that there will be sufficient space at City Hall within 5 years to accomodate 100 percent of the space needs of the relocated employees.”
We were told that the consolidation would be immediate, and last for years. Now we hear that it will only happen five years out, and then only because of layoffs. How many more times will the mayor and council lie to us taxpayers?
Yeah, yeah, I know that was a former mayor. But the Sunshine Chuck promised us is slow in coming. Now they’re circling the wagons on the 647f’s.
A bureaucrat who spans the administrations keeps popping up—Rick Doyle.
Why not relocate those city employees to the old City Hall on North 1st Street? Why can’t the city do something with this asset, which has stood empty for years?
Hugh, because City politicos and employees think they’re too g*d d*mn*d important!
We need to eliminate all politicians and bureaucrats from having access and/or the ability to dole out the taxpayer’s money.
Similar to throwing out all the booze in the home of an alcoholic.
Half of the local gov’t jobs could be done in 1/10th the time with less red tape by volunteers in the community.
As someone who works in the corporate security sector, I can state as a fact, having worked many of the events at McEnery that it is definitely not bringing in any where near the types and quality of shows that Moscone is currently landing. It could possibly be a matter of venue size. I’ve worked Moscone on a number of occasions and I will say that not only is that venue so much roomier, but the fact that it is across the street from Yerba Buena, the Metreon, and a Westfield shopping center make it that much more interesting to attend an event there.
Team San jose are idiots,the city as well.They are laying off every city employee at convention center and have money to expand BS NO one at city hall gets chopped more BS Chuck Reed F-U.