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By KEVIN McCALLUM
THE PRESS DEMOCRAT
The first day of fall is still weeks away, but Silly Season has already arrived in Santa Rosa.
That’s what Mayor Susan Gorin calls the period running up to an election when it becomes more difficult to distinguish the difference between good governance and political posturing.
Silly Season showed up Tuesday shortly after interim Chief Financial Officer Bruce McConnell finished giving a presentation about redevelopment financing to the City Council.
McConnell outlined why he believed that forcing the city’s Redevelopment Agency to repay $6.6 million in outstanding loans to the city was a bad idea.
Jake Ours
Jake Ours, the former chairman of the Redevelopment Agency board, had floated the proposal shortly after he quit the board and announced he was making a run for for City Council. He suggested the city consider recalling the loans as a way to raise much-needed cash.
So Gorin asked staff to give the council a primer on the complex world of redevelopment funding and whether Ours’ idea had merit.
They concluded that, at least at the moment, it did not.
Recalling the loans would not be financially prudent and could jeopardize the agency’s economic development projects, including the former AT&T building, McConnell said. Requiring the agency to refinance the loans would also take money out of the community and send it to Wall Street, he said.
And perhaps most importantly, it would cause the city to lose $250,000 in annual interest income in exchange for a short-term cash infusion.
“Bringing in one-time money and saying we can solve everybody’s woes is somewhat shortsighted,” McConnell said.
After that, the debate quickly became less about the merits of recalling the loans and more about how much political mileage Ours would be allowed to get out of his idea.
Councilmembers who back his opponents — incumbents Gorin and Veronica Jacobi — sought to undercut the proposal, supporting McConnell’s conclusions and questioning Ours’ motives.
Ernesto Olivares
But Ours’ allies on the council — John Sawyer, Jane Bender and Ernesto Olivares — all sought to rehabilitate his idea, thanking him for bringing it forward and calling for further investigation.
Though he acknowledged he’s “still kind of learning” about the complex world of redevelopment funding, Olivares said he thought the idea should be explored further.
The revelation about the loans made him wonder “was this stone overturned and are there other stones to be turned over still?” he asked.
John Sawyer also sought to support Ours’ idea, and expressed disappointment that it had not been brought forward before now. In a rare rebuke to city staff, Sawyer said he felt “those in charge of our financial department” in the past few years should have brought the option of recalling the loans to the council’s attention.
During the intense budget debates of the past two years, “not having that information at our disposal I think was probably more than unfortunate,” Sawyer said.
David Heath, who served as CFO for three years before joining SMART two months ago, said the council was well aware of the outstanding redevelopment loans. He said he never proposed recalling the loans because, even if it were possible, it would cost the city interest income for years to come.
“It’s one-time money that didn’t solve our structural deficit,” Heath said. “I’m not even 100 percent certain that we could just knock on the door and say ‘We want our money back.’”
Gary Wysocky
Meanwhile, Councilman Gary Wysocky sharply questioned Ours about the timing of his proposal. He asked why Ours never mentioned anything about repaying the loans during his seven years on the Redevelopment Agency board, only floating the idea after becoming a City Council candidate.
Ours answered that it only became clear how much money the downtown redevelopment area would have available to repay once the development contract for the former AT&T building was finalized.
But Wysocky noted the Redevelopment Agency has had development agreements before that never went anywhere because the financing never came though. The AT&T building sale and redevelopment is “absolutely not guaranteed,” and the Redevelopment Agency needs to hold its cash in reserve until that project is further along, he said.
“It’s premature to consider repayment,” Wysocky said. “Maybe not in a year.”
Mayor Gorin said she was “rather amused” by the whole discussion because the council has always known about the loans — and had been regularly reminded of them over the years by a member of the public critical of arrangements.
She agreed with Wysocky that it felt premature to ask for repayment of the loans because of the impact it could have on redevelopment efforts.
“This is probably not the time to pull back from the effort on economic development,” she said.
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The city’s loans to the agency are only the tip of the iceberg. There are much bigger and far deeper problems.
The following was sent to the city on 2/2/2009
“2/2/09
richard canini
to SUE, cmoffice, ernesto, gary, jane, john, marsha, susan, veronica,
It is good that the Council has stated its intent to review the redevelopment agency, focusing on the financial report for 2008. Towards that end I offer these questions:
The agency intends to draw down a 14.7 Million dollar line of credit at the Exchange Bank. Why is this draw down necessary? For what will it be spent ? {p6 08}
In 2008 agency expenses were $12.8 Million revenues were $9.8 Million. How was this deficit covered ? {p3 08}
Who got a grant or grants from the agency [ names, dates, amounts] ? How much of the bond proceeds was give out in grants ?
Why did agency payroll increase from about $ 0.5 Million in 2007 to $1 Million in 2008 ?
Why were redevelopment areas combined ?
Are property taxes from all properties in a redevelopment area used to pay off the bonds ? Even properties which have not received redevelopment funds ?
How are bonds to be repaid if projects in redevelopment areas are tax exempt ? {p4 08}
The AT&T property pays no real property tax. How will the bonds be paid off ? How much property tax was being paid before the agency/city bought the property ?
Hyatt hotel pays no real property tax. How will the bonds be paid off ?
Hyatt got a $ 2 Million loan form the city in 2008. On what was it spent ? Agency has spent $ 12.5 Million on Hyatt. How much has been returned/repayed ?
Agency stated in email of 2-29-2008 that city did not loan money to Grace Bros/Hyatt project. But Financial report shows a $ 2 Million dollar loan to this project. Please clarify. {p33 08}
Which redevelopment projects need planning, design review, or cultural heritage approval ? Redevelopment projects are generally exempt – right ? Why ?
Who manage the agency, who is the management of the agency [ names, titles] ? Who are the “we” on page three ? {p3 08}
City claims redevelopment pays for sewer and water improvements. But $ 6 Million of sewer and water rate payer’s funds were spent in redevelopment areas. Please clarify.
City claims agency is separate from city and therefore city/tax payers are not liable for agency debt. But statements in finical report indicate otherwise. Please clarify, stating case and statue law. {pvii, 18, 23, 25 08}
Is the present Council bound by previous Council decision. May the present Council cancel or alter Gateways or other projects ?
How much does the agency owe the city ? When will it be paid back ?
What happens if agency can not meet bond payments ? If there is no tax increment, what happens ?
Please let me know when you have answers to these questions.
Yours for good government, Richard Canini”
Electing anyone who’s served on this redevelopment board [who can not explain away its/his failures] to the city council is absurd.
Has everyone forgotten the disaster perpetrated on San Franciso by a Redevelopment Agency. The thriving community of the Fillmore District was razed to the ground resulting in the loss of thousands of affordable homes, the many jazz and music clubs and a thriving community. The land stood empty for more than 20 years to finally be replaced with high income housing and a police station.
The only positive side effect was the community gardens that appeared on the wasted landscape. Neighbors created community vegetable gardens and a green oasis in the blighted landscape. Like many others who have lived in San Francisco and witnessed the scorched earth policies of Redevelopment Agencies I have no use for that method of preserving and improving communities. Make them give back the $6.6 million. I am sure there are better more beneficial uses for that money!
The Lowe’s project was bad!
It was not about increasing business, it was about cannibalization. Cannibalization of business that went to Friedman’s and Home Depot.
Cannibalization is NOT a sustainable business practice, it is destructive. It destroys one business to make another.
As for the city budget, the MAIN concern is the economy. That’s it. It is pretty simple. Santa Rosa is not unique.
City governments all across this country are battling the forces of recession. If the so called pro-business folks were in power, they would still be having the same problem balancing the budget.
\In remarks prepared for delivery to a Labor Day speech in Milwaukee, the president said Republicans are betting that between now and Election Day on Nov. 2, Americans will forget the Republican economic policies that led to the current recession.
\These are the folks whose policies helped devastate our middle class and drive our economy into a ditch. And now they’re asking you for the keys back,\ Obama said.\ AP/Huffington Post
The economically disastrous Hyatt Vineyard Creek Hotel was inflicted upon us by a Republican dominated Santa Rosa City council.
The President is right!
Something needs to change. It does seem that Santa Rosa could be doing a lot better financially if the philosophies were oriented more towards being a business friendly city. Most of our revenue is generated through taxes on businesses. Less business = less revenue.
So what needs to change? Is it council deciding the ‘no box stores in my town’ mentality or is it some other department? After the responses from council of \NO WAY\ before the EIR for LOWES was even presented leads me to believe that council is the problem.
We recalled the Governor so why can’t we recall our council and find some members who will think offensively when it comes to the economy of the city. Stop combating low funds with cuts and start bringing money in. I think OURS will do that.
We have light rail coming in. Are there any plans to utilize that for financial benefit? Not that I’ve heard.
We have freight rail coming. Same thing…No Ideas! Just passing through.
The opportunities are out there. Just stop saying NO!
Replenish…city coffers by making the Redevelopment Agency repay $6.6 million in loans…a proposal floated by City Council candidate Jake Ours… These should be immediately repaid because the money is no longer needed now that a deal has been struck to sell the AT&T building…, Ours said. 1
A deal has been struck; the redevelopment agency has struck out and it lost by more than a million. Way to go! We need better players on that old city team of ours.
The city council expressed support for increasing the city’s reserve fund as money becomes available. This money will earn less interest than the Redevelopment Agency is paying and will not be available for salaries.
…Ours…sat on the Redevelopment Agency and Housing Authority boards from 2003 until he stepped down in July to run for City Council…
Some people think the real reason he makes this proposal now, is some kind of political campaign ploy.
1‘Santa Rosa council urged not to call in redevelopment loans’ WSC
Thumb up if you think it’s a ploy.
There’s nothing silly about mayor Gorin’s attack of her political opponent, Jake Ours. Sure, his idea was self promoting, but for Gorin to direct staff to summarily dismiss his idea at a council meeting is just wrong.
McConnell misrepresented the facts at the council meeting. Ours correctly rebutted his ‘silly’ arguments. Jake Ours is a redevelopment specialist that knows a lot more than McConnell and he told the truth at the meeting.
The City is under no obligation to loan money to the redevelopment agency. And $250,000 is not 6% interest on the 6.6 million loan. It’s only about 4%, do the math.
There’s no way I will vote for increased sales tax when the city will not recover their own funds. Gorin’s silly season should be renamed the cheap shots season. Vote her out.
So Mayor Susan Gorin and council member Veronica Jacobi think bringing in one-time money is somewhat shortsighted? Weren’t these the same two that just last week lauded city employees for accepting furloughs and railed on about the resulting savings to the city? Oh well, I guess internal consistency has never been a requisite for elective office. Silly season is indeed here. Thanks to the mayor for leading the way.
Allegiances are clear. Thinking is faulty.
“…Ours…sat on the Redevelopment Agency and Housing Authority boards from 2003 until he stepped down in July to run for City Council.”1 “Jake Ours, the former chairman of the Redevelopment Agency board…”2
A few questions of ours:
Why did the Redevelopment Agency [RA] buy the AT&T building?
Why did RA buy it at the height of the real estate market?
Did the RA know about the real estate bubble?
Did the RA know, buying it would remove it from the property tax rolls?
Why did RA buy it when they knew or should have known that buying it would remove it from the property tax rolls?
Why did RA sell the building a loss of more than a million dollars?
Thumb up if you would like our questions answered.
1 Santa Rosa council urged not to call in redevelopment loans WSC
2 Silly Season arrives in Santa Rosa WSC
Ours’ proposal, and the pro-business Council minority’s support for it, may indeed just be “political posturing”. The immediate issue is Hugh Futrell’s grandiose, misguided plan for the AT&T building; and both factions want the taxpayers to pay for Downtown/Railroad Square redevelopment.
But whatever his motives, Ours is right. The Council needs to recover the $6.6 million now, to balance the general fund budget. The Council should never have loaned its Redevelopment Agency the millions of taxpayer dollars to “jumpstart” the five redevelopment areas.
Ours was an “Economic Development” pro, and has been on the HA/RA for seven years. He should know whether the Agency can refinance the redevelopment areas–without draining the general fund any further.
The Council should pursue Ours’ proposal, while continuing to cut the fat from the general fund budget–especially those $100,000+ management salaries and benefits.
But that doesn’t mean that Ours would be a better Councilmember than Gorin, Jacobi, or the other candidates this November.
And of course our council can just put another sales tax on the ballot! Tax and spend and spend and spend while cutting services to the people shows where the city councils priorties lie! And they surely arent with the people!
Amend to that! The “silly season” started with the current mayor’s regime. If Mayor Gorin understood anything other than how to spend taxpayer money on progressive boondoggles, Santa Rosa could have minimized the deficit. Leadership to her and her progressive colleagues comes down to slapping themselves on the back for a job well done and spending like there is no tomorrow.
Perhaps the real problem is people like “The Real Problem” poster.
It offers little information — and what little there is doesn’t seem to make sense.
It claims “Jake Ours is looking for a way to help dig Santa Rosa out of this whole IMMEDIATELY to the tune of SEVERAL MILLION DOLLARS so that it won’t have to continue to cut services and employees.”
Calling a $5 million loan not only undercuts economic development (more jobs over the long run), it would be less than a 1.5% dent in the total city budget. Makes little sense.
As to the mayor and other city officials leadership problems, I have no idea what The Real Problem means. Seems to me the City is running just fine — especially in a very negative economy.
If The Real Problem has a specific complaint, he or she should name it. (Please don’t quote some self-published book. Tell us the specifics, yourself.)
I don’t know anyone on the City Council, or any of their friends, so I have no axe to grind here. Do you have an axe to grind, “The Real Problem”?
While the merits of this idea are hard to understand without further information, what I do find curious is the timing.
Our has sat on the Redevelopment Agency board through the last two years as the city council has struggled to balance this city’s budget.
Why now? Why bring up the topic just as you start a run for city council? Two ideas pop to mind.
The first is that as a member of the agency board he was tasked with doing what was best for the agency and not the city. I believe that the agency is a separate legal entity that a board member might feel they need to protect.
The other is that Ours is simply using a snappy idea to win a council seat. The idea looks good in print, cause everyone hates redevelopment, right? And without knowing Ours, it really is hard to tell.
It’s unfortunate to see the Council (followed by the PD) slam somebody for trying to help fix the problem. It seems to me that Jake Ours is looking for a way to help dig Santa Rosa out of this whole IMMEDIATELY to the tune of SEVERAL MILLION DOLLARS so that it won’t have to continue to cut services and employees.
Investments are wise, but if I had a couple million dollars in my stock portfolio and I couldn’t afford to buy groceries, I’d probably find a way to liquidate a little bit!
The most disgusting part of this article is Mayor Gorin’s dig on Mr. Ours, alleging that he is trying to “pull back from the effort on economic development.” What a farce coming from the person whose lack of leadership has only made Santa Rosa’s problem worse! (Maybe she calls it “Silly Season” because she invented it!)
It’s time to clean out the City Council who can’t seem to get anything right. Let’s put some people in there who have fresh ideas to get us out of this misery and try to get things moving in the right direction.
I personally will not be voting for any incumbents this election season. Their track record is just not there.