May 5, 2009 ... regarding the urbanized nature of the SNI Project Area; 4) continued economic
feasibility of the ... Development Plan adopted in 2003 guide development of the
area. SNI Plan ...... indebtedness approved by the voters of the taxing agency on
or after January 1, 1989. ...... 1744 SAN CARLOS gasoline.
BOARD AGENDA: 5/5/09 ITEM: 8.2
THE REDEVELOPMENT AGENCY OF THE CITY OF SAN JOSE
MEMORANDUM TO:
HONORABLE MAYOR, CITY COUNCIL, AND AGENCY
FROM: HARRY S. MAVROGENES EXECUTIVE DIRECTOR
HOARD
SUBJECT: SEE BELOW
SUBJECT:
DATE: APRIL 22, 2009
APPROVAL OF A PROPOSED PLAN AMENDMENT TO THE REDEVELOPMENT PLAN FOR THE STRONG NEIGHBORHOODS INITIATIVE AREA
RECOMMENDATION It is recommended that the Redevelopment Agency Board and City Council
conduct a joint public hearing and take the following actions: (a)
Adoption of a resolution by the Redevelopment Agency Board and City Council approving the Report to Council on the proposed Amendment to the Strong Neighborhoods Initiative (SNI) Project Area and authorizing the collection of tax increment from the "Diridon Area," a portion of the SNI generally bounded by Santa Clara Street on the north, the UP railroad on the west, San Carlos Street on the south, and the GuadalupelLos Gatos Creek and Highway 87 on the east.
(b)
Approval of an ordinance by the City Council adopting the proposed SNI Project Area authorizing the collection of tax increment from the "Diridon Area" and making certain findings.
OUTCOME Approval of the Diridon Area Amendment will enable the Agency to collect tax increment revenue generated in the near-term in the Diridon Area to address not only blighting factors and finance programs in the Diridon Area, but will also provide for additional revenue for programs in the SNI Redevelopment Project Area and the entire Merged Project Area.
Honorable Mayor, City Council, Agency Board SNI PLAN AMENDMENT
Page 2 April 22, 2009
BACKGROUND On April 22, 2008, the Agency Board authorized the Redevelopment Agency to explore the feasibility of collecting tax increment from the Diridon Area of the SNI Project Area. As a result, the Preliminary Report for the Amendment to the Redevelopment Plan for the Strong Neighborhoods Initiative "Diridon Amendment" was produced and provides the following information: 1) reasons for the proposed amendment; 2) description of the physical and economic blighting conditions in the whole SNI Area and in the specific Diridon Area; 3) facts regarding the urbanized nature of the SNI Project Area; 4) continued economic feasibility of the Project Area and reasons for collecting tax increment; and, 5) description of the programs the Agency may pursue and how the potential programs will address continuing redevelopment. This Preliminary Report was submitted to taxing entities on April 10, 2009. To date, Agency staff has not received comments from any taxing entities. ANALYSIS California Redevelopment Law allows agencies to collect tax increment from project areas. However, the Redevelopment Plan for the SNI Redevelopment Project Area does not include a provision for the Agency to receive the tax increment revenue. Redevelopment programs and projects in the SNI Project Area are financed by tax increment revenue generated in other areas of the San Jose Merged Project Area, which consist of21 separate Redevelopment Project Areas, 11 of which currently generate tax increment. The Agency is proposing to amend the SNI Redevelopment Plan to authorize tax increment collection from the Diridon Area only. Attachment A is a map of the SNI Project Area; Attachment B is a map of the proposed Diridon Area. The Diridon Area was not designated as one of the original neighborhoods within the SNI Project Area but includes portions of both the Delmas Park and BurbanklDel Monte neighborhoods. Due to its proximity to downtown San Jose, the Diridon Area is envisioned to be a major transit hub. The historic Diridon Station, formerly known as the Southern Pacific Depot, plays a significant role in the development of the Diridon Area. Investment in infrastructure improvements and hazardous waste clean-up would assist development in the area and serve to address future impacts of new developments on transportation systems. The Midtown Specific Plan adopted by the City of San Jose in December 1992 and the DiridoniArena Strategic Development Plan adopted in 2003 guide development of the area. SNI Plan Amend
Honorable Mayor, City Council, Agency Board SNI PLAN AMENDMENT
Page 3 April 22, 2009
For example, the Agency is currently involved in a project to extend Autumn Street from Coleman Avenue to Interstate 280. This is an essential transportation proj ect that will benefit the Diridon Area, as well as the surrounding redevelopment project areas of Julian Stockton, the Downtown project areas and numerous SNI neighborhoods. Additionally, in recent weeks Agency and City staffs began planning for a potential Major League Baseball stadium in the Diridon area. Regardless of whether the Ball Park is built, the General Plan, Midtown Specific Plan, and Diridon Strategic Plan encourage a mix of uses, transit-oriented and pedestrianoriented development for the Diridon Area. On April 8,2009, the draft Plan Amendment (Attachment C)was considered by the Planning Commission. The Commission determined that the proposed Plan Amendment is in conformance with the City of San Jose's General Plan and recommended approval of the Plan Amendment to the Redevelopment Agency Board. REPORT ACCOMPANYING THE PROPOSED PLAN AMENDMENT: The Report to Council (Attachment D) documents the physical and economic blight remaining in the Diridon Area, the method of financing, and the programs that will continue to eliminate those blighted conditions. The Report also contains updated blighting conditions data for the SNI and Merged Project Area that were presented in the 2009 Plan Amendment to Redevelopment Plans in the Merged Project Area, adopted by the City Council on April 21, 2009. The Report sets forth part of the basis for the City Council to adopt the proposed amendment to authorize the collection of tax increment from the Diridon Area. WRITTEN OBJECTIONS: If any written objections to the proposed amendment are received from the affected property owners or affected taxing entities before or at the joint public hearing, the written objections must be considered and detailed written responses approved before adoption of the proposed amendment. The City Council can approve the ordinance for a first reading but may not adopt the ordinance until the City Council has considered and responded to the written objections. This response may occur at the time of or prior to the second reading of the ordinance. California Redevelopment Law provides that the City Council must wait at least one week after the public hearing before it may respond to written objections and adopt the Plan Amendment. To date, no written objections have been received.
SNI Plan Amend
Honorable Mayor, City Council, Agency Board SNI PLAN AMENDMENT
Page 4 April 22, 2009
REDEVELOPMENT LAW FINDINGS: Based on the materials and information submitted to the City Council, the City Council is requested to make certain findings and determinations in connection with the proposed amendment. A supplemental memo outlining those findings and the bases for making them will be provided before the May 5 hearing. PUBLIC OUTREACH/INTEREST Staff held a community stakeholder meeting on April 16, 2009, to discuss the proposed plan amendment. Five individuals attended the meeting. Furthermore, approximately 75,000 Notices of Public Hearing were sent first-class mail to businesses, residents and property owners in the Merged Project Area advising them of the May 5, 2009 hearing: these notices were provided in English, Spanish, and Vietnamese. As of April 17, 2009, staff has responded to approximately 75 calls from residents seeking clarification on the plan amendment. The Notice of Public Hearing was published in the San Jose Mercury News on April 7, 14,21, and 28, 2009. Finally, the Preliminary Report has been available on the Agency's website since April 13, 2009, at the following link: http://www.sjredevelopment.org/PublicationsPlans/Diridon%2OPreliminary%20R eport%20-%20Final.pdf
o o
o
Criterion 1: Requires Council action on the use of public funds equal to $1 million or greater. Criterion 2: Adoption of a new or revised policy that may have implications for public health, safety, quality of life, or financiaVeconomic vitality of the City. Criterion 3: Consideration of proposed changes to service delivery, programs, or staffing that may have impacts to community services and have been identified by staff, the Board or Council, or a community group that requires special. outreach.
COORDINATION This report has been coordinated with the Agency's General Counsel. FISCAL IMPACT It is forecasted that the first tax increment receipts will be received by the Agency in Fiscal Year 2012-13.
8NI Plan Amend
Honorable Mayor, City Council, Agency Board SNI PLAN AMENDMENT
Page 5 April 22, 2009
CEQA See attached CEQA determination (Attachment E), File No. PP08-289, adopted by the Director of Planning, Building, and Code Enforcement, dated February 4, 2009.
Executive Director Attachments
SNI Plan Amend
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Seventh Amendment to the Strong Neighborhoods Initiative Redevelopment Plan The Redevelopment Agency of the City of San Jose
Date______
REDEVELOPMENT PLAN CHRONOLOGY: STRONG NEIGHBORHOODS INITIATIVE
Original Plan Adopted June 25, 2002 City Council Ordinance No. 26662 First Amendment Adopted June 25, 2002 City Ordinance No. 26663 (Merger: Strong Neighborhoods Initiative) Second Amendment Adopted August 6, 2002 City Ordinance No. 26660 (Merger: Century Center Expanded Area) Third Amendment Adopted November 18, 2003 City Ordinance No. 27011 (SB 1045 – Extend date of plan effectiveness, date to incur debt and receive property taxes) Fourth Amendment Superior Court of Santa Clara County; Case No. 1-02-CV-811706 Ruling April 26, 2005 (invalidated Ord. Nos. 26659 and 26660) City Ordinance No. 27511, adopted August 9, 2005 Removed the expanded area from the Century Center Project Area and Merged Project Area Adoption of Ordinance describing eminent domain plan Adopted June 5, 2007 City Ordinance No. 28044 (no amendment to plan – adoption of ordinance per SB 53 describing the eminent domain plan) Fifth Amendment Adopted __________ City Ordinance No. _______ (Remove Naglee Park from University area)
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Sixth Amendment Adopted __________ City Ordinance No. _______ (Increase tax increment limit and bonded indebtedness limit)
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CITY COUNCIL AND REDEVELOPMENT AGENCY BOARD
Chuck Reed, Mayor and Chair Redevelopment Agency Board Judy Chirco, Vice-Mayor and Vice Chair Redevelopment Agency Board Pete Constant Ash Kalra Sam Liccardo Kansen Chu Nora Campos
Pierluigi Oliverio Madison Nguyen Rose Herrera Nancy Pyle
PLANNING COMMISSION Jim Zito, Chair Matt Kamkar, Vice Chair Thang Do Lisa Jensen
Xavier Campos Christopher Platten Hope Cahan
Debra Figone, City Manager Harry Mavrogenes, Executive Director The Redevelopment Agency of the City of San Jose
Amendment to Strong Neighborhoods Initiative Redevelopment Plan Adopted _________ City Council Ordinance No. _________
The Redevelopment Plan for the Strong Neighborhoods Initiative Redevelopment Project Area (“Project Area”), adopted on June 25, 2002, by the Council of the City of San Jose, California, on passage of Ordinance No. 26662 (as amended, the “Plan”) is hereby further amended to add tax increment financing to a portion of the Project Area, commonly known as the “Diridon Area”, as follows: 1. The “Burbank/Del Monte” paragraph of Section 102, Boundary Description, is hereby revised in its entirety to read as follows: “Burbank/Del Monte is generally bounded by Forest Avenue, W. San Carlos Street, Park Avenue, W. San Fernando Street, and W. Santa Clara Street to the north; I-280 and Fruitdale Avenue to the south; I-880, Bascom Avenue, Sundol Avenue, and White Street to the west; and Los Gatos Creek and Southwest Expressway to the east. Areas flanking either side of W. San Carlos Street within this neighborhood are unincorporated urban areas of Santa Clara County. Approximately half of this neighborhood is developed with residential uses, and half is developed with a combination of industrial and commercial uses. That area described in the legal description attached as Exhibit A to that certain Seventh Amendment to this Plan and depicted on the map attached as Exhibit B to such Seventh Amendment lies partially within a portion of this neighborhood and shall be referred to herein as the “Diridon Area”.” 2. The “Delmas Park” paragraph of Section 102, Boundary Description, is hereby revised in its entirety to read as follows: “Delmas Park is generally bounded by W. Santa Clara Street to the northwest; SR 87 to the northeast; W. San Carlos to the southeast; and S. Autumn Street to the west. This neighborhood consists of single-family residential, multi-family residential, commercial, industrial and public uses. The Diridon Area (as defined in the “Burbank/DelMonte” definition above) lies partially within a portion of this neighborhood.” 3. Section 401, Proposed Financing Method, is hereby revised in its entirety to read as follows: “The Agency is authorized to finance implementation of the projects conforming to this Plan with financial assistance from the City, State of California, federal government, tax increment funds from the Diridon Area or otherwise from the San Jose Merged Area Redevelopment Project, interest income, Agency bonds, donations, loans from private financial institutions, proceeds from the lease or sale of Agency-owned property and any other available source, public or private. The Agency is also authorized to obtain advances, borrow funds, and create indebtedness in carrying out this Plan. The principal and interest on such advances, funds, and indebtedness may be paid from tax increments from the Diridon Area, other tax increments from the San Jose Merged Area Redevelopment Project or any other funds available to the Agency. Advances and loans for survey and planning and for the
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operating capital for administration of this Project may be provided by the City until adequate tax increment or other funds are available, or sufficiently assured, to repay the advances and loans and to permit borrowing adequate working capital from sources other than the City. The City, as it is able, may also supply additional assistance through City loans and grants for various public facilities. The City or any other public agency may expend money to assist the Agency in carrying out this Project. As available, funds from the state and county may be used for street improvements and public transit facilities.” 4. Section 402, Tax Increment Funds, is hereby revised in its entirety to read as follows: “Commencing with the effective date of the ordinance approving the Seventh Amendment to this Plan, taxes, if any, levied upon taxable property in the Diridon Area each year by or for the benefit of the State of California, any city, county, city and county, district, or other public corporation (hereinafter sometimes called “taxing agencies”) after the effective date of the ordinance approving the Seventh Amendment to this Plan, shall be divided as follows: (a) That portion of the taxes which would be produced by the rate upon which the tax is levied each year by or for each of the taxing agencies upon the total sum of the assessed value of the taxable property in the Diridon Area as shown upon the assessment roll used in connection with the taxation of that property by the taxing agency, last equalized prior to the effective date of Ordinance No. 26662 (the last equalized assessment roll prior to the effective date of Ordinance No. 26662 was 20022003), shall be allocated to and when collected shall be paid to the respective taxing agencies as taxes by or for the taxing agencies on all other property are paid (for the purpose of allocating taxes levied by or for any taxing agency or agencies which did not include the territory in the Diridon Area on the effective date of the ordinance but to which that territory has been annexed or otherwise included after that effective date, the assessment roll of the county last equalized on the effective date of the ordinance shall be used in determining the assessed valuation of the taxable property in the Diridon Area on the effective date); (b) Except as provided in subdivision (c), that portion of the levied taxes each year in excess of that amount shall be allocated to and when collected shall be paid into a special fund of Agency to pay the principal of and interest on loans, moneys advanced to, or indebtedness (whether funded, refunded, assumed, or otherwise) incurred by the Agency to finance or refinance, in whole or in part, the San Jose Merged Area Redevelopment Project. Unless and until the total assessed valuation of the taxable property in the Diridon Area exceeds the total assessed value of the taxable property in the Diridon Area as shown by the last equalized assessment roll referred to in subdivision (a), all of the taxes levied and collected upon the taxable property in the Diridon Area shall be paid to the respective taxing agencies. When the loans, advances, and indebtedness, if any, and interest thereon, have been paid, all moneys
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thereafter received from taxes upon the taxable property in the Diridon Area shall be paid to the respective taxing agencies as taxes on all other property are paid; and (c) That portion of the taxes in excess of the amount identified in subdivision (a) which are attributable to a tax rate levied by a taxing agency for the purpose of producing revenues in an amount sufficient to make annual repayments of the principal of, and the interest on, any bonded indebtedness for the acquisition or improvement of real property shall be allocated to, and when collected shall be paid into, the fund of that taxing agency. This subsection shall only apply to taxes levied to repay bonded indebtedness approved by the voters of the taxing agency on or after January 1, 1989. The Project Area has been merged with the San Jose Merged Area Redevelopment Project for purposes of financing, as provided in Section 404. That portion of taxes allocated to the Agency pursuant to Section 33670 of the California Health and Safety Code is hereby irrevocably pledged for the payment of the principal of and interest on the advance of monies, or making of loans or the incurring of any indebtedness (whether funded, refunded, assumed or otherwise) by the Agency to finance or refinance the San Jose Merged Area Redevelopment Project, in whole or in part. The Agency is authorized to make such pledges as to specific advances, loans and indebtedness as appropriate in carrying out the San Jose Merged Area Redevelopment Project.” 5. Subsection C of Section 405, Financing Limitations, is hereby revised in its entirety to read as follows: “Pursuant to Section 33333.2(a)(3) of the California Health and Safety Code, the Agency shall not pay indebtedness or receive property taxes pursuant to Section 33670 after that date that is forty-six (46) years** after the effective date of the ordinance adopting this Plan, unless otherwise permitted by law. [**This limit reflects a clerical update noting the limit as amended by the Third Amendment to this Plan. ]” 6. Exhibit A, the legal description of the Diridon Area, is attached hereto and incorporated herein by this reference. 7. Exhibit B, a map depicting the Diridon Area, is attached hereto and incorporated herein by this reference. Except as set forth in this Amendment, the Plan shall remain unchanged and in full force and effect.
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EXHIBIT A LEGAL DESCRIPTION OF DIRIDON AREA
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EXHIBIT B MAP DEPICTING DIRIDON AREA [behind this page]
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S AN JO S É R E D EV E L O PM ENT AG E N CY 200 EAST SANTA CLARA ST S AN J O S É , C A 9 5 1 1 3
REPORT TO COUNCIL Amendment to the Redevelopment Plan for the Strong Neighborhoods Initiative “Diridon Amendment” April 21, 2009
ROSENOW SPEVACEK GROUP, INC. www.webrsg.com
S A N JO S É R E D E V E L O P M E N T A G E N CY STRONG NEIGHBORHOODS INITIATIVE “DIRIDON AMENDMENT” REPORT TO COUNCIL
T ABLE OF C ONTENTS INTRODUCTION & BACKGROUND OVERVIEW
1
CONTENTS OF REPORT
1
PLAN AMENDMENT PROCESS
2
BACKGROUND
2
DIRIDON TRAIN STATION AND TRANSIT CENTER
2
PUBLIC AMENITIES AND ATTRACTIONS
3
REGIONAL SIGNIFICANCE
3
BLIGHTING CONDITIONS AND BARRIERS TO REDEVELOPMENT IN THE DIRIDON AREA
4
ENVIRONMENTAL CONTAMINATION
4
PARCELS OF SUBSTANDARD SIZE IN MULTIPLE OWNERSHIP
5
INFRASTRUCTURE FINANCING
5
AREA-WIDE BENEFIT
5
BACKGROUND - SAN JOSE REDEVELOPMENT AGENCY
5
MERGED PROJECT AREA AND FIVE REDEVELOPMENT AREAS
5
MERGED PROJECT AREA
6
SNI REDEVELOPMENT AREA
7
DIRIDON AREA
7
RELATIONSHIP TO OTHER PLAN AMENDMENTS
9
MERGED PROJECT AREA AMENDMENT
9
NAGLEE PARK AMENDMENT
9
SECTION A: REASONS FOR THE AMENDMENT & DESCRIPTION OF SPECIFIC PROJECTS THE AGENCY MAY PURSUE INCLUDING HOW POTENTIAL PROJECTS WILL ADDRESS CONTINUING REDEVELOPMENT OF THE PROJECT AREA
17
OVERVIEW
17
STATE REDEVELOPMENT POLICY
17
REASONS FOR THE AMENDMENT
17
AGENCY PROGRAMS AND PROJECTS
19
DIRIDON AREA PROGRAMS
20
SUMMARY
21
SECTION B: DESCRIPTION OF BLIGHTING CONDITIONS
22
BLIGHTING CONDITIONS
22
PHYSICAL BLIGHT AND ECONOMIC BLIGHT
23
BLIGHT STUDY APPROACH AND METHODOLOGY
24
THE FIELD SURVEY
24
OTHER PHYSICAL AND ECONOMIC RESEARCH
25
S A N JO S É R E D E V E L O P M E N T A G E N CY STRONG NEIGHBORHOODS INITIATIVE “DIRIDON AMENDMENT” REPORT TO COUNCIL
DIRIDON AREA BLIGHTING CONDITIONS
25
BLIGHTING CONDITIONS IN THE SNI REDEVELOPMENT AREA
41
SNI REDEVELOPMENT AREA ECONOMIC BLIGHTING CONDITIONS
41
IMPAIRED PROPERTY VALUES DUE TO HAZARDOUS W ASTES
44
DEPRECIATED OR STAGNANT PROPERTY VALUES
49
HIGH BUSINESS VACANCIES & LOW LEASE RATES
60
EXCESS OF BARS, LIQUOR STORES, OR ADULT-ORIENTED BUSINESSES
62
CRIME RATES
64
SNI REDEVELOPMENT AREA PHYSICAL BLIGHT
65
UNSAFE AND UNHEALTHY BUILDINGS FOR PERSONS TO LIVE OR W ORK
67
FAULTY OR INADEQUATE W ATER AND SEWER UTILITIES
72
CONDITIONS PREVENTING OR SUBSTANTIALLY HINDERING THE VIABLE USE OF BUILDINGS OR LOTS
74
LOTS OF INADEQUATE SIZE IN MULTIPLE OWNERSHIP
83
SUMMARY
85
2008 MERGED PROJECT AREA BLIGHT ANALYSIS
87
SECTION C: FIVE YEAR IMPLEMENTATION PLAN
91
SECTION D: WHY ELIMINATION OF BLIGHT AND REDEVELOPMENT CANNOT BE ACCOMPLISHED WITHOUT AGENCY INVOLVEMENT
92
OVERVIEW
91
WHY AGENCY INVOLVEMENT IS ESSENTIAL
91
SECTION E: METHOD OF FINANCING
94
FINANCING METHODS AND ALTERNATIVES AVAILABLE TO FUND REDEVELOPMENT
93
DIRIDON AREA TAX INCREMENT REVENUES
93
CONTINUED ECONOMIC FEASIBILITY OF FINANCING METHODS AND REDEVELOPMENT PROGRAM
94
SECTION F: METHOD OF RELOCATION
96
SECTION G: ANALYSIS OF PRELIMINARY PLAN
97
SECTION H: REPORT AND RECOMMENDATION OF THE PLANNING COMMISSION
98
SECTION I: REPORT AND RECOMMENDATION OF THE PAC
99
SECTION J: STATEMENT OF CONFORMANCE WITH GENERAL PLAN
100
SECTION K: ENVIRONMENTAL DOCUMENTATION
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SECTION L: REPORT OF THE COUNTY FISCAL OFFICER
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S A N JO S É R E D E V E L O P M E N T A G E N CY STRONG NEIGHBORHOODS INITIATIVE “DIRIDON AMENDMENT” REPORT TO COUNCIL
SECTION M: NEIGHBORHOOD IMPACT REPORT
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OVERVIEW
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SECTION N: SUMMARY OF CONSULTATION WITH TAXING ENTITIES
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SAN JOSÉ REDEVELOPMENT AGENCY STRONG NEIGHBORHOODS INITIATIVE “DIRIDON AMENDMENT” REPORT TO COUNCIL
I NTRODUCTION & B ACKGROUND OVERVIEW The San Jose Redevelopment Agency (“Agency”) is proposing an Amendment to the Redevelopment Plan for the Strong Neighborhoods Initiative Redevelopment Area (“Diridon Amendment”). The Redevelopment Plan for the Strong Neighborhoods Initiative Redevelopment Area (“Redevelopment Plan”) does not include the provision for the Agency to receive tax increment revenue allowed by California Community Redevelopment Law (“CRL”) Section 33670. Currently, redevelopment programs and projects in the Strong Neighborhoods Initiative Redevelopment Area (“SNI”) are financed by tax increment revenue generated in other areas of the Merged Project Area, which consists of 21 different redevelopment project areas (“Project Area”). The portion of the SNI Redevelopment Area known as the “Diridon Area” is located in the southwest portion of the SNI Redevelopment Area (see Exhibit i-3) and contains the multiple transit related facilities including the Diridon Station, and Valley Transit Authority’s (“VTA”) Diridon Transit Center. The Diridon Amendment will allow for tax increment revenue generated in the Diridon Area to be collected by the Agency. The Agency will continue to not collect tax increment in the remainder of the SNI Redevelopment Area. The Amendment will not change any Merged Project Area financial limitations. Therefore the total amount of tax increment that may be allocated to the Merged Project Area will not be changed by this Amendment, nor will the amount of bonded indebtedness that may be outstanding at any one time be changed. The intent is to limit the impact on other affected taxing entities by leaving in place all existing financial limitations, and adding tax increment provisions to only the approximately 52 acres of territory within the Diridon Area. The goal is to use tax increment generated from the Diridon Area to address infrastructure deficiencies in the vicinity to compliment and facilitate expansion of the multi-modal transportation facilities located around the Diridon Train Station while stimulating new private investment into the area. If the Agency is successful in stimulating new private development in the vicinity, the added population will have a synergistic affect by increasing the demand for transit services. Through the Amendment the Agency seeks to more timely address the remaining blight in the Diridon Area, using the tax increment generated from Diridon, resulting in new public and private development that will better serve all parts of the Merged Project Area. CONTENTS OF REPORT The Report to Council has been prepared by the Agency in accordance with the CRL. Consistent with CRL Section 33352 and Section 33457.1 this Report contains the following information to the extent warranted by the Diridon Amendment: Section A: Reasons for the Amendment and descriptions of specific projects the Agency may pursue including how potential projects will address continuing redevelopment of the Project Area. Section B: Description of blighting conditions Section C: Five Year Implementation Plan Section D: Why elimination of blight and redevelopment cannot be accomplished without Agency involvement Section E: Method of financing Section F: Method of relocation Section G: Analysis of Preliminary Plan Section H: Report and recommendation of the Planning Commission
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SAN JOSÉ REDEVELOPMENT AGENCY STRONG NEIGHBORHOODS INITIATIVE “DIRIDON AMENDMENT” REPORT TO COUNCIL
Section I: Report and recommendation of the PAC Section J: Statement of conformance to General Plan Section K: Environmental documentation Section L: Report of the County Fiscal Officer Section M: Neighborhood Impact Report Section N: Summary of consultation with taxing entities PLAN AMENDMENT PROCESS This Report to Council required by CRL Sections 33352 and 33457.1 is one of several documents the Agency must prepare during the amendment process. The Report’s primary purpose is to provide decision makers with comprehensive information concerning the proposed Diridon Amendment. The Report to Council and the final text of the proposed Diridon Amendment will be considered by the Agency and the City Council at a joint public hearing. All Merged Project Area property owners, residents, business owners, and affected taxing entities have been sent a notice of this public hearing by mail and through the publication of public notices in a local newspaper. The Agency has also prepared other key documents in connection with preparation of the Diridon Amendment. On April 13, 2009, a Preliminary Report was prepared and transmitted, which provided local officials, affected taxing agencies, and the community at large an opportunity to study and comment on the proposed Diridon Amendment. It should be noted that the Planning Commission found that the Diridon Amendment conforms to the City of San Jose’s General Plan 2020 and recommended approval of the Diridon Amendment on April 8, 2009. The Agency requested a base year report from the State Board of Equalization and the County pursuant to CRL Section 33328. On April 6, 2009, the Santa Clara County Controller’s Office provided both the 20022003 base year assessed value of the Diridon Area and the 2008-2009 assessed value. BACKGROUND DIRIDON TRAIN STATION AND TRANSIT CENTER The Diridon Area is the central transportation hub for the Silicon Valley with intermodal (bus, rail, personal automobile) connectivity for the region through multiple rail systems, freeways (101, 280, 680, 880), and state routes (17, 82, 87,). The Diridon Train Station and VTA’s Transit Center (together referred to in this report as the “Diridon Transit Hub”) provide a centralized location for passenger rail and bus facilities. The hub provides for inter-rail connectivity between VTA Light Rail, Caltrain (service between San Francisco and Gilroy), ACE Rail (Altamont Commuter Express with service between San Jose and Stockton), and Amtrak. (See Exhibit i-5 for VTA’s Downtown San Jose System Map.) The VTA’s Downtown Area Shuttle (DASH) also provides easy access from the Diridon Transit Hub to the Downtown Area and San Jose State University. The Monterey-Salinas Transit’s Line 55 out of the Diridon Transit Hub also provides express bus service from San Jose to Monterey. The regional significance of the Diridon Transit Hub is affirmed by the VTA’s long-range plans to extend the San Francisco area’s Bay Area Rapid Transit (“BART”) 16.1 miles south from Fremont to San Jose, connecting to the Diridon Transit Hub. BART’s southbound service routes currently terminate in Millbrae along the 101 Freeway (just south of San Francisco International Airport) and in Fremont along the 680 and 880 Freeways on the other side of the San Francisco Bay. Broad public support for the 16-mile BART extension, known as the Silicon Valley Rapid Transit (“SVRT”) Project, was received last year when voters approved Measure B on the November 2008 ballot, passing a one-eighth cent sales tax increase to fund
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operations and maintenance for BART to Silicon Valley with 66.78% of the votes, exceeding the required twothirds super-majority approval. Measure B will provide operating and maintenance expenses and capital reserve contribution for the SVRT Project and will take effect upon receipt of appropriate funding from the 1 state and federal government . Although the SVRT extension has been delayed until approximately 2025 due 2 to current economic conditions and declining sales tax revenues , immediate redevelopment activities and new private investment will better financially position the Agency and VTA for the SVRT project, including early infrastructure improvements and environmental remediation activities. Of even broader regional significance are plans to ultimately extend high-speed rail through San Jose at the Diridon Transit Hub. Statewide Proposition 1A, the Safe, Reliable High-Speed Passenger Train Bond Act, was also approved by voters on the November 2008 ballot and authorizes $9.95 billion in bonds for a Bay Area-to-San Diego high-speed rail project. On March 9, 2009, the California High-Speed Rail Authority and Federal Railroad Administration issued a Notice of Intent to prepare an Environmental Impact Statement (EIS) 3 and Environmental Impact Report (EIR) for extension of the high-speed rail project from San Jose to Merced. PUBLIC AMENITIES AND ATTRACTIONS Regional transportation access through the Diridon Transit Hub provides important access to public amenities and attractions, including:
Sports and Entertainment: HP Pavilion at San Jose is a major sports and entertainment venue located immediately adjacent to the Diridon Area on the northern side of Santa Clara Street.
Cultural and Performing Arts: Downtown San Jose offers an array of cultural and performing arts venues, including the Civic Auditorium, the San Jose Museum of Art, the Tech Museum of Innovation, the Center for the Performing Arts, the Children’s Discovery Museum, and California Theatre.
Education: San Jose State University is located just east of the Diridon Transit Hub and is easily accessible via DASH and Light Rail.
Shopping, Dining, and Entertainment: The Downtown Area is immediately east of the Diridon Area and offers a wide array of shopping, dining, and entertainment opportunities for the entire Silicon Valley.
REGIONAL SIGNIFICANCE Given its central location in Santa Clara County, its proximity to Downtown San Jose, and its integrated connectivity to regional inter-modal transportation systems, the Diridon Area is of regional significance to Silicon Valley and is one of the most critical components of the Agency’s citywide redevelopment strategies. Given these physical and economic assets, the Diridon Area is extremely underutilized today. Redevelopment and economic development of the Diridon Area would provide significantly enhanced public amenities and attractions for the region and benefit all of the Agency’s redevelopment areas, creating a major catalyst for increased private investment in neighboring project areas with increased ridership of VTA’s transit systems, and the promotion of blight-eliminating economic development activities throughout the City of San Jose’s 21 redevelopment Project Areas.
1
Valley Transit Authority Website. BART Project. Richards, Gary. “BART to Berryessa: Sales tax projections force VTA to scale back plans.” Mercury News, February 27, 2009 3 Federal Register. Vol. 74, No. 49 / Notices. March 16, 2009.
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To facilitate these efforts, the Agency partnered with VTA to prepare the Diridon/Arena Strategic Development 4 Plan (“Strategic Plan”), a transit-oriented land use, design, and circulation strategy for the area. The Agency has also taken proactive measures to acquire property in the area that can be positioned and marketed for development under the Strategic Plan. Over two-thirds (70%) of the properties in the Diridon Area are publicly owned today. However, even with Diridon’s geographic advantages and the momentum gained from the Agency’s proactive planning and property acquisition activities, there are significant physical and economic blighting conditions and barriers to redevelopment in the Diridon Area that cannot be overcome by private development interests, the Agency and City of San Jose (“City”), VTA, and other stakeholders alone without additional financing tools to fund redevelopment programs and projects that will spur revitalization of the Diridon Area. BLIGHTING CONDITIONS AND BARRIERS TO REDEVELOPMENT IN THE DIRIDON AREA Section B of this Report to Council provides an in-depth analysis of the physical and economic blighting conditions in the Diridon Area that present major hurdles to redevelopment. Blight analysis of the broader SNI Redevelopment Area is also contained in Section B. It is important to note here that these hurdles are barriers to redevelopment regardless of the type or intensity of development. The City of San Jose is currently strategizing for the possible development of a baseball stadium in the Diridon Area. While such an endeavor would require a complex myriad of public and private approvals, contractual agreements, and financing mechanisms, the Diridon Area’s infrastructure deficiencies, environmental contamination, and other blighting conditions alone would present major barriers to the project. With or without the stadium project, this will be true for any land use and development type, including, but not limited to, residential transit-oriented development, commercial-retail mixed-use, and commercial-office buildings. ENVIRONMENTAL CONTAMINATION Of particular concern in the Diridon Area are the financial barriers to redevelopment posed by environmental conditions of properties. "Brownfield site" means real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or 5 contaminant. Recent environmental studies and assessments in the area have revealed the presence of significant levels of soil and groundwater contamination that would physically and financially complicate the expansion, redevelopment, or reuse of properties in the Diridon Area. Redevelopment of brownfield sites requires regulatory oversight, typically from the Department of Toxic Substances Control (“DTSC”) or a Regional Water Quality Control Board, and involves the preparation of Phase I and Phase II environmental site assessments, development of remedial action plans, and the cleanup of the sites. The costs of assessment and cleanup of brownfield sites often make redevelopment of those sites economically infeasible for private parties without public assistance from redevelopment agencies and local, state, and federal grant programs. The state recognizes the valuable role that redevelopment agencies can play in the redevelopment of brownfield sites. In 1990, the California Legislature passed AB 3193 (Chapter 1113, Statutes of 1990) enacting the Polanco Redevelopment Act, which provides immunity from liability for redevelopment agencies and subsequent property purchasers for sites cleaned up under a cleanup plan approved by Department of Toxic Substances Control (DTSC) or a Regional Water Quality Control Board. The Polanco Redevelopment Act has become a widely used tool by redevelopment agencies in California to guide and pursue redevelopment of brownfield sites. A major, notable brownfield redevelopment project in California that involved proactive redevelopment agency participation and the use of the Polanco Redevelopment Act was the development of Petco Park in San Diego, home to the San Diego Padres. Redevelopment agencies can also facilitate acquiring environmental insurance coverage to protect the affected property owners, developers, and/or agencies from unforeseeable legal and financial liabilities. 4 5
“Diridon/Arena Strategic Development Plan.” San Jose Redevelopment Agency and Valley Transportation Authority. April 2003. Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9601).
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PARCELS OF SUBSTANDARD SIZE IN MULTIPLE OWNERSHIP Another major barrier to redevelopment in the Diridon Area is the abundance of under-sized parcels. Nearly 50% of parcels in the Diridon Area are considered to be of substandard size. The economic viability of undersized industrially-zoned and commercially-zoned parcels is significantly hindered by their size. Of even greater hindrance is the fact that 30% of these parcels are in multiple ownership, making it challenging for the private sector to assemble sufficient land to build projects of adequate size and mass that will be economically feasible. Property assemblage will be critical to implement the joint VTA/Agency Strategic Plan. Redevelopment agencies can play a vital role in property assemblage through proactive tools, including the Polanco Redevelopment Act where properties contain environmental contamination. Financial participation by the Agency in a project can also facilitate assemblage. INFRASTRUCTURE FINANCING In addition to direct Agency participation in a redevelopment project, the Agency can also play a critical role in the design and construction of a new or upgraded infrastructure backbone system in the Diridon Area (e.g., transportation/circulation, streetscapes, landscaping, utilities) that will support new development intensities, foster retail business growth, eliminate blighting conditions, and generate public benefit for the Diridon Area, the rest of the SNI Redevelopment Area, the other redevelopment project areas, and the greater Silicon Valley region, all of which have direct transit connectivity with the Diridon Area. To take on this role, however, the Agency will need additional tax increment financing capabilities in the Diridon Area, which would be facilitated by this Amendment. AREA-WIDE BENEFIT By investing new tax increment dollars in the Diridon Area, the Agency can more effectively eliminate blight in the Diridon Area (as detailed in Section B), address barriers to redevelopment and leverage funds to facilitate the investment of new private capital in the Diridon Area, and generate additional tax increment financing capacity that can be leveraged in the Diridon Area, SNI Redevelopment Area, and the rest of the Merged Project Area. It is important to emphasize the regional significance of this Plan Amendment. Investment in infrastructure in the Diridon Area will improve transportation service to the entire region including other portions of the SNI Redevelopment Area and the Merged Project Area. By using tax increment financing from only the Diridon portion of the SNI Redevelopment Area, transportation systems throughout the entire Merged Project Area, including SNI, will be enhanced. To the extent that enhanced systems cause new development elsewhere in the SNI Redevelopment Area, other affected taxing entities will benefit from the increased property taxes generated by new investment. Thus, investment in Diridon will benefit the entire Merged Project Area, and in particular, other taxing entities throughout the remaining SNI Redevelopment Area. BACKGROUND - SAN JOSE REDEVELOPMENT AGENCY The San Jose Redevelopment Agency (“Agency”) was created by the San Jose City Council (“City Council”) in 1956. The Agency is governed by the City Council, who serves as the Redevelopment Agency Board. The Agency’s mission is to address blighting conditions – both physical and economic – and thereby improve the quality of life for all who live, work, and recreate in San Jose. The Agency’s goals are to create jobs, develop affordable housing, strengthen neighborhoods, and build pubic facilities and infrastructure. The Agency also partners with regional stakeholders (e.g., VTA) and local businesses to revitalize the economy in San Jose through public/private partnerships and community collaborative efforts. MERGED PROJECT AREA AND FIVE REDEVELOPMENT AREAS The City of San Jose is located within the County of Santa Clara (“County”) near the southern portion of the th San Francisco Bay. The City of San Jose encompasses 178 square miles and is the 10 largest city in the
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nation. There are 21 Project Areas throughout the City. The Project Areas are located within the City 6 boundaries and represent approximately 17% of the City’s territorial jurisdiction and provide almost 40% of the City’s jobs. Over time, the 21 Project Areas have been merged into one project area, known as the Merged Project Area, for financing purposes only, to allow greater flexibility and efficiency in the implementation of redevelopment activities. The Merged Project Area is a mix of approximately 44.7% residential, 22.3% commercial, 16.2% public/institutional, 9.3% open space, and 7.4% industrial land uses. The SNI Redevelopment Area is one of the five redevelopment areas in the Merged Project Area. The SNI Redevelopment Area spans 10,873 acres and represents nearly 55% of the Merged Project Area. Over 42% of the SNI Redevelopment Area is developed with residential land uses and represents approximately 84% of the residential units in the Merged Project Area. The Diridon Area is located in the south-west portion of the SNI Redevelopment Area near the Diridon Train Station. The Diridon Area consists of 87 parcels and is approximately 52 acres. Exhibit i-1 illustrates the Merged Project Area and each Project Area’s boundaries; Exhibit i-2 illustrates the regional location of the Merged Project Area and its location within the City boundaries; Exhibit i-3 illustrates the location of the Diridon Area. More detailed descriptions of the Merged Project Area, SNI Redevelopment Area, and Diridon Area are provided below. Merged Project Area The Agency has grouped the 21 Project Areas that comprise the Merged Project Area into five distinct areas (“Redevelopment Areas”) to facilitate better planning and management of implementation activities. These five groupings are known as: (1) Downtown, (2) Industrial, (3) Strong Neighborhoods Initiative, (4) Neighborhood Business Clusters, and (5) Neighborhood Business Districts. A brief description of the Redevelopment Areas follows.
Downtown is comprised of eight (8) Project Areas: Almaden Gateway, Century Center, Civic Plaza, Guadalupe-Auzerais, Market Gateway, Park Center, Pueblo Uno, and San Antonio Plaza. This area comprises the core of downtown San Jose and encompasses approximately 369 acres. The Downtown Project Areas, with the exception of the Civic Plaza, generate tax increment revenue for the Merged Project Area.
The Industrial area includes five (5) Project Areas: Edenvale (Original and Expansion Areas), Julian-Stockton, Monterey Corridor, Olinder, and Rincon de Los Esteros (1st, 2nd, and 3rd Expansion Areas). The Industrial area is approximately 7,843 acres and is generally located in the northern and southern portions of the Merged Project Area. The Industrial Project Areas, with the exception of the Rincon de los Esteros 3rd Expansion Area, generate tax increment revenue for the Merged Project Area. These Project Areas generate the greatest portion of tax increment revenue received from the Merged Project Area.
Neighborhood Business Clusters (“NBC”) consist of six (6) non-contiguous business clusters located throughout the City. These business clusters are referred to as Fruitdale Station, Bascom Station, Union/Foxworthy, Union/Camden, Quimby/White, and Monterey/Roeder. NBCs do not generate tax increment revenue.
Neighborhood Business Districts (“NBD”) consist of six (6) non-contiguous business districts along the City’s major thoroughfares. These business districts are referred to as East Santa Clara Street, Alum Rock Avenue, West San Carlos Street, The Alameda, Story Road, and Japantown. NBDs do not generate tax increment revenue.
6
Other Agency documents indicate that the Merged Project Area represents 25% of the City of San Jose’s total area, however, a GIS based calculation of both areas concludes that the Merged Project Area actually represents 17% of the City’s land area.
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The Strong Neighborhoods Initiative (“SNI”) area consists of 22 neighborhoods referred to as Five Wounds, 13th Street, St. James Square, East Valley/680 Communities, Brookwood Terrace, Mayfair II, Spartan/Keyes, Tropicana, Tully/Senter, Rockspring, Santee, University, West Evergreen, Burbank/Del Monte, Blackford, Gardner, Delmas Park, Washington, Winchester, Union/Curtner, Hoffman/Via Monte, and Edenvale/Great Oaks. The SNI Redevelopment Area is generally located in the center of the Merged Project Area and encompasses approximately 10,873 acres. The SNI Redevelopment Area does not generate tax increment revenue. The Diridon Area affected by this Amendment is located in both the Delmas Park and Burbank/Del Monte neighborhoods.
SNI Redevelopment Area On June 25, 2002, by Ordinance No. 26662, the Agency adopted the Redevelopment Plan for the SNI Redevelopment Area for the purpose of preserving and revitalizing older residential neighborhoods in the City. Prior to inclusion in the Agency’s redevelopment program, properties in the SNI Redevelopment Area were often overlooked by developers, who turned towards more desirable locations in the southern portion of the City. Residents and property owners approached the City for assistance to help their neighborhoods become economically viable to avoid continued decline and obsolescence. The community continues to be actively involved with the decision-making process of all project implementation activities in the SNI Redevelopment Area. Each neighborhood identified in the Redevelopment Plan has a Neighborhood Advisory or Action Committee (“NAC”) that acts as a liaison between the neighborhood, the City, and other stakeholders in the community. The Agency has actively been working to implement projects and programs in the SNI Redevelopment Area that eliminate blighting conditions that hinder the viability of neighborhoods. At the time of adoption, the Agency elected not to receive tax increment revenue generated in the SNI Redevelopment Area to reduce the financial impact to taxing entities eligible to receive a portion of the property tax levy. At the time, tax increment revenue generated by the Industrial and Downtown Redevelopment Areas was sufficient to fund projects and programs implemented throughout Merged Project Area, including the SNI Redevelopment Area and Delmas Park and Burbank/Del Monte neighborhoods. Diridon Area The Diridon Area is located within the southwest portion of the SNI Redevelopment Area. It was not specifically designated as one of the original neighborhoods within the SNI Redevelopment Area but instead 7 includes portions of both the Delmas Park and Burbank/Del Monte neighborhoods. The Delmas Park NAC envisions infill residential development with neighborhood-serving commercial uses, while protecting singlefamily residential properties and reducing impacts to parking and traffic. The Burbank/Del Monte NAC 8 encourages transit-oriented development in accordance with the Midtown Specific Plan. The Strategic Plan completed by the Agency and VTA in April of 2003 focuses on development in the Diridon Area in accordance with the San Jose General Plan 2020 (“General Plan”). The General Plan recognizes this area as a major transit hub in the City. The historic Diridon Train Station, formerly known as the Southern Pacific Depot, plays a significant role in the development of the Diridon Area. The City/Agency is currently investing a considerable amount of revenue in infrastructure improvements near downtown San Jose. As land uses in downtown San Jose intensify, the Diridon Train Station and surrounding neighborhoods could become one of most important transit hubs in the Bay Area. The Agency is currently involved in a project to extend Autumn Street from Coleman Avenue to Interstate 280. This is an essential transportation project that will benefit the Diridon Area, as well as the surrounding 7
See Appendix 1. The Midtown Specific Plan was adopted by the City of San Jose in December of 1992. The Diridon/Arena Strategic Development Plan overlaps a portion of the area detailed in the Midtown Specific Plan. The Midtown Specific Plan encourages residential and commercial mixed used developments. The Strategic Plan land use designations are consistent with the Midtown Specific Plan. 8
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redevelopment project areas of Julian Stockton, the Downtown project areas, and numerous SNI Redevelopment Area neighborhoods. The Downtown Strategy 2000 EIR anticipates this project as mitigation for the continued development of Downtown. The Baseball Stadium EIR anticipates the completion of this project as not only mitigation for development, but critical for the movement of vehicles into and away from the potential stadium with minimal impacts on surrounding residential neighborhoods. The planned project will create a four lane roadway with a parkway median where possible, parking, and sidewalks. Because of property acquisition required to develop the new roadway it is also anticipated that additional parkland along the Guadalupe River and Los Gatos Creek will be created. This additional parkland will also enable the completion of the Los Gatos Creek and Guadalupe River trail sections through the Downtown resulting in important connective links to the overall trails system. The development of this road also improves the connection of residents in the southern and western neighborhoods of downtown to better access the burgeoning commercial areas along Coleman Avenue. Finally, completion of this roadway will vastly improve the connection of the downtown and the surrounding neighborhoods to the Mineta International Airport, which is important for the long term economic growth of the city. The costs related to this important infrastructure improvement are estimated to be $145 million. This cost estimate includes over $52 million related to acquisition and relocation; $56 million in demolition, remediation, Los Gatos Creek Park construction, a parking garage and related soft costs; and $36 million in street construction. In addition to the plans completed by the Agency and City, numerous other transportation entities have plans for future expansion in the Diridon Area. As described earlier, the BART system is slated to expand service to San Jose by bringing an underground stop somewhere in the Diridon Area. Agency and City staff are currently planning for a potential major league ball park in the Diridon Area. Regardless of the whether the Ball Park is built, the General Plan, Midtown Specific Plan, and Strategic Plan encourage a mix of uses, transit-oriented and pedestrian-oriented development for the Diridon Area. Due to the proximity of downtown San Jose, the Diridon Area is envisioned to be part of a long-term downtown expansion area that is developed with high- and mid-rise office and residential uses, with ground-level commercial and entertainment uses. This would create a seamless transition from the Diridon Area into downtown San Jose, and vice versa. To facilitate development in the Diridon Area, near-term cash flow is needed to build public improvements to provide a catalyst for and support new infill development. These improvements would also serve to address future impacts of new development on service levels and infrastructure capacities, including the local and regional transportation systems. Over two-thirds (70%) of the properties located in the Diridon Area are publicly-owned. Table i-1 below illustrates parcel ownership within the Diridon Area. Exhibit i-4 illustrates the location of publicly-owned parcels in the Diridon Area. Taxing entities typically receive ad valorem property tax revenue from parcels that are privately owned, but because publicly-owned properties are exempt from property taxes, publiclyowned parcels typically do not generate property tax increment. Tax increment revenue collected as a result of the proposed Diridon Amendment would therefore have a minimal short-term effect on the property tax revenue received by taxing entities within the Diridon Area. Future tax increment from the Diridon Area will only be generated if the Agency is successful in its effort to improve the area and encourage new private development.
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Parcel Ownership San Jose Diridon Area
Agency City State Valley Transit Authority Pacific Gas & Electric Pacific Bell Santa Clara Valley Water District Peninsula Joint Powers Board Private Total
Table i-1
Parcels 10 1 1 16 2 2 3 7 45 87
s.f. 290,087 164,419 19,999 155,524 117,757 226,473 69,406 536,525 677,621 2,257,812
acres % of area 6.66 13% 3.77 7% 0.46 1% 3.57 7% 2.70 5% 5.20 10% 1.59 3% 12.32 24% 15.56 30% 51.83 100%
Source: San Jose GIS and Metroscan
The Valley Transit Authority oversees the County of Santa Clara’s regional transportation system and represents 7% of the ownership in the Diridon Area. The VTA was one of the key sponsors of the Strategic Plan and is focused on expanding the BART system into San Jose. The Diridon Area plays a major role in expanding the BART system and access to these transportation amenities will attract people to live and work in the area. The Peninsula Joint Powers Board owns and operates the Caltrain system that currently runs through the Diridon Train Station. They currently own 24% of the properties in the Diridon Area. Agency assistance is necessary to facilitate infrastructure improvements in preparation for development in the Diridon Area. The Diridon Amendment would provide funding for the Agency to implement infrastructure improvements that would act as a catalyst to private development. RELATIONSHIP TO OTHER PLAN AMENDMENTS MERGED PROJECT AREA AMENDMENT In 2007, the Agency initiated the Plan Amendment to the Various Redevelopment Plans in the Merged Project Area (“Merged Project Area Amendment”). The Merged Project Area Amendment will increase the tax increment limit to $15 billion. It will also consolidate and establish one limit on the amount of bonded indebtedness that may be outstanding at one time. The Merged Project Area Amendment will also modify the list of eligible public improvements in each Redevelopment Plan so that all Redevelopment Plans have consistent language relating to public improvements. The Merged Project Area Amendment will assure that the Agency’s future redevelopment activities are financially viable in the long-term. The Diridon Amendment will not alter any of the amendments and limitations envisioned in the Merged Project Area Amendment; the Agency will remain subject to the new limitations achieved by the Merged Project Area Amendment NAGLEE PARK AMENDMENT The Agency also processed an Amendment to delete Naglee Park from the Strong Neighborhoods Initiative Project Area. The Agency concluded that the inclusion of Naglee Park in the SNI Redevelopment Area was no longer necessary for effective redevelopment or the elimination of blight in the SNI project area. For this reason, the area of Naglee Park is not shown in any of the maps and exhibits in this Report.
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San Jose Merged Project Area and Project Area Boundaries
Exhibit i-1
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San Jose Merged Project Area Location
Exhibit i-2
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VTA Downtown San Jose System Map
Exhibit i-5
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S ECTION A: R EASONS FOR THE A MENDMENT & D ESCRIPTION OF S PECIFIC P ROJECTS THE A GENCY M AY P URSUE INCLUDING H OW P OTENTIAL P ROJECTS WILL A DDRESS C ONTINUING R EDEVELOPMENT OF THE P ROJECT A REA OVERVIEW Section A includes the reason for the Diridon Amendment and descriptions of the existing public improvement and economic development programs that will continue to be undertaken by the Agency in the Merged Project Area and Diridon Area. STATE REDEVELOPMENT POLICY In CRL Sections 33070 and 33071, the State Legislature declared that decent housing and genuine employment opportunities for all the people in the state are vital to the state’s future peace and prosperity, and that a fundamental purpose of redevelopment is to expand the supply of low- and moderate-income housing, to expand employment opportunities for jobless, underemployed, and low-income persons, and to provide an environment for the social, economic, and psychological growth and well-being of all citizens. Since adoption of the Redevelopment Plan, the Agency has focused on investments of tax increment that will eliminate blighting conditions and at the same time add jobs to the local economy and improve the social, economic, and psychological growth and well-being of the community. While the Agency has made important progress in the SNI Redevelopment Area, the field surveys (described in more detail on page B-24) have shown evidence that significant blight remains and that ongoing redevelopment and tax increment financing is critically needed to overcome the physical economic challenges. The proposed Diridon Amendment will provide the Agency additional financing tools necessary to continue to make community investments that the State Legislature declared to be the charge of redevelopment agencies. REASONS FOR THE AMENDMENT An in-depth financial analysis was completed when the Redevelopment Plan for the SNI Redevelopment Area was adopted in 2002. At the time, revenue generated in the Merged Project Area from the Downtown and Industrial Redevelopment Areas was determined to be sufficient to fund redevelopment activities throughout the Merged Project Area, including the SNI Redevelopment Area. Therefore, the Agency elected not to collect tax increment revenue generated in the SNI Redevelopment Area to minimize the affect on the taxing entities that receive property tax revenue. The Agency had anticipated it could implement blight eliminating projects and boost the economic prosperity of the neighborhoods within the SNI Redevelopment Area without impacting the taxing entities. The Diridon Amendment will enable the Agency to collect tax increment revenue generated in the near-term in the Diridon Area to address not only blighting factors and finance programs in the Diridon Area, but will also provide for additional revenue for programs in the SNI Redevelopment Area, and the entire Merged Project Area. With the recent decline in market conditions, development activity by the private sector has come to a halt because of constrained lending conditions. The financial capacities of public agencies, including the City of San Jose, have also rapidly contracted. The Diridon Amendment is needed to generate near-term cash flow in the Diridon Area and the Merged Project Area that can be used by the Agency to secure funding and development opportunities. Many developments and funding opportunities will no longer be available if the Agency cannot provide near-term funding. Given the specific programs that are needed in the Diridon Area, and the current economic challenges that the City and Country overall faces, the Agency needs access to additional revenue to address blighting conditions.
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The urgent need for expedited and increased cash flow that the Diridon Amendment would provide is critical. By increasing the Agency’s financial capacity through the Diridon Amendment, the Agency will be better equipped to implement projects in the Diridon Area and the Merged Project Area. In these difficult economic times, increasing the Agency’s ability to eradicate blight will benefit not only the Diridon Area, but the entire Merged Project Area and City, and ultimately the County and State economy. As described later in this Section, the Agency is proposing and implementing projects and programs within the Diridon Area that will eliminate blight. Subsequent to the adoption of the Redevelopment Plan, the Strategic Plan for the Diridon Area was completed in 2003. Neither the 2002 adoption of the SNI Redevelopment Area nor the 2003 completion of the Strategic Plan foresaw the current economic crisis that is spreading throughout the public and private sectors of today’s economy. The Strategic Plan vision for the Diridon Area includes transforming the area into a major Bay Area transportation hub by expanding the Diridon Station and creating a pedestrian-friendly environment with a mix of land uses that will transition into downtown San Jose. While the Agency has been actively working to implement the Strategic Plan, a significant amount of public and private investment is still critically needed to generate sufficient economic momentum to fulfill the Strategic Plan. In order to develop the Diridon Area as envisioned, major infrastructure improvements still require large funding allocations and infill development requires major infusions of private capital. A significant financial investment will be necessary in order to fulfill the strategic vision for the Diridon Area. A critical financial strategy for creating needed funding for public improvements is leveraging local public tax dollars, including tax increment, to secure additional outside funding sources. It is anticipated that redevelopment activities coordinated by the Agency will provide additional employment opportunities and enhance the quality of life in the Diridon Area and surrounding neighborhoods for residents, businesses, visitors, and transit users. The Diridon Amendment would improve the immediate and long-range economic viability of the entire City of San Jose by attracting people to this urban center as a place to live and work. Several resource-intensive projects and programs in the Diridon Area have been identified by the Agency that will require significant financial participation. In addition, the Agency-owned parcels in the Diridon Area have recently drawn interest from a professional baseball team looking to relocate and construct a new stadium. These projects and the accompanying environmental mitigation and infrastructure improvements required by these projects, which will be described in greater detail in Section E, will all require tremendous amounts of financial support from the Agency. Absent this Amendment to collect tax increment in the Diridon Area, nearterm resources may not be available from the Merged Project Area as a whole to complete the needed infrastructure improvements, carry out the environmental cleanup and remove existing blight to make these transportation additions, professional sports complex, and a mix of other commercial and residential uses a reality. As part of the American Recovery and Reinvestment Act (“ARRA”), Mayors across the Country submitted funding requests for some of the most critical development programs that were shovel-ready. While not specifically outlined in the final legislation, the Diridon Transit Station Expansion for BART and High Speed 9 Rail was forwarded as one of the City’s shovel-ready development projects at $100 million. However, the funding that is ultimately approved by Congress for these programs in the ARRA may fall short of the Mayors' recommendations. Because not every project requested by the Mayors will be funded, the Agency should not consider this funding to be guaranteed in the ongoing redevelopment of the Diridon Area. The Diridon Amendment is also needed to address environmental remediation and cleanup of known hazardous waste sites. In work conducted on the Agency’s behalf, environmental consultants Cornerstone Earth Group have conducted a variety of Phase I environmental studies as well as research on the historical uses of the area. The result of their efforts reveal an area containing a significant amount of environmental challenges as a result of heavy industrial uses dating back to the late 1800’s and early 1900’s. The level of environmental remediation that will be required on the majority of properties in the Diridon Area will erode the private sector’s ability to independently finance projects without some level of Agency assistance.
9
Woolfolk, John. “San Jose Issues Wish-list for Federal Stimulus Package.” Mercury News. January 16, 2009.
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Section E of the Report to Council includes information on the continued economic feasibility of the Merged Project Area and Section D includes the reasons for the continued inclusion of tax increment financing. AGENCY PROGRAMS AND PROJECTS The following discussion includes a description of the projects or programs proposed to eliminate remaining blight, a description of how these projects or programs will improve the conditions of blight, and the reasons why the projects or programs cannot be completed without the Diridon Amendment. All redevelopment implementation activities will be subject to future review and approval by the Agency Board, and/or other appropriate agencies, committees, and/or other interested parties as appropriate or required by CRL. The Diridon Amendment will not change the projects and programs the Agency pursues to eliminate blight, however, the Diridon Amendment will enhance the timeliness of implementation activities. The supporting documentation to the Merged Project Area Amendment presented the Agency’s projects and programs for the entire Merged Project Area, and explained how these on-going programs will continue to address blight throughout the entire Merged Project Area. This documentation is presented in Appendix 8 to this Report. In summary the Merged Project Area programs include:
Public Facilities and Spaces: Public investments in community infrastructure, parks, open space areas, and other public spaces.
Transportation: Enhancement of roads, intersections, sidewalks, trails, bike paths and pedestrian pathways to better facilitate safe transportation networks.
Economic Development: Promote economic development to: expand and improve business enterprise by addressing problems that impede business expansion; create and expand job opportunities; and stimulate private investment into the Merged Project Area.
Hazardous Materials and Remediation: Assessment and remediation of brownfields properties, the redevelopment of which are hindered by the presence of environmental contamination.
Streetscapes: Public investment into streetscape and façade improvements, including enhancements to dilapidated buildings, decaying and crumbling façades, and the “walkability” and safety of street-level environments.
Parking: Efficient and cost-effective parking to support public transit, transit-oriented development, and the existing multi-purpose arena.
Eligible City Improvements: Capital investment into programs and projects that enhance neighborhoods, serve City residents and promote business retention and expansion.
Low and Moderate Affordable Housing Programs: Responsible and cost-effective expenditure of the Agency’s 20% tax increment set-aside deposited into the Low and Moderate Income Housing Fund in accordance with the CRL.
The Agency anticipates investing $4.8 billion in these various programs over the remaining life of the Merged Project Area including $2.5 billion to affordable housing programs as required by law. A detailed discussion of how these amounts are estimated to be allocated to programs is included in the Merged Project Area documents included in Appendix 8 to this Report.
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DIRIDON AREA PROGRAMS After land assemblage and lot consolidation, one of the most critical needs in any development or redevelopment project is ensuring that adequate infrastructure is in place. Infrastructure improvements, replacements, and new installations are expected to be very costly in the Merged Project Area, especially in the Diridon Area. The Agency’s existing activities to extend Autumn Street from Coleman Avenue to Interstate 280 are one example of the Agency’s focus on improving infrastructure, particularly in the Diridon Area. This project will widen Autumn Street to a four-lane roadway with a parkway median where possible, and also include parking and sidewalk improvements. Because of property acquisition required to develop the new roadway, it is anticipated that additional parkland along the Guadalupe River and Los Gatos Creek will be created. This additional parkland will also enable the completion of the Los Gatos Creek and Guadalupe River trail sections through the Downtown. The development of this road also improves the connection of residents in the southern and western neighborhoods of Downtown to better access the burgeoning commercial areas along Coleman Avenue. Completion of this roadway will vastly improve the connection of the Downtown and the surrounding neighborhoods to the Mineta International Airport, which is important for the long-term economic growth of the City. The costs related to this important infrastructure improvement are estimated to be $145 million. This cost estimate includes over $52 million related to acquisition and relocation; $56 million in demolition, remediation, Los Gatos Creek Park construction, a parking garage and related soft costs; and $36 million in street construction. The California High Speed Rail Authority has been established to oversee all aspects of the planning and development of bringing high speed rail to California. While $9.5 billion was established from Proposition 1A 10 for this massive public transportation project , the Agency will need to play a significant financial role in preparing the Diridon Area for the eventual arrival of high speed rail service. As the current estimated cost of 11 the entire project is approximately $45 billion , the Agency will need to have sufficient financial resources set aside to address the infrastructure, buildings and parking required. Other transportation upgrades in the area include BART’s plans to add a station in the Diridon Area. However, this extension has been postponed due 12 to the economy, State budget, and falling sales tax receipts. Given the successful activities of the Agency to acquire and assemble property in the Diridon Area, a new baseball stadium is being proposed to be located 13 between Montgomery and Autumn Avenue. According to staff, the proposed $500 million stadium would require significant investments in infrastructure and additional property acquisition to make the project a reality. The Agency has identified numerous programs that will assist the private sector in carrying out the required environmental clean-up of selected sites. Previous records show that some of the buildings in the Diridon Area are former storage and industrial-use buildings that have environmental contamination. As addressed earlier in this Report, there are three known active hazardous materials cases in the Diridon Area. In addition to the three active cases identified, 34 sites in the Diridon Area are believed to contain some level of environmental contamination. These probable hazardous waste sites were identified during the preparation of Phase I environmental site assessments, site reconnaissance studies, and other historical research during the course of CEQA studies and due diligence activities in the Diridon Area. Other environmental studies and data have been collected and analyzed, including the Baseball Stadium Environmental Impact Report prepared by LSA Associates and recent interviews with Cornerstone Earth Group, an environmental consulting firm who conducted a variety of tests on specific parcels in the Diridon Area for the Agency’s Midtown Specific Plan. The Agency has and will continue to be involved in clean up of property it acquires. These programs will also help the Agency address existing blighting conditions by improving impaired 10
California High Speed Rail Authority Website. Questions and Answer: What is Proposition 1A. 11 California High Speed rail Authority Website. Questions and Answers; Financing Costs 12 Richards, Gary. “BART to Berryessa: Sales tax projections force VTA to scale back plans.” Mercury News, February 27, 2009 13 Swift, Mike. “San Jose Could Be On Deck Next For the A’s.” Mercury News. February 25, 2009.
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property values, stimulating private investment and reducing significant risks to the health, safety, and welfare of Diridon Area businesses and surrounding residents. By making concentrated efforts in the remediation of hazardous materials and contamination, the Agency will assist in the creation of more viable locations for the private sector to create more employment and residential options in the Diridon Area and Merged Project Area overall. By engaging in environmental remediation, the Agency will directly address blighting conditions, make improvements to property values and address health and safety issues for both commercial and residential uses. Given the existing multi-purpose arena and existing and future transportation development options, increasing the availability of public parking will continue to be another goal of the Agency in the Diridon area. In many instances, a lack of parking can negatively affect the retention and attraction of commercial businesses. Given the physical size of the area compared to the future growth potential of the area with such close proximity to downtown, HP Arena, and the proposed BART, High Speed Rail expansion and new baseball stadium, Agency efforts to create public parking will add to the viability of private development and provide shared parking in situations that could not be created by the private sector alone. Furthermore, the creation of new and easily accessible parking will specifically address blighting characteristics such as stagnant property values as well as high vacancy and low lease rates. The potential of mixed-use projects in this area seems likely, but without adequate funding for parking, many of these projects will not make financial sense. In the case of the Diridon Area, much of this parking will likely be underground and in multi-level parking structures. Agency assistance can alleviate these challenges and burdens on the private sector to develop viable and properly parked projects. With an increase in the availability of parking, the Agency will add value to any existing and future development projects and will serve to remove physical impediments to commercial development. SUMMARY By adopting the proposed Diridon Amendment, the Agency will not only gain the ability to collect tax increment revenue from the Diridon Area to address blight in the Diridon Area, but will also allow it to collect tax increment revenue to fund projects in a more expedient manner across the entire Merged Project Area. This new revenue will provide the Agency with the necessary funds to implement the aforementioned programs designed to address the remaining physical and economic blight and create employment and housing opportunities in the Diridon Area as well as other areas in the Merged Project Area overall. Without this additional revenue capacity, the Agency’s ability to timely fund projects and programs in the Diridon Area that work towards the removal of remaining blight and provide for affordable housing opportunities throughout the Merged Project Area are hindered. The programs enumerated in this Section will significantly improve conditions within the Diridon Area by addressing physical and economic blight and providing for affordable housing. Whether the program supplies funding to address inadequate infrastructure, create streetscape programs to enhance values to adjacent properties, or to remediate environmental contamination, the Agency has outlined a development program to effectively address existing blight in the Diridon Area and the entire Merged Project Area. As will be discussed in Section D, the blighting conditions cannot reasonably be expected to be reversed or alleviated by private enterprise, governmental action, or both, without redevelopment action and proper funding. Implementing the identified programs will allow the Agency to abate the blighting conditions affecting the Diridon Area. This investment by the Agency will signal to the private development community and the public at large the Agency’s commitment to the Diridon Area, and provide a catalyst for new private investment.
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S ECTION B: D ESCRIPTION OF B LIGHTING C ONDITIONS BLIGHTING CONDITIONS Because the Diridon Area is part of a project area which has been merged into other project areas, this Report to Council includes a description of the physical and economic conditions existing in the Diridon Area, SNI Redevelopment Area, and the Merged Project Area. Although the definition of blight has been modified since the adoption of the Redevelopment Plan, this Section will examine the remaining physical and economic blighting conditions in accordance with current CRL requirements. CRL Sections 33030 through 33039 describe the conditions that constitute blight in a redevelopment project area. A blighted area is one that necessitates the creation of a redevelopment project area because the combination of conditions in an area constitute a burden on the community, and cannot be alleviated by private enterprise, governmental action, or both, without redevelopment. The purpose of a redevelopment area is to remedy blighting conditions and the CRL recognizes that less blight will remain in a redevelopment project area as time progresses. CRL Section 33030 defines a blighted area as one that contains both of the following:
1. An area that is predominantly urbanized and is an area in which the combination of physical and economic blighting conditions is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the community that cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment. 2. An area characterized by one or more physical condition of blight and one or more economic condition of blight as set forth in subdivisions (a) and (b) of CRL Section 33031.
A blighted area that meets the conditions above can also be characterized by the existence of inadequate public improvements. CRL Sections 33035 and 33036 contain legislative findings and declarations that explain the effect that blighted areas have on project area inhabitants and property owners. Blighted areas create physical and economic liabilities to the community that require redevelopment to protect the health, safety, and general welfare of the public. Blighted areas are a menace to the community and disproportionately impact community resources such as police and fire services. Remedying blighting conditions in a community using redevelopment tools benefits not only a project area but the entire community. As such, the blighting conditions described in this Section of the Report include those that exist not only in the SNI Redevelopment Area and Diridon Area, but in the Merged Project Area as a whole. Since the 21 redevelopment Project Areas are financially merged, the short-term Agency investment that will occur in the Diridon Area as a result of the Diridon Amendment is expected to translate into long-term benefits for the Diridon Area, the SNI Redevelopment Area, and the Merged Project Area.
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PHYSICAL BLIGHT AND ECONOMIC BLIGHT Section 33031(a) of the CRL describes the conditions that cause blight as follows:
Physical Blight Defined …
Economic Blight Defined …
Section 33031(a) of the CRL describes physical conditions that cause blight as follows:
Section 33031(b) of the CRL describes economic conditions that cause blight in the following manner:
1. Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions may be caused by:
1. Depreciated or stagnant property values.
a. Serious Building Code violations b. Serious dilapidation and deterioration caused by longterm neglect c. Construction that is vulnerable to serious damage from seismic or geologic hazards d. Buildings suffering and from faulty or inadequate water or sewer utilities 2. Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots. These conditions may be caused by: a. Buildings of substandard, defective, or obsolete design, or construction given the present general plan, zoning, or other development standards 3. Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area. 4. The existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions.
2. Impaired property values, due in significant part, to hazardous wastes on property where the agency may be eligible to use its authority as specified in Article 12.5 (commencing with Section 33459). 3. Abnormally a. High business vacancies b. Low lease rates c. High number of abandoned buildings 4. A serious lack of necessary commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions. 5. Serious residential overcrowding that has resulted in significant public health or safety problems. As used in this paragraph “overcrowding” means exceeding the standard referenced in Article 5 (commencing with Section 32) of Chapter 1 of Title 25 of the California Code of Regulations. 6. An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems. 7. A high crime rate that constitutes a serious threat to the public safety and welfare.
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BLIGHT STUDY APPROACH AND METHODOLOGY THE FIELD SURVEY The analysis of blighting conditions was based upon the primary data collected in a field survey and secondary data collected from a variety of sources more fully described below. During the preparation of the initial Feasibility Study for the Merged Project Area Amendment, RSG conducted a cursory field survey of the Merged Project Area on January 7 – 9, 2008 (“Initial Field Survey”). To accomplish the Initial Field Survey, RSG team members were grouped with Agency staff members familiar with the Merged Project Area. The Merged Project Area was divided between two RSG survey teams that drove throughout their assigned portion of the Merged Project Area. Each team was joined by various Agency Project Managers familiar with each area. The purpose of the Initial Field Survey was to get a general idea of the physical and economic conditions present in the Merged Project Area. Agency staff pointed out to RSG team members the locations of completed and planned redevelopment projects and areas where conditions still required improvement. At that time, the RSG survey team identified locations within the Merged Project Area where blight conditions appeared to remain. Subsequently, RSG team members conducted a parcel-by-parcel survey from the public right-of-way (“2008 Field Survey”) on June 16 – 19 and July 7 – 11, 2008. RSG prepared a survey instrument that provides a survey sheet for each parcel within the Merged Project Area. Each parcel was identified by the County Assessor’s Parcel Number that could be associated with the County’s Assessor Maps and the City’s GIS information. The survey sheet was designed to provide basic physical and economic information that could be derived by field inspection of the Merged Project Area and to record information related to the blighting conditions as defined in the CRL. The form includes six sections (1) Deterioration and Dilapidation; (2) Defective Design; (3) Substandard Design; (4) Use; (5) Vacancy; and (6) Photos. Each section allows the surveyor to record the existence of a particular condition, and to make field notes. The Deterioration and Dilapidation section is designed to note such conditions as: faulty weather protection; broken windows or doors; broken or deteriorated roofing materials, eaves, overhangs, or exterior building materials; damaged or missing foundations; doors or windows that are out of alignment; sagging, split or buckled roof support structure; split, leaning or buckled wall supports or columns; broken or deteriorated chimneys; substandard exterior plumbing. The Defective Design section is designed to note such conditions as inadequate pedestrian access, inadequate vehicular access; substandard exterior building materials; poorly constructed building additions; a lack of natural light and ventilation. The Substandard Design section is designed to note such conditions as inadequate loading facilities; excessive lot coverage or inadequate setbacks; garbage, debris, stagnant water, or combustible materials; outdoor storage or production; inadequate or lack of parking. The Use section is designed to note if the use is an adult-business; if the use is incompatible with the surrounding uses; if the use appears to be a converted living space; if the use is boarded up or uninhabited. The Vacancy section allows the surveyor to note vacant buildings and/or leasing information. The Photos section allows the photo number to be noted. Each parcel was evaluated to determine the presence of serious dilapidation or deterioration by examining building components (roof, chimney, eaves and overhangs, plumbing, exterior building materials, walls, foundation, windows, doors, weather protection, and wiring). Survey forms were noted if one of these components was present and appeared to cause the structure or lot to be significantly deteriorated. Buildings whose structural components did not appear to have any visible signs of deterioration or showed only the beginning phases of deferred maintenance were not recorded. Buildings that were moderately or extensively in need of rehabilitation or were significantly dilapidated were noted on the survey forms if the building condition appeared to pose a threat to health or safety. Such structures exhibited signs of long-term neglect
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and repairs. Such conditions included: sagging roofs, broken or missing windows, holes in stucco, deteriorated external building materials, exposed wiring, inadequate weather protection, roofing with missing tiles or cracked surfaces, and deteriorated door or window frames. No information was recorded if only deferred maintenance or minor repairs were needed, such as peeling paint that did not jeopardize the buildings weather protection, broken windows in otherwise kept-up buildings, or scratches or imperfection on exterior building materials that did not compromise the integrity of the structure. The 2008 Field Survey was conducted by two RSG staff teams. Each team consisted of at least three team members, including a minimum of one Associate (4+ years of experience in redevelopment and planning) and two Analysts (2+ years of experience). Each team had members with prior experience in conducting field surveys and all team members received training before commencing the survey. The purpose of the training was to review the specific forms, to provide examples of the types and degree of conditions that warranted recording information on the survey form. The definitions of each condition were explained and discussed and examples were reviewed to assure that each member understood the particular category. Two RSG Principals (30+ years of experience) managed the survey teams and were available to answer any questions. The teams slowly drove through the Merged Project Area to adequately assess parcel conditions and stopped at parcels that needed closer examination or to photograph conditions. During the survey, each team member was assigned a particular task. One member drove the vehicle and called out specific conditions they observed while another team member recorded information on the survey sheet and noted particular conditions. The third team member verified the parcel location using GIS and parcel maps, took photographs, and also called out their observations. Thus, three members jointly made the determination of what conditions existed and to what extent. Team members were rotated throughout the survey to ensure consistency between the two survey teams. Data regarding whether a parcel had shifted from one type of use to another was gathered as part of the field survey and later verified with the City’s planning information. This data includes buildings that are substandard in design to accommodate the existing use or occupant. Incompatible land uses were also identified. This data includes land uses that are incompatible with the adjacent land use of a neighboring property, such as residential properties adjacent to industrial uses where the industrial use negatively impacts the environment and quality of life. Other factors that show evidence of defective or obsolete design were collected, such as inadequate circulation, parking, access, loading facilities, and storage of materials and garbage. Information on vacant space within buildings was noted to assist in examining the Merged Project Area market conditions. Names and contact information for properties with “for lease” or “for sale” signs were noted as references to gain insight from market area brokers and real estate professionals. On January 14, 2009, RSG re-examined data collected in the Diridon Area during the 2008 Field Survey to ensure that the blighting conditions previously noted remained. OTHER PHYSICAL AND ECONOMIC RESEARCH The CRL definition of blight includes a number of factors that either cannot be observed from the street, or cannot be quantified based on a single parcel. To assess the presence of these other factors, RSG researched other data sources. These include: Assessor Parcel information (age, size, land use, value, sale dates, etc.); code enforcement records; DataQuick information (home values and sales); Realtytrac information (home foreclosure data); Department of Toxic Substances Control (“DTSC”); EnviroStor (hazardous materials information); CB Ellis Market View Reports (lease rates and vacancy rates); ESRI Business Analyst Reports (demographic and market data); FBI and City crime data; and US Census data. DIRIDON AREA BLIGHTING CONDITIONS The 2008 Field Survey was undertaken to evaluate the physical and economic conditions of structures and parcels throughout the Merged Project Area. The SNI Redevelopment Area and the Diridon Area were surveyed as part of the 2008 Field Survey. The Diridon Area was re-surveyed on January 14, 2009 to ensure
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that the conditions were still present. The focus was to identify conditions that pose a health and safety threat to occupants or visitors. The survey generated information for 87 parcels covering 52 acres that make up the 14 Diridon Area. RSG used the field surveys to obtain a broad-spectrum understanding of the blighting conditions present in SNI Redevelopment Area and the Diridon Area. Additional research and investigation beyond the field surveys were also undertaken and a detailed description of both physical and economic blighting conditions found from all sources is provided throughout this Section. When possible, blighting conditions were mapped to illustrate the location and severity of a particular condition. These maps are located throughout the text of this Report and enlarged maps are located in Appendix 2. The location of physical and economic blighting conditions present in the Diridon Area is presented in Exhibit B-1.
14
Survey information was generated using the City’s GIS database and Metrocsan Inc. Assessor Parcel information.
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The Diridon Area is burdened by many physical and economic blighting conditions that hinder the redevelopment and economic viability of the area. Conditions plighting the area include both physical blight (dilapidation and deterioration, substandard lot sizes, lots in multiple ownership, and infrastructure deficiencies) and economic blight (hazardous waste sites). A summary of existing blighting conditions by ownership in the Diridon Area is presented in Table B-1. Physical & Economic Blight San Jose Diridon Area
Table B-1 Public Owned Parcels Acres
Private Owned Parcels Acres
Total1 Parcels Acres
Physical Blight Observed Physical Blight2
4
1.30
11
2.62
15
3.92
10%
4%
24%
17%
17%
8%
2
0.30
5
0.83
7
1.13
2 0 0 2 0 2
1.01 0 0 1.01 0 1.01
3 1 1 3 4 3
0.69 0.32 0.32 0.69 1.25 0.69
5 1 1 5 4 5
1.69 0.32 0.32 1.69 1.25 1.69
17
2.16
20
3.35
37
5.51
40% 0 17
6% 0 2.16
44% 3 17
22% 0.96 2.39
43% 3 34
11% 0.96 4.55
2
0.15
9
1.84
11
2.00
5% 0 2
0% 0 0.15
20% 3 6
12% 0.96 0.88
13% 3 8
4% 0.96 1.04
17
3.00
26
5.32
43
8.32
% of Total by Ownership
40%
8%
58%
34%
% of Diridon Area
20%
6%
30%
10%
49%
16%
22
19.58
20
10.3
42
29.88
% of Total by Ownership
52%
54%
44%
66%
% of Diridon Area
25%
23%
23%
20%
48%
58%
42
36.28
45
15.56
87
51.83
% of Total Unsafe & Unhealthy Dilapidation & Deterioration Factors Hindering Viable Use Inadequate Pedestrian/Vehicular Access Substandard Building Materials Poorly Constructed Addition Inadequate Loading Facilities Outdoor Storage & Production Parking Inadequate/Lacking Substandard Lots % of Total Commercial Industrial Substandard Lots in Multiple Ownership % of Total Commercial Industrial Physical Blight Summary Total Physically Blighted Parcels/Acres
Economic Blight (Parcel Specific) Hazardous Waste
Total Diridon Parcels/Acres 1 2
Total figures may not add exactly as shown due to rounding decimal points These figures represent total number of parcels. Some parcels have multiple conditions.
Pursuant to CRL Section 33031(b)(2), impaired property values due in significant part to hazardous wastes are an economic blighting condition. Environmental contamination of properties poses serious financial barriers to redevelopment or reuse of property. "Brownfield site" means real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous
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substance, pollutant, or contaminant. Recent environmental studies and assessments in the area have revealed the presence of significant levels of soil and groundwater contamination that would physically and financially complicate the expansion, redevelopment, or reuse of properties in the Diridon Area. Redevelopment of brownfield sites requires regulatory oversight, typically from the Department of Toxic Substances Control (“DTSC”) or a Regional Water Quality Control Board, and involves the preparation of Phase I and Phase II environmental site assessments, development of remedial action plans, and the cleanup of the sites. The costs of assessment and cleanup of brownfield sites often make redevelopment of those sites economically infeasible for private parties without public assistance from redevelopment agencies and local, state, and federal grant programs. As described later in this Section, research was conducted using the Department of Toxic Control 16 Substance’s (“DTSC”) EnviroStor database, the State Water Resources Control Board’s (“SWRCB”) 17 18 Geotracker database, and the Environmental Protection Agency’s (“EPA”) CERCLIS database. The data identified 204 hazardous waste sites in the SNI Redevelopment Area, of which 71 are active and 133 are closed. In the Diridon Area, the data reveals that there are three active sites and four closed sites. Table B-2 below lists active hazardous waste sites in the Diridon Area. Table B-2
Active Hazardous Waste Sites San Jose Diridon Area Database
Site Name
Cleanup Status
Address
Contaminants of Concern
Media 1 Affected
Geotracker
NBC Universal
Open-Site Assessment
645 Park Avenue
Arsenic, Lead
Under Investigation
Geotracker
Perrucci Properties
Open- Site Assessment
53 Montgomery S.
Gasoline
Soil
Geotracker 1"
Diridon Cal Train Station
Open-Site Assessment
65 Cahill Street
Diesel, Waste Oil/Motor/Hydraulic/ Other Lubricating Groundwater
Other Groundwater" is defined as water sources other than those used for drinking water
Source: Geotracker Environmental Database
The NBC Universal site listed in Table B-2, is an example of a site that has been left underutilized and abandoned. According to the California Regional Water Quality Control Board (San Francisco Bay Region) (“RWQCB”), site investigations uncovered arsenic and elevated concentrations of lead in the soil. The RWQCB also states that current land use restrictions prevent the use of child care centers, hospitals, hospices, schools, playgrounds, parks, and groundwater on the site until further remediation is conducted. In January 2006, the Agency and owner negotiated a Purchase and Sale Agreement in the amount of $9,500,000, a price that was consistent with previous appraisals and Agency acquisitions in the Diridon Area. As part of the Purchase and Sale Agreement, the owner of the property was required to develop, fund, and implement a proposed remediation plan, which included the demolition of the current structure on the property. In light of required environmental assessments and remediation identified by the City of San Jose Planning department, the owner of the property decided to lower the purchase price to sell the property “as15
Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (42 U.S.C. 9601). EnviroStor is an online research and Geographic Information System tool that allows you to search for information on investigation, cleanup, permitting, and/or corrective actions that are planned, being conducted or have been completed under DTSC’s oversight. 17 The SWRCB’s Geotracker is a similar online research tool as Envirostor but pulls information from different databases, such as Leaking Underground Storage Sites (“LUST”) and Spills, Leaks, Investigations, and Cleanups (“SLIC”). 18 CERCLIS is the acronym for the EPA’s comprehensive environmental response, compensation, and liability information system. CERCLIS is the national database and management system that the EPA uses to track activities of hazardous waste sites considered for cleanup under the Comprehensive Environmental Response and Liability Act (“CERCLA”), which is commonly know as Superfund. Superfund sites are land within the United States that has been contaminated by hazardous waste and identified by the EPA as a candidate for remediation because it poses a risk to human health and/or the environment. 16
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is.” In June, 2008, the Agency purchased the property for $6,000,000, which was $3.5 million less than the original Purchase and Sale Agreement price. Within the proposed purchase agreement, the recordation of a Remediation and Easement Agreement (“REA”) states that it is the Agency’s responsibility to conduct environmental clean up on the site. With the additional tax increment receipts proposed in this Amendment, the Agency will have a greater financial capacity to help fund environmental site assessments and remediation costs to facilitate the future development of not only this site but sites with similar conditions in 19 the Diridon Area. Table B-3 below lists closed hazardous waste sites in the Diridon Area.
Closed Hazardous Waste Sites San Jose Diridon Area
Table B-3
Database
Site Name
Cleanup Status
Address
Geotracker
San Jose Arena PG& E Parcel
Completed-Case Closed
17 Otterson Street
Geotracker
Automatic Car Wash
Geotracker
Vitale Auto Body
Geotracker
Completed-Case Closed 77 S. Montgomery Street Completed-Case Closed
52 Autumn St. S.
San Jose Arena Block 5A Completed-Case Closed
522 Santa Clara
Source: Geotracker Environmental Database
According to City Environmental Services staff, the existence of closed hazardous waste sites can be equally as deterring to new investment as active sites due to possible traces of environmental contamination that may still remain. In some cases, closed hazardous waste sites may have been cleaned up to meet historic safety standards under previously established State and Federal regulations. These same sites, if re-evaluated, would most likely not be able to meet current State and Federal regulatory standards. In addition, City Environmental Services staff indicates that some closed sites may have been partially remediated, so that only the current land use of a property is permitted. For instance, some closed hazardous waste sites that were used for industrial purposes may still contain contamination that would preclude a residential or commercial use on the site or would require further remediation to be able to develop the site with a more restrictive use. The San Jose Arena Block 5A site, listed in Table B-3, is a current example of a closed hazardous waste site that still contains traces of contamination. According to the Notice of Restriction of Use, provided on the State Water Resources Control Board website, the site still may contain fuel-related hydrocarbon contaminants such as gasoline, diesel, benzene, toluene, ethyl benzene, and methyl t-butyl ether (“MTBE”). The Notice also states that “the shallow groundwater is not suitable for use as a drinking water supply or for use as an 20 individual/commercial supply. ” In this case, the contamination on the aforementioned site has only been cleaned up to support the use of a parking lot. Any higher use of the site will likely require further environmental assessments and remediation to remove any significant health and safety risks to Diridon Area residents and workers.
19 Redevelopment Agency, Memorandum- Approval of a Purchase and Sale Agreement for the Acquisition of Property at 645 Park Ave, June 5, 2008. 20
Redevelopment Agency of the City of San Jose, Notice of Restriction of Use of San Jose Arena Block 5A Parking Lot, August, 2001.
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In addition to sites with active or closed cases that are or have been monitored by regulatory agencies (e.g., DTSC, SWRCB), 35 additional sites in the Diridon Area are believed to have some level of environmental contamination. These probable hazardous waste sites were identified during the preparation of Phase I environmental site assessments, site reconnaissance studies, and other historical research during the course of CEQA studies and due diligence activities in the Diridon Area, including the Baseball Stadium Environmental Impact Report prepared by LSA Associates and recent interviews with Cornerstone Earth Group, an environmental consulting firm who conducted a variety of tests on specific parcels in the Diridon Area for the Agency’s Midtown Specific Plan. The 42 active, closed, and probable hazardous waste sites represent approximately 48% of the total number of parcels in the entire Diridon Area. According to the Baseball Stadium Environmental Impact Report and consultations with Cornerstone Earth Group, historical land uses have contributed to most of this contamination. Cornerstone Earth Group maintains that, from the late 1800’s through the 1960’s, there were intensive commercial and industrial land uses in the Diridon Area, and that a majority of buildings in the area are older and were built with inferior building materials, which likely contain contaminants such as lead, asbestos, pesticides, arsenic, benzene, cobalt and cadmium. During preparation of the Baseball Stadium Environmental Impact Report, a number of Phase I environmental assessments were prepared. The Phase I’s identified 18 active or probable hazardous waste sites in the Diridon Area that were likely contain acetylene, ammonia, chlorine, tetrachloroethylene, and other volatile organic compounds that were the result of historical industrial and commercial uses on those properties. In separate studies, the Cornerstone Earth Group identified 37 active or probable sites with hazardous waste contamination including a former meat packing and processing plant, a former electrical business, a machine shop, laundry mat, and an auto repair shop. Contaminants believed to be present on these sites include arsenic, lead, cadmium, cobalt, and dry cleaning solvents. Currently, the Agency is implementing various projects and programs to remediate hazardous waste parcels within the Diridon and greater SNI Redevelopment Area. Receipt of additional tax increment will provide additional capital to continue to implement projects and programs that will help remediate environmental contamination, boost impaired property values, stimulate private investment, and reduce health and safety risks in the Diridon Area as well as the greater SNI Redevelopment Area. Exhibit B-2 shows the location of current active, closed, and probable hazardous waste cases in the Diridon Area.
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Nearly half (49%) of the parcels in the Diridon Area exhibit conditions of physical blight and represent 16% of the total acreage. Of the 43 parcels where physical blight exists, 17 parcels, encompassing three acres, are owned by a public entity. Privately owned parcels represent 26 of the physically blighted parcels in the Diridon Area and encompass five acres. As the Diridon Area transitions from a primarily industrial area into a transit-orientated district, public-private partnerships will be necessary to eliminate blight and promote private development. Public agencies have been actively acquiring properties in preparation for greater redevelopment and own more than two-thirds of the area. The field surveys found that seven Diridon Area parcels had structures that were seriously dilapidated and deteriorated (refer to Table B-1). The majority of these buildings are located between South Autumn Road and South Montgomery Street in the central portion of the Diridon Area. The age of the buildings and the lack of private investment to maintain and modernize structures is one reason for dilapidation and deterioration in the Diridon Area. Aging structures need routine maintenance to avoid serious dilapidation and deterioration of the structure. The majority (four) of these buildings exhibit signs of faulty weather protection that expose the internal structure of the building to the outside elements. Each building that has faulty weather protection, also exhibit at least one other characteristic of dilapidation and deterioration. All of the structures suffer from at least one of the following conditions: damaged external building materials, deteriorated roofing materials, and/or deteriorated eaves and overhangs. Such dilapidation and deterioration caused by significant deferred maintenance and aging, present major impediments to the health and safety of occupants. For example, if exterior surfaces are not properly maintained to remove wood dry rot, rust, or damaged exterior building materials, this exposes the interior framing and foundation of a structure to water, thus weakening the structural integrity of the building. Deterioration of roofing materials, doors, and windows causes framing, rafters, and interior wiring to be susceptible to water damage and increases the deterioration of the entire structure. This also leaves the structure susceptible to fire. Water leakage resulting from design defects or deterioration of buildings also poses serious health risks to occupants exposing individuals to dangerous molds and fungi. Damage to the exterior fronts of houses, more specifically the porch and stairs, creates opportunities for injury resulting from a fall. The following photos were taken during the field surveys and illustrate the conditions documented.
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Photo 1: This home located along South Autumn Street shows signs of severe deterioration. The roof of this home is need of replacing and is missing roofing materials. The exterior of the building is lacking adequate weather protection to the point where the wood is exposed. The stairs leading to the front door are broken and are out of alignment posing a threat to the safety of the residents.
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Photo 2: This multi-family residence located along South Montgomery Street exhibits signs of deterioration. The doors and windows are out of alignment indicating that the foundation of the structure is compromised. The eaves and overhangs are deteriorated exposing wood to the weather elements. The Agency has acquired this property to eliminate blight and redevelop. All residents have been relocated from this building to ensure their safety and proceed with redevelopment of the site. Figure B-1 provides an illustration of the economic realities if routine building maintenance is not undertaken in a timely manner. First minor and then major building failures occur over time. The cost of renovating the building goes up exponentially over the years. Ultimately structural failures occur and the building cannot be recovered. Conversely, if preventive maintenance to address normal wear is routinely accomplished, the building’s structural integrity is maintained. Frequent investment into routine maintenance is the best way to assure the long-term integrity of a structure. Based on data from ESRI Business Analyst 2009, The Diridon Area’s annual median income is approximately $60,000 per household which is only 66% of the City’s and 60% of the County’s median household income. This lack of disposable income makes it difficult for families to maintain their properties and leads to disrepair.
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Figure B-1 ILLUSTRATION OF MAINTENANCE/COST RELATIONSHIPS Structural failures occur
Repair costs
Structure not usable
C
Start of major failures
Major repair
B
Start of minor failures Normal wear
Minor repair
A
Time in years
Preventive maintenance
Total cost of major repair (C) Total cost of minor repair (B) Total cost of preventive maintenance (A)
PREVENTIVE MAINTENANCE (bottom line) not only costs markedly less in aggregate than repairing building failures, it reduces human wear and tear. A building whose systems are always breaking or threatening to break is depressing to the occupants, and that brings on another dimension of expense. This diagram is adapted from Preventive Maintenance of Buildings (New York: Van Nostrand Reinhold, 1991), p.3.
Dilapidation and deterioration is a natural phenomenon of aging structures where routine maintenance and upkeep are deferred for extended periods of time. By nature, older structures are more difficult to rehabilitate and, as structures age, rehabilitation becomes more expensive due to the need to bring buildings up to current building code. As stated in Stewart Brand’s book, How Buildings Learn, What Happens After They’re Built, a lack of maintenance results in buildings becoming unusable, with the threat of structural failure. Brand states that, “…due to deterioration and obsolescence, a building’s capital value (and the rent it can charge) about halves by twenty years after construction. Most buildings you can expect to completely refurbish from eleven to twenty-five years after construction. The rule of thumb about abandonment is simple…if repairs will cost half of the value of the building, don’t bother.”
It is no surprise, therefore, that a structure’s condition is often directly correlated with its age. According to data obtained through the Metroscan, the seven parcels exhibiting signs of deterioration and dilapidation were built between 1890 and 1922, built over 85 years ago and well above the 25 year threshold. It is important to stimulate reinvestment into these structures to assure that they remain safe to occupy and economically viable. The more prevalent building conditions noted during the field surveys that characterize a parcel as dilapidated and deteriorated include: deteriorated or damaged external building materials, lack of weather protection, and broken and deteriorated roofing materials. The need for redevelopment continues to be necessary to remedy and prevent deteriorating or obsolete buildings. Instances of dilapidation and deterioration pose a significant health and safety threat to building residents and patrons. Diridon Area demographics show that the capacity of residents to reinvest in their properties is
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hindered by low educational attainment and low median household income. There is also a high percentage 22 of renter-occupied units in the Diridon Area , which commonly leads to the dilapidation and deterioration of structures due to the lack of residents who are property stakeholders and the abundance of absentee landlords taking minimal care of their rental properties. Owner-occupied units are typically better maintained than rental units. According to the California Building Industry Association, “Homeowners work to maintain the value of their investment, which translates into a greater concern for neighborhoods and surrounding communities. When citizens become homeowners, they become stakeholders as well. By increasing the number of stakeholders, communities not only enjoy increased stability, but also benefit from a new spirit of 23 revitalization.” If not addressed, these problems can perpetuate causing further dilapidation. Redevelopment can provide tools and help fund programs that provide incentives for property owners to invest in their properties and create avenues to hold property owners accountable for the maintenance and upkeep of their properties. The Agency has invested money in the City’s Code Enforcement Division to help monitor code violations in the SNI Redevelopment Area to ensure property maintenance. Pursuant to CRL Section 33031(a)(2), a building’s or lot’s viable use or capacity may be prevented or substantially hindered by substandard, defective, or obsolete design or construction given the present general plan, zoning, or other development standards. For the purpose of this analysis viability is defined as “capable 24 of working, functioning or developing adequately and financially sustainable”. Chapters 17 and 20 of the San Jose Municipal Code set forth the building requirements and zoning regulations to assure that development throughout the City is safely achieved. The purpose of Chapter 17 (Building and Construction) of the Municipal Code is to provide minimum building and construction standards. Chapter 20 of the Municipal Code details the required development standards by zoning designations throughout the City. These provisions are enforced to protect the safety, health, peace, and general welfare of the public. Based on zoning designations, the San Jose Municipal Code (Chapter 20) requires that parcels meet 25 minimum lot size requirements in order to be developed. Within the Diridon Area, 37 parcels do not meet minimum lot size standards and represent 43% of the parcels. Of these, three commercial parcels and 34 industrial parcels do not meet minimum lot size requirements (refer to Table B-1). The public sector owns 17 of the parcels not meeting minimum lot size requirements in preparation for redevelopment of the area. Many of the publicly-owned substandard lots are developed as parking lots that are recognized by separate assessor parcel numbers. All residentially zoned parcels meet lot size standards prescribed by the Municipal Code. Many of these parcels are currently developed and occupied because they were built prior to the minimal lot size requirements being established. Title 20.10.020 of the Municipal Code explains that the zoning code was established to prevent development that would lead to undue traffic hazards on public rightsof-way and overcrowding. The financial viability of commercially- and industrially-zoned properties with inadequate lot sizes was examined for Commercial General (“CG”) and Light Industrial (“LI”) zoning land use designations. CG and LI land use designations were selected due to the prevalence of inadequately sized lots for those uses in the Diridon Area. CG represents 67% of all commercially-zoned land use designations with inadequate lot sizes. LI represents 100% of all industrially-zoned land use designations failing to meet minimum lot size requirements. Table B-4 provides a summary of the median and average lot and building sizes of lots zoned CG and LI that are inadequately sized in the Diridon Area. The minimum lot size requirement for CG zoned parcels is one acre or 43,560 square feet, and the minimum lot size requirement for LI zoned parcels is 10,000 square feet. As shown on Table B-4, for all lots that fail to meet the minimum lot size for CG zoned 21
Data derived from ESRI Business Analyst 2008 indicates that the percent of persons over the age of 25 without a high school diploma is 21% in the Diridon Area compared to 19% in the City and 14% in the County. 22 Data derived from ESRI Business Analyst 2009 indicates that only 38% of homes located in the Diridon Area are owner-occupied, compared to 42% for the Merged Project Area, 62% for the City of San Jose, and 59% for Santa Clara County 23 Nevin, Alan. “Homeownership in California.” California Building Industry Association. 22 March 2008. 9 September 2008. . 24 “Viability.” Merriam-Webster’s Collegiate Dictionary. 10th ed. 1998 25 See Appendix 3 for minimum lot size standards.
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lots, the average lot size is 13,921 square feet or 68% less than the required lot size, and for LI zoned lots is 5,832 square feet or 42% less than the required lot size.
Analysis of Substandard Sized Lots Table B-4 San Jose Diridon Area Commercial Light General Industrial (Square Feet) (Square Feet) 14,122 6,351 Median Lot Size Average Lot Size 13,921 5,832 Median Building Size 8,903 2,304 Average Building Size 8,903 2,842 Source: San Jose GIS and Metroscan
To evaluate the impact of substandard lots sizes on the financial viability of new development, development pro formas were prepared. Samples of these for the SNI Redevelopment Area are included later in this section of the Report (see page B-77). Generally these pro formas show that development of undersized lots is not economically viable because they represent very high risk with very little return on the developer’s investment. Public agencies including the Agency have been assembling small lots for the purposes of implementing new projects, particularly transit-related improvements, in the Diridon area. Without the extraordinary acquisition activities of these public entities, the continued presence of these under-sized lots would continue to be a economic burden on the Diridon area. Parking is also a major constraint to developing small parcels. It is difficult to accommodate parking requirements while maintaining development of a building with sufficient square footage to support development costs. On larger lots that meet minimum lot size requirements, the ability to build at a greater FAR while still achieving required parking reduces a project’s cost per square foot by spreading certain project-related cost over the entirety of a larger site. During the filed surveys, factors hindering the viable use of lots (Table B-1) were noted, such as inadequate access or loading facilities, outdoor storage and production, and a lack of parking, further indicating constraints of development on substandard lots. The following photos illustrate these conditions.
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Photo 3: This industrial building on South Autumn Street has inadequate pedestrian and vehicular access, parking, and loading facilities. Wooden crates are stored outside on the street due to a lack of loading facilities, blocking access to the driveway and sidewalk. The materials stacked outside create a fire hazard and block emergency access. The property is located on an inadequately sized lot.
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Photo 4: This industrial property on South Autumn Street has inadequate vehicular and pedestrian access, parking, and loading facilities. The lack of adequate parking and loading facilities has caused a vehicle to park partially on the street, blocking the driveway and sidewalk. This obstructs views and creates a safety hazard to both drivers and pedestrians. These conditions are often linked to substandard lots of inadequate size. Out of the 37 lots that do not meet minimum lot size requirements in the Diridon Area, 11 are in multiple ownership (refer to Table B-1). All three of the under-sized, commercially-zoned lots are in multiple ownership. Out of the 34 industrially zoned properties in the Diridon Area, eight are in multiple ownership. Lots in multiple ownership that do not meet the minimum lot size standards pursuant to the Municipal Code represent 13% of parcels in the Diridon Area. The physical development of inadequately sized lots is impaired because it is unlikely that a developer would take the risk to invest in an inadequately sized lot with minimal return on investment when they could instead invest in a less constrained site. Therefore, lots would need to be consolidated in order to provide a site with enough square-footage to develop a building with market rate returns on investment. Lots that are in multiple ownership are difficult for the private sector to assemble and create a site large enough to support an economically feasible development. The inability to effectively use a parcel or a lot can lead to obsolescence of a property. Redevelopment tools can be used to help business and property owners assemble properties that support new development that is economically feasible, while improving building conditions. Property assemblage will be necessary to implement the vision of the Strategic Plan. The Agency can assist the private sector with property assemblage. Transformation of the Diridon Area into the major Bay Area transportation hub and entertainment district will require the design and construction of new or upgraded infrastructure systems. Infrastructure improvements are costly and Agency assistance would be required to facilitate and subsidize improvements. The Environmental Impact Report prepared for the potential new baseball stadium in the Diridon/Arena Area
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identified infrastructure needs in the Diridon Area. The Diridon Area is located in one of San Jose Water Company’s largest water pressure zones and currently experiences lower than average water pressure. Increased development in the area will impact the other water users in the Diridon Area and infrastructure upgrades will be required to mitigate impacts. Mitigation measures would include, but not be limited to, installation of at least one new well and inter-zone regulators. Additionally, development in the Diridon Area may require the relocating the existing Pacific Gas & Electric substation from its current location to the southern portion of the lot. Electrical distribution lines may also require upgrades to accommodate the demand for electricity associated with future development. The relocation of the substation will require a significant amount of funding and tax increment revenue generated in the Diridon Area could be used to pay the extraordinary cost of correcting existing deficiencies while preparing for new uses. Furthermore, development of the Diridon Area will affect existing transportation and circulation infrastructure. By increasing the number of people frequenting the Diridon Area, the amount of traffic will grow proportionally straining the existing system. Future development will affect the current freeway segments servicing the area and traffic may spillover into adjacent neighborhoods. Infrastructure improvements will need to be made to improve circulation and increase capacity. The Agency, including partnerships with other public entities, has made progress towards eliminating blighting conditions in the Diridon Area and implementing the redevelopment vision of the area. With the recent unforeseen decline in market conditions, redevelopment of the Diridon Area has come to a halt and the Diridon Amendment is needed to eliminate remaining blight. Both conditions of physical and economic blight remain and are placing a burden on the community. Redevelopment assistance is still necessary to alleviate these conditions and tax increment revenue generated by the proposed Diridon Amendment will enable the Agency to reach its redevelopment goals and the priorities of the respective NACs. The Diridon Amendment proposes to add tax increment authority to the Diridon Area of the SNI Redevelopment Area and is effectively enhancing the Agency’s ability to continue to eliminate blight and provide catalytic funding to spur further private sector investment. Receipt of additional tax increment revenue provides the Agency with additional capital to implement blight-eliminating projects and fund necessary capital improvement projects in accordance with the vision for the area and through out the entire Merged Project Area. These projects include environmental remediation, upgrading and improving outdated public infrastructure, working toward the continued enhancement of property values, and enabling economic revitalization of commercial and industrial enterprises. Section E provides additional detail of the proposed programs to be undertaken by the Agency in the Diridon Area and identifies the blighting conditions addressed by those programs. BLIGHTING CONDITIONS IN THE SNI REDEVELOPMENT AREA The Diridon Area is located within the SNI Redevelopment Area. The Diridon Area, unlike the remainder of the SNI Project Area, will produce tax increment.. The following discussion focuses on remaining blight in the SNI Redevelopment Area. SNI REDEVELOPMENT AREA ECONOMIC BLIGHTING CONDITIONS CRL Section 33031(b) describes the economic conditions that cause blight. In order to show that the SNI Redevelopment Area remains blighted, economic conditions of blight described in CRL Section 33031(b) 27 were analyzed. These economic conditions are generally assessed in terms of depreciated property values, low lease rates, a lack of commercial facilities, residential overcrowding, an excess of bars and other adult-oriented businesses, and high crime rates. In order to assess economic blight in the SNI Redevelopment Area, data from brokers, market studies, DataQuick, Metroscan parcel data, EnviroStor, the Police Department, and other resources were collected and analyzed to determine what conditions may be adversely affecting the health and safety of persons in the SNI Redevelopment Area, as well as the economic 26
City of San Jose. Baseball Stadium in the Diridon/Arena Area EIR. LSA Associates, Inc. February 2006. Many of the SNI Redevelopment Area statistics based off of zip code analysis are identical to analysis completed for the Merged Project Area Amendment due to how zip codes overlap with the Agency’s Project Areas. 27
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viability of the community. The following discussion substantiates the seriousness of several conditions of economic blight within the SNI Redevelopment Area. Exhibit B-3 illustrates the location of economic blight throughout the SNI Redevelopment Area.
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Impaired Property Values Due to Hazardous Wastes Pursuant to CRL Section 33031(b)(2), impaired property values due, in significant part, to hazardous wastes is an economic blighting condition. The CRL defines hazardous waste as any hazardous substance that is defined in Section 25281(h) of the California Health and Safety Code. The Environmental Protection Agency defines hazardous wastes as liquids, solids, contained gases, or sludges. Furthermore, hazardous wastes can be the by-products of manufacturing processes or simply discarded commercial products, such as cleaning fluids or pesticides. The presence of hazardous waste contamination can often be a major impediment to the redevelopment of a property. Hazardous waste contamination can severely delay the disposition and development of a property due to testing, remediation, difficulty in resolving existing or potential liability issues, and difficulty in obtaining financing. As a result of the lengthy and costly process to remediate a hazardous waste site, properties that contain hazardous waste contamination are often left underutilized and abandoned. In some cases, historical land uses of properties can cause unforeseen problems that contribute to the delay in hazardous waste remediation and development. Up until the 1960s, the City of San Jose was primarily a farming community, producing fruits and vegetables. Starting in the 1940s, the City’s economy shifted from an agricultural focus to industrial manufacturing. Due to historical land uses in the City of San Jose, pesticides and toxic metals may have contributed to 28 contaminated land within the City boundaries. According to a 2007 article by April Lynch , Santa Clara County had more toxic cleanup sites involving old orchard pesticides than any county in California. Napp Fukuda, an Environmental Compliance officer for the City, discussed in the article that the prior methods used to maintain crops helped contribute to environmental contamination of land. The article also indicated that, as of 2006, the City of San Jose had identified “35 projects that required assessment for agricultural chemicals; of those, 12 required some level of cleanup by an owner or developer.” 29
According to J.C. Norby & Associates , case histories document devastating consequences for many who have purchased, invested in, or made loans on real estate impaired by chemicals and toxic compounds. J.C. Norby & Associates further note that, in many cases, the cost of remediation exceeds the property’s market value. Short of a full property appraisal, it is difficult to fully assess how hazardous wastes may impair these sites’ property values or the property values of nearby properties. It is a generally accepted truth that hazardous waste contamination and even the perception of contamination can have drastic affects on property values. Karen Swanson, of the National Association of Realtors, states that, “The presence of hazardous waste and its associated stigma can have serious ramifications on the value of the subject property, not to mention the 30 31 values of surrounding properties and neighborhoods.” Authors Michael Greenberg and Justin Hollander 32 state that superfund hazardous waste sites have a negative stigma , which reduces the value and marketability of a site as well as adjacent land. Both Greenberg and Hollander argue that the time it takes to remediate a site, proximity to a contaminated site, and the type of contamination are major constraints that can negatively impact the value and/or marketability of the contaminated site and surrounding properties. 33 According to William Kinnard , the following criteria are commonly used for measuring the decreased market value of contaminated properties:
28
Lynch, April. “Valley’s Hidden Pesticide Risk.” San Jose Mercury News 19 October 2007. 21 October 2007. . 29 J.C. Norby & Associates is a professional real estate appraisal company. 30 Swanson, Karen. “Field Guide to Effects of Hazardous Wastes of Property Values”. National Association of Realtors. March 2007. 31 Greenberg, M. and J. Hollander. “Neighborhood Stigma Twenty Years Later: Revisiting Superfund Sites in Suburban New Jersey.” Appraisal Journal. 2006. 32 According to Greenberg and Hollander, Stigma is defined as an environmental condition that reduces the value and/or marketability of a site and sometimes adjacent land. 33 Kinnard, William N. “The Cutting Edge 1998.” The Royal Institution of Chartered Surveyors”. 1998.
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1.
Cost to Correct
2.
Reduced Marketability
3.
Inability to Obtain Mortgage Financing
4.
Reduced Net Operating Income
5.
Higher Capitalization Rate
In order to assess ongoing environmental contamination within the SNI Redevelopment Area, research was 34 conducted using the Department of Toxic Control Substance’s (“DTSC”) EnviroStor database, the State 35 Water Resources Control Board’s (“SWRCB”) Geotracker database, and the Environmental Protection 36 Agency’s (“EPA”) CERCLIS database. In the Merged Project Area there are a number of properties listed in the EnviroStor, Geotracker, and CERCLIS databases, which currently contain hazardous waste contamination. Table B-5 provides a comparison of the total number of active and closed hazardous waste sites that are located in the SNI Redevelopment Area versus the entire Merged Project Area and the City of 37 San Jose .
Hazardous Waste Sites Strong Neighborhoods Initiative
Table B-5
Redevelopment Area
Acreage
% of Total 1 Acreage
Active Haz. Waste Sites
% of Total 2 Active Sites
Strong Neighborhoods Initiative Merged Project Area City of San Jose
10,873 19,621 114,048
9.5% 17.2% 100.0%
71 189 345
20.6% 54.8% 100.0%
1
Closed Haz. % of Total Waste Sites Closed Sites3 133 286 893
14.9% 32.0% 100.0%
Represents each Redevelopment Area as a percentage of the total acreage in the City
2
Represents the number of each Redevelopment Area's active hazardous waste sites as a percentage of total active hazardous waste sites in the City 3
Represents the number of each Redevelopment Area's closed hazardous waste sites as a percentage of total closed hazardous waste sites in the City Source: City of San Jose, California Department of Toxic Substances Envirostor database, California State Water Resources Control Board Geotracker database, and Environmental Protection Agency CERCLIS database
The data provided in Table B-5 reveals that the SNI Redevelopment Area, while only 9.5% of the total acreage in the City of San Jose, contains nearly 21% of all active hazardous waste sites and approximately 15% of all closed hazardous waste sites identified in the entire City. Combining the active and closed hazardous waste sites, there are 1,238 sites Citywide and 204 sites within the SNI Redevelopment Area representing 16% of the combined Citywide sites. If these hazardous waste sites are not remediated, they can have a negative effect on surrounding property values and perpetuate a lack of investment on the part of property owners and private enterprise. According to author Glen R. Mueller, private developers have difficulty with the up-front cleanup costs and risks necessary to develop contaminated properties. The article 34
EnviroStor is an online research and Geographic Information System tool that allows you to search for information on investigation, cleanup, permitting, and/or corrective actions that are planned, being conducted or have been completed under DTSC’s oversight. 35 The SWRCB’s Geotracker is a similar online research tool as Envirostor but pulls information from different databases, such as Leaking Underground Storage Sites (“LUST”) and Spills, Leaks, Investigations, and Cleanups (“SLIC”). 36 CERCLIS is the acronym for the EPA’s comprehensive environmental response, compensation, and liability information system. CERCLIS is the national database and management system that the EPA uses to track activities of hazardous waste sites considered for cleanup under the Comprehensive Environmental Response and Liability Act (“CERCLA”), which is commonly know as Superfund. Superfund sites are land within the United States that has been contaminated by hazardous waste and identified by the EPA as a candidate for remediation because it poses a risk to human health and/or the environment. 37 In an effort to keep consistent with the Merged Project Area TI Amendment, the data provided in Table B-5 has not been updated to reflect new information provided for Diridon.
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further states that, private developers have trouble finding the capital investors willing to take on the risk 38 associated with these type of investments. Within the SNI Redevelopment Area, the presence of hazardous waste has significantly impaired property values. Table B-6 presents an analysis that compares the average assessed value by lot square footage for 39 active hazardous waste sites and those without hazardous waste within the SNI Redevelopment Area.
Active Hazardous Waste Site Analysis Strong Neighborhoods Initiative
1
Table B-6
Average Assessed Value/ Lot Square Footage Land Use Industrial Commercial Residential
SNI Non Hazmat SNI Active Hazmat Sites Sites $34 $51 $115
N/A $35 $67
% Difference N/A -31.4% -41.7%
1
Reflects active hazardous waste sites recorded on the Envirostor, Geotracker, and Cerclis databases, which were associated with a specific parcel Source: San Jose Redevelopment Agency GIS Department and Metroscan
Table B-6 reveals that, for commercial and residential land uses, active hazardous waste sites in the SNI Redevelopment Area have a significantly lower average assessed value by lot square footage than those sites without hazardous waste. The assessed value per lot square footage of active hazardous waste sites within the SNI Redevelopment Area is 31.4% less for commercial land uses and 41.7% less for residential uses than those parcels that do not contain hazardous waste. As evidenced in Table B-6, hazardous waste has significantly impaired the value of properties in the SNI Redevelopment Area and, if not remediated, will continue to hinder their development and economic viability. Currently, the Agency is implementing various projects and programs to remediate hazardous waste sites within the SNI Redevelopment Area. Receipt of additional tax increment will provide additional capital to continue to implement projects and programs that will help remediate environmental contamination, boost impaired property values, and stimulate private investment in the SNI Redevelopment Area. With a limited financial capacity to address parcels that contain environmental contamination, the Agency is left without sufficient resources to evaluate and clean-up these parcels that will help reduce health and safety risks to residents and workers. Remediation of these active hazardous waste sites is necessary to facilitate redevelopment in the SNI Redevelopment Area. The existence of active hazardous waste sites will leave properties underutilized and abandoned, and contributes to their impaired value. Further, the exorbitant costs associated with remediation of an active hazardous waste site, prior to its development, would be a major deterrent to private investment. Similar situations have resulted in the need for the Agency’s participation to fund necessary clean up. Watson Park, located in the SNI Redevelopment Area, is the site of a former incinerator and landfill that was closed in the 1930s. Over the last 40 years, the site has operated as a park and recreational facility. In 2004, the City discovered that the site contained lead contamination and posed a significant risk to the health and safety of residents and workers. In order to initiate the clean-up of the contaminated site, the Agency 38
Mueller, Glenn R. “Brownfields Capital-Unlocking Value in Environmental Redevelopment.” Journal of Real Estate Portfolio Management. 2006. 39 In an effort to keep consistent with the Merged Project Area TI Amendment, the data provided in Table B-6 has not been updated to reflect new information provided for Diridon.
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allocated approximately $2 million to fund remediation efforts. In 2006, the Agency also funded environmental 40 remediation efforts on eight residential properties that were adjacent to Watson Park . According to an Environmental Compliance officer with the City of San Jose, the costs and steps to remediate a site are specific to the type of contamination, quantity, type of soil, and depth of groundwater, just to name a few. Staff further states that the costs associated with the remediation of contamination can vary and may range from a few hundred dollars to several million dollars. Staff also maintains that the cost to remediate active hazardous waste sites, like those identified in Table B-5, cannot be fully estimated unless a Phase I and II environmental assessment were conducted. Additionally, the process required to remediate a contaminated site can, in some cases, involve excavating contaminated soil for disposal off-site or installing complex groundwater treatment systems to extract contaminated groundwater, which can range from a few weeks to several decades in order to fully address the problem. As evidenced by Table B-5, there are also 133 closed hazardous waste sites that are located in the SNI Redevelopment Area. According to City Environmental Services staff, the existence of closed hazardous waste sites can be equally as deterring to new investment as active sites due to possible traces of environmental contamination that may still remain. In some cases, closed hazardous waste sites may have only been cleaned up to meet State and Federal regulations previously established. However, these same sites, if re-evaluated, would not be able to meet current State and Federal regulatory standards. In addition, City Environmental Services staff indicates that some closed sites may have been partially remediated, so that only the current land use of a property is permitted. For instance, some closed hazardous waste sites that were used for industrial purposes may still contain contamination that would preclude a residential use of the site or would require further remediation to be able to develop the site with new construction. As referenced in Appendix 4, common causes of hazardous waste contamination on active sites are related to the illegal activities of industrial and commercial businesses. Within the SNI Redevelopment Area, there are a number of auto businesses, gas stations, metal recycling facilities, dry cleaners, and electronics manufacturers that are known sources of hazardous waste contamination. These known sources of contamination have illegally spilled, leaked, and disposed of contaminants such as lead, gas, motor oil as well as volatile organic compounds and metals such as tetrachloroethylene. The aforementioned contaminants, as referenced in Appendix 4, have also been known to affect groundwater and soil as well as aquifers and wells used for drinking water supply, which can pose a serious threat to the health, safety, and general welfare of residents and workers. These contaminants, located throughout the SNI Redevelopment Area, increase the costs of redeveloping the sites as well as decrease the valuation of surrounding properties. More importantly, these contaminants pose a serious threat to the health, safety, and welfare of those that live and work in the Redevelopment Area. Exhibit B-4 illustrates active and closed hazardous waste sites located in the SNI Redevelopment Area.
40
“Watson Park Staff Report.” City of San Jose. 6 Sep. 2006.
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Depreciated or Stagnant Property Values According to CRL, depreciated or stagnant property values are conditions that cause economic blight. Property values depreciate or stagnate when blighting factors exist and impede economic progress. Residential Property Values Residential property values are lower in the SNI Redevelopment Area when compared to surrounding communities and the County (depicted on Exhibit B-5). As evidenced by Table B-7, median home sales in 2008 averaged $362,500 in the SNI Redevelopment Area which is the lowest sales price when compared to surrounding areas and the County. The SNI Redevelopment Area 2008 median home sale prices are 34% lower than the City’s and 51% lower than the County’s median home sale prices. Over the past five years this ratio has been increasing; in 2004 the SNI Redevelopment Area median sale prices were only 23% and 33% less than the City’s and the County’s, respectively. SNI Redevelopment Area median home sale prices have decreased by 13% since 2004 and it has continually had the lowest median sales value throughout the County. Furthermore, the median sales price of $362,500 in 2008 was less than the 2007 median sales price of $557,000, representing a 35% decrease in value in just one year.
2004-2008 Median Home Sale Prices Strong Neighborhoods Initiative %∆ %∆ %∆ 2004 2005 2006 2007 Median Home from Median Home from Median Home from Median Home Location Sales Price 2004 Sales Price 2005 Sales Price 2006 Sales Price SNI1 $417,813 22% $510,000 10% $563,375 -1% $557,000 Santa Clara $553,750 15% $638,333 4% $665,833 0% $663,333 San Jose $544,932 21% $659,804 5% $693,630 -1% $688,281 Santa Clara County $626,085 19% $744,690 5% $783,750 2% $802,639 Cupertino $753,250 20% $901,000 4% $935,000 1% $945,000 Palo Alto $822,750 22% $1,000,000 5% $1,054,250 13% $1,193,750 Saratoga $1,101,500 24% $1,367,000 2% $1,397,500 8% $1,510,000
Table B-7 %∆ %∆ 2008 from Median Home from 2007 Sales Price 2004 to 2008 -35% $362,500 -13.24% -9% $601,750 8.67% -20% $551,509 1.21% -8% $739,196 18.07% 7% $1,012,500 34.42% 24% $1,480,500 79.95% 0% $1,503,000 36.45%
Notes: 1 SNI boundaries overlap zip codes. Source: DataQuick
Table B-8 illustrates the volume of home sales in the SNI Redevelopment Area and surrounding areas since 2004. Not only are SNI Redevelopment Area median home sale prices lower than surrounding areas, but the SNI Redevelopment Area has also experienced a greater percentage decrease in the volume of home sales than four out of six neighboring cities since 2004. The number of home sales in the SNI Redevelopment Area decreased by nearly 49% from 2007 to 2008.
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S A N JO S É R E D E V E L O P M E N T A G E N CY STRONG NEIGHBORHOODS INITIATIVE “DIRIDON AMENDMENT” REPORT TO COUNCIL 2004-2008 Home Sales Volume Strong Neighborhoods Initiative 2004 Number of Location Home Sales SNI1 2,597 Santa Clara 1,898 San Jose 16,558 Santa Clara County 31,685 Cupertino 927 Palo Alto 445 Saratoga 571
Table B-8 %∆ 2005 from Number of 2004 Home Sales 0% 2,600 -10% 1,712 -8% 15,251 -8% 29,267 -16% 780 -24% 336 -12% 502
%∆ 2006 from Number of 2005 Home Sales -19% 2,105 -16% 1,444 -23% 11,676 -21% 22,993 -17% 644 -22% 261 -25% 376
%∆ 2007 from Number of 2006 Home Sales -38% 1,299 -11% 1,287 -26% 8,661 -17% 18,978 23% 789 81% 472 30% 488
%∆ %∆ 2008 from Number of from 2007 Home Sales 2004 to 2008 2% 1,330 -48.79% -29% 914 -51.84% 1% 8,733 -47.26% -18% 15,653 -50.60% -37% 501 -45.95% -11% 420 -5.62% -28% 353 -38.18%
Notes: 1 SNI boundaries overlap zip codes. Source: DataQuick
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Foreclosures Foreclosures have a tremendous adverse impact on the real and perceived value of residential property. In 41 recent data published by RealtyTrac , the nation’s leader in tracking foreclosures, California was the leading State in terms of the numbers of foreclosures per housing unit. Furthermore, the County of Santa Clara is one of the most impacted counties in the State of California when it comes to foreclosures. RSG tracked housing units that were in a state of foreclosure for Santa Clara County, San Jose and various other Cities in Santa Clara County, and Zip Codes that overlap the SNI Redevelopment Area. The following tables provide a summary of the foreclosure data collected for the SNI Redevelopment Area, the City of San Jose, and surrounding communities. Table B-9 shows that the City of San Jose contains a disproportionately large number of foreclosures when compared with other Cities in the County. More specifically, the City of San Jose contains approximately 49% of the housing units in the County of Santa Clara, yet it accounts for 74% of the homes in a state of foreclosure in the County. Conversely, the City of Palo Alto contains approximately 5% of the housing units in the County, and 1% of the homes in a state of foreclosure. The City of San Jose suffers from a heavy concentration of the homes in a state of foreclosure within the County.
Foreclosures in Santa Clara County
Table B-9
Strong Neighborhoods Initiative Location
Numbers of Properties in a State of Foreclosure
Housing Units 5/16/08
Santa Clara County
5/23/08
579,329 281,706 48.6%
8,571 6,322 73.8%
Cupertino
18,714 3.2%
36 0.4%
33 0.4%
Palo Alto
26,155 4.5%
86 1.0%
39,602 6.8% 10,667 1.8%
272 3.2% 32 0.4%
San Jose
Santa Clara Saratoga
5/30/08
8,220 8,302 6,064 6,127 73.8% 73.8%
6/6/08
6/13/08
6/27/08
6/30/08
7/3/08
7/18/08
1
7/25/08
8/1/08
8/8/08
8/13/08
4/9/2009
8,676 6,397 73.7%
8,693 6,454 74.2%
7,847 8,423 8,566 9,031 9,002 9,258 11,908 11,660 11,594 5,857 6,299 6,419 6,778 6,770 6,991 9,036 8,847 8,548 74.6% 74.8% 74.9% 75.1% 75.2% 75.5% 75.9% 75.9% 73.7%
39 0.5%
35 0.4%
31 0.4%
26 0.3%
27 0.3%
30 0.4%
30 0.3%
28 0.3%
29 0.3%
40 0.3%
36 0.3%
52 0.4%
83 1.0%
79 1.0%
75 0.9%
57 0.7%
54 0.7%
60 0.7%
61 0.7%
69 0.8%
69 0.8%
73 0.8%
87 0.7%
84 0.7%
144 1.2%
261 3.2% 32 0.4%
261 3.1% 33 0.4%
281 3.2% 33 0.4%
273 3.1% 27 0.3%
240 3.1% 22 0.3%
254 3.0% 21 0.2%
262 3.1% 22 0.3%
278 3.1% 26 0.3%
283 3.1% 26 0.3%
289 3.1% 26 0.3%
371 3.1% 34 0.3%
371 3.2% 33 0.3%
415 3.6% 54 0.5%
Sources: Realtytrac.com, Census.gov 1 RealtyTrac defines a property in a State of Foreclosure as one in pre-foreclosure, bank owned, or being offered at auction.
Foreclosure data was collected on the dates identified in Tables B-9 and B-10. The majority of data was collected from June to August 2008 as part of research for the Merged Project Area Amendment. Updated data was collected in April 2009 for the Diridon Amendment. Data could not be collected for the time period between August 2008 and April 2009 because data can only be recorded the day it is researched and RealtyTrac does not have archival data available that suits the methodology used for this Report. Table B-10 further delineates foreclosure data collected by SNI Redevelopment Area zip codes. Although zip code boundaries do not exactly match those of the SNI Redevelopment Area, for the purpose of this analysis (and other analyses throughout this Report) RSG selected zip codes that significantly overlap with the 42 boundaries and are therefore representative of the SNI Redevelopment Area. Foreclosures in the City of San Jose are disproportionately concentrated in and directly adjacent to the SNI Redevelopment Area. Zip code 95122 overlaps the area almost entirely. It contains approximately 4% of the City’s housing units, yet it 41 42
See Appendix 5 for a description of foreclosure information utilized. See Appendix 6 for a map of the zip codes that overlap the City and SNI.
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contains on average over the data collection period, 20% of the homes in a state of foreclosure. The SNI Redevelopment Area’s overlapping zip codes indentified in Table B-10 comprise approximately 17% of the City’s housing units and at the data collection date of July 3, 2008, 80% of the homes in a state of foreclosure. These four zip codes have experienced fewer foreclosures during the last data collection date (April 9, 2009), yet they still contain over 65% of the homes in a state of foreclosure in the City. Foreclosures in San Jose That Occur in Selected Zip Codes in the SNI Strong Neighborhoods Initiative Location
Housing Units
95122 95116 95112 95110 Total of SNI Zip Codes
281,706 12,104 4.3% 12,175 4.3% 17,489 6.2% 4,872 1.7% 46,640 16.6%
Table B-10
Numbers of Properties in a State of Foreclosure 7/3/08
San Jose
1
6,419 1,618 25.2% 1,155 18.0% 1,235 19.2% 1,107 17.2% 5,115 79.7%
7/18/08
6,778 1,315 19.4% 1,190 17.6% 1,261 18.6% 1,146 16.9% 4,912 72.5%
7/25/08
6,770 1,370 20.2% 1,203 17.8% 1,139 16.8% 1,015 15.0% 4,727 69.8%
8/1/08
6,991 1,423 20.4% 1,239 17.7% 513 7.3% 886 12.7% 4,061 58.1%
2
8/8/08
9,036 1,853 20.5% 1,554 17.2% 633 7.0% 1,086 12.0% 5,126 56.7%
8/13/08
8,847 1,812 20.5% 1,512 17.1% 613 6.9% 1,047 11.8% 4,984 56.3%
4/9/09
8,548 1,637 19.2% 1,428 16.7% 1,396 16.3% 1,119 13.1% 5,580 65.3%
Sources: Realtytrac.com, Census.gov 1Selected zip codes are most representative of the SNI geographical boundaries. 2 RealtyTrac defines a property in a State of Foreclosure as one in pre-foreclosure, bank owned, or being offered at auction.
According to the Division Manager of the City’s Code Enforcement Division, foreclosed properties suffer from other problems, as well. A significant amount of Department resources are being allocated to address ancillary problems brought on by the rampant foreclosure problem in the City. Code Enforcement staff struggle to keep up with securing foreclosed homes and to ensure no access is allowed to a home that has been foreclosed and subsequently abandoned. New staff has been hired just to monitor foreclosed properties and in certain areas of the SNI Redevelopment Project Area, 13th Street and Washington Project Areas in particular, staff cannot keep pace with people breaking into and accessing vacant properties as a result of being foreclosed. The Report to Council for the Amendment to the Redevelopment Plans for the Merged 43 Project Area Tax Increment Limit & Bonded Indebtedness Limit Increases from March 26, 2009 showed that the Merged Project Area has higher poverty rates, lower household median income, and lower educational attainment compared to other areas of the City. This demographic already faces greater challenges in maintaining and investing in property, so the foreclosure problem now identified in the SNI Redevelopment Area becomes an even greater challenge. . In data provided by the Code Enforcement Division, the number of abandoned homes is up over ten (10) times when compared to last year at this time. As staff attempts to keep these properties secure, they are now encountering a much higher number of break-ins resulting in squatting, illegal and gang-related activity, theft and fire. Fires set within foreclosed homes are especially on the rise in the West Evergreen and Tully/Senter Project Areas. In other areas, swimming pools on foreclosed properties are also beginning to pose a serious health risk. Not only is the potential of drowning in an abandoned swimming pool a problem, but also stagnant water in these pools is becoming an environmental problem. When taken collectively, foreclosed properties have a tremendously negative impact on the property values of homes in the adjacent areas.
43
See Appendix 8
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Another serious implication from foreclosures is the “spillover” effect on properties that surround a foreclosed property. Spillover is when surrounding property values fall because they are located adjacent to or nearby a foreclosed property. In a report, published by the Center for Responsible Lending, the spillover effect is not 44 only described, but quantified as well. According to the report, approximately 7.5 million homes in California will lose a combined $60.6 billion of market value because of their proximity to a foreclosed property. These estimates are calculated based on published research that a foreclosure on a home lowers the price of other nearby single-family homes, on average, by 0.9 percent. This impact is greater in lower-income 45 neighborhoods where each foreclosure dropped home values by an average of 1.44 percent. Another article, also published by the Center for Responsible Lending, sums up the foreclosure problem succinctly: “Foreclosures pose serious problems that go well beyond the families immediately at risk of losing their homes because the negative spillover effects of these foreclosures are substantial: property values are dropping by billions of dollars, crime is up in high-foreclosure communities, cities are losing their tax bases, and millions of Americans who depend on a robust housing market are losing jobs and income. School districts, police departments, and local neighborhoods do not have the capacity to deal with the burdens associated with rising foreclosures. Therefore, avoiding unnecessary foreclosures is urgently needed, not only for the sake of the families immediately impacted, but for the good of their neighbors, communities, state 46 and local governments, and the housing market and the economy nationwide.” The photographs on the following pages were provided by the Code Enforcement Division, and highlight the dangers posed by vacant and abandoned foreclosed properties as they relate to public health, safety, and general welfare.
44
45
46
“Subprime Spillover: Foreclosures Cost Neighbors $202 Billion; 40.6 Million Homes Lose $5,000 on Average.” Center for Responsible Lending, January 18, 2008. http://www.responsiblelending.org/pdfs/subprime-spillover.pdf Immergluck, Dan and Smith, Geoff. “The External Costs of Foreclosure: The Impact of Single Family Mortgage Foreclosures on Property Values.” Housing Policy Debate. Fannie Mae Foundation. 2006. 15 September 2008. . “Home Retention and Economic Stabilization Act.” Center for Responsible Lending. 27, June 2008. 18 January 2008. .
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This property, located in the SNI Redevelopment Area, provides several examples of how a foreclosed property can pose serious problems for the health, safety, and general welfare of residents in the surrounding area. The front yard area has become severely overgrown, making the area more inviting for rodents and insects. This type of infestation can cause a variety of health and environmental problems. Second, all of the exterior doors have been removed. The complete lack of doors makes the interior completely accessible for all types of illicit and illegal behavior to occur.
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This photograph, from the same property described on the previous page, clearly shows other symptoms of vacant and abandoned homes as a result of foreclosure. Gang-related graffiti can be seen in the photograph. As described earlier in this section, Code Enforcement often finds gang-related graffiti in many of the abandoned homes. Other challenges pointed out by Redevelopment Agency staff include a serious problem with homeless individuals and squatters. Unsecured properties are an easy source of refuge for those that need a place to sleep. Because utilities are often turned off in these properties, unhealthy and unsanitary conditions quickly arise as a result of such activities in these properties. Theft of all viable building materials, including copper-based materials, is also a problem in these foreclosed properties. Doors, windows, hinges, air conditioning vents, and other interior hardware and fixtures are being stolen from these homes. Because the financial institutions that have an ownership position in these properties are often not locally based, Code Enforcement resources are often consumed in securing these properties. This specific property had to be secured by Code Enforcement because the financial institution that owns the property did not secure the property themselves.
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Another growing problem as a result of abandoned homes that have been foreclosed is visible in the picture above. Unfortunately, once it is known that the home has been abandoned, the property becomes a dumping ground for all types of garbage, trash, and debris. This picture was taken of a side-yard area of a property in the SNI Redevelopment Area. All types of garbage and waste have been dumped on this property. Once again, the resources of Code Enforcement and other City departments must be called in to clean up this property. The garbage poses serious health risks from rotting detriment and from the insects and vermin that are attracted to the piles. The stench and overall appearance also pose significant challenges to area residents. This is another severe example of how a vacant foreclosed property endangers the health, safety, and general welfare of residents in the surrounding area.
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This final picture provided by Code Enforcement that relates to the impact of foreclosed homes on the health, safety, and general welfare of residents in surrounding areas is also in the SNI Redevelopment Area. Code Enforcement received a call from the San Jose Police Department regarding gang activity at the residence. The Code Inspector found that house was in foreclosure. While conducting the inspection, the front door was found opened and unsecured. The interior of the home had been completely trashed, a shed in the backyard had been broken into, and several windows were broken. The City abated the property and secured the house, including painting over the graffiti. A reinspection a short period later revealed that a 2nd story window was broken. The real estate agent was contacted and told to re-secure the house. Another inspection revealed more gang graffiti and overgrown weeds. Again, the real estate agent was contacted to remove the graffiti. The prevalence of gang activity has an adverse impact on neighborhood residents in many ways. Not only is the safety of residents at risk from higher gang activity, but property values also suffer as a result of graffiti and other gang-related activities. Exhibit B-6 illustrates properties in a state of foreclosure across the entire City, as well as the SNI Redevelopment Area.
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High Business Vacancies & Low Lease Rates Pursuant to CRL Section 33031(b)(3), abnormally high business vacancies or abnormally low lease rates are economic conditions causing blight. Market reports by real estate brokerage firm CB Richard Ellis show that submarket areas within the SNI Redevelopment Area had lower lease rates than the Silicon Valley average in 47 the first quarter of 2009, especially in the office and research and development (“R&D”) sectors . Lease rates for submarkets within the SNI Redevelopment Area are 21-31% less for Class A Office, 21-33% less for Class B Office, 16-39% less for R&D, and 4-12% less for Industrial Manufacturing uses. Industrial wholesale lease rates are 8% less in the Central and South submarkets. Table B-11 and the chart below show a comparison of SNI Redevelopment Area market area lease rates to the Silicon Valley Average.
SNI Lease Rate Comparisons - 1st Quarter 2009 Strong Neighborhoods Initiative vs. Silicon Valley Office Market Area
47
Silicon Valley Average SNI Submarkets Central San Jose South San Jose
Table B-11
Office
Class A $3.30
%*
2.42 2.27
-27% -31%
R&D
Class B $2.56
%*
1.72 1.76
-33% -31%
Industrial Whse. $0.51
%*
-39% -19%
0.47 0.47
-8% -8%
$1.23
0.75 0.99
Industrial
%*
Manuf. $0.73
%*
0.64 -12% 0.69 -5%
* Percent difference from Silicon Valley Average Note: Submarket values are weighted averages based on net rentable area Source: CB Richard Ellis Market View Reports, 1Q 2009
Average Lease Rates 1Q 2009 SNI Submarkets
$3.50 $3.00 $2.50 Silicon Valley Average
$2.00
Central San Jose
$1.50
South San Jose
$1.00 $0.50 $0.00 Class A Office
47
Class B Office
R&D
Industrial Whse.
Industrial Manuf.
See Appendix 7 for a description of CB Richard Ellis submarket areas in relationship to the SNI Redevelopment Area.
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Table B-12 below shows that vacancy rates vary between SNI Redevelopment Area submarket areas compared to the Silicon Valley average. R&D vacancy rates are 34% higher in the South San Jose submarket. Industrial vacancy rates are 24% higher in the Central San Jose submarket. Vacancy rates tend to be higher in areas that have higher lease rates.
SNI Vacancy Rate Comparisons - 1st Quarter 2009 Strong Neighborhoods Initiative vs. Silicon Valley
Market Area47
Office
Silicon Valley Average
17.6%
SNI Submarkets Central San Jose South San Jose
17.5% 7.8%
%*
Table B-12
R&D
%*
Industrial
18.2%
0% -56%
19.3% 24.3%
%*
7.0%
6% 34%
8.7% 5.7%
24% -19%
* Percent difference from Silicon Valley Average Note: Submarket values are weighted averages based on net rentable area Source: CB Richard Ellis Market View Reports, 1Q 2009
Average Vacancy Rates 1Q 2009 SNI Submakrets
30.0% 25.0% 20.0%
Silicon Valley Average Central San Jose
15.0%
South San Jose
10.0% 5.0% 0.0% Office
R&D
Industrial
RSG observed 16 vacant properties in the SNI Redevelopment Area. The 13th Street Project Area had 6 (5 Retail, 1 Industrial), the Burbank/Del Monte Project Area had 7 (4 Office, 1 Industrial, 2 Commercial), the West Evergreen Project Area had 2 vacant office properties and the Hoffman/Via Monte Project Area had 1 retail vacancy.
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Excess of Bars, Liquor Stores, or Adult-Oriented Businesses An excess of bars, liquor stores, or adult-oriented businesses that has resulted in a significant public health, safety, or welfare problems is a condition of economic blight pursuant to CRL Section 33031(b)(6). In 2005, City staff undertook an analysis of liquor licenses and related problems throughout the City. One area of focus was the proximity of proposed new liquor licenses to existing licenses and data showed, in every instance, that another establishment selling liquor was within 100 to 200 feet of the business applying for a license. The proliferation of establishments selling liquor, or applying for a liquor license, had become a major problem and resulted in the modification of City policy. The City adopted Ordinance No. 27564 on December 6, 2006 that automatically denies all applications for new liquor licenses and those seeking to enhance their liquor license category. The matter can be appealed directly to the City Council, with the Council having the final approval. The persistence of the problem despite the City ordinance reveals the severity of an excessive amount of establishments that sell liquor. The Brookings Institution recommends 48 that, “localities use measures to address the availability of alcohol to reduce problems.” This statement both suggests that there is an established knowledge of the relationship between crime and alcohol, and that fixing this problem should be a priority. Although the City has taken action to follow this recommendation, the problem of proliferation remains. Exhibit B-7 presents a map showing census tracts with over-concentration of off-sale liquor licenses, overlaid with the boundaries of the SNI Redevelopment Area. It is evident from the map that a large portion of the SNI Redevelopment Area exhibits this over-concentration. Although the City has taken steps to attempt to address this problem, this economic blighting condition persists. This condition is further exasperated by the crime that results in these areas as discussed in the next section of this Report.
48
Dilulio, John J. Jr. “Broken Bottles: Alcohol, Disorder, and Crime.” The Brookings Institution. 1996. 18 September 2008. .
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Crime Rates A high crime rate that constitutes a serious threat to public safety and welfare is an economic blighting condition. According to feedback received from a Neighborhood Team Manager of the Redevelopment Agency, when an area suffers from high levels of crime, businesses and other investors are often unwilling to locate their businesses and/or invest their private dollars into these neighborhoods because of the increased level of risk. This can further perpetuate other blighting conditions, such as dilapidation and deterioration resulting from long-term neglect. To analyze crime and its impact on the SNI Redevelopment Area, information regarding the incidence of violent and other serious crimes was collected from the City of San Jose Police Department and the Office of the Attorney General of the State of California. The California Attorney General has the duty to collect, analyze, and report statistical data, which provide valid measurements of crime and the criminal justice process to government and the citizens of California. Table B-13 summarizes the dangerous crimes occurring in high crime beats throughout the City. Crime in both the City and the SNI Redevelopment Area has decreased since 2002 by 0.3% and 8.1%, respectively. Although overall crime has decreased since 2002, 20 high crime beats still remain in the City where over 100 crimes were committed in 2007 and crime has increased by 20% since 2002. Keeping in mind that the SNI Redevelopment Area only encompasses approximately 9.5% of the total area of the City, the SNI Redevelopment Area contains six (6) of the twenty (20) high crime beats in the City and over 30% of all dangerous crimes committed in the City. These findings demonstrate that the SNI Redevelopment Area suffers from a negatively disproportionate amount of the dangerous crimes committed and high crime beats in the City.
2002 - 2007 Crime Statistics in High Crime Beats Strong Neighborhoods Initiative
Table B-13
2002 Total Dangerous Crimes1 Total Dangerous Crimes in High Crime Beats2 % of Dangerous Crimes in High Crime Beats
SNI 10,301 886 8.6%
2007 City 30,272 1,927 6.4%
SNI 9,469 1,348 14.2%
City 30,196 2,779 9.2%
% Change SNI City -8.1% -0.3% 52.1% 44.2% 65.5% 44.6%
1
Dangerous crimes include Armed Robbery, Carjacking, Home Invasion, Strong-Arm Robbery, Attempted Robbery, Auto Burglary, Commercial Burglary, Residential Burglary, School Burglary, Attempted Burglary, Aggravated Assault, Arson, Simple Assault, Child Abuse, Child Molest, Child Neglect, Grand Theft, Homicide, Kidnapping, Liquor Offenses, Manslaughter, Narcotics, Other Felony, Prostitution, Rape, and Weapons Offenses. 2
A high crime beat is any beat that over 100 crimes were committed and crime has increased by 20% or more since 2002. There are 20 high crime beats located throughout the City of which six are located in Strong Neighborhoods Initiative. Source: City of San Jose Police Department
When reviewing only high crime beats from 2002 to 2007, crime has increased by 52.1% in the SNI Redevelopment Area and 44.2% in the City. Furthermore, the percentage of crime occurring in the high crime beats compared to all citywide beats has increased from 8.6% to 14.2% in the SNI Redevelopment Area and 6.4% to 9.2% citywide. In beats where crime has increased, it is increasing at a significant rate, and 30% of the high crime beats are located within the SNI Redevelopment Area boundaries. Table B-14 provides a comparison of dangerous crimes in the SNI Redevelopment Area and the City. For 2007, the SNI Redevelopment Area constitutes 31.4% of all the dangerous crimes committed in all citywide beats. Though this percentage has decreased from the 2002 value of 34.0%, the SNI Redevelopment Area still represents over 30% of the crimes committed in the City while covering only 9.5% of the City’s land area. For 2007 in high crime beats the SNI Redevelopment Area constituted 48.5% of the total crimes committed and has increased from the 2002 value of 46%. The total number of crimes in the SNI Redevelopment Area is much higher than the rest of City.
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2002 - 2007 Crime Statistics Strong Neighborhoods Initiative and Citywide Comparison Strong Neighborhoods Initiative
Total Dangerous Crimes Citywide1 Total Strong Neighborhood Initiative Dangerous Crimes2 % of Dangerous Crimes that Occur in Strong Neighborhood Initiative Area
All Beats 2002 2007 30,272 30,196 10,301 9,469 34.0%
31.4%
Table B-14
High Crime Beats 2002 2007 1,927 2,779 886 1,348 46.0%
48.5%
1
Dangerous crimes include Armed Robbery, Carjacking, Home Invasion, Strong-Arm Robbery, Attempted Robbery, Auto Burglary, Commercial Burglary, Residential Burglary, School Burglary, Attempted Burglary, Aggravated Assault, Arson, Simple Assault, Child Abuse, Child Molest, Child Neglect, Grand Theft, Homicide, Kidnapping, Liquor Offenses, Manslaughter, Narcotics, Other Felony, Prostitution, Rape, and Weapons Offenses. 2
A high crime beat is any beat that over 100 crimes were committed and crime has increased by 20% or more since 2002. There are 20 high crime beats located throughout the City of which six are located in Strong Neighborhoods Initiative. Source: City of San Jose Police Department
SNI REDEVELOPMENT AREA PHYSICAL BLIGHT CRL Section 33031(a) describes the physical conditions that cause blight. These physical conditions are assessed in terms of their impact on the health and safety of persons in the area, and the economic viability of development in the area. In order to assess physical blight in the SNI Redevelopment Area, data from the 2008 Field Survey, MetroScan parcel data, the City’s Code Enforcement Division, and other resources were collected and analyzed to determine what conditions may be adversely affecting the health and safety of persons in the SNI Redevelopment Area, as well as the adverse economic conditions that result from physically deteriorating conditions. Generally, as economic conditions decline there is a corresponding lack of investment in physical maintenance of properties, which further perpetuates physical blight. The location of physical blighting conditions present in the SNI Redevelopment Area is presented in Exhibit B-8. The presence of these conditions reflects a lack of investment by property owners in maintaining their properties in a condition that assures the safety of persons who live and work in the area. Physical blighting conditions propagate further decline of an area and deter economic development activities by private investors. CRL Section 33036(a) declares that conditions of blight further perpetuate obsolescence, deterioration, and disuse of a property because it creates a lack of incentive for landowners to reinvest in their properties while the conditions of neighboring properties go unchanged.
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Unsafe and Unhealthy Buildings for Persons to Live or Work Pursuant to CRL, the condition of buildings in which it is unsafe or unhealthy for persons to live or work may be caused by serious dilapidation and deterioration caused by neglect, serious building code violations, construction that may be vulnerable to damage from seismic or geologic hazards, and faulty and/or inadequate water and sewer utilities. Code Violations Pursuant to CRL Section 33031(a), serious violations of local or state codes are a cause of unsafe and unhealthy buildings for persons to live or work. Buildings and structures that do not meet current uniform building requirements, or other local codes mandated to ensure human health and safety, pose a threat to the workers, patrons, and residents of an area. Code violations, whether building code violations or other code violations, can pose a threat to the safety and welfare of the community and are indicative of physical blight in an area. Generally, the City of San Jose’s code enforcement system is complaint based (with some exceptions as discussed below). As is the case with many jurisdictions, City code enforcement officers respond to complaints and issue citations when appropriate. Insufficient staffing levels impede officers from being more proactive throughout the entire City. The Code Enforcement Division uses four different programs to cite violations: (1) “General”; (2) “Multiple Family”; (3) “SNI”’ amd (4) “Vacant Building.” All four programs are complaint based and Code Enforcement staff follows up on all complaints to verify there is a violation, and issues a citation when warranted. However, the “SNI” and “Multiple Family” programs are also operated somewhat proactively. In the SNI Redevelopment Area, the City operates a program where residents can help document code violations, known as the Code Enforcement “driveway team.” The driveway team looks for code violations from the public-right-of-way and is thus intended to be a proactive approach to code violations. As such, the level of code enforcement is still governed to a degree by the number of complaints received. Thus, what someone might complain about in one neighborhood may not be considered out of the ordinary in another. Nevertheless, insights can be gained from looking at general patterns in code enforcement as they can be indicative of basic issues related to blighting conditions as described in the CRL. A code violation occurs when standards within Chapters 9 (Health & Safety), 17 (Buildings & Construction), and 20 (Zoning) of the San Jose Municipal Code are not being met. Code Enforcement classifies code violations using 25 different categories. The Code Enforcement Division has created this nomenclature for 49 data collection purposes, and therefore all code enforcement data is based upon these 25 categories. RSG met with Code Enforcement staff to collectively determine which violation categories pose a serious threat to the safety and welfare pursuant to the CRL definition of blight. Violations that merely caused an eyesore or inconvenience (animal, construction hours, nuisance, shopping carts, tree cutting, etc.) were not included as serious violations posing a threat to safety and welfare. Violations that did not pose a threat were not included in this analysis. Serious code violation categories determined to pose a threat to human safety and welfare pursuant to the CRL definition of blight are discussed below. For each violation category, the corresponding Municipal Code reference is provided.
The most prevalent code violations observed in the SNI Redevelopment Area were “blight” violations. The definition of a “blight” violation used by the San Jose Code Enforcement Division refers to the Municipal Code Chapter 17.02 definition and relates specifically to properties that pose a threat to the safety or welfare of the public by failing to provide the minimum standards of safety and habitability. This definition is not the same definition of “blight” used in CRL Section 33031 which covers a much broader spectrum of conditions. However, the Municipal Code definition of “blight” overlaps with CRL Section 33031 (a)(1)
49
The San Jose Code Enforcement Department uses the following categories to classify code violations: Animal, Blight, Building, Construction Hours, Health & Safety, Housing, Lawn Parking, Living in Trailer, Monitoring List, Nuisance, Odor, Private Property, Required Inspection, Shopping Carts, Sight Obstruction, Signs, Smoking, Solid Waste, Spray Paint, Tree Cutting, Unknown, VA Streets, Vacant Building, Water Waste and Zoning.
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which specifically refers to buildings that are unsafe or unhealthy because of the presence of serious building code violations. Blight violations consist of abandoned construction, properties that attract nuisances, properties in disrepair, dilapidated or deteriorated, properties that are a fire hazard, and properties in which there is a hazardous condition. Other “blight” violations include outdoor storage and waste, and illegal vehicular storage. These conditions are a health and safety hazard because they create site obstructions and hinder emergency vehicle access. Additionally, vehicle storage can lead to leakage of hazardous materials that can leach into the water system or be a fire hazard. Such dilapidation and deterioration caused by significant deferred maintenance and aging, present major impediments to the health and safety of occupants. For example, if exterior surfaces are not properly maintained to remove wood dry rot, rust, or damaged exterior building materials, this potentially exposes the interior framing and foundation of a structure to water, thus weakening the structural integrity of the building. Deterioration of roofing materials, doors, and windows causes framing, rafters, and interior wiring to be susceptible to water damage and increases the deterioration of the entire structure. This also leaves the structure susceptible to fire. Water leakage resulting from design defects or deterioration of buildings also poses serious health risks to occupants exposing individuals to dangerous molds and fungi. Damage to the exterior fronts of houses, more specifically the porch and stairs, creates opportunities for injury resulting from a fall. Likewise, substandard or exposed electrical wiring presents a serious threat to human life in the event of direct contact. Exposure also increases fire susceptibility in the structure. During the 2008 Field Survey 1,727 buildings were noted as exhibiting conditions of dilapidation and deterioration. – Municipal Code Chapter 17.02
The second most prevalent code violations observed were “solid waste” violations. Solid waste violations include such items as substantial amounts of garbage and debris not placed in a container, accumulation of rubbish, accumulation of hazardous materials, non-frequent disposal of waste, and improper disposal of solid waste. Solid waste violations occur when the presence of such debris is so extensive that is constitutes a health and safety hazard for the general welfare of the people of San Jose. Accumulation of debris inhibits access to buildings by emergency service vehicles and creates a fire hazard. – Municipal Code Chapter 9.10
“Building” violations were also documented in the SNI Redevelopment Area. Building violations include structures or conversions that have been constructed without a valid building permit. Unpermitted buildings that have not been properly inspected, such as illegal residential garage and carport conversions used as additional living space, for safety could cause personal injury to occupants.. Garages and carports are not suitable living spaces and when converted without permit or proper inspection it is not possible to determine if structural 50 integrity has been jeopardized by the nature or quality of work. – Municipal Code Chapter 17.20
“Housing” violations were most typically seen on multi-family rental properties. The purpose of the Housing Code is to provide safe and sanitary conditions for buildings used for human inhabitance within the jurisdictional boundaries of San Jose. Housing violations include items such as improper dwelling size, inadequate light and ventilation, unsanitary dwelling spaces, buildings that are not weather protected, inadequate heating, and substandard housing. When housing violations are present, the health and safety of inhabitants is threatened. Municipal Code Chapter 17.20
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The Illegal Secondary Residential Units Memorandum prepared by Leslye Krutko and Joseph Horwedel in November 2006 details the Council’s approach to dealing with this problem in the City. The Council approved secondary residential uses within R-1 Zoning in the City to address illegal conversions and ensure that they were being built to code.
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“Zoning” violations occur when properties do not meet current zoning code standards. The most prevalent violations of this type were single family properties operating on-site businesses. Although zoning standards permit some home businesses, when a zoning violation is issued it means that the business operation is not allowed. These businesses often do not meet minimum safety requirements as it relates to a building that is operating a business (exits, parking, egress and ingress, etc.) and therefore create a health and safety problem to residents and patrons. – Municipal Code Chapter 20.30,40,50
“Lawn parking” violations occur when vehicles park on unpaved surfaces. Parking on lawns can result in oil and gas leakage directly into the soil creating a hazardous waste site and a fire hazard. Parking in undesignated spots is also an indicator of an overcrowded living arrangement. Furthermore, parking in undesignated locations can often result in cars 51 inadvertently backing over children. According to the Kids and Cars Organization , approximately 44% of fatalities involving children under the age of 15 and vehicles are caused from vehicle backovers. Enforcement of lawn parking violations is a way to address these health and safety hazards. – Municipal Code Chapter 17.72
These conditions not only create an unsafe and unhealthy environment for persons to live and work but they also cause a drain on City resources as most code enforcement cases require at least one, if not more, additional follow up visits to make sure the violation is not reoccurring. The SNI Redevelopment Area represents 55% of the total Merged Project Area and is primarily residential in land use. This data indicates that a total of 459 serious code violation cases remain open in the SNI Program 52 at the end of September 2008. Because of the proactive way the SNI Program operates, these violations are not merely complaints but have been filed because Code Enforcement staff verified the violation. These violations have also been culled to eliminate non-serious violations and represent serious health and safety hazards. The primary violation types include “blight” and “solid waste” violations. Table B-15 provides a summary of these serious open code violations.
Open Code Violations as of Sept. 2008 Strong Neighborhoods Initiative Violation Type Blight Building Health & Safety Housing Lawn Parking Solid Waste Vacant Building Zoning Total
Table B-15
# Cases 260 2 5 4 185 3 459
Souce: City of San Jose Code Enforcement Department
The City’s Code Enforcement data is kept by case and requires a substantial effort to reclassify into comparable categories. For comparison purposes, Table B-16 presents the status of 2007 code violation
51 52
Kids and Cars is a non-profit organization aimed at increasing public awareness of children fatalities due to non-traffic accidents. There were a total of 459 violations out of 502 code violations in the SNI Program that are serious code violations.
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data for the City compared to the SNI Redevelopment Area as of July 2008. A total of 12,723 serious code violations were documented in the City during 2007. The SNI Redevelopment Area represents 33% of the total code violations recorded in 2007 citywide. The SNI Redevelopment Area encompasses only 9.5% of the City’s land area yet is responsible for 33% of the code violations. Of the 358 serious code violation cases citywide that remained open in July 2008, the SNI Redevelopment Area accounts for 117 (33%) of the 2007 open cases.
2007 Code Violations as of July 2008 Strong Neighborhoods Initiative
Violation Type Blight Building Health & Safety Housing Lawn Parking Solid Waste Vacant Building Zoning Grand Total % Cases in SNI
Table B-16
Strong Neighborhoods Initiative Code Violation Status Open % Closed % Total 12 0.9% 1,342 99.1% 1,354 44 22.4% 152 77.6% 196 0.0% 46 100.0% 46 40 6.8% 545 93.2% 585 0.0% 58 100.0% 58 6 0.3% 1,786 99.7% 1,792 0.0% 7 100.0% 7 15 8.1% 171 91.9% 186 117
2.8% 32.7%
4,107
97.2% 33.2%
4,224
Open 49 126 2 111 1 17 4 48 358
City of San Jose Code Violation Status % Closed % 1.2% 4,008 98.8% 14.0% 772 86.0% 0.8% 234 99.2% 5.7% 1,852 94.3% 0.7% 144 99.3% 0.4% 4,454 99.6% 10.8% 33 89.2% 5.2% 868 94.8% 2.8%
12,365 97.2%
Total 4,057 898 236 1,963 145 4,471 37 916 12,723
33.2%
Source: City of San Jose Code Enforcement
Exhibit B-9 is a map illustrating the location of the remaining serious code violations in the SNI Redevelopment Area. Because available data differs for the SNI Redevelopment Area, the map separately identifies open cases as of October 2008 in the SNI Redevelopment Area, and open cases in the entire Merged Project Area as of July 2008. For better visualization, there are different sized locators for various sized parcels that are described in the legend to the map. The presence of serious code violations creates an environment that is unsafe or unhealthy for people to live or work, and as the map indicates, serious code violations remain open throughout the entire SNI Redevelopment Area. Although many of the code violation cases have been closed over time, new cases continue to be opened (thus the difference between the July 2008 Merged Project Area open case status and the October 2008 open case status for the SNI Redevelopment Area alone). The Code Enforcement Division alone has not been able to remedy the code violation problem. Investment of tax increment into the impacted neighborhoods through rehabilitation programs, and infrastructure improvements continues to be needed.
53
There were a total of 13,537 code violations cited through out the City in 2007, of those 12,723 were noted as being serious code violations.
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Faulty or Inadequate Water and Sewer Utilities Pursuant to CRL Section 33031(a)(1), the existence of faulty or inadequate water or sewer utilities are defined as conditions, which can cause a building or structure to be deemed unsafe or unhealthy for persons to live or work. Within the SNI Redevelopment Area, there are instances where the existence of faulty or inadequate water or sewer utilities hinders the viable use of properties. While these conditions are not always visible, their existence is substantiated by City sponsored studies and reports evaluating infrastructure needs. Sanitary Sewer System Deficiencies The Agency has identified existing sanitary sewer infrastructure deficiencies within the SNI Redevelopment Area. According to a 10 year sanitary sewer report, conducted by the City of San Jose Public Works 54 Department, there have been 234 citizen complaints of sanitary sewer back ups. These problems occur when there is a blockage to the lateral line or main line of a sanitary sewer system. When a blockage to the lateral line occurs, drains and toilets in a house or building back up and can overflow. When a main line blockage of the sanitary sewer system occurs, it can result in a sewage spill in a home or building. These sanitary sewer system blockages have caused sewer overflows. These spills release pathogens, bacteria, harmful chemicals, and other toxic pollutants. As a result, these toxic pollutants have an adverse affect on the health, safety, and general welfare of Merged Project Area residents and workers. Exhibit B-10 below shows the location of infrastructure citizen complaints in the SNI Redevelopment Area since 1998. Exhibit B-10 reveals that sanitary sewer back ups have been a consistent problem and pose a real and significant threat to residents and workers in the SNI Redevelopment Area. A primary goal of the Agency is to ensure that the sanitary and storm sewer system is repaired or upgraded to maintain structural integrity. Currently, the Agency has initiated efforts to assess the extent of sanitary and storm sewer infrastructure deficiencies throughout the SNI Redevelopment Area. It is important to note that sanitary and storm infrastructure deficiencies, if not corrected, can lead to increased development costs and curb price competitiveness, which is key to the economic viability of the SNI Redevelopment Area. Amending the Redevelopment Plan to allow the provision of collecting tax increment revenue in the Diridon Area would provide the Agency with the necessary capital to successfully address this problem.
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“Sanitary Sewer Cleaning.” City of San Jose Department of Transportation. 2008. 1 October 2008. .
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Conditions Preventing or Substantially Hindering the Viable Use of Buildings or Lots Pursuant to CRL Section 33031(a)(2), a building’s or lot’s viable use or capacity may be prevented or substantially hindered by substandard, defective, or obsolete design or construction given the present general plan, zoning, or other development standards. For the purpose of this analysis viability is defined as “capable 55 of working, functioning or developing adequately and financially sustainable”. Substandard Lot Sizes As discussed earlier in Section B, Chapters 17 and 20 of the San Jose Municipal Code set forth the building requirements and zoning regulations to assure that development throughout the City is safely achieved. Table B-17 presents data on SNI Redevelopment Area parcels that do not meet minimum lot size requirements based on development standards established in the San Jose Municipal Code. Inadequate Minimum Lot Sizes1 Strong Neighborhoods Initiative
Zoning2 Residential Commercial Industrial Total 1
Total Number Number of 3 Inadequate Lots of Parcels 4,892 22,805 600 1,385 543 1,067 6,035 25,257
Table B-17
Percentage 21.5% 43.3% 50.9% 23.9%
Development standards based upon Title 20 of the San Jose Municipal Code,
as of May 30, 2008. 2 Does not include Planned Development zones. 3
City's GIS layer does not include zoning information for all parcels in the
Merged Project Area. Source: City of San Jose GIS, San Jose Municipal Code, and Metroscan.
Currently in the SNI Redevelopment Area, 21.5%% of residential parcels, 43.3% of commercial parcels, and 50.9% of industrial parcels do not meet minimum lot size requirements. According to the San Jose Code Enforcement Supervisor, “approximately 25% of the automotive uses in the Delmas Park Project Area and West San Carlos Neighborhood Business District do not meet current development standards.” She indicated that if these uses were proposed for development in these areas today, they would not be allowed due to lot size and permitted use constraints. She also indicated that properties with “grandfathered” non-conforming land uses may be legally allowed, however, these non-conforming properties still create problems in the area. Exhibit B-11 illustrates locations throughout the SNI Redevelopment Area where lots do not meet minimum lot standards. Financial Viability of Substandard Lots Development pro formas for lots that fail to meet minimum lot size standards were prepared using the average minimum lot size for Commercial General (“CG”) and Light Industrial (“LI”) zoned lots in the SNI Redevelopment Area to determine if it is feasible to develop or reinvest on lots of this nature while maintaining profitability. The pro formas show that reinvestment in new development on these lots is not financially viable because the resulting returns on the investment are well below market-rate returns. This is made evident from analysis of development pro formas based on the average size of the undersized lots. The financial viability of commercially and industrially zoned properties with inadequate lot sizes was examined for 55
“Viability.” Merriam-Webster’s Collegiate Dictionary. 10th ed. 1998
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Commercial General (“CG”) and Light Industrial (“LI”) zoning land use designations. CG and LI land use designations were selected due to the prevalence of inadequately sized lots. Table B-10 provides a summary of the median and average lot and building size of lots zoned CG and LI that are inadequately sized in the SNI Redevelopment Area. The minimum lot size requirement for CG zoned parcels is one acre or 43,560 square feet, and the minimum lot size requirement for LI zoned parcels is 10,000 square feet. As shown on Table B-18, for all lots that fail to meet the minimum lot size for CG zoned lots, the average lot size is 8,831 square feet or 80% less than the required lot size, and for LI zoned lots is 5,666 square feet or 43% less than the required lot size. Analysis of Substandard Sized Lots Strong Neighborhoods Initiative
Median Lot Size Average Lot Size Median Building Size Average Buildilng Size
Table B-18 Commercial Light General Industrial (Square Feet) (Square Feet) 6,092 5,554 8,831 5,666 1,729 1,231 4,981 1,806
Source: City of San Jose GIS and Metroscan
Pro formas B-1 and B-2 present economic analyses of the cost, revenues and economic return on capital invested for the average sized Light Industrial and Commercial General zoned lots that fail to meet minimum lot size requirements. The pro formas assume the average lot size of 5,666 square feet for Light Industrial and 8,831 square feet for Commercial General (based on the actual average lot sizes of under-sized lots shown on Table B-18). A floor area ratio factor (FAR) was used to determine the level of development that could occur on these parcels. The Light Industrial zone allows for up to .35 FAR pursuant to the zoning requirements in Municipal Code Chapter 20.50. The Commercial General zone (Municipal Code Chapter 20.40) allows for up to a 6.0 FAR, but due to the limited size of the average undersized lot it is unreasonable to expect that density of 6.0 FAR could ever be achieved the FAR was reduced to .65 to reflect a building that could actually be built on these undersized commercial lots. Using the 6.0 FAR would result in a project with insufficient space to accommodate a marketable floor plate, and parking requirements (1 space:250 SF) detailed in Municipal Code Chapter 20.90. Due to the constrained lot size of the Commercial General parcels it is unlikely that surface parking would be feasible, therefore, it was assumed that parking would be achieved through structured parking or sub-grade parking. The pro formas employ the income approach to valuation. Project feasibility is determined by subtracting the total development costs from the project value, on normal market income and costs characteristics. The developer’s equity and rate of return was analyzed to determine the feasibility of the project. The Marshall and Swift Valuation Manual was used to estimate building shell costs for both the industrial and commercial uses. On-site, off-site, financing and other indirect costs were generated from current market rates or RSG’s database for like expenses. Operating income and expense assumptions were based on review of local area real estate professionals and RSG’s experience with projects of the proposed scope and scale. Based on information obtained through CBRE, average lease rates in the SNI Redevelopment Area were utilized; the assumed rental rate for Light Industrial was $0.82 psf/month, and for Class B office space was $1.85 psf/month. Pro Forma B-1 represents development of a Light Industrial manufacturing building located on a 5,666 square foot lot. The minimum standard set forth in the Municipal Code for this type of development is 10,000 square feet. The analysis concludes that the development would return a minimal profit of $74,707 to the developer and there would be no feasibility gap assistance required. In order for this project to occur the developer
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would be required to invest $52,782 to secure financing and proceed with the project. The net operating income totals $15,572 and the annual debt service payment equals $13,541 meaning that there is only a $2,031 annual profit. When the profit is compared to the equity investment required the rate of return is a mere 3.8%. It is very unlikely that a developer would take this type of development risk and would be much more profitable building on a less constrained site.
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PRO FORMA B-1 San Jose Light Industrial PROTOTYPE PRO FORMA Site Size (in acres): Industrial Acres (%) Residential Acres (%) Total Acres (%) Industrial Square Feet Industrial FAR Industrial Building (S.F.) Number of units existing: Number of units proposed: Unit Size: PROJECT COST ACQUISITION COSTS
0.13 100.0% 0.0% 100.0% 5,666 0.35 1,983 0.0 0.0 0 SF/UNITS/SP
PER SF/SP
5,666
$30.00
TOTAL ACQUISITION COSTS DIRECT CONSTRUCTION: OFFSITE/INFRASTRUCTURE/UTILITIES SITE COSTS (including landscaping) PARKING (Surface) LIGHT INDUSTRIAL BUILDING COST (Shell & TI) CONTRACTOR FEE & GENERAL CONDITIONS CONTINGENCY TOTAL CONSTRUCTION
5,666 5,666 5.7 1,983 14.0% 10.0%
$9.00 $3.00 $2,000 $65.75 $14.80 $10.57 $2,103
% of construction 6.0% 5.0% 3.0% 5.0% 12.0% 10.0%
TOTAL RESERVES
7.0% 3.0%
TOTAL PROJECT COST Effective Developer Fee Developer Equity Funding Required
$50,994 $16,998 $11,332 $130,387 $29,360 $20,971 $26,004 $195,984
RESERVES: CAPITALIZED OPERATING RESERVES (3 MOS.)
FINANCING: CONSTRUCTION FINANCING FINANCING FEES TOTAL FINANCING
$169,980 $169,980
TOTAL LAND & CONSTRUCTION
SOFT COSTS: A&E / CONSULTANT FEES PUBLIC PERMITS & FEES TAXES, INSURANCE, LEGAL & ACCOUNTING MARKETING DEVELOPER FEE (Administration & Overhead) CONTINGENCY TOTAL SOFT COSTS
TOTAL
(51,661) 54,782
$ per Bldg. Sq. Ft. $0.79 $0.66 $0.39 $0.66 $1.57 $1.31 $5.38
Total $1,560 $1,300 $780 $1,300 $3,121 $2,600 $10,662
$2.08
$4,127
$2.08
$4,127
$4.15 $1.46 $5.61
$8,231 $2,897 $11,128
$111.90
$221,901
-198.7% 24.7%
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PRO FORMA B-1 San Jose Light Industrial Commercial Rental Income Gross Annual Rental Income (Less): Vacancy & Collection Gross Effective Income Operating Expenses Property Management Reserves Total Expenses
1,983 Sf 5.0% of Gross Income 8.0% of Gross Effective Income 6.0% of Gross Effective Income 2.0% of Gross Effective Income
Net Operating Income
$19,514 (976) $18,538 ($1,483) (1,112) (371) ($2,966) $15,572
Cap Rate
5.25%
Total Project Revenue (Less) Development Costs Profit/(Feasibility Gap) Per S.F. of Building Per S.F. of Land
$9.84 /Sf
$296,608 (221,901) 1,983 Sf 5,666 Sf
$74,707 $37.67 $13.19
Pro Forma B-2 represents development of a Class B office building that would be permitted under Commercial General zoning. The average lot size of Commercial General zoned under-sized parcels in the SNI Redevelopment Area is 8,831 square feet; the minimum lot size standard permitted in the Municipal Code is 43,560 square feet (1 Acre). This development would require the developer to invest $3,167,156 to secure financing and make an additional investment of $2,590,025 in order to fund the project’s feasibility gap. The development costs far exceed the value of the project; therefore, this project is not economically feasible. This project represents a very high risk to a developer because the pro-forma indicates that there would be no return on the developer’s investment for some time.
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PRO FORMA B-2 San Jose Commercial General Office Class B PROTOTYPE PRO FORMA Site Size (in acres): Commercial Acres (%) Residential Acres (%) Total Acres (%) Commercial Square Feet Commercial FAR Commercial Building (S.F.) Number of units existing: Number of units proposed: Unit Size: PROJECT COST ACQUISITION COSTS
0.20 100.0% 0.0% 100.0% 8,831 0.64 5,652 0.0 0.0 0 SF/UNITS/SP
PER SF/SP
8,831
$30.00
TOTAL ACQUISITION COSTS CONSTRUCTION: OFFSITE/INFRASTRUCTURE/UTILITIES SITE COSTS (including landscaping) PARKING (Subterranian) COMMERCIAL BUILDING COST (Shell & TI) CONTRACTOR FEE & GENERAL CONDITIONS CONTINGENCY TOTAL CONSTRUCTION
8,831 8,831 23 5,652 14.0% 10.0%
$9.00 $3.00 $61.54 $277.18 $54.87 $44.68 $491.48
FINANCING: CONSTRUCTION INTEREST FINANCING FEES TOTAL FINANCING
% of construction 6.0% 5.0% 3.0% 5.0% 12.0% 10.0% 33.3%
$ per Bldg. Sq. Ft. $23.52 $26.92 $14.74 $24.57 $58.98 $14.87 $163.60
Total $132,907 $152,135 $83,333 $138,888 $333,332 $84,059 $924,654
$4.70
$26,573
0.0%
$4.70
$26,573
7.0% 3.0%
$30.69 $10.89 $41.58
$173,434 $61,567 $235,000
$748.24
$4,228,921
TOTAL PROJECT COST Effective Developer Fee Developer Equity Funding Required
$79,479 $26,493 $542,577 $1,566,574 $310,117 $252,524 $2,777,763 $3,042,693
RESERVES: CAPITALIZED OPERATING RESERVES (3 MOS.) TOTAL RESERVES
$264,930 $264,930
TOTAL LAND & CONSTRUCTION
SOFT COSTS: A&E / CONSULTANT FEES PUBLIC PERMITS & FEES TAXES, INSURANCE, LEGAL & ACCOUNTING MARKETING DEVELOPER FEE (G&A / Profit) CONTINGENCY TOTAL SOFT COSTS
TOTAL
(2,246,693) 3,167,156
-80.9% 74.9%
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PRO FORMA B-2 San Jose Commercial General Office Class B Commercial Rental Income Gross Annual Rental Income (Less): Vacancy & Collection Gross Effective Income Operating Expenses Property Management Reserves Total Expenses
5,652 s.f. 5.0% of Gross Income 8.0% of Gross Effective Income 6.0% of Gross Effective Income 3.0% of Gross Effective Income
Net Operating Income
$125,471 (6,274) $119,197 ($9,536) (7,152) (3,576) ($20,264) $98,934
Cap Rate
6.00%
Total Project Revenue (Less) Development Costs Profit/(Feasibility Gap) Per S.F. of Building Per S.F. of Land
$22.20 s.f.
$1,648,896 (4,228,921) 5,652 s.f. 8,831 s.f.
($2,580,025) ($456.49) ($292.16)
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Of the residential lots that do not meet minimum lot size requirements (4,892 lots), the majority fall within the R-1-8 zoning designation prescribed by Municipal Code Chapter 20.30. Many of these lots are located within zip code 95122 in the SNI Redevelopment Area. The R-1-8 zoning designation permits 8 residential units per acre with one single family residence per lot. Per the Municipal Code, “The purpose of the single-family residence district is to reserve land for the construction, use and occupancy of single-family subdivisions.” SNI Redevelopment Area parcels sales price per building square foot for parcels that meet minimum lot size requirements were compared to those that do not meet minimum requirements to examine the economic viability of substandard parcels. Table B-19 presents the 2004 through 2008 median and average price per square foot values and building sizes for R-1-8 properties in the SNI Redevelopment Area. Parcels not meeting minimum lot size requirements in the SNI Redevelopment Area have a lower median and a lower average price per square foot value than parcels meeting the minimum lot size requirements. The ability to expand buildings on small lots is constrained due to space limitations. Although residents with small lots are allowed to improve their properties, they must still maintain minimum setback requirements detailed in Chapter 20.30 of the Municipal Code. This constraint often requires new development on the site to be built upward rather than outward, which is much more expensive to build on an existing structure. According to an experienced building contractor, “the cost to add a second story onto an existing structure is much more costly than expanding outward. To build upward rather than outward requires structural improvements to the existing structure’s foundation, wall supports, and roof.” The capacity and economic viability of lots not meeting minimum lot size requirements are substantially hindered by their lack of space, the cost to improve, and depreciated property values. 2004-2008 R-1-8 Sales Price Analysis1 Strong Neighborhoods Initiative
Average Median 1
Lots Meeting Mimimum Size $/SF $381.91 $403.38
Table B-19
Substandard Lots $/SF $373.17 $390.28
Based on building square footage.
Source: San Jose GIS and Metroscan
A closer look at zip code 95122 where a prevalence of these conditions exist in the SNI Redevelopment Area was examined (see Exhibit B-11). The 2007 median sales price of homes within zip code 95122 ($582,500) 56 is much less than the City’s ($688,281). Between 2004 and 2008, the median sales prices in zip code 95122 have been 15% to 20% less than the City’s. Inadequately sized parcels limit the ability to make improvements to expand building size and substantially hinder the economic viability of the properties. Further challenges affecting the value of these properties stems from the high percentage of renter occupied single family units; 59% of all R-1-8 properties in the Merged Project Area are renter occupied compared to 57 38% citywide. The SNI Redevelopment Area constitutes nearly 84% of the residential parcels in the Merged Project Area. Property owners residing on their properties are more vested in maintaining their properties. According to HUD, “Absentee landlords may be much more concerned with immediate cash flow than with 58 future livability of their buildings”. Routine maintenance is ignored and repairs are only made when an 56
Refer to Table B-7 for a summary of median home sale prices. ESRI Business Analyst 2008 58 “Communities at Work: Addressing the Urban Challenge.” U.S. Department of Housing and Urban Development. June 2006. 15 September 2008. .
57
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emergency arises requiring the problem to be addressed. This further perpetuates the problem of decreased property values on substandard lots because potential buyers recognize the financial liability of buying properties that have not been maintained and the lower values self-perpetuate. For the R-1-8 homes that are owner-occupied, financial constraints make it difficult to maintain homes. According to Coldwell Banker, “annual maintenance costs range from 1.5 to 4 percent of the home's original cost”. Applying these factors, the range of annual maintenance cost for units in zip code 95122 is $8,738 to $23,288 per year. Financially constrained residents are less likely to reinvest into properties due to insufficient income. Lots of Inadequate Size in Multiple Ownership Section 33031(a)(4) defines the existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions as a physical blighting condition. An earlier section of this Report, entitled Conditions Preventing or Substantially Hindering the Viable Use of Buildings or Lots, analyzed lots that do not meet minimum lot size standards based on the City’s Municipal Code. This section expands on that condition to analyze how many inadequately sized lots are in multiple ownership. Table B-20 summarizes the number of subdivided lots of inadequate size, in multiple ownership, within the SNI Redevelopment Area. Multiple ownership was determined by isolating inadequately sized lots that do not have an adjacent lot with the same owner.
Subdivided Lots of Inadequate Size in Multiple Ownership Stong Neighborhoods Initiative Land Use/Zone Residential Commercial Industrial Total
Table B-20
SNI 4,561 437 305 5,303
Source: City of San Jose GIS, San Jose Municipal Code, and Metroscan.
Out of the 6,035 lots that do not meet minimum lot size requirements, 5,303 (88%) are in multiple ownership. Of the 4,892 under-sized residentially zoned lots in the SNI Redevelopment Area, 4,561 (93%) are in multiple ownership. Similarly, 437 (73%) of the 600 under-sized commercially zoned, and 305 (56%) of the 543 under-sized industrially zoned lots are in multiple ownership. As previously discussed, pro forma analyses show that the costs to develop on small lots do not produce economically viable returns. Lot consolidation would be required to provide a site with enough space to develop a building with market rate returns. Assembling lots in multiple ownership is difficult for the private sector and Agency assistance is necessary to facilitate lot consolidation. Exhibit B-12 shows the location of inadequately sized lots in multiple ownership.
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Summary Both physical and economic blight exist in the SNI Redevelopment Area (see Exhibit B-13). Physical blighting conditions remaining include: dilapidation and deterioration; serious code violations; faulty or inadequate sewer and water utilities; under-sized parcels hindering the viable use of lots and buildings; and under-sized lots that are in multiple ownership. Economic blighting conditions remaining in the project include: stagnant or depreciated property values; hazardous waste sites; low lease rates and high vacancies; a high concentration of alcohol serving of selling establishments; and high crime rates. Based on the observations and research in this Section, it is evident that the SNI Redevelopment Area continues to suffer from various physical and economic blighting conditions. Although progress has been made by the Agency and there has been private investment, further improvements are needed to alleviate current conditions. The Diridon Amendment proposes to add the authority for the Agency to collect tax increment from the Diridon Area that can be utilized to eliminate blight in through out the SNI Redevelopment Area and the Merged Project Area. Summary of Blight Significant blight exists throughout the Agency’s Project Areas. The Diridon Amendment will provide financial resources to eliminate blight and spur private investment throughout the entire Merged Project Area inclusive of the SNI Redevelopment Area, but specifically within the Diridon Area.
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2008 MERGED PROJECT AREA BLIGHT ANALYSIS Tax increment revenue collected in the Diridon Area may also be allocated towards projects in the Merged Project Area. As part of the recent Merged Project Area Amendment, the Agency analyzed blighting 59 conditions present throughout the entire Merged Project Area. Please refer to Appendix 8 for complete documentation of remaining blighting conditions substantiating the Merged Project Area Amendment. Documentation considered by the City Council, taxing entities, and the public for the Merged Project Area Amendment concluded that significant blight remains. The following is a summary of the blighting conditions found in the Merged Project Area:
59
2008 Field Survey observations indicate that 2,250 parcels representing 1,225 acres in the Merged Project Area have a condition of physical or economic blight that can be observed from the public right of way and there are 1,984 instances of dilapidation and deterioration. The majority of these parcels are in the SNI Redevelopment Area.
352 parcels in the Merged Project Area suffer from defective design.
822 parcels in the Merged Project Area suffer from substandard design.
In 2007 there were 4,358 serious code violations reported in the Merged Project Area representing 34% of serious code violations reported throughout the entire City of San Jose.
A total of 459 serious code violations occurring in 2008 remain open in the SNI Redevelopment Area at the end of September 2008.
Since 1998, there have been 405 citizen complaints of sewer blockage and back up throughout the Merged Project Area.
The North San Jose EIR identifies a need for $30 million dollars to upgrade the sanitary sewer system in the Rincon de los Esteros Project Area.
North San Jose has a 3-year design sewer system that cannot adequately control runoff that is causing localized flooding problems. An upgrade to a 10-year design storm sewer system is needed to address this problem.
There are 5,112 residential lots (28.8% of residential parcels), 1,394 commercial parcels (50% of commercial parcels), and 858 industrial lots (29.9% of industrial parcels) in the Merged Project Area that do not meet minimum lot size requirements, which are based on the development standards prescribed by the San Jose Municipal Code. Viable development of these properties is hindered by their small lot sizes.
R-1-8 zoned parcels not meeting minimum lot size requirements in the Merged Project Area have a lower median (33% less) and a lower average (29% less) price per square foot value than parcels meeting the minimum lot size requirements.
Blight data was collected between November 2007 through January 2009 for analysis of remaining blight in the Merged Project Area.
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Out of all the lots that do not meet minimum lot size requirements, 5,588 (76%) are adjacent to properties that are owned by a different property owner, meaning the owner of the inadequately sized lot does not own an adjacent lot. There are 4,593 residential (89%), 562 commercial (40%), and 433 industrial (50%) inadequately sized lots whose adjacent properties are in multiple ownership. It is difficult for the private sector to assemble properties that are in multiple ownership.
When compared to the entire City of San Jose, all of Santa Clara County, and the neighboring cities of Santa Clara, Pleasanton, Cupertino, Palo Alto and Saratoga, the Merged Project Area has experienced the greatest decrease (-50%) in the number of home sales since 2004. Furthermore, the Merged Project Area has decreased in the number of home sales by nearly 38% since 2006, which is much greater than surrounding areas.
The Merged Project Area 2007 median home sale prices are 19% lower than the City’s and 31% less than the County’s median home sale prices. Over the past four years this ratio has been increasing, in 2004 the Merged Project Area median sale prices were only 13% and 23% less than the City’s and the County’s, respectively.
Merged Project Area median home sale prices have increased by 33% since 2004 but they continually have the lowest median sales value throughout the County. Additionally, the median sales price in 2007 was less than 2006, representing a 1% decrease in value.
The City of San Jose contains approximately 49% of the housing units in the County of Santa Clara and accounts for 74% of the homes in a state of foreclosure in the County. The Merged Project Area’s overlapping zip codes comprise 17% of the City’s housing units (at the data collection date of 7/3/2008) and 80% of the homes in a state of foreclosure.
The Merged Project Area potentially stands to lose approximately $212 million of diminished property market value due to the spillover effect from foreclosed properties.
The Merged Project Area contains 189 active and 286 closed hazardous waste sites. The Industrial and SNI Redevelopment Areas together comprise approximately 77% of the total number of active hazardous waste sites in the Merged Project Area.
There are 9 active Superfund hazardous waste sites within the Industrial and SNI Redevelopment Areas, which represent 52% of all active Superfund sites identified in the entire City of San Jose. The 17 Superfund sites listed are considered to be some of the most dangerous hazardous waste sites in the City of San Jose posing a serious threat to the health, safety, and welfare of nearby residents and workers.
Within the Merged Project Area, the presence of hazardous waste has significantly impaired property values. The assessed value per square foot of active hazardous waste sites within the SNI Redevelopment Area is 31.4% less for commercial land uses and 41.7% less for residential uses than those SNI parcels that do not contain hazardous waste. For active hazardous waste sites within the Industrial Redevelopment Area, assessed values are 60.8% less for industrial land uses, 76.9% less for commercial, and 97.5% less for residential.
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Market Reports by CBRE indicate that the Merged Project Area (made up of the North San Jose, Central San Jose, and South San Jose submarkets) generally had lower lease rates than the Silicon Valley average in the third quarter of 2008, especially in the office sector. Lease rates for submarkets within the Merged Project Area are 24-32% less for Class A office, 25-38% less for Class B office, 14-38% less for R&D, and 6-8% less for industrial manufacturing uses. Industrial wholesale lease rates are 10-12% less in the Central and San Jose submarkets, but 14% higher in the North San Jose submarket.
Vacancy rates varied within the Merged Project Area in the third quarter of 2008. Office vacancy rates are 16% higher than the Silicon Valley average in the Central San Jose submarket. R&D vacancy rates are 12-45% higher in the North and South San Jose submarkets. Industrial vacancy rates are 4-24% higher in the Central and South San Jose submarkets. Other submarkets have vacancy rates that are lower than the regional average.
R&D vacancy rates were 10% higher in the Edenvale Project Area and 537% higher in the Julian Stockton Project Area compared to the Silicon Valley average in the second quarter of 2008. The industrial vacancy rate was 29% higher in the Monterey Corridor Project Area. Other Industrial Project Areas had a vacancy rate that was equal to or lower than the regional average.
Historic data shows that most Industrial Project Area vacancy rates have remained steady except for office vacancy rates. These have increased in the Rincon de Los Esteros and Edenvale Project Areas over the last two years and in the Monterey Corridor and Julian Stockton Project Areas in the last quarter of 2008. Additionally, the Monterey Corridor industrial vacancy rate has increased over the last year.
During the 2008 Field Survey, 231 properties in the Merged Project Area were noted as being vacant.
Between January 2007 and July 2008, 66 alcohol violations were issued by the California Department of Alcohol Beverage Control in the City of San Jose. 52% of all violations in the City of San Jose were located in the Merged Project Area. There are 34 businesses in violation of ABC in the Merged Project Area with 46 citations against them. 57% of violations are related to the sale to or the consumption of alcohol by minors.
As of 2008, serious crimes have decreased in the Merged Project Area and City of San Jose since 2002, 17% and 0.3%, respectively. However, there are 20 crime beats in the City that have increased in crime by 20% since 2002. In 2007, each of these crime beats had over 100 serious crimes recorded. Of these 20 high crime beats, 7 (or 35%) are located in the Merged Project Area. In these 7 high crime beats, serious crimes have increased by 50.5%.
In 2007, of all dangerous crimes committed in the City, 41.2% were committed in the Merged Project Area. This percentage has decreased since 2002 but still represents 40%+ of crimes committed in the City while only covering 17% of the City’s land area. Additionally, the Merged Project Area only constitutes 28% of the City’s population and accounts for over 40% of the crimes committed.
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S ECTION C: F IVE Y EAR I MPLEMENTATION P LAN The SNI Redevelopment Area Five-Year Implementation Plan was adopted on October, 2, 2007 by Redevelopment Agency Resolution No. 5785, and covers years 2008 through 2012. The 2005-09 Five-Year Implementation Plan adopted on November 16, 2004 by Resolution No. 5557 includes the Downtown Redevelopment Area, Industrial Redevelopment Area, Neighborhood Business Districts, and the Neighborhood Business Clusters. Together these two Implementation Plans cover activities throughout the entire Merged Project Area. The Diridon Amendment will not impact ongoing projects and programs identified in the Five Year Implementation Plans. Consequently, pursuant to Section 33457.1 of the CRL, no amendment to the Implementation Plans is warranted as part of the Diridon Amendment The Diridon Amendment adds the ability of the Agency to collect tax increment on the Diridon Area and will not change existing programs or projects. The Diridon Amendment does not have a significant impact on the Agency’s current Five Year Implementation Plans because the fiscal impact of the Diridon Amendment will not change the Agency’s short-term projects. The Implementation Plans detail revenue and program expenditures over a five-year planning period. Analysis was completed during the adoption of the Implementation Plans to ensure that there was sufficient revenue to cover program expenses during the planning period. The Diridon Amendment affects the Agency’s ability to fund future projects beyond the planning period of the Implementation Plans by providing additional tax increment revenue that can be allocated towards existing Merged Project Area and Diridon Area programs and projects eliminating the remaining blight detailed in Section B of this Report. New Implementation Plans will be adopted by the Agency within the time frames required by the CRL. The Agency’s Implementation Plans are included as Appendix 9 of this Report.
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S ECTION D: W HY E LIMINATION OF B LIGHT AND R EDEVELOPMENT C ANNOT B E A CCOMPLISHED W ITHOUT A GENCY I NVOLVEMENT OVERVIEW In 2008, the Agency initiated proceedings for the Merged Project Area Amendment which increased the tax increment limit, set a new bond indebtedness limit, and made modifications to the Projects list in each Redevelopment Plan to make all of the Plans consistent. A detailed description of the proposed redevelopment program and costs associated with the Merged Project Area Amendment is contained in Appendix 8 of this Report to Council. The development program outlines key public improvement and economic development initiatives the Agency proposes to pursue in the Merged Project Area and SNI Redevelopment Area including the Diridon Area to address blight, remediate serious environmental contamination, replace outdated infrastructure, create housing and employment opportunities, and revitalize the local economy. The Diridon Amendment is consistent with the goals of the Merged Project Area Amendment and will not change any of the financial limitations incorporated into the Merged Project Area Amendment. WHY AGENCY INVOLVEMENT IS ESSENTIAL The Diridon Amendment will help the Agency continue its redevelopment efforts throughout the Merged Project Area, including the Diridon Area, with an increased ability to fund projects and address blight. This newly available revenue in the near-term will fund programs that will enhance the value of the area, bring additional private investment into this vital multi-modal transportation center, and eliminate blighting conditions. Through public and private investment, the Agency plans to address physical and economic blight, which in turn brings economic revitalization, development, affordable housing and employment opportunities into the area. The Merged Project Area Amendment to increase the overall limit of tax increment is vital to the Agency’s ongoing goal to eliminate blighting conditions, provide employment opportunities, and provide affordable housing options. Given the specific programs that are needed in the Diridon Area, and the current economic challenges that the City and Country overall face, the Agency’s programs will benefit from additional revenue to address blighting conditions. The urgent need for an expedited and increased cash flow that the Diridon Amendment would provide is critical. The Diridon Amendment will enable the Agency to collect tax increment revenue generated in the near-term in the Diridon Area to address not only blighting factors and finance programs in the Diridon Area, but will also provide for additional revenue for programs in the SNI Redevelopment Area, and the entire Merged Project Area. The purpose of the Agency’s redevelopment programs are to alleviate blight, create and improve affordable housing, and create jobs in the entire Merged Project Area. The cost of that program moving forward, as described in the Merged Project Area Amendment, will total $4.8 billion in 2008 dollars. When all costs are included, the total costs for redevelopment of the entire Merged Project Area will reach almost $15 billion. Given the remaining needs of the Merged Project Area, the specific needs identified in the Diridon Area, the volatility in the real estate market and the need to provide funding for a comprehensive environmental remediation program, the Agency seeks new tax increment revenue in the Diridon Area to provide a readily accessible and near-term source of redevelopment funding. As discussed previously, this new source of revenue could also be used to fund other projects in the Merged Project Area. Neither the City nor the private sector has historically been able to finance a redevelopment
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effort of this scope and size alone, and public/private partnerships will form the basis for a redevelopment program to successfully move forward. The Agency will continue to look to other funding sources to assist in the redevelopment effort. This will be a challenge for the Agency since most of the elements of the program of redevelopment have little or no alternative funding sources. The limitations of alternative funding sources present serious challenges for the City, Agency, and the private sector. Grants from other levels of government are sporadic, highly competitive, and difficult to obtain. The ongoing budget situation at the State level will continue to pose significant challenges. Assessment districts can be used to fund certain activities, but they can only be set at a level where private development can economically absorb them. Development impact fees are also another opportunity available to the City. New fees, however, would further impede development in blighted areas that are impacted by lower property values and lease rates. Even if the Agency secured all of these other sources of revenue, funding gaps would still remain and pose a significant challenge for the private sector to finance a project independently. Tax increment is therefore needed to fill funding gaps between the costs identified and other limited funding sources. Tax increment revenues will be generated by the activities being proposed by the Agency. Tax increment provides a stable source of revenue that will continue to grow as the Agency’s redevelopment efforts spur private investment. As additional investment is attracted to the Merged Project Area and specifically the Diridon Area and additional tax increment is generated, those resources can be used to fund projects in other parts of the Merged Project Area that benefit all of the Redevelopment Areas. In addition, such revenues can be leveraged in the form of tax allocation bonds and provide a large source of capital financing. For each of these reasons, tax increment financing is necessary for successful redevelopment of the Diridon Area, SNI Redevelopment Area, and the Merged Project Area.
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S ECTION E: M ETHOD OF F INANCING FINANCING METHODS AND ALTERNATIVES AVAILABLE TO FUND REDEVELOPMENT While the Agency can access funding for redevelopment projects and programs from the City, other governmental sources, and the private sector, collectively these outside sources are not capable of providing all of the needed funding to carry out the redevelopment program that the Agency outlined in the Merged Project Area Amendment. According to a report provided by the City Manager, the City is currently facing a budget deficit and has had to make cuts to various departments. Additional funding for program and projects from the State of California would seem unlikely, given the ongoing budget problems facing the State. The prevalence of dilapidated and deteriorated buildings, depreciated or stagnant property values, and other adverse physical and economic blighting conditions in the Merged Project Area and the Diridon Area are clear indicators that the private sector alone cannot be expected to revitalize the area without some type of catalyst from the Agency. A more detailed analysis of why the City, other government entities, and the private sector acting alone cannot eliminate blight is included in Appendix 8. The proposed Diridon Amendment does not affect the Agency’s existing authority to fund activities from a variety of sources including: financial assistance from the County, the State and the Federal Government; donations; special assessment districts; interest income; loans from private financial institutions; the lease or sale of Agency-owned property; and any other legally available public or private sources of funding. The Diridon Amendment will enable the Agency to continue to use a variety of financing tools, including tax increment generated in the Diridon Area and other portions of the Merged Project Area, to implement the proposed redevelopment program and achieve the goals of the adopted General Plan and the Strategic Plan for the area. If the Diridon Amendment is adopted, the Agency’s ability to collect tax increment in this area will be constrained by the existing time limit contained in the SNI Redevelopment Plan of fiscal year 20482049. Additionally, the Diridon Amendment would not affect the tax increment cap or bonded indebtedness limit set forth in the Merged Project Area Amendment. DIRIDON AREA TAX INCREMENT REVENUES The Santa Clara County Auditor Controller compiled both the 2002-2003 base year assessed value of the Diridon Area and the 2008-2009 assessed value. The 2002-2003 assessed value is the “base year” value for the Diridon Area because pursuant to Section 33670(a), the assessment roll of the County last equalized on the effective date of the ordinance adopting a redevelopment plan shall be used in determining the assessed valuation of the taxable property in the project area. The 2002-2003 assessed value is utilized as the base year because the ordinance adopting the Redevelopment Plan for the SNI Redevelopment Area was adopted on June 25, 2002. The 2002-2003 assessed value was $80,838,277. Because many parcels within the Diridon Area are currently in public ownership, the 2008-2009 assessed value of $65,515,541 is lower than the 2002-2003 base year value. Because the current assessed value of the Diridon Area is lower than the assessed value from the 2002-2003 base year, the Diridon Area will not generate tax increment revenue until sufficient new private investment is made so that the value is above the 2002-2003 base year value. It is anticipated that by 2013-2014, if the Agency’s efforts are successful, in excess of $1 billion of new development could be added to the rolls. This level of new development would generate annual gross tax increment revenue of approximately $11.6 million. Once anticipated new development is completed, currently estimated to be finalized in the 2016-2017 fiscal year, annual gross tax increment revenue is expected to reach $17 million. Overall, total gross tax increment from fiscal years 2009-2010 through 2048-2049 is estimated to exceed $1 billion for the Diridon Area. The required 20% affordable housing set aside, required taxing entity payments,
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administrative fees, and other required payments and fees must all be paid every year and the Agency’s net tax increment revenue after the deductions will be used to fund redevelopment programs. Assumptions used to estimate this potential revenue includes the Proposition 13 allowable inflationary adjustment of up to 2 percent annually and additional annual increases resulting from reassessments resulting from property sales and new construction. A 5.5% annual growth rate is assumed throughout the duration of the Plan. During these years, it is assumed that the Diridon Area will realize the remaining development potential consistent with allowed land uses, including new mixed-use development valued at approximately $1.5 billion. CONTINUED ECONOMIC FEASIBILITY OF FINANCING METHODS AND REDEVELOPMENT PROGRAM The feasibility analysis conducted for the Merged Project Area Amendment concluded that the Amendment to raise the tax increment limit was economically feasible. This analysis is included in Appendix 8. The Merged Project Area Amendment will increase the tax increment collection limit from $7.6 billion to $15 billion. The Diridon Amendment will not change the Agency’s overall financing methods, but will enhance the Agency’s near-term cash flow if new development can be fostered. The primary assumptions in this analysis are that the costs for redevelopment activities are as projected and growth will occur in the Diridon Area as the Agency continues to remove impediments to development. The economic feasibility and viability of the Merged Project Area Amendment is established. Since that analysis concluded that the redevelopment program and financing methods for the Merged Project Area Amendment were feasible, the additional tax increment revenue from the Diridon Area Amendment will provide an earlier cash flow in the near-term ensuring the continued financial feasibility of the entire Merged Project Area.
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S ECTION F: M ETHOD OF R ELOCATION Pursuant to the CRL, the Agency previously prepared a Method of Relocation for the SNI Redevelopment Area (“Relocation Method”) at the time the SNI Redevelopment Area was adopted. The Agency adopted relocation guidelines on April 20, 1999 relating to the displacement of any persons as a result of an Agency redevelopment project. These guidelines apply to any required relocation activity within the Merged Project Area. In addition, should any actions be undertaken which include the relocation of residents or businesses, such actions will adhere to the State Relocation Law (Government Code 7260 et seq.) and the State Relocation Guidelines, as those regulations may be amended by the State from time to time. Any amendments to the State Guidelines or State Relocation Law shall automatically be incorporated without the need for further action by the Agency. The Relocation Method and Agency relocation guidelines are on file with the Agency and incorporated herein by reference.
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S ECTION G: A NALYSIS OF P RELIMINARY P LAN Section 33352(g) of the CRL describes an analysis of a preliminary plan. When the SNI Redevelopment Area was adopted, a preliminary plan was adopted in accordance with the CRL setting forth the boundaries of the SNI Redevelopment Area and certain land use criteria. Pursuant to Section 33457.1 of the CRL, an analysis of a preliminary plan is not required for the Diridon Amendment because it does not propose to add new territory nor amend SNI Redevelopment Area boundaries that necessitate the need for a preliminary plan.
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S ECTION H: R EPORT AND R ECOMMENDATION OF THE P LANNING C OMMISSION The Planning Commission of the City of San Jose (“Planning Commission”) reviewed the proposed Diridon Amendment and determine conformance with the City’s General Plan. On April 8, 2009, the Planning Commission reviewed and considered a report and recommendations from Agency staff on the Diridon Amendment and took action (File No. PP08-289), pursuant to Section 33346 of the CRL, to: (1) find that the February 4, 2009, CEQA determination made by the Director of Planning, Building & Code Enforcement for the City of San José is adequate; (2) determine that the Diridon Amendment is in conformance with the City’s General Plan; and (3) recommend adoption of the Diridon Amendment to the Agency and City Council. Section J of this Report provides more information regarding conformance with the City’s General Plan. Section K provides more information regarding environmental documentation. The report to the Planning Commission stated: “The proposed redevelopment plan amendments are consistent with the San José 2020 General Plan. In particular, the plan amendment furthers the City Concept goals and policies to strengthen San Jose’s identity as a distinct place that provides a variety of cultural and recreational opportunities for public enjoyment.” The Planning Commission unanimously approved staff’s recommendations. A synopsis and a copy of the Agency’s staff report of the April 8, 2009 Planning Commission meeting are attached hereto as Appendix 10.
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S ECTION I: R EPORT AND R ECOMMENDATION OF THE PAC In accordance with CRL Section 33385, a project area committee (“PAC”) was elected and appointed for the SNI Redevelopment Area in March and April of 2001, and confirmed by the City Council on June 19, 2001, when the SNI Redevelopment Area was adopted. Following the three-year statutory life span required by CRL Section 33386, the PAC was dissolved and replaced by a 27-member SNI Redevelopment Project Advisory Committee, the primary role of which is to advise the Agency on redevelopment implementation and policy issues affecting the various neighborhoods. In addition, each neighborhood within the SNI Redevelopment Area has a local Neighborhood Advisory Committee or Neighborhood Action Committee (“NAC”) which collaborates with the Project Advisory Committee on neighborhood improvements, including those implemented as part of 12 projects and programs established in the SNI Redevelopment Area Five Year Implementation Plan. Through a community-based prioritization process, a top-10 priority list of neighborhood improvements is developed for each Strong Neighborhood. Funding for these priority projects comes from a variety of sources, including City General Fund dollars, tax increment, CDBG, and other grants. If a PAC formed in accordance with CRL Section 33385 does not exist, Section 33385.3 requires the Agency to establish a new PAC for a redevelopment plan amendment if the proposed amendment would either: (1) grant the authority to the Agency to acquire by eminent domain property on which persons reside in a project area in which a substantial number of low- and moderate-income persons reside; or (2) add territory in which a substantial number of low- and moderate-income persons reside and grant the authority to the Agency to acquire, by eminent domain, property on which persons reside in the added territory. The proposed Diridon Area Amendment does not involve either of these activities. Therefore, there is no requirement to form a new PAC. Consequently, pursuant to Section 33457.1 of the CRL, there is no requirement for a summary referred to in CRL Section 33387. Although a PAC, as defined by CRL Section 33385, does not exist, and the formation of a new PAC is not required, the Agency has taken steps to ensure that local residents, business owners, and other interested parties are aware of and involved in the Diridon Area Amendment. Notice of the joint Agency/City Council public hearing on the Diridon Amendment was mailed to all Merged Project Area property owners, residents, businesses, and affected taxing entities. Notice of the hearing is also being duly published for three or more successive weeks in a local newspaper of general circulation in accordance with CRL Section 33452 and Government Code Section 6063. On January 22 and April 16,2009, Agency staff held community outreach meetings to present and discuss the Diridon Area Amendment with local community members. Agency staff listened to concerns and answered questions, most of which were related to the impact the Diridon Area Amendment would have on their properties. No objections to the Diridon Area Amendment were raised at the meeting.
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S ECTION J: S TATEMENT OF C ONFORMANCE TO G ENERAL P LAN On April 8, 2009, the Planning Commission determined that the Diridon Amendment is in conformance with the City of San Jose’s 2020 General Plan. The Planning Commission’s meeting synopsis and Agency staff’s report are attached hereto as Appendix 10.
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S ECTION K: E NVIRONMENTAL D OCUMENTATION Pursuant to the provisions of Title 21 of the Municipal Code, on February 4, 2009, the Director of the City of San Jose Planning, Building, and Code Enforcement Department completed the review required under the California Environmental Quality Act (“CEQA”) for the proposed Merged Project Area Amendment. It was determined that, amongst other things, the proposed Amendment does not warrant additional CEQA documentation beyond what has been previously prepared for the Redevelopment Plans within the Merged Project Area, since the Amendment does not change the scope of any projects described within existing redevelopment plans nor commit to the implementation of any particular project. Any development projects in the Merged Project Area will be required to complete a separate CEQA review. On April 8, 2009, the Planning Commission reviewed and considered a report and recommendations from Agency staff on the Diridon Amendment and took action (File No. PP08-289), pursuant to Section 33346 of the CRL, to: (1) find that the February 4, 2009 CEQA determination made by the Director of Planning, Building & Code Enforcement for the City of San José is adequate; (2) determine that the Diridon Amendment is in conformance with the City’s General Plan; and (3) recommend adoption of the Diridon Amendment to the Agency and City Council. The report to the Planning Commission stated: “The proposed redevelopment plan amendments are consistent with the San José 2020 General Plan. In particular, the plan amendment furthers the City Concept goals and policies to strengthen San Jose’s identity as a distinct place that provides a variety of cultural and recreational opportunities for public enjoyment.” The Planning Commission unanimously approved staff’s recommendations. A synopsis and a copy of the Agency’s staff report of the April 8, 2009 Planning Commission meeting, including the CEQA determination, are attached hereto as Appendix 10.
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S ECTION L: R EPORT OF THE C OUNTY F ISCAL O FFICER The proposed Diridon Amendment does not add territory to the SNI Redevelopment Area. However, it does propose to add the Agency’s ability to collect tax increment in the Diridon Area, a portion of the SNI Redevelopment Area. Consequently, pursuant to Section 33457.1 of the CRL, there is a requirement for preparation of a base year report, as described in CRL Section 33328 for the proposed Diridon Amendment. On May 6, 2009, the Santa Clara County Controller’s Office compiled both the 2002-2003 base year assessed value of the Diridon Area and the 2008-2009 assessed value. The 2002-2003 assessed value is the “base year” value for the Diridon Area because pursuant to Section 33670(a), the assessment roll of the County last equalized on the effective date of the ordinance adopting a redevelopment plan shall be used in determining the assessed valuation of the taxable property in the project area. The 2002-2003 assessed value is utilized as the base year because the ordinance adopting the Redevelopment Plan for the SNI Redevelopment Area was adopted on June 25, 2002. The 2002-2003 assessed value was $80,838,277. Because many parcels within the Diridon Area are currently in public ownership, the 2008-2009 assessed value of $65,515,541 is lower than the 2002-2003 base year value. A copy of the Santa Clara County Controller’s Office Report is included as Appendix 11.
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S ECTION M: N EIGHBORHOOD I MPACT R EPORT OVERVIEW A Neighborhood Impact Report was prepared for the Merged Project Area Amendment as described in CRL Section 33352(m). The Diridon Amendment will generate tax increment revenue that can be utilized throughout the SNI Redevelopment Area and the Merged Project Area. As such, the same environmental impacts outlined in the Merged Project Area Amendment are applicable to the Diridon Amendment. The Neighborhood Impact Report for the Merged Project Area Amendment is included as Appendix 8.
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S ECTION N: S UMMARY OF C ONSULTATION WITH T AXING E NTITIES The Agency notified the taxing entities of the proposed Diridon Amendment on April 10, 2009, when the Preliminary Report was transmitted. At that time, the Agency offered to consult with the affected taxing entities pursuant to Section 33328 of the CRL. Notices of the joint public hearing on the proposed Amendment were sent to each affected taxing entity in accordance with the requirements of the CRL. To date, the County of Santa Clara has consulted with the Agency. No other taxing entity has requested a consultation.
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Appendices Report to Council for the Diridon Amendment Appendix 1 – Map of Proposed Diridon Area Appendix 2 – Blight Map Exhibits (11x17 inches) Appendix 3 – Minimum Lot Size Requirements Appendix 4 – Hazardous Waste Data Tables Appendix 5 – RealtyTrac Foreclosure Information Appendix 6 - Merged Project Area Zip Code Map Appendix 7 – CB Richard & Ellis Market Areas Appendix 8 – Excerpts from the Report to Council for the Amendment to the Redevelopment Plans for the Merged Project Area Tax Increment Limit & Bonded Indebtedness Limit Increases, March 26, 2009 (Updated April 13, 2009) Appendix 9 – 2008-12 Strong Neighborhoods Initiative Redevelopment Area Five Year Implementation Plan; 2005-09 Five Year Implementation Plan for the Downtown Redevelopment Area, Industrial Redevelopment Area, Neighborhood Business Districts, and Neighborhoods Business Clusters; and Progress Report for the 2005-09 Five Year Implementation Plan Appendix 10 – Agency Report to the Planning Commission & Meeting Synopsis Appendix 11 – Santa Clara County Controller’s Office Report
Appendix 1 Map of Proposed Diridon Area
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*# * # *# # * # * (# ! *# # * ( ! *# ( # * *! (# *! # * ( ! ( ! # * ( !
# *
( ! * # *# # *# * ( !
* (# # ( *! #! * ( !
# * # * # *
# *
( !
* !# (
# *
( !
§ ¦ ¨
# *
# *
# * # * ( ! # * # *# * ( ! # * # ** #* ! ( ## * # * ! # * *( # * # # * *#
# *! ( # # * * *# # *# * *# # * # * ( *# # *! * # # *# # * # * * # * ! ( ( # *! # # ( # * * *! # * # * * # *#
# * * #
( !
( !
( !
( !
V U 87
# * # *
V U 17
( ! # *
V U 85
V U 85
101
£ ¤ * ## *
V U 85
( ! # *
Open Hazardous Waste Cases
Closed Hazardous Waste Cases Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area City of San Jose Boundary
Exhibit B-4
²
Decrease in Home Values by Zip Code from 2007 to 2008 in SNI 95035 94089
95134
95132
95054 95131
95133 95127
95050
95051
95110 95116
95112
95113
95126
95129
95148
95122
95128 95117
95135
95130
95130
95121
95125
95008
95111 95138 95136
95124 95118
95030
95123 95032 Percent Decrease
0.01 to 9.1
95119
0 to -19
-20 to -39 -40 to -46
Strong Neighborhoods Initiative City of San Jose Boundary
Exhibit B-5
95120
²
§ ¦- July 31 2008) Homes in a State § ¦ of Foreclosure in SNI (May 1¨ ¨ 680
237
§ ¦ ¨ 880
§ ¦ ¨ 680
101
£ ¤
V U 87
# * * # ) ! ( " * ! (# * * * # # ( #! * # * #
* # * # ) "
§ ¦ ¨
)" ) *" #
*# ! (# * *#
! (
* # * #
* #
*" # )
*) *# # # * " * # * # ! ( * # *# * ! )# " ( * ! # ( ! ( ! ( ! (# * ! *! ( " ) ) # " # * ( * # *! ( # * *# # *# )" " )
* #
* #
* #
! ( ) * " ! ( * # # ! ( *# # * # * # * * # ! " ! (( ) ) " # * # ! * ( * # ) " * " # ) " )# " ) # * ! ( ) * " ! ( * # ! ) # " ( ! * # # *" # * ( ) * # ! * ( * # ) " ) " ## * # * # * # # * * # ) " * # * # (*" * ) " ! ( * # * # )! ) * # * # *" # * # * # ( ! ( * ! # # * * # * # * # ! ! ( ( *# # ! * # ( * # ) " *" * # *! # ) )! *( # !*" ! ( (# * # ( * ! *" # # *# # *# # ) (" ! *# ( )( # *# ) " )" " )! *! ** )# *" * " ) (# ) " * # # ! * # ( ! ( * ! ( "" ) ) " *# # ( ) " *" **! * # * # ) ) # * # *# # ) " ) " *# ! (* # ! * 680 ( (" * # * # # )# *# *# * # ! ( ! *" ( * ! # ) * # (# ! ! ( ) " ( * ) " )! " ! ( *# # *# # * # * # # * *" ) " ! ( )# " * # * ! ( ) " ) * ) " * # ! * # ( * # *# # * # # )! )# " * ) " ) * " * # (! ! (" *" * # ) # ()* # ! (( ! * # * # * " # ! ! *! # (*" ( *! # ) ( * # * # * # ( * # * " * # )# ) ! (" ) " ) " * # # ) " * # * * " # ) * # ! (" ) " ( ) ( ! * ! # * # * ! # * # (# ) " ! ( # ) " " * ) " * # * * # ) " ) * # * # * # ) " ) " ) * ! (# ! )" * ( " *# (# *# # ( * *# # *# )! " *! # *# *# * # # * * # !# ** * ! ( * # *( *# ! ! (# ( # ! ) (# *" # * # ) " ) " *# * # * # * # ! ! ( ( * * # ! ( * # * # * # * # ) " * # * # ! ( ) " * * # ) )# * # ((" ) ! " *# # *! # ) " *" # *)# )" ( # *# ) ! " * # * # ! (" * # *# # *# )# * # * " # * ** " ! ( ) )" " * # ) ! * )" " *) **# # * " # (# *# )* # * *# # ! ( *# # ** # * # * # ! ( * # * # ! * # ( * # ! * # ( ) " ! ! ( ( * # ) " *" # ) " ) )# *# # * *" * # # * # ! ( * # *# ) " * ! ( * # # * # * *# * # # *! ( *" # * # ) # *" ) " ) " ) * ! (# ) " *# * ! # ! ( * # ( * # ) "
880
# * )# " * * # ) "
* # # * ) " ) *" # *# * *# # # * * # * # * # # * ! (
* # ! ( ) ) " "
)# " *
§ ¦ ¨
( "! ) ) " )# " *
* #
! ( ) "
* #
* # # *
! ( " )
#" * )# * * #
§ ¦ ¨ 280
! (
* ## *
* # * * # *# ## * ! (! ( # *
§ ¦ ¨ 280
* #
* #
* #
* #
) "
) "
! ( * #
) "
) #" *
) "
) "
* #
# * * #
* # ) "
* #
V U
* #
87
V U 17
* # ! *" ( ) )# " ! (
) "
) *) " # # " * * # * # * " # ! ) ) " *( # * * # # ) " ) *" * *# )# " (# *! ! (# ) # " * ) * " # ) " ! ( * ! # * ( # * #
V U 85
101
£ ¤
V U 85
V U 85
) "
* # ! (
Bank Owned
Notice of Default Auction
Diridon Area Strong Neighborhoods Initiative Remainder of Merged Project Area City of San Jose Boundary
Exhibit B-6
²
Census Tracts with Over Concentration of Off-Sale Liquor Licenses 237
§ ¦ ¨
880
§ ¦ ¨
680
§ ¦ ¨
²
101
£ ¤
87
V U
880
§ ¦ ¨ 680
§ ¦ ¨
880
§ ¦ ¨ 280
§ ¦ ¨ 280
§ ¦ ¨ 87
V U 101
£ ¤ 17
V U
85
V U
85
V U 17
V U
Overconcentrated Census Tracts Diridon Area
Exhibit B-7
Strong Neighborhoods Initiative
§ ¨ ¦
Physical Blight in SNI
§ ¨ ¦ 880
101
£ ¤
V U 87
§ ¨ ¦ 680
§ ¨ ¦ 880
§ ¨ ¦ 280
§ ¨ ¦ 280
V U 87
V U 17
V U 85
101
£ ¤ V U 85
Physical Blight Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area City of San Jose Boundary
Exhibit B-8
²
Open Serious Code Violations within SNI 237
§ ¦ ¨
680
§ ¦ ¨ 880
§ ¦ ¨ 101
£ ¤
680
87
§ ¦ ¨
V U 880
§ ¦ ¨
Y X
Y X Y X X Y YX X Y YX Y X X Y Y X Y YX X Y X Y X Y X YX X Y X X Y Y X Y X YX YX Y X Y X Y X YX Y X YX X Y YX X Y X Y X Y X YX YX X Y X YX YX Y Y X Y X Y X X Y X Y Y Y X Y X Y X Y X Y X Y X Y X Y X Y X YX YX X Y X YX Y X YX X Y X Y X YX X Y X Y X Y Y X YX X Y Y YX X Y Y X Y X Y X YX Y X Y X Y X Y X Y X Y X Y X Y X Y X Y X Y Y X Y Y X Y X Y X Y X Y X Y X Y X Y X Y X Y X Y X YX YX Y X X YX X YX X Y YX X Y Y X Y X Y Y X Y Y X Y X Y X Y X Y X YX X Y X Y X YY X Y X Y X Y X Y X Y X Y X Y X Y Y X Y X Y X Y X Y X Y X Y X Y X YX X Y X Y X Y X Y X YX Y X Y X Y X Y X Y X Y X Y X Y X Y X Y X Y X Y X YX X Y X Y X Y X Y X Y X Y Y X Y X YX Y X YX X Y X Y X YX Y X X Y Y Y X X Y X Y X Y X Y Y X YX X Y X Y Y YX X Y X Y X Y X Y X Y X Y Y X YX X Y X Y X Y X Y X Y X Y X Y X Y X Y X YX X Y X Y Y X YX Y X Y X Y X X YX X Y X YX X Y X Y X Y X Y X YY YX X YX Y X Y Y X Y X Y Y X Y X Y X YX Y YX YY YX X YX X YX X Y X Y YX X Y X Y X YX Y X Y X XX Y YX Y YX Y X
X Y
880
§ ¦ ¨ Y X X Y
280
§ ¦ ¨
280
X Y Y YX X Y X Y X
X X Y Y Y X
§ ¦ ¨
87
V U
Y X
Y X YX X Y X Y Y X
17
V U YX X X Y Y Y X Y X Y X X Y X Y Y X Y X Y Y X YX X Y X
85
V U
101
£ ¤
85
V U Y X YX X Y X Y X Y X Y Y X Y X Y X Y X Y X Y X Y X Y X Open Cases Within Merged Project Area as of July 2008
85
V U
Area (Sqft)
1,200 - 79,999 80,000 - 159,999 160,000 to 240,000
Open Cases Within SNI as of October 2008 Area (Sqft)
Y X
2,600 - 24,999
Y X
25,000 - 49,999
Y X
50,000 - 75,035 Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area City of San Jose Boundary
Exhibit B-9
²
§ ¨ ¦ Complaints (1998-2008) SNI Infrastructure Deficiencies - Citizen § ¨ ¦ 680
237
101
£ ¤
§ ¨ ¦ 680
§ ¨ ¦ 880
U V 87
( !
( !
( (! ! ( ! ! ( ( ! ( ! ! ( ( ! ! ! ( ( ! ( ! ( ( ! ( ! ( ! ( ! ! ( ( ! ! ( ! ( ( ! (! ! ( ! ( ! ( ( ! ( ! ( ! ( ! ( ! ( ! (! ! (! ( ! ! ( ( ! ( ! ( ! (! (! ( ( ! ( ! ( (! ! ( ! ( ! ! ( ! ( ! ( ! ( ! ( ! ( ( ! ( ! ( ! (! ( ! (! ! ( ( ! ( ! ! ( ( ! ( ! ( ! ( ! ( ( ! ( ! 680 (! ! ( ! ( ! (! ! ( ( ! ( ! (! (! (! ( ( ( ! (! ! (! (! ! (! ! ( ! (! ! (! ( ( ( ! ( ! ( ! ( ! (! ! ( (! (! ( ! ( ! ! ( ( ! ( ! ( ! (! ! ( ! ( ! ( ! ( ! ( ! ( ! ( (! ( ! ( ! ( ! 280 ( ! (! ! ( ! ( ( ! ( ! ( ! ( ! ! ( ( ! ( ! ( ! ! ( ! ( ( ! ( ! ( ! ( ! ( ! ! ( ( ! (! ! ( (! ! ( ( ! ( ! ( ! ( ! ( ! ( ! (! ! (! ( ! ! ( (
§ ¨ ¦
§ ¨ ¦ 880
( ! ! ( !! ( (
§ ¨ ¦ 280
!( ( (! !
( !! (( ! ( !
( !! ( ( ! ( ! ( (! ! ( (! ! (! ( ! ( ! ( (! ! ( ! ( !
( ( ! !
§ ¨ ¦
U V 87
( !! (! ( ( ! ! (
101
£ ¤ U V 17
( !
( !
U V 85
( !
V U 85
U V 85
( !
Infrastructure Deficiencies Complaints Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area CityBoundary
Exhibit B-10
²
94089
§ ¨ ¦
Lots of Substandard Size in SNI 95035
95134
95132
§ ¨ ¦ 880
95054
95131
101
£ ¤ 95133
95127
V U 87
95050
95051
95110
95116 95112
§ ¨ ¦ 680
95113
§ ¨ ¦ 880
95129
§ ¨ ¦ 280
95148
95122
95126
§ ¨ ¦ 280
95128
95117
95121 95130
95130
95125
95008
V U 87
95111
V U 17
95138
95136
V U 85
95124
95118
101
95030
£ ¤ 95138
V U 85
95123
95032
95119
Lot of Substandard Size Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area City of San Jose Boundary Zip Codes
Exhibit B-11
95120
²
§ ¨ ¦
Lots of Substandard Size in Multiple Ownership in SNI
§ ¨ ¦ 880
§ ¨ ¦ 680
101
£ ¤
V U 87
* # ) " ) " ) " (" ! ) " ) )" ) " ) ) " " ) ) " )" " )" ) " ) " ) " ) " ) " ) " ) ) " )" " ) " ) " ) " ) " ) " ) " ) " ) " ) " ) " ) " * # *# ) # " * * # ) # " * # ) *# " * # *# * * # * * # * # *# # * # * # * # * # * #
§ ¨ ¦ 880
( !
* # # * * # * #
) * " # *# # * * * # *# ) " )# ( ! *" # *" # ) ( ! ) " ( ! ) " ) " ( ! * * " # )" ) " *# # ) ) " ) " ( ! * # * # ( ! ( ! ) " ) " ) " ) " ) " ) # " ) " ( ! ( ! ) " ( ! ) " * # * # * * # # * * # * # ) " * # ) " * # ) " * # ) " ( ! * # ( ! * # ) " )# * )" " ( ! * ( ! *# ) # " ( ( ! * ) ) " ( ! ( ! *# # )" " (! ! * !(!( !( " # *# ) ( ! ) " ) *# # ** # ) !( " ( ! (" ! ) " * *# * # *# # * # * ( ! ! (! ! *# # ) ) " * # )" " ( ( ! ( * # ( ! * # * # ( ! * # (# ! ( * *# ( ! *# *# # ( ! (! (! ! *# ( ! ( # (! * # ) " (! * # (! ! ) " * ) " (! ! * * # ( ) " ) " * # * # * # * # * # * # * # * # ( ! * # * # )# " )" " * # * * # * # ) * *# # * # * # * # * *# * * # *# *# *!(!(!(!(!(!(# # *# * # *# *# # ) * # (* ! * # *# # * # *" *# # ( ! *# # 680 * # ( ! * ( ! * # ( ! ( ! ( ! ** # *# # *# ) " ( ! ( ! * # * # * !( # * (# # * # * # * ( ! ! * # ( ( ! * # ( ! (! ! * # * # * # * # ( * # * # * # * # * # * # ( ! * # ) " * # (! ! )" " *# # ( ! * # ( ! * # ( ! ( ! * # * * # ) ) * # * # ( ! * # ( ! )" " ) " ( ! ** # * # * # ) " ) " ) " ) " )" " *# # ) ) " * ) " ) " *" # )" ) " ) " *# # * # * !( # ) " * # ) ) " ) " * # ( ! ) * " # " ( ! )# * * # ) " * # ) " ( ! )" * # * # ) *!( " # * * # ) # " * # )* " *" ) )" " * # )# " ) " *# # ) " ) ) ) " " * # *# # # * ) " )" *# # * # * ) " * * * # * # *" # ) ) " ) " ))" " *# # ) " * # * # ( ! * # ) " ) " ) " * # ) " * ) " ) " *# ) " ) )# " )" ) " *!( !(!( " # )" " ) " ) " ) " * # ) " ) ) " * # * * # ) " ) " *# # ) " * # ) " ) " * # ) " ) " ) " ) " ) ) " * !(# # ) ) " " ) " * # * # *" # * # ** # )" " * # * # * * # *# # ) **# # * # * # * * # ) " *# # * # * # ) " * # * # * # ( ! * # * # * # * *# # ) " * # * # *# * *# # ( ! ) )" " 280 ) " ) " (! ! * ) " **# # (! * # * *# # ( ) " *# # ) # " *# * ( ! ) " ) " ) "
* #
* # ( ! * # * # * # * ## * *# ! ( ( !
# *
§ ¨ ¦
* # # * * #
* #
# * * #
# * * # ( !
§ ¨ ¦ 280
( !
( !
" ) * # ) " " )
*# # * * #
§ ¨ ¦
( !
* # * # * * # # "# ) * # * *# * # * # * # * # * # * #
( !
( !
* # ## * *
( ! ( ! ! ( ( !
V U 87
* #
V U 17
V U 85
( !
( !
101
£ ¤
V U 85
V U 85
Lots of Substandard Size in Multiple Ownership ) " * #
Industrial
Commercial
Residential
Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area City of San Jose Boundary
Exhibit B-12
²
§ ¨ ¦
Physical & Economic Blight in SNI
§ ¨ ¦ 880
§ ¨ ¦ 680
101
£ ¤
V U 87
! ( ! (
( ! # * ( !
§ ¨ ¦ 880
( #! (* ! ! (
* ## ## * **
# *
# *
# *! ( # *
§ ¨ ¦ 680
( *! # *# # * * # *#
§ ¨ ¦ 280
# # * *
# * * # *#
# *
( ! 280
*# * # *# # * # * ( # ! *# # * ( ! *# ( # * *! (# *! # * ( ! ( ! # * ( !
# *
# *
( ! * # *# # *# * ( !
* (# # ( *! #! * ( !
# * # * # *
# *
( !
!# ( *
# *
( !
§ ¨ ¦
# *
# *
# * # * # * ( ! # # * * ( ! # * # *# *# ! ( #* * # * ! # * *( # * # # * *#
# *! ( # * # * *# # *# * *# # * # *# ( ! *# # * # # ** # * # * * # * ! ( ( # *! # #! ( # * * * # * # * * # *#
* # * #
( !
( !
( !
( !
V U 87
# * # *
V U 17
( ! # *
V U 85
V U 85
101
£ ¤ * ## *
V U 85
Physical Blight
Economic Blight ( ! # *
Open Hazardous Waste Cases
Closed Hazardous Waste Cases Diridon Area
Strong Neighborhoods Initiative
Remainder of Merged Project Area City of San Jose Boundary
Exhibit B-13
²
Appendix 3 Minimum Lot Size Requirements The following table presents minimum lot size standards from the City of San Jose’s Municipal Codes. These standards were used to determine lots of inadequate size within the Merged Project Area.
Minimum Lot Size by Zoning San Jose Merged Project Area Zoning and Square Footage Residential
Commercial
R-1-8
R-1-5
R-1-2
R-1-1
R-1-RR
R-2
R-M
5,445
8,000
20,000
43,560
217,800
5,445
6,000
Source: San Jose Municipal Code
R-MH 6,000
CO
CP
6,000
6,000
Industrial
CN
CG
IP
LI
HI
6,000
43,560
10,000
10,000
6,000
Appendix 4 Hazardous Waste Data Tables The following tables list the database, name, clean up status, address, contaminants of concern, and media affected for all active and closed hazardous waste sites that were identified in the SNI Redevelopment Area. The data below was used to reveal concentrations of active and closed hazardous waste sites in the SNI Redevelopment Area and show how hazardous waste not only impairs property values but affects the health and safety of SNI Redevelopment Area residents and workers.
Active Hazardous Waste Sites
Table 1
San Jose Merged Project Area - Strong Neighborhoods Initiative Redevelopment Area (1 of 2) 1
Database
Site Name
Cleanup Status
Address
Contaminants of Concern
Media Affected
Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker
SAN JOSE GLASS CO. PFEIFLE GROUP CHEVRON #9-3093 SAN JOSE ARENA BLOCK 5A CHEVRON #9-4259 BRANDENBURG-BUTTERS FMC CORP. PORTOLA CLEANERS
Open-Verification Monitoring Open-Verification Monitoring Open-Verification Monitoring Open-Verification Monitoring Open-Verification Monitoring Open-Verification Monitoring Open-Verification Monitoring Open- Site Assessment
425 AUZERAIS 1056 FIRST 395 BIRD 522 SANTA CLARA 147 SANTA CLARA 153 WEST JULIAN ST 333 WEST JULIAN 130 VIRGINIA ST W
gasoline gasoline gasoline gasoline gasoline VOC, PET, SVO VOC Tetrachloroethylene
other groundwater other groundwater other groundwater other groundwater other groundwater none specified none specified under investigation
Geotracker
REGAL #423
Open- Site Assessment
827 1ST
gasoline
other groundwater
498 4TH 150 WILLOW 638 AUZERAIS 1409 BIRD AVE 53 MONTGOMERY S 224 SANTA CLARA E 447 WILLIAM 250 SANTA CLARA ST E 247 SAINT JOHN 452 SANTA CLARA 59 SUTUM ST S 675 SANTA CLARA 455 JULIAN 961 SANTA CLARA 226 24TH ST S 1160 E. SANTA CLARA STREET 640 9TH ST N 1098 1ST 1098 5TH 290 KEYES ST 1702 STORY 2695 STORY 2710 STORY 1610 TULLY 1151 TULLY 1620 STORY 2035 STORY RD
gasoline gasoline gasoline Tetrachloroethylene gasoline petroleum - other gasoline Tetrachloroethylene gasoline gasoline gasoline diesel gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline diesel
other groundwater other groundwater other groundwater other groundwater soil none specified other groundwater under investigation other groundwater other groundwater under investigation under investigation other groundwater other groundwater under investigation other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater aquifer used for drinking water other groundwater other groundwater other groundwater soil
Geotracker SPARTAN GAS STATION Open- Site Assessment Geotracker T&T MINIMART Open- Site Assessment Geotracker DARIANO & SONS Open- Site Assessment Geotracker SWIFT CLEANERS Open- Site Assessment Geotracker PERRUCCI PROPERTIES Open- Site Assessment Geotracker DELUXE CLEANERS Open- Site Assessment Geotracker PETE'S STOP INC. Open- Site Assessment Geotracker DELUXE CLEANERS Open- Site Assessment Geotracker RICHARDSONS AUTO SERVICE Open- Site Assessment Geotracker 7-ELEVEN #17496 Open- Site Assessment Geotracker MARIAN JOHNSON Open- Site Assessment Geotracker SAN JOSE MEDICAL CENTER Open- Site Assessment Geotracker ROTTEN ROBBIE #42 Open- Site Assessment Geotracker ROOSEVELT COMM. CENTER Open- Site Assessment Geotracker FIFTY TWO FORTY EIGHT INC Open- Site Assessment Geotracker TORRES MOTORS Open- Site Assessment Geotracker M & M TIC INC Open- Site Assessment Geotracker SHELL Open-Remediation Geotracker ANCEWICZ PROPERTY Open-Remediation Geotracker PETE'S STOP Open-Remediation Geotracker BP #11238 (FORMER) Open-Verification Monitoring Geotracker TEXACO (CVX #21-1340) Open-Verification Monitoring Geotracker CHEVRON #9-8247 Open-Verification Monitoring Geotracker EXXON #7-3704 Open-Verification Monitoring Geotracker CHEVRON #9-2780 Open-Verification Monitoring Geotracker ALL STAR GAS Open- Site Assessment Geotracker COAST OIL STATION ROTTEN RO Open- Site Assessment 1 Other Groundwater is defined as water sources other than those used for drinking water Source: Geotracker, Envirostor, and Cerclis Environmental Databases
Open/Active Hazardous Waste Sites
Table 2
San Jose Merged Project Area - Strong Neighborhoods Initiative Redevelopment Area (2 of 2) Site Name Cleanup Status Database Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Envirostor Envirostor
SAN JOSE FIRE STATION #16 GOLDEN VALLEY PLAZA JET GAS BAND H BRAKE CAPITAL CAR WASH SHELL CONOCOPHILLIPS #6915 MOE'S ARCO GAS AND SHOP DAI CO VIET MOTORS QUALITY TUNE-UP #6 UNOCAL #5925 SHELL ROTTEN ROBBIE #11 STANDARD OIL (FORMER) UNOCAL #7259 JET GAS (FORMER) TEXACO UNOCAL #3926 COAST OIL BULK PLANT SHELL TEXACO TRAPANI PROPERTY ANTIQUES COLONY ANTIQUES COLONY BEACON #584 C & M SERVICE SAN CARLOS SITE FLOOR SERVICE SUPPLY CO SHELL JOHN'S TUNE-UP LEYVA MIDDLE SCHOOL SAFETY-KLEEN
Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open-Reopen Case Open-Reopen Case Open-Remediation Open-Remediation Open-Remediation Open-Remediation Open-Remediation Open-Remediation Open-Remediation Open Open-Verification Monitoring Open-Verification Monitoring Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open- Site Assessment Open-Remediation Open-Remediation Open Open
Envirostor CRISTINA WAREHOUSE C Open Cerclis LEW SMITH Open 1 Other Groundwater is defined as water sources other than those used for drinking water Source: Geotracker, Envirostor, and Cerclis Environmental Databases
1
Address 2001 KING 1855 ALUM ROCK 1589 ALUM ROCK 1737 ALUM ROCK RD 2701 STORY 2510 ALUM ROCK 1708 TULLY 1604 MCKEE 1590 MCKEE 1655 MCKEE 1696 STORY RD 1299 STORY 1699 STORY 2305 STORY 2230 ALUM ROCK 2370 ALUM ROCK 2790 STORY 1645 TULLY 1100 WHITE 2075 ALUM ROCK AVE 5270 MONTEREY 5260 MONTEREY 840 BASCOM 1915 SAN CARLOS ST W 1915 SAN CARLOS ST W 1744 SAN CARLOS 1098 SAN CARLOS 860 SAN CARLOS ST W 861 AUZERAIS 1025 WINCHESTER 1295 SAN CARLOS 1865 MONROVIA DRIVE 1147 NO TENTH ST
Contaminants of Concern
Media Affected
gasoline diesel gasoline 25322207 gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline gasoline Waste Oil/Motor/HY gasoline gasoline gasoline gasoline gasoline none specified gasoline gasoline gasoline Tetrachloroethylene gasoline gasoline gasoline Lead gasoline gasoline gasoline no info no info
other groundwater other groundwater other groundwater under investigation aquifer used for drinking water other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater other groundwater aquifer used for drinking water other groundwater aquifer used for drinking water none specified aquifer used for drinking water aquifer used for drinking water aquifer used for drinking water soil soil other groundwater other groundwater under investigation other groundwater aquifer used for drinking water other groundwater under investigation hazardous waste
1045 N 10TH ST no info
no info no info
hazardous waste no info
Closed Hazardous Waste Sites
Table 3
San Jose Merged Project Area - Strong Neighborhoods Initiative Redevelopment Area (1 of 3) Database
Site Name
Cleanup Status
Address
Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker
FRANK'S AUTOMOTIVE CENTER COMMUNICATIONS GOLDEEN'S WAREHOUSE GEM PROPERTY STATE RADIATOR SJ REDEVEL D'AMICO PROPERTY MOORE INVESTMENTS SAN JOSE CLEANERS T&T MINIMART SAN JOSE FIRE STATION #3 THE RADIATOR DOCTOR YELLOW CAB COMPANY EXXON STATION #7-3539 BENNETT'S AUTO SHOP VIKING MATERIALS A & A AUTO UNOCAL #6231 CLOUDBURST CAR WASH KRALYEVICH PROPERTY BUTCHER ELECTRIC MOORE INVESTMENT COMPANY VITALE AUTO BODY WOODCHUCKERS SCHINDLER PROPERTY AUTOMATIC CAR WASH SHELL TEXACO SCVTA - TAMIEN ORCHARD SUPPLY HARDWARE BANK OF TRADE BUILDING RUSH ROOFING SPARTAN SERVICE STATION INDEPENDANT SCISSOR LIFT CENTRAL SUPPLY SJSU CENTRAL PLANT DEL MONTE PLANT 51 PETE'S AUTO SERVICE LOOMIS ARMORED, INC. C&H AUTO CORNERSTONE PROPERTY SJSU-INDUSTRIAL STUDIES SJSU-CORPORATE YARD FILICE ESTATE VINEYARDS PHU'S AUTO SALES JF & C INVESTMENTS
COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED
ALMADEN AVE AUZERAIS AVE AUZERAIS AVE AUZERAIS AVE GIFFORD AVE E MARGARET ST E VIRGINIA ST W SAN CARLOS ST WILLOW ST MARTHA ST PARK AVE BIRD AVE W SAN CARLOS ST WILLOW ST S 5TH ST S 3RD ST W SAN CARLOS ST SAN CARLOS ST AUZERAIS W SAN FERNANDO ST MARTHA ST AUTUMN ST S S SIXTH ST S 3RD ST S MONTGOMERY ST E VIRGINIA ST S 4TH ST LICK AVE W SAN CARLOS ST E SANTA CLARA ST PARK AVE KEYES ST MCEVOY ST HUMBOLT ST WASHINGTON SQUARE BUSH ST KEYES ST E SAINT JOHN ST S 6TH ST 4TH E SAN FERNANDO ST E SAN FERNANDO ST MONTEREY RD KEYES ST N 2ND ST
Source: Geotracker, Envirostor, and Cerclis Environmental Databases
Closed Hazardous Waste Sites
Table 4
San Jose Merged Project Area - Strong Neighborhoods Initiative Redevelopment Area (2 of 3) Database Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker Geotracker
Site Name
Cleanup Status
J. W. CONSTRUCTION HUDSON STATION (FORMER) RYLAND MEWS SCC HOUSING AUTHORITY PAULINE KEPHART PROPERTY SJSU ENGINEERING BUILDING ATRIUM VENTURES SAN JOSE CITY OF SATARIANO PROPERTY SOUSA PROPERTY BEECHNUT NUTRITION CORP. BARITEAU'S LINEN SERVICE HENRY'S MERCEDES REPAIR HEWLETT PACKARD GENEROUS GEORGE MARTINEZ SHELL CHEVRON #9-3477 FORMER QUICK CIRCUITS SWIM POOL SUPPLY SORRENTO CHEESE SORRENTO CHEESE SORRENTO CHEESE THUNDERBIRD GOLF COURSE MAYFAIR PACKING MONTES AUTO SALES CENTURY CITY PARKING LOT SHELL COAST OIL COMPANY 7-ELEVEN #18039 EXXON #7-0267 ALUM ROCK HARDWARE MITSUBISHI AUTO DEALERSHIP MCDONALDS PROPERTY MISSION CONCRETE PRODUCTS SAN JOSE STEEL CO., INC. MOBIL (#10-JIX) CHEVRON #9-1574 UNOCAL #6915 CHEVRON #9-4655 DENNIS'S BEACON EXXON #7-3297 GUMMOW PROPERTY
COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED
Source: Geotracker, Envirostor, and Cerclis Environmental Databases
Address E SANTA CLARA ST KEYES ST 1ST ST N E JULIAN AVE N 6TH ST WASHINGTON SQUARE BLOSSOM RIVER DR HARRON ST E JULIAN AVE WASHINGTON SENTER RD 13TH ST N S 24TH ST STORY RD S 24TH ST STORY RD STORY RD STORY KNOX AVENUE STORY RD SUNNY CT SUNNY SUNNY CT S KING RD SAN ANTONIO E/PRESERVATION ALUM ROCK AVE SOUTH THIRD STREET STORY RD ALUM ROCK AVE ALUM ROCK AVE ALUM ROCK ALUM ROCK AVE CAPITOL EXPWY E SANTA CLARA &27TH ST ST N 30TH ST N 30TH ST LANAI AVE ALUM ROCK AVE TULLY RD TULLY RD MCKEE RD ALUM ROCK AVE E JULIAN AVE
Closed Hazardous Waste Sites San Jose Merged Project Area - Strong Neighborhoods Initiative Redevelopment Area (3 of 3) Site Name Database Geotracker FORMER TEXACO STATION Geotracker ANDRADE TRUCKING Geotracker DIAMOND SHAMROCK Geotracker CHEVRON #9-1573 Geotracker UNOCAL #6464 Geotracker SCCEHD Geotracker SHELL Geotracker BASCOM MOTORS Geotracker SHELL Geotracker J.I.L. AUTO SALES Geotracker B.P. SERVICE STATION Geotracker UNOCAL #6028 Geotracker ANTIQUES COLONY Geotracker DOMBROW PROPERTY Geotracker SAN JOSE FIRE STATION #4 Geotracker UNOCAL #7001 Geotracker TEXACO Geotracker ANGELO FERRIGNO Geotracker SHELL Geotracker CHEVRON #9-6027 Geotracker BARRY SWENSON BUILDERS Geotracker ARCO #9531 Geotracker UNOCAL #5922 Geotracker A.J. SERVICE STATION Geotracker GORDON & SILVA Geotracker MARK MORRIS TIRES Geotracker FORMER SEARS PROPERTY Geotracker ELECTRICAL DISTRIBUTORS Geotracker ALL AMERICAN INSULATION Geotracker CHEVRON TRAINING CENTER Geotracker REED AND GRAHAM Geotracker SCCTA - CENTRAL BUS YARD Geotracker CHEIM LUMBER Geotracker SAN JOSE FIRE SEARCH & RESCUE Geotracker SAN JOSE ARENA PG & E PARCEL Geotracker SAN JOSE ARENA GEISLER PARCEL Geotracker SAN JOSE ARENA RITCHEY PARCEL Geotracker DOWNTOWN AUTO EXPRESS/SJ REDEV Geotracker BARRY SWENSON BUILDING CONST. Geotracker L&D SERVICE STATION (FORMER)
Table 5 Cleanup Status COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED
Address STORY RD MARBURG WAY BLOSSOM HILL RD BLOSSOM HILL RD BRANHAM LN MOORPARK AVE BASCOM AVE BASCOM AVE BASCOM AVE STEVENS CREEK BLVD S WINCHESTER BLVD MOORPARK AVE CLEVELAND ST CLEVELAND ST LEIGH AVE PARKMOOR AVE S WINCHESTER BLVD S WINCHESTER BLVD S WINCHESTER BLVD S WINCHESTER BLVD MERIDIAN AVE WINCHESTER BLVD S WINCHESTER BLVD MERIDIAN AVE MERIDIAN AVE W SAN CARLOS ST W SAN CARLOS ST AUZERAIS ST SAVAKER ST SUNOL ST SUNOL ST SAN CARLOS SAN CARLOS AUZERAIS AVE MONTGOMERY ST N MONTGOMERY ST N MONTGOTMERY ST N E SANTA CLARA ST N 2ND ST STORY RD
Geotracker
SECURITY CONTRACTOR SERVICES
COMPLETED - CASE CLOSED
N 28TH ST
Geotracker
CALIFORNIA AUTOMOTIVE CENTER
COMPLETED - CASE CLOSED
S CAPITOL AVE
Geotracker Geotracker Geotracker
SANTA CLARA COUNTYDEPT OF ENVMNTL HEALTH THRIFTY #175 PACIFIC BELL STORAGE YARD
COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED COMPLETED - CASE CLOSED
MOORPARK AVE E JULIAN AVE ROSE AVE
Source: Geotracker, Envirostor, and Cerclis Environmental Databases
Appendix 5 RealtyTrac Foreclosure Information According to RealtyTrac, the foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default or Lis Pendens. The foreclosure process can end one of four ways: 1. The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure. 2. The borrower/owner sells the property to a third party during the preforeclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history. 3. A third party buys the property at a public auction at the end of the preforeclosure period. 4. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure, via a short sale foreclosure or by buying back the property at the public auction. Properties repossessed by the lender are also known as bank-owned or REO properties (Real Estate Owned by the lender). Foreclosure filings include foreclosure-related documents in all three phases of foreclosure: Default — Notice of Default (NOD) and Lis Pendens (LIS); Auction — Notice of Trustee Sale and Notice of Foreclosure Sale (NTS and NFS); and Real Estate Owned, or REO properties (that have been foreclosed on and repurchased by a bank) This foreclosure process, or state of foreclosure, allows RealtyTrac to assemble data into one of three categories: Pre-Foreclosure Auction Bank-owned
Appendix 6
Appendix 7 CB Richard & Ellis Market Areas The CBRE submarket areas used to compared Merged Project Area and Silicon Valley lease and vacancy rates are further identified below.
CBRE Market Area
% in MPA Merged Project Area Project Areas within CBRE Market Areas
North San Jose
50%
Central San Jose
75%
Downtown
Industrial - Rincon de Los Esteros
Downtown - All SNI - Blackford, Winchester, Burbank/DelMonte, Delmas Park, Market Almaden, University, 13th Street, Five Wounds (east of 101) NBD - West San Carlos, The Alameda, Japantown, East Santa Clara NBC - Bascom Station, Fruitdale Station Industrial - Julian Stockton Diridon - All
IBP
SNI - Gateway East, Mayfair, East Valley/680 (north of 280), Five Wounds (west of 101) NBD - Alum Rock
South San Jose San Jose South
San Jose East
San Jose Meridian
20% SNI - Edenvale/GreatOaks, Hoffman/ViaMonte Industrial - Edenvale NBC - Monterey/Roeder SNI - East Valley/680 (south of 280), KONA, West Evergreen, Tully/Senter NBD - Story Road NBC - Quimby & White Industrial - Olinder, Monterey Corridor SNI - Union & Curtner, Greater Gardner, Washington, Spartan Keyes NBC - Union & Foxworthy, Union & Camden
CBRE Submarket Map
Appendix 8 Excerpts from the Report to Council for the Amendment to the Redevelopment Plans for the Merged Project Area Tax Increment Limit & Bonded Indebtedness Limit Increases, March 26, 2009 (Updated April 13, 2009)
Attached as separate document
SAN JOSE REDEVELOPMENT AGENCY 200 EAST SANTA CLARA ST SAN JOSE, CA 95113
EXCERPTS FROM THE REPORT TO COUNCIL Amendment to the Redevelopment Plans for the Merged Project Area Tax Increment Limit & Bonded Indebtedness Limit Increases San Jose Redevelopment Agency March 26, 2009 Updated April 13, 2009
ROSENOW SPEVACEK GROUP, INC. www.webrsg.com
SAN JOSE REDEVELOPMENT AGENCY REPORT TO COUNCIL
REASONS FOR THE AMENDMENT & DESCRIPTION OF SPECIFIC PROJECTS THE AGENCY MAY PURSUE INCLUDING HOW POTENTIAL PROJECTS WILL ADDRESS CONTINUING REDEVELOPMENT 3 OF THE PROJECT AREA OVERVIEW 3 REASONS FOR THE AMENDMENT 3 AGENCY PROGRAMS AND PROJECTS 4 PUBLIC FACILITIES AND SPACES 5 TRANSPORTATION 6 ECONOMIC DEVELOPMENT 6 HAZARDOUS MATERIALS AND REMEDIATION 7 STREETSCAPES 7 PARKING 8 ELIGIBLE CITY IMPROVEMENTS 8 LOW AND MODERATE AFFORDABLE HOUSING PROGRAMS 10 FISCAL SUMMARY OF PROGRAMS 10 A DESCRIPTION OF THE REMAINING BLIGHT BLIGHTING CONDITIONS Physical Blight and Economic Blight BLIGHT ANALYSIS PHYSICAL BLIGHTING CONDITIONS IN THE MERGED PROJECT AREA UNSAFE AND UNHEALTHY BUILDINGS FOR PERSONS TO LIVE OR WORK Code Violations Serious Dilapidation and Deterioration FAULTY OR INADEQUATE WATER AND SEWER UTILITIES Sanitary Sewer System Deficiencies Storm Sewer System Deficiencies CONDITIONS PREVENTING OR SUBSTANTIALLY HINDERING THE VIABLE USE OF BUILDINGS OR LOTS Substandard Lot Sizes Financial Viability of Substandard Lots LOTS OF INADEQUATE SIZE IN MULTIPLE OWNERSHIP ECONOMIC BLIGHTING CONDITIONS IN THE MERGED PROJECT AREA DEPRECIATED OR STAGNANT PROPERTY VALUES Residential Property Values Foreclosures Commercial Property Values IMPAIRED PROPERTY VALUES DUE TO HAZARDOUS WASTES HIGH BUSINESS VACANCIES & LOW LEASE RATES Vacancy Rates within the Industrial Redevelopment Area Summary of Lease Rate and Vacancy Rate Information EXCESS OF BARS, LIQUOR STORES, OR ADULT-ORIENTED BUSINESSES CRIME RATES SUMMARY OF PHYSICAL AND ECONOMIC BLIGHTING CONDITIONS
12 12 13 14 16 18 18 24 25 25 29 30 30 31 39 41 43 43 46 54 58 64 66 69 70 74 77
SAN JOSE REDEVELOPMENT AGENCY REPORT TO COUNCIL SUMMARY OF PHYSICAL BLIGHT SUMMARY OF ECONOMIC BLIGHT CONCLUSION
78 78 79
AN EXPLANATION OF WHY THE ELIMINATION OF BLIGHT AND REDEVELOPMENT OF THE MERGED PROJECT AREA CANNOT BE COMPLETED WITHOUT THE AMENDMENT 82 OVERVIEW 82 THE EXISTING TAX INCREMENT LIMIT 82 RELATIONSHIP BETWEEN THE NEED TO AMEND THE FINANCIAL LIMITS AND THE COST OF THE CONTINUING PROGRAM OF REDEVELOPMENT 83 WHY CITY FUNDING SOURCES ARE INADEQUATE TO ADDRESS BLIGHT 84 WHY OTHER GOVERNMENTAL FUNDING SOURCES ARE INADEQUATE TO ELIMINATE BLIGHT 84 WHY PRIVATE ENTERPRISE ALONE CANNOT ELIMINATE BLIGHT 85 THE PROPOSED METHOD OF FINANCING OVERVIEW FINANCING METHODS AND ALTERNATIVES AVAILABLE TO FUND REDEVELOPMENT SOURCES OTHER THAN TAX INCREMENT TAX INCREMENT REVENUES CALCULATING THE NEW TAX INCREMENT LIMIT THE EXISTING BONDED INDEBTEDNESS LIMITS PROPOSED FINANCING METHOD AND ECONOMIC FEASIBILITY REASONS FOR CONTINUING TO INCLUDE TAX INCREMENT FINANCING
87 87 87 87 88 89 89 89 91
NEIGHBORHOOD IMPACT REPORT OVERVIEW IMPACT ON RESIDENTS IN THE PROJECT AREA AND SURROUNDING AREA RELOCATION ENVIRONMENTAL QUALITY TRAFFIC CIRCULATION COMMUNITY FACILITIES AND SERVICES 1. Police Services 2. Fire Protection 3. Libraries 4. Parks and Recreation 5. Gas, Electricity, and Telecommunications 6. Storm Drainage 7. Solid Waste Disposal 8. Water 9. Wastewater SCHOOL POPULATION AND QUALITY OF EDUCATION PROPERTY ASSESSMENTS AND TAXES RELOCATION AND LOW- AND MODERATE-INCOME HOUSING Affordable Housing Units to be Destroyed or Removed Projected Displacement of Low- and Moderate-Income Persons and Families
93 93 93 93 94 94 95 95 96 96 96 96 97 97 97 97 98 98 99 99 99
SAN JOSE REDEVELOPMENT AGENCY REPORT TO COUNCIL Number and Location of Replacement Housing Number and Location of Low- and Moderate-Income Housing Planned Other than Replacement Housing Financing Method for Proposed Low- and Moderate-Income Dwelling Units Planned for Construction or Rehabilitation Timetable for Provision of Relocation, Rehabilitation, Replacement and Inclusionary Housing Other Matters Affecting the Physical and Social Quality of the Environment
LIST OF APPENDICES Appendix 1 –
Blight Map Exhibits (11x17 inches)
Appendix 2 –
Minimum Lot Size Requirements
Appendix 3 –
Realty Trac Foreclosure Information
Appendix 4 –
Merged Project Area Zip Code Map
Appendix 5 –
Hazmat Data Tables
Appendix 6 –
CB Richard & Ellis Market Areas
Appendix 7 –
Blight Photographs From Field Survey
***Appendices are not included herein but are available from the San Jose Redevelopment Agency.***
100 100 101 101 101
REASONS FOR THE AMENDMENT & DESCRIPTION OF SPECIFIC PROJECTS THE AGENCY MAY PURSUE INCLUDING HOW POTENTIAL PROJECTS WILL ADDRESS CONTINUING REDEVELOPMENT OF THE PROJECT AREA
OVERVIEW Section A includes the reason for the Amendment and descriptions of the existing public improvement and economic development programs (“Programs”) that will continue to be undertaken by the Agency in the Merged Project Area. CRL Section 33352(a) requires a description of the Programs proposed to eliminate any remaining blight and a description of how these Programs will improve the conditions of blight. REASONS FOR THE AMENDMENT The Agency has made progress in eliminating blight throughout the Merged Project Area by actively pursuing revitalization opportunities and engaging in redevelopment activities as allowed by the CRL. Unfortunately, blighting conditions still remain within the Merged Project Area. The proposed Amendment is necessary to continue the Agency’s efforts in eliminating physical and economic blight and attracting private investment to the Merged Project Area. Section B of this Report presents a discussion and documentation of the remaining blighting conditions prevalent within the Merged Project Area. The proposed Amendment will enable the Agency to continue to effectively implement existing programs, capital improvements, planning activities, commercial, industrial and residential rehabilitation, and increase the overall viability of the properties within the Merged Project Area. The existing tax increment limit for the Merged Project Area was established in 1986 by Ordinance No. 22412. The tax increment limit was initiated when only nine (9) Project Areas had been adopted. Since the limit was established, the Agency has adopted and added 12 more Project Areas to the Merged Project Area. There was no increase to the financial limits when these 12 Project Areas were added because at the time the $7.6 billion limit appeared to be sufficient, particularly because tax increment authority was not included with most of the new Project Areas. However, recent analysis indicates that the existing tax increment limit will not be sufficient. In 1986, the Agency established a $7.6 billion limit on the amount of tax increment that may be received from the Merged Project Area to pay indebtedness. As of June 20, 2008, the Agency received $2,474,275,845 of tax increment revenue (this excludes the $48.4 million in tax increment paid to ERAF in 2002-03, 2003-04, 2004-05 and 2005-06.) Of the remaining $5.1 billion to be received, it is projected that $3.1 billion will be used for bond debt service on existing bonds, $1 billion will be passed through to other taxing entities, as well as negotiated tax sharing payments to the County, and $1.0 billion must be allocated to affordable housing. These are estimates of future allocations. The actual payments of future bond debt service will vary because a portion of the outstanding bonds have variable interest rates, and actual payments to other taxing entities will vary depending on actual growth in assessed valuation. Although there is significant tax increment yet to be collected before the tax increment limit is reached, most of these funds are committed to existing projects and obligations. With a 2.0% rate of tax increment growth, the Agency would likely reach the tax increment limit in 2024-25; at 7.4% growth the limit will be reached in 2022-23. The Agency has the ability to continue to pursue implementation of the existing Program through 2041 if the tax increment limit is increased. This is the primary reason for the Amendment. The Amendment will also consolidate and establish one limit on the amount of bonded indebtedness that may be outstanding at one time. Currently some of the Project Areas have no requirement for a bonded indebtedness limit, and others have independent bond limits. Because the tax increment from the Merged Project Area is cross-collateralized and is a parity lien to all bondholders, the Agency intends to clarify the bonded indebtedness limit and establish one consolidated amount for the entire Merged Project Area of $7.6 billion. The proposed Amendment will also modify the list of eligible public improvements in each Redevelopment Plan so that all Redevelopment Plans have consistent language relating to public improvements, and public
3
SAN JOSE REDEVELOPMENT AGENCY
health and safety facilities are incorporated in each Redevelopment Plan’s list of public improvements. The text in each of the Redevelopment Plans is currently is very similar, however, there were slight variations depending on when the initial Redevelopment Plan was adopted. The purpose of this text amendment is to achieve uniformity between all of the Redevelopment Plans that comprise the Merged Project Area and to clarify that public health and safety facilities are included in the list of eligible improvements in each Redevelopment Plan. Because all of the tax increment collected throughout the Merged Project Area is cross-collateralized, all tax increment is eligible to be used for any implementation project or program throughout the entire Merged Project Area. Therefore the text in each Redevelopment Plan pertaining to public improvements should be consistent. By increasing the Agency’s financial capacity as proposed by the Amendment, the Agency will be better equipped to implement projects necessary to eradicate the remaining blight. The Merged Project Area provides 40% of the City’s jobs, and it is anticipated that redevelopment activities coordinated by the Agency will provide additional employment opportunities and enhance the quality of life within the Merged Project Area and surrounding community. The benefits from the Amendment would improve the immediate and longrange economic viability of the entire City of San Jose. As described, the Agency is proposing to continue to implement existing projects and programs within the Merged Project Area that will continue to eliminate blight. In these difficult economic times, increasing the Agency’s ability to eradicate blight will benefit not only the Merged Project Area, but the entire City, and ultimately the County and State economy. All redevelopment implementation activities will be subject to future review and approval by the Board, and/or other appropriate agencies, committees, and/or other interested parties as appropriate or required by CRL. AGENCY PROGRAMS AND PROJECTS The critical element of this Amendment revolves around the amount of dollars needed to fund the existing Programs that will eliminate blighting conditions currently existing in the Merged Project Area. The Agency estimates that the current tax increment limit of $7.6 billion will likely be reached in fiscal year 2022-2023. Of the approximate $2.5 billion already collected in tax increment, the additional $5.1 billion would be collected by 2022-2023. As will be discussed in Sections D and E, all of the additional tax increment revenue to be generated in the Merged Project Area is already committed to existing Programs, debt service, and administrative and other operating costs, leaving little financial ability to address remaining blight and to create additional employment and housing opportunities. In general, arriving at a limitation figure requires taking capital costs needed for existing Programs and recognizing that this principal amount needs to be increased to account for principal and interest on debt service payments over time if bonds are issued to pay for the capital costs. To this amount, additional revenue must be added to cover the following: housing set aside requirements (20% of the total gross increment received by the Merged Project Area), pass through payments to other affected taxing entities, existing bonded debt service, and County Auditor-Controller administrative charges. By amending the Redevelopment Plans to increase the tax increment revenue limit, the Agency hopes to continue redevelopment efforts in the Merged Project Area. This newly available revenue and capital will fund the existing Programs that will enhance the value of the area, bring additional private investment into lesserserved areas of the community, and eliminate blighting conditions. Through public and private investment, the Agency plans to address physical and economic blight in the Merged Project Area, which in turn brings economic revitalization, development, affordable housing and employment opportunities into the area. The following identifies and describe the existing Programs the Agency will continue to undertake over time in its effort to address blight, create housing and employment opportunities, and complete revitalization of the Merged Project Area. The Agency will continue to implement existing Programs and is not proposing as part of the Amendment any new programs or projects.
4
SAN JOSE REDEVELOPMENT AGENCY
PUBLIC FACILITIES AND SPACES One of the preeminent goals of the Agency is to make improvements to the City’s public facilities and open spaces, particularly within the Merged Project Area. By making much needed investments in community infrastructure, parks, and open spaces, the Agency makes a direct investment in the community. These investments translate to social and economic improvements in the community. Because these improvements renew the physical environment, values are enhanced that then stimulate private investment in the community. To help guide the creation of an environment that encourages the growth and prosperity of public facilities and spaces, the Agency has outlined Programs to address this area of redevelopment. The Agency has budgeted approximately $1.65 billion for these Programs. These Programs will focus on the redevelopment and/or rehabilitation of inadequate public facilities. With the help of acquisition and construction Programs, the Agency will create open space opportunities and assist in the development of parks and open spaces. Additionally, the development and improvement of public facilities will help improve the health, safety, and welfare of Merged Project Area residents and workers due to improved pedestrian and vehicular traffic circulation and access. The majority of the public facilities built by the Agency are, in fact, public-private partnerships. Consequently, the Agency’s investment clearly spurs private investment in everything from the arts to public gathering spaces. Another benefit of these public facilities is the potential for job creation. Jobs are needed to construct the facilities, and oftentimes, jobs are needed to run or maintain the facilities. By adding jobs within the Merged Project Area, employment opportunities for residents in the area will be enhanced helping to alleviate the problems of higher unemployment and lower median income than in other areas of the City.
New and improved public facilities and open spaces can have a direct impact on various blighting conditions observed in the Merged Project Area. Property values in a neighborhood can be dramatically improved with a new park, playground, or rehabilitated open space. Buyers, especially those with young children, will be attracted to an area that offers a wealth of open space and recreational choices. By making these types of investments, the Agency will make a direct positive impact on property values in the areas surrounding the particular park or open space. Another blighting condition that can be addressed and alleviated through investments in parks and open spaces is a decrease in criminal activity. By making concerted planning efforts, new parks and open spaces can be designed with a focus on decreasing the level of criminal activity. In fact, the National Community Development Through Environmental Design (“CPTED”) Institute has been formed for such a purpose. As stated on the CPTED website: “CPTED’s goal is to prevent crime through designing a physical environment that positively influences human behavior – people who use the area regularly perceive it as safe, and would-be criminals see 1 the area as a highly risky place to commit crime.” Law enforcement officials have teamed with architects, planners, landscape professionals and builders to make parks, buildings, and open spaces safer by creating fewer opportunities for criminal activity to take place. For example, improved lighting, fewer places to hide and not visible from a parked police car, and improved lines of site to help people keep an eye on others from a greater distance are all part of the planning that go into designing a building or park with safety in mind. By designing these parks and opens spaces with basic CPTED principals, the Agency can have a direct impact on criminal activity in and around these facilities. This Program also allows the Agency to rehabilitate dilapidated and older structures for a public purpose such as a park facility, community center, or other community-based activity center. By rehabilitating older structures in commercial and retail areas, the Agency can have a positive impact on lease rates in adjacent properties. When older structures are redeveloped, more businesses will want to locate in around these improved structures. This increase in demand will have a direct positive effect on lease rates and work to 1
Crime Prevention Through Environmental Design website. November 20, 2008. http://www.cpted-watch.com/
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decrease the overall vacancy rates in a particular area. In this, the Agency will actively combat blighting conditions. TRANSPORTATION Providing an excellent network of transportation options for residents, visitors, and the business community will always be a goal of the City and Agency. Given the volatility in the energy market and the City’s continuing growth, the City and Agency seek to provide for a wide range of public transportation options. The Agency has budgeted approximately $25 million for these transportation Programs. These transportation Programs specifically target blight by addressing inadequate transportation infrastructure, which is a critical element to housing, office, and retail development in the Merged Project Area. Transportation improvements, including pedestrian and bicycle safety improvements, will also help improve the health, safety, and general welfare of Merged Project Area residents by making transportation more efficient and coordinated. Agency financial support for these Programs will play a critical role in completing transportation projects that benefit the Merged Project Area as well as the community at-large. The private sector cannot always be expected to shoulder the burden of required infrastructure improvements as part of every development project. By identifying and prioritizing these Programs, the Agency is taking a proactive role in enriching the transportation options available and filling a funding gap that would not be provided by the private sector. Transportation improvements can have a direct impact on property values. As observed, the Merged Project Area suffers from depreciated property values compared to the City and County. By making necessary and needed transportation improvements, the Agency can make a direct positive impact on these depreciated property values. New roads, sidewalks, bike and pedestrians paths are all a welcome addition to any residential or commercial property. Given the choice between a home on a newly paved street with sidewalks and a home on a street in serious need of repairs and lacking any safe pedestrian pathways, which home would most likely have the higher property value? Few people would argue for the latter. The same observation would also hold true for commercial and retail property. The value of a building with crumbling sidewalks and access roads would be dramatically improved by transportation funding on the part of the Agency. ECONOMIC DEVELOPMENT One of the goals of the Agency is to promote economic development in the Merged Project Area and the entire City. Through various efforts that seek to improve the economic well-being and quality of life for residents and businesses by creating and/or retaining jobs and supporting or growing incomes and the tax base, the Agency will help stimulate private investment and expand the economic base of the Merged Project Area and the entire City. The Agency has budgeted approximately $139 million for these economic development Programs. Some examples of these Programs the Agency can directly participate in include the acquisition and assembly of small, underutilized and/or poorly configured parcels of land for reuse and new development. The configuration of these types of lots can seriously hinder their viable use, and also adversely impact their value. The Agency can engage in property acquisition activities to assemble smaller parcels to facilitate larger developments. These developments are typically designed to include a variety of types of commercial uses including grocery stores, banking and financial institutions, and drug and other convenience stores. In some instances, smaller neighborhood pockets suffer from a lack of these basic retail services. The Agency can actively pursue acquisition of property to help facilitate the development of these types of businesses. These activities will help facilitate reinvestment by other surrounding property owners and private enterprise. As a result, support will be provided to assist in larger programs that could not be funded through private investment alone and employment opportunities will be created. By allocating resources for these Programs, the Agency is being proactive in addressing and remediating blight in the Merged Project Area. For example, the Merged Project Area suffers from many challenges
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dealing with lots that do not meet minimum lot size requirements, lots with incompatible adjacent uses, lots in multiple ownership, and lower lease rates and higher vacancy rates. By purchasing and consolidating lots, the Agency can directly alleviate many of these problems. Vacant properties are another challenge facing the Merged Project Area. This is another area where Agency funding can be used to purchase vacant properties, and either consolidate them with other surrounding parcels, or partner with a private developer to complete improvements and return the property to a valued use that provides jobs and a tax base. Other Agency Programs in this category include providing a centralized water detention basin in the Edenvale area that will also enhance the Coyote watershed, making improvements to vacant retail space to enhance future tenant opportunities, and providing infrastructure for the creation of new employment opportunities. Agency programs will also address blight by removing hindrances that interfere with viable use of land and provide much needed commercial services to residents in areas that suffer from a lack of these needed services. The Agency could also allocate funds in this Program to various property improvement programs. By setting aside funds as loans and grants, the Agency could work close with residents to alleviate serious blighting conditions such as dilapidated roofs, faulty weather protection, and other blight observed during the field survey and evidenced by Code Enforcement activity. This would also increase property values and improve economic conditions in the Merged Project Area. HAZARDOUS MATERIALS AND REMEDIATION The presence of hazardous waste contamination can often be a major impediment to the redevelopment of a property. Hazardous waste contamination can severely delay the disposition and development of a property due to testing, remediation, difficulty in resolving existing or potential liability issues, and difficulty in obtaining financing for clean-up. Remediation of property that contains environmental contaminants and hazardous materials can often lead to Programs that far exceed the funding capacity of the private sector. By actively remediating hazardous waste and addressing the inadequacies of the current public infrastructure system, the Agency is proactively addressing blight. As a result of the lengthy and costly process to remediate a hazardous waste site or make a needed public infrastructure improvement, properties that contain hazardous waste contamination or lack public infrastructure are often left underutilized and abandoned. The Agency has budgeted approximately $110 million for these remediation Programs. As detailed in Section B, the assessed value per lot square footage of active hazardous waste sites within the SNI Redevelopment Area is 31.4% less for commercial land uses and 41.7% less for residential uses than those parcels that do not contain hazardous waste. For active hazardous waste sites within the Industrial Redevelopment Area, assessed values are 60.8% less for industrial land uses, 76.9% less for commercial, and 97.5% less for residential. By engaging in environmental remediation, the Agency will directly address blighting conditions, make improvements to property values and address health and safety issues for both commercial and residential uses. The Agency has identified numerous Programs that will assist the private sector in carrying out the required environmental clean-up of selected sites. These Programs will also help the Agency address existing blighting conditions by improving impaired property values, stimulating private investment and reducing significant risks to the health, safety, and welfare of Merged Project Area residents and workers near contaminated properties. By making concentrated efforts in the remediation of hazardous materials and contamination, the Agency will assist in the creation of more viable locations for the private sector to create more employment and residential options in the Merged Project Area and citywide. STREETSCAPES Dilapidated buildings, crumbling facades, and street-level environments that are unsafe and unappealing do not attract new businesses or offer an atmosphere where businesses and residents can flourish. One of the key areas where Agency funding can make a tremendous impact is the area of façade and streetscape improvements. These types of investments can actively address inadequate and deficient public infrastructure in areas that have no other means to finance these types of improvements. By making building façade
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improvements and an investment in the streetscapes of neighborhoods, throughout the Merged Project Area, the Agency is directly contributing to the improvement of blighting factors that would otherwise continue to further deteriorate impacted neighborhoods. The Agency has budgeted approximately $85 million for these streetscape improvement Programs. These Programs specifically address blight by making positive changes to stagnant property values and making neighborhoods and public spaces more inviting. Once streetscapes and other public improvements are complete, property owners want to take the same level of pride in their own properties and make improvements to create a more appealing neighborhood. The synergy created by a concerted program of this type typically results in improvements across an entire neighborhood, then more and more businesses will consider locating in the area. According to the general rule of supply and demand, when the demand for commercial space increases, the asking price of commercial space will increase. By making these types of investments, the Agency can actively address high vacancy rates and low lease rates. By completing these Programs in retail and commercial areas, especially the Neighborhood Business Districts, these efforts also have a positive direct impact on lease and vacancy rates. If a small business has the option of locating in an area that has recently received streetscape improvements or a more distressed area, the business will choose the area that is most inviting and accessible for customers. In making publicly funded improvements, the Agency will encourage additional private investment in these identified areas with the result of increased property values, safer and more inviting neighborhoods, and remediating a variety of other physical and economically blighting characteristics. PARKING Increasing the availability of public parking will continue to be another goal of the Agency. The absence of adequate and easily accessible parking facilities has contributed to the physical and economic decline of the Merged Project Area. In many instances, a lack of parking can negatively affect the retention and attraction of commercial businesses. The Agency has budgeted approximately $134 million for these parking Programs. Agency efforts to create public parking will add to the viability of adjacent private development and provide shared parking in situations that could not be created by the private sector alone. Furthermore, the creation of new and easily accessible parking will specifically address blighting characteristics such as stagnant property values as well as high vacancy and low lease rates. The cost of constructing needed parking can oftentimes lead to a project that is not feasible to construct. Agency assistance can alleviate these problems. Especially in the downtown area, developments with adjacent parking will draw more of a premium in terms of rents than those developments without convenient and accessible parking. With an increase in the availability of parking, the Agency will add value to any existing and future development projects and will serve to remove physical impediments to commercial development. The Agency has successfully completed two public parking projects (The Globe and B 88) through the Parking Plus Program. As new development opportunities present themselves, the Agency has clearly outlined a Program to offer parking solutions to match each situation. By addressing the deficiencies in parking, the Agency is proactively providing solutions to inadequate public facilities. By making more public parking available and shouldering some of the financial costs of new development, the Agency is proactively creating economic development opportunities that in turn create jobs. ELIGIBLE CITY IMPROVEMENTS The Agency has identified other critical areas and Programs where Agency funding will play a factor in the successful redevelopment of the Merged Project Area and eliminate blight. The Agency has set aside approximately $230 million for these Programs. The composition of San Jose's workforce has changed dramatically in recent years and is expected to continue to change in the future. The fastest growing segment of the labor force is the dual-working parents of young children. More parents would return to work if they could find affordable, quality child care. Given this, the City has established itself as a leader in providing the planning and financial support of childcare facilities.
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Whether an employee lives within the City boundaries or commutes into the City, employers cannot always provide onsite childcare facilities. By making this investment in childcare, the Agency will demonstrate a commitment to employers and employees by making quality childcare more affordable and accessible to a wider range of people. As presented in the Introduction of this Report, Merged Project Area households have a higher rate of poverty, lower median incomes, lower educational attainment, and larger household size than in the remaining portions of the City. Investment in childcare facilities can provide a direct benefit to these households and thus help them to improve their quality of life. Another program in this category of redevelopment Programs is a comprehensive project for the Downtown to provide enhanced signage for pedestrian and vehicular traffic. By assisting people on foot, bicycle, or vehicle, an enhanced system of signage will enable people to find their destination more quickly, and reduce drive times in the Downtown. Another example is the Agency’s Signage Grant Program. This program provides financial assistance to upgrade or install new signage, creating a more positive retail environment in downtown San Jose. The Signage Grant Program also provides other financial assistance to eligible ground floor businesses and property owners to install new signage or upgrade existing signage in order to create a positive retail environment in other Redevelopment Project Areas as well. More than 30 businesses have taken advantage of the Program since its inception in June 2004. According to staff documentation, participants have noticed a 10 to 20 percent increase in sales. Agency support for the excellent network of public parks in the City will continue, as demonstrated in the planning of several other critical development Programs. This network of public parks and spaces adds tangible as well as intrinsic values to the properties that surround them. The creation and improvements to the parks would not be possible through the actions of the private sector. Agency involvement and support of the park system will continue to be a valuable tool to address blighting characteristics in all areas of the City, especially in the Merged Project Area. Some of the parks that are specifically targeted for improvements and clean-up are Watson Park, Martin Park, and essential improvements to several parking facilities in the Downtown area. Some examples of these Programs include proposed the clean-up of soil contaminated with burn ash and garbage debris is proposed for the Watson Park site. In June 2004, the City discovered soil containing burn ash and garbage debris during work to excavate the property for a new skate park. Construction was stopped and the City conducted other tests to the soil to determine the type of contaminants and the size of the affected area. The test results revealed mainly elevated levels of lead. The Department of Toxic Substances Control is overseeing the cleanup activities under a Voluntary Cleanup Agreement. A proposed cleanup plan has been developed for the Watson Park site. However, additional funding is needed to carry out the Plan. The Martin Park landfill site operated from 1970 until 1974, and closed prior to the enactment of State regulations. These regulations require solid waste disposal site owners/operators to fund closure and postclosure maintenance operations. In mid-2005, rising methane concentrations were detected by several probes that were monitoring the site. The City subsequently submitted a work plan to further investigate the extent of the gas problem, and began monitoring on a weekly basis of adjacent residential properties and crawlspaces as a preliminary measure to make sure those homes were not at risk of high levels of methane gas. Improvements and cleanup of Martin Park will help reduce further subterranean gas leaks and allow these gases to passively vent to the atmosphere. The Agency has partnered with the State for preliminary work and planning, but additional funding will be needed to complete the project. Both of these park improvements will improve the health, safety, and welfare of residents and visitors to the City. The Agency recognizes inadequate water and sewer utilities throughout the Merged Project Area. Under this Program the Agency could work with the Public Works Department to identify and remediate these infrastructure deficiencies. North San Jose is one known location where inadequate water and sewer utilities have been identified. Water and sewer utility improvements in this area are estimated to be approximately $54 million. The Agency could provide needed funding to implement improvements to these systems. The Agency could also work closely with other departments to allocate dollars under this Program for additional investments in capital projects that directly address blight conditions. For example, the Agency could partner with the Police and Building Departments to address crime and building code violations that are
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tied to blight. As identified in Section B, the Merged Project Area suffers from higher crime than compared to the City as a whole. The Agency could make investments in community centers and parks to help alleviate this crime problem. The Agency could also invest in capital projects to assist the Code Enforcement Division to help monitor code violations in the SNI Redevelopment Area. Both of these types of investments in capital projects would have a direct impact on the alleviation of blighting conditions. LOW AND MODERATE AFFORDABLE HOUSING PROGRAMS Pursuant to CRL Sections 33334.2, 33334.3, 33334.4 and 33334.6, the Redevelopment Agency deposits 20% of the gross tax increment it collects annually into the Low and Moderate Income Housing Fund for the creation and improvement of affordable housing. Because these funds are 20% of the actual tax increment collected, the Agency has estimated the set aside amount to address affordable housing to be approximately $2.5 billion. These funds are to be used to increase, improve and preserve the supply of low and moderate income housing in the community. Specific activities may include, but are not limited to, site acquisition, developer subsidies for constructing affordable housing, identifying and developing infill housing, rehabilitating existing units and converting them to affordable units, and purchasing affordability covenants. In addition to the 20% set aside, the Planning Department, Redevelopment Agency, and the Housing Department work together to administer the Inclusionary Housing Program in the Merged Project Area. Collectively, these Programs provide a vast array of affordable housing options for existing and new residents and will continue to be a priority for the Agency. Blighting factors in residential areas observed during the field survey and Code Enforcement such as dilapidated structures, damaged and substandard exterior building materials, and homes lacking sufficient weatherproofing can all be alleviated with this funding. The Agency can purchase or provide loans to property owners to rehabilitate these structures, and make them available to very low, low, and moderate income families. In other circumstances, the Agency may be able to assemble vacant and dilapidated parcels for a consolidated affordable housing development that will provide countless families more housing opportunities. These housing Programs are directly addressing one of the many purposes of redevelopment, which is outlined in CRL Sections 33070 and 33071. Decent and genuine housing opportunities are a fundamental purpose of redevelopment, and it is one of the responsibilities of redevelopment agencies to ensure that these housing opportunities exist. By rehabilitating and constructing new housing units, the Agency is not only remediating existing blight on distressed residential properties, but also providing for the opportunities identified in the Health and Safety Code. FISCAL SUMMARY OF PROGRAMS As outlined in Table A-1 on the following page, the total cost of Programs outlined by the Agency to address physical and economic blight in the Merged Project Area is approximately $4.8 billion. Table A-1 outlines not only the budgeted amount for each Program, but also shows how each Program will address the various categories of physical and economic blight.
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Table A-1
PROGRAM COST
Japantown, Guadalupe/Auzerais, Monterey Corridor, Park Center Plaza, San Antonio Plaza, Rincon de los Esteros, Julian/Stockton, Almaden Gateway, SNI Project Area
$1,651,000,000
Julian/Stockton, Century Center, Park Center Plaza
$25,000,000
Edenvale, Civic Plaza, Rincon de los Esteros
$139,000,000
San Antonio Plaza, Rincon de los Esteros, SNI Project Area
$110,000,000
Century Center, Pueblo Uno, Almaden Gateway, San Antonio Plaza, Market Gateway, Alum Rock, Story Road, West San Carlos, SNI Project Area
$85,000,000
x
Pueblo Uno, Civic Plaza, Park Center Plaza, Almaden Gateway, Market Gareway
$134,000,000
x
Entire MPA
$230,000,000
Entire MPA
$2,500,000,000
High crime rate rates
Excessive bars liquor stores
Lack of com.facilities
High vacancies low lease rates
PROJECT AREA
Hazardous waste
Stagnant property values
Incompatible land uses
Hinder viable use
PROGRAM NAME
Unsafe buildings/ Dilapidation & Deterioration
How Project/Program Will Address Blight Physical Blight Economic Blight
33030[c] Inadequate Public Improvements or Inadequate Water or Sewer Utilities
How Agency Redevelopment Programs Address Blight
I. PUBLIC FACILITIES/SPACES
SUMMARY
x
x
x
x
II. TRANSPORTATION SUMMARY
x
III. ECONOMIC DEVELOPMENT SUMMARY
x
x
IV. HAZARDOUS MATERIALS SUMMARY
x
x
V. STREETSCAPES
SUMMARY
x
x
VI. PARKING SUMMARY
x
VII. ELIGIBLE CITY IMPROVEMENTS SUMMARY
x
x
x
x
VIII. HOUSING SET-ASIDE (20%) SUMMARY
GRAND TOTAL
$4,874,000,000
Source: San Jose Redevelopment Agency Staff, RSG Tax Increment Model
By adopting the proposed Amendment, the Agency will gain increased capacity to collect tax increment revenue from the Merged Project Area providing the Agency with the necessary funds to continue to implement the aforementioned Programs designed to address the remaining physical and economic blight in the Merged Project Area. Without this additional revenue, the Agency’s ability to work towards the removal of remaining blight and providing for affordable housing opportunities would be seriously hindered. The Amendment will also establish one limit on bonded indebtedness that can be outstanding at any one time for the combined Merged Project Area that will assure easier compliance with bond disclosure documents in the future. The Programs enumerated in this Section would significantly improve conditions within the Merged Project Area by addressing physical and economic blight and providing for affordable housing. Whether the Program supplies funding to address inadequate infrastructure, or streetscape programs to inject values to adjacent properties, or to remediate environmental contamination, the Agency has outlined a development Program to effectively address blight in the Merged Project Area and without additional funding, these Programs would not be possible. As will be discussed in Section D, the blighting conditions cannot reasonably be expected to be reversed or alleviated by private enterprise, governmental action, or both, without redevelopment action and proper funding. Implementing the identified Programs will allow the Agency to abate the blighting conditions affecting the Merged Project Area. This investment by the Agency will signal to the private development community and the public at large the Agency’s on-going commitment to the Merged Project Area and provide a catalyst for new private investment and reinvestment.
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A DESCRIPTION OF THE REMAINING BLIGHT
BLIGHTING CONDITIONS This Report includes a description of the physical and economic conditions existing in the Merged Project Area. Although the definition of blight has been modified since the adoption of the Redevelopment Plans that make up the Merged Project Area, this section will examine the remaining physical and economic blighting conditions present in the Merged Project Area in accordance with current CRL requirements. CRL Sections 33030 through 33039 describes the conditions that constitute blight in a redevelopment project area. A blighted area is one that necessitates the creation of a redevelopment project area because the combination of conditions in an area constitute a burden on the community, and cannot be alleviated by private enterprise, governmental action, or both, without redevelopment. The legally mandated blight standards of adopting a new redevelopment project area varies from that needed to substantiate the Amendment. The purpose of a redevelopment area is to remedy blighting conditions and the CRL recognizes that less blight will remain in a redevelopment project area as time progresses. The ordinance adopting the Amendment must contain findings that both (1) significant blight remains within the project area and (2) the blight cannot be eliminated without the adoption of the Amendment. For the purpose of this Section, the 2 definition of “significant” is assumed to be “of a noticeably or measurably large amount” and/or “important 3 and of a magnitude to warrant Agency assistance.” CRL Section 33030 defines a blighted area as one that contains both of the following: 1. An area that is predominantly urbanized and is an area in which the combination of physical and economic blighting conditions is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the community that cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment. 2. An area characterized by one or more physical condition of blight and one or more economic condition of blight as set forth in subdivisions (a) and (b) of CRL Section 33031. A blighted area that meets the conditions above can also be characterized by the existence of inadequate public improvements. CRL Sections 33035 and 33036 contain legislative findings and declarations that explain the effect that blighted areas have on project area inhabitants and property owners. Blighted areas create physical and economic liabilities to the community that require redevelopment in order to protect the health, safety, and general welfare of the public. Blighted areas are a menace to the community and disproportionately impact community resources such as police and fire services. Remedying blighting conditions in a community using redevelopment tools benefits the not only a project area but the entire community.
2 3
“Significant.” Merriam-Webster’s Collegiate Dictionary. 10th ed. 1998 Definition per CRL Section 33333.10(c)(2)
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Physical Blight and Economic Blight Section 33031(a) of the CRL describes the conditions that cause blight as follows:
Physical Blight Defined …
Economic Blight Defined …
Section 33031(a) of the CRL describes physical conditions that cause blight as follows:
Section 33031(b) of the CRL describes economic conditions that cause blight in the following manner:
1. Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions may be caused by:
1. Depreciated or stagnant property values.
a. Serious Building Code violations b. Serious dilapidation and deterioration caused by long-term neglect c.
Construction that is vulnerable to serious damage from seismic or geologic hazards
d. Buildings suffering and from faulty or inadequate water or sewer utilities 2. Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots. These conditions may be caused by: a. Buildings of substandard, defective, or obsolete design, or construction given the present general plan, zoning, or other development standards 3. Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area. 4. The existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions.
2. Impaired property values, due in significant part, to hazardous wastes on property where the agency may be eligible to use its authority as specified in Article 12.5 (commencing with Section 33459). 3. Abnormally a. High business vacancies b. Low lease rates c.
High number of abandoned buildings
4. A serious lack of necessary commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions. 5. Serious residential overcrowding that has resulted in significant public health or safety problems. As used in this paragraph “overcrowding” means exceeding the standard referenced in Article 5 (commencing with Section 32) of Chapter 1 of Title 25 of the California Code of Regulations. 6. An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems. 7. A high crime rate that constitutes a serious threat to the public safety and welfare.
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BLIGHT ANALYSIS The 2008 Field Survey was undertaken to evaluate the condition of structures and parcels, document the occurrence of vacant buildings, and locate incompatible land uses on adjacent parcels. The focus was to identify conditions that pose a health and safety threat to occupants or visitors. The survey generated information for 31,780 parcels covering 19,621 acres that make up the Merged Project Area. RSG used the field survey to obtain a broad-spectrum understanding of the blighting conditions present in the Merged Project Area. Additional research and investigation beyond the field survey were also undertaken and a detailed description of both physical and economic blighting conditions found from all sources is provided throughout this Section. When possible, blighting conditions were mapped to illustrate the location and severity of a particular condition. These maps are located throughout the text of this Report and enlarged maps are located in Appendix 1. The location of physical and economic blighting conditions present in the Merged Project Area is presented in Exhibit B-1.
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PHYSICAL BLIGHTING CONDITIONS IN THE MERGED PROJECT AREA CRL Section 33031(a) describes the physical conditions that cause blight. These physical conditions are assessed in terms of their impact on the health and safety of persons in the area, and the economic viability of development in the area. In order to assess physical blight in the Merged Project Area, data from the 2008 Field Survey, MetroScan parcel data, the City’s Code Enforcement Division, and other resources were collected and analyzed to determine what conditions may be adversely affecting the health and safety of persons in the Merged Project Area, as well as the adverse economic conditions that result from physically deteriorating conditions. Generally, as economic conditions decline there is a corresponding lack of investment in physical maintenance of properties, which further perpetuates physical blight. The location of physical blighting conditions present in the Merged Project Area is presented in Exhibit B-2. The presence of these conditions reflect a lack of investment by property owners in maintaining their properties in a condition that assures the safety of persons who live and work in the area. Physical blighting conditions propagate further decline of an area and deter economic development activities by private investors. CRL Section 33036(a) declares that conditions of blight further perpetuate obsolescence, deterioration, and disuse of a property because it creates a lack of incentive for landowners to reinvest in their properties while the conditions of neighboring properties go unchanged.
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UNSAFE AND UNHEALTHY BUILDINGS FOR PERSONS TO LIVE OR WORK Pursuant to CRL, the condition of buildings in which it is unsafe or unhealthy for persons to live or work may be caused by serious dilapidation and deterioration caused by neglect, serious building code violations, construction that may be vulnerable to damage from seismic or geologic hazards, and faulty and/or inadequate water and sewer utilities. Code Violations Pursuant to CRL Section 33031(a), serious violations of local or state codes are a cause of unsafe and unhealthy buildings for persons to live or work. Buildings and structures that do not meet current uniform building requirements, or other local codes mandated to ensure human health and safety, pose a threat to the workers, patrons, and residents of an area. Code violations, whether building code violations or other code violations, can pose a threat to the safety and welfare of the community and are indicative of physical blight in an area. Generally, the City of San Jose’s code enforcement system is complaint based (with some exceptions as discussed below). As is the case with many jurisdictions, City code enforcement officers respond to complaints and issue citations when appropriate. Insufficient staffing levels impede officers to be more proactive throughout the entire City. The Code Enforcement Division operates using four different programs to cite violations: (1) “General”; (2) “Multiple Family”; (3) “SNI”; and (4) “Vacant Building.” All four programs are complaint based and Code Enforcement staff follows up on all complaints to verify there is a violation, and issues a citation when warranted. However, the “SNI” and “Multiple Family” programs are also operated somewhat proactively. In the SNI Redevelopment Area, the City operates a program where residents can help document code violations, known as the Code Enforcement “driveway team.” The driveway team looks for code violations from the public-right-of-way and is thus intended to be a proactive approach to code violations. As such, the level of code enforcement is still governed to a degree by the number of complaints received. Thus, what someone might complain about in one neighborhood may not be considered out of the ordinary in another. Nevertheless, insights can be gained from looking at general patterns in code enforcement as they can be indicative of basic issues related to blighting conditions as described in the CRL. It is important to note that code violations occur throughout the Merged Project Area and are not isolated to any particular part of the Merged Project Area. A code violation occurs when standards within Chapters 9 (Health & Safety), 17 (Buildings & Construction), and 20 (Zoning) of the San Jose Municipal Code are not being met. Code Enforcement classifies code violations using 25 different categories. The Code Enforcement Division has created this nomenclature for 4 data collection purposes, and therefore all code enforcement data is based upon these 25 categories. RSG met with Code Enforcement staff to collectively determine which violation categories pose a serious threat to the safety and welfare pursuant to the CRL definition of blight. Violations that merely caused an eyesore or inconvenience (animal, construction hours, nuisance, shopping carts, tree cutting etc.) were not included as serious violations posing a threat to safety and welfare. Violations that did not pose a threat were not included in this analysis. Serious code violation categories determined to pose a threat to human safety and welfare pursuant to the CRL definition of blight are discussed below. For each violation category, the corresponding Municipal Code reference is provided.
The most prevalent code violations observed were “solid waste” violations. Solid waste violations include such items as substantial amounts of garbage and debris not placed in a container, accumulation of rubbish, accumulation of hazardous materials, non-frequent disposal of waste, and improper disposal of solid waste. Solid waste violations occur when the presence of such debris is so extensive that is constitutes a health and safety hazard for the general welfare of the people of San Jose. Accumulation of
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The San Jose Code Enforcement Department uses the following categories to classify code violations: Animal, Blight, Building, Construction Hours, Health & Safety, Housing, Lawn Parking, Living in Trailer, Monitoring List, Nuisance, Odor, Private Property, Required Inspection, Shopping Carts, Sight Obstruction, Signs, Smoking, Solid Waste, Spray Paint, Tree Cutting, Unknown, VA Streets, Vacant Building, Water Waste and Zoning.
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debris inhibits access to buildings by emergency service vehicles and creates a fire hazard. – Municipal Code Chapter 9.10
The second most prevalent code violations observed in the Merged Project Area were “blight” violations. The definition of a “blight” violation used by the San Jose Code Enforcement Division refers to the Municipal Code Chapter 17.02 definition and relates specifically to properties that pose a threat to the safety or welfare of the public by failing to provide the minimum standards of safety and habitability. This definition is not the same definition of “blight” used in CRL Section 33031 which covers a much broader spectrum of conditions. However, the Municipal Code definition of “blight” overlaps with CRL Section 33031 (a)(1) which specifically refers to buildings that are unsafe or unhealthy because of the presence of serious building code violations.
Blight violations consist of abandoned construction, properties that attract nuisances, properties in disrepair, dilapidated or deteriorated, properties that are a fire hazard, and properties in which there is a hazardous condition. Other “blight” violations include outdoor storage and waste, and illegal vehicular storage. These conditions are a health and safety hazard because they create site obstructions and hinder emergency vehicle access. Additionally, vehicle storage can lead to leakage of hazardous materials that can leach into the water system or be a fire hazard.
Such dilapidation and deterioration caused by significant deferred maintenance and aging, present major impediments to the health and safety of occupants. For example, if exterior surfaces are not properly maintained to remove wood dry rot, rust, or damaged exterior building materials, this potentially exposes the interior framing and foundation of a structure to water, thus weakening the structural integrity of the building. Deterioration of roofing materials, doors, and windows causes framing, rafters, and interior wiring to be susceptible to water damage and increases the deterioration of the entire structure. This also leaves the structure susceptible to fire. Water leakage resulting from design defects or deterioration of buildings also poses serious health risks to occupants exposing individuals to dangerous molds and fungi. Damage to the exterior fronts of houses, more specifically the porch and stairs, creates opportunities for injury resulting from a fall. Likewise, substandard or exposed electrical wiring presents a serious threat to human life in the event of direct contact. Exposure also increases fire susceptibility in the structure. – Municipal Code Chapter 17.02
“Building” violations were also documented in the Merged Project Area. Building violations include structures or conversions that have been constructed without a valid building permit. Unpermitted buildings that have not been properly inspected for safety could cause personal injury to occupants, such as illegal residential garage and carport conversions used as additional living space. Garages and carports are not suitable living spaces and when converted without permit or proper inspection it is not 5 possible to determine if structural integrity has been jeopardized by the nature or quality of work. – Municipal Code Chapter 17.20
“Housing” violations were most typically seen on multi-family rental properties. The purpose of the Housing Code is to provide safe and sanitary conditions for buildings used for human inhabitance within the jurisdictional boundaries of San Jose. Housing violations include items such as improper dwelling size, inadequate light and ventilation, unsanitary dwelling spaces, buildings that are not weather protected, inadequate heating, and substandard housing. When housing violations are present, the health and safety of inhabitants is threatened. - Municipal Code Chapter 17.20
“Zoning” violations occur when properties do not meet current zoning code standards. The most prevalent violations of this type were single family properties operating on-site businesses. Although zoning standards permit some home businesses, when a zoning violation is issued it means that the business operation is not allowed. These businesses often do not meet minimum safety requirements as it relates to a building that is operating a business (exits, parking, egress and ingress, etc.) and therefore create a health and safety problem to residents and patrons. – Municipal Code Chapter 20.30,40,50
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The Illegal Secondary Residential Units Memorandum prepared by Leslye Krutko and Joseph Horwedel in November 2006 details the Council’s approach to dealing with this problem in the City. The Council approved secondary residential uses within R-1 Zoning in the City to address illegal conversions and ensure that they were being built to code.
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“Health and safety” violations can occur from unsecured or unsanitary pools and sewage back-up on properties. Unscreened pools have historically caused infant and child deaths due to drowning and the City requires that all pools be secured. Sewage back ups pose health issues due to the likelihood of spreading diseases. Sewage problems should be remedied quickly to ensure the health of residents is not compromised. – Municipal Code Chapter 9.08
“Lawn parking” violations occur when vehicles park on unpaved surfaces. Parking on lawns can result in oil and gas leakage directly into the soil creating a hazardous waste site and a fire hazard. Parking in undesignated spots is also an indicator of an overcrowded living arrangement. Furthermore, parking in undesignated locations can often result in cars inadvertently backing over children. According to the Kids 6 and Cars Organization , approximately 44% of fatalities involving children under the age of 15 and vehicles are caused from vehicle backovers. Enforcement of lawn parking violations is a way to address these health and safety hazards. – Municipal Code Chapter 17.72
“Vacant building” violations occur when a property or a structure is unoccupied, has been abandoned, or is unsecured and has become a neighborhood nuisance. Such properties attract youth, vagrants, and criminals onto properties without proper authorization. The City recently retained additional code enforcement officers and has made it a priority to address the high number of foreclosed homes that have been abandoned. Many of these homes are the subject of vandalism and occupancy by gang affiliates. The Code Enforcement Division is experiencing a significant number of violations in abandoned homes related to gang activity and squatting. Often these homes are found to be stripped of reusable content such as metal wiring or there is evidence of drug activity. Some cases have indicated that illegal fires are being started inside of the abandoned homes. Residents near these properties complain of the following problems: aggressive homeless individuals soliciting money and food, homeless individuals defecating on the front porches of the abandoned units, vandalism to both unoccupied and occupied homes, robberies, and the sound of nearby gun shots. Furthermore, according to Stewart Brand’s book ,“How 7 Buildings Learn, What Happens After They Are Built, “an empty building rots fast and attracts trouble. These conditions pose a health and safety threat to the local neighborhood. – Municipal Code Chapter 17.28
These conditions not only create an unsafe and unhealthy environment for persons to live and work but they also cause a drain on City resources as most code enforcement cases require at least one, if not more, additional follow up visits to make sure the violation is not reoccurring. The City’s Code Enforcement data is kept by case and requires a substantial effort to reclassify into comparable categories. For comparison purposes, Table B-1 presents the status of 2007 code violation data 8 for the City compared to the Merged Project Area as of July 2008.
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Kids and Cars is a non-profit organization aimed at increasing public awareness of children fatalities due to non-traffic accidents. Brand, Stewart. How Buildings Learn, What Happens After They’re Built. New York, NY: Penguin Books, 1994. 8 There were a total of 13,537 code violations cited through out the City in 2007, of those 12,723 were noted as being serious code violations.
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2007 Code Violations as of July 2008 San Jose Merged Project Area
Violation Type Blight Building Health & Safety Housing Lawn Parking Solid Waste Vacant Building Zoning Grand Total
Open 12 47 41 6 19 125
% Cases in MPA
Table B-1
Merged Project Area Code Violation Status % Closed % 0.9% 1,357 99.1% 22.1% 166 77.9% 0.0% 49 100.0% 6.6% 579 93.4% 0.0% 58 100.0% 0.3% 1,816 99.7% 0.0% 8 100.0% 8.7% 200 91.3% 2.9%
4,233
34.9%
Total 1,369 213 49 620 58 1,822 8 219
Open 49 126 2 111 1 17 4 48
97.1%
4,358
358
34.2%
34.3%
City of San Jose Code Violation Status % Closed % 1.2% 4,008 98.8% 14.0% 772 86.0% 0.8% 234 99.2% 5.7% 1,852 94.3% 0.7% 144 99.3% 0.4% 4,454 99.6% 10.8% 33 89.2% 5.2% 868 94.8% 2.8%
12,365 97.2%
Total 4,057 898 236 1,963 145 4,471 37 916 12,723
Source: San Jose Code Enforcement
A total of 12,723 serious code violations were documented in the City during 2007. The Merged Project Area represents 34% of the total code violations recorded in 2007 citywide. The Merged Project Area encompasses only 17% of the City’s land area yet is responsible for 34% of the code violations. Of the 358 serious code violation cases citywide that remained open in July 2008, the Merged Project Area accounts for 125 (35%) of the 2007 open cases. More recent code enforcement data was made available by Code Enforcement staff for the specific SNI Program. The SNI Area represents 55% of the total Merged Project Area. This data indicates that a total of 9 459 serious code violation cases remain open in the SNI Program at the end of September 2008. Because of the proactive way the SNI Program operates, these violations are not merely complaints but have been filed because Code Enforcement staff verified the violation. These violations have also been culled to eliminate non-serious violations and represent serious health and safety hazards. The primary violation types include “blight” and “solid waste” violations. Table B-2 provides a summary of these serious open code violations. The SNI portion of the Merged Project Area is primarily residential in land use.
Open Code Violations as of Sept. 2008 Strong Neighborhoods Initiative
Table B-2
Violation Type Blight Building Health & Safety Housing Lawn Parking Solid Waste Vacant Building Zoning Total
# Cases 260 2 5 4 185 3 459
Souce: City of San Jose Code Enforcement Department
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There were a total of 459 violations out of 502 code violations in the SNI Program that are serious code violations.
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Exhibit B-3 is a map illustrating the location of the remaining serious code violations in the Merged Project Area. Because available data differs for the SNI Area, the map separately identifies open cases as of October 2008 in the SNI Area, and open cases in the entire Merged Project Area as of July 2008. For better visualization, there are different sized locators for various sized parcels that are described in the legend to the map. The presence of serious code violations creates an environment that is unsafe or unhealthy for people to live or work, and as the map indicates, serious code violations remain open throughout the entire Merged Project Area. Although many of the code violation cases have been closed over time, new cases continue to be opened (thus the difference between the July 2008 Merged Project Area open case status and the October 2008 open case status for the SNI Area alone). The Code Enforcement Division alone has not been able to remedy the code violation problem. Investment of tax increment into the impacted neighborhoods through rehabilitation programs, and infrastructure improvements continues to be needed.
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Serious Dilapidation and Deterioration The 2008 Field Survey found 1,984 parcels had structures that were seriously dilapidated and deteriorated. The majority of these buildings are located throughout the SNI Redevelopment Area, which is primarily residential in use. The age of the buildings and the lack of private investment to maintain and modernize structures is one reason for dilapidation and deterioration in the Merged Project Area. Aging structures need routine maintenance to avoid serious dilapidation and deterioration of the structure. Figure B-1 provides an illustration of the economic realities if routine building maintenance is not timely undertaken. First minor and then major building failures occur over time. The cost of renovating the building goes up exponentially over the years. Ultimately, structural failures occur and the building cannot be recovered. Conversely, if preventive maintenance to address normal wear is routinely accomplished, the building’s structural integrity is maintained. Frequent investment into routine maintenance is the best way to assure the long-term integrity of a structure. Over 12% of the Merged Project Area’s residents fall below the poverty level indicating a lack of capital available to invest in building maintenance. The Merged Project Area’s annual median income is approximately $61,000 for household averaging 3.65 persons which is only 67% of the City’s and 61% of the County’s median household income. This lack of disposable income makes it difficult for families to maintain their properties and leads to disrepair. Figure B-1 ILLUSTRATION OF MAINTENANCE/COST RELATIONSHIPS Structural failures occur
Repair costs
Structure not usable
C
Start of major failures
Major repair
B
Start of minor failures Normal wear
Minor repair
A
Time in years
Preventive maintenance
Total cost of major repair (C) Total cost of minor repair (B) Total cost of preventive maintenance (A)
PREVENTIVE MAINTENANCE (bottom line) not only costs markedly less in aggregate than repairing building failures, it reduces human wear and tear. A building whose systems are always breaking or threatening to break is depressing to the occupants, and that brings on another dimension of expense. This diagram is adapted from Preventive Maintenance of Buildings (New York: Van Nostrand Reinhold, 1991), p.3.
Dilapidation and deterioration is a natural phenomenon of aging structures where routine maintenance and upkeep are deferred for extended periods of time. By nature, older structures are more difficult to rehabilitate and as structures age rehabilitation becomes more expensive due to the need to bring buildings up to current building code. As stated in Stewart Brand’s book, How Buildings Learn; What Happens After They’re Built, a lack of maintenance results in buildings becoming unusable, with the threat of structural failure. Brand states that:
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“…due to deterioration and obsolescence, a building’s capital value (and the rent it can charge) about halves by twenty years after construction. Most buildings you can expect to completely refurbish from eleven to twenty-five years after construction. The rule of thumb about abandonment is simple…if repairs will cost half of the value of the building, don’t bother.” It is no surprise, therefore, that a structure’s condition is often directly correlated with its age. According to data obtained through the Claritas Inc., there are 69,416 structures located within the Merged Project Area, and 63.65% (44,180) of those permitted structures were built prior to 1980 or more than 25 years ago. Table B-3 presents a summary of the structures within the Merged Project Area by decade built. It should be noted that unpermitted structures and illegal additions are not accounted for by Claritas Inc. and therefore are not included. Structures By Age San Jose Merged Project Area
Table B-3
Decade No. of Structures % of Total Structures 7,391 10.65%
