2011-2012 Santa Clara County Civil Grand Jury Report San Jose’s City Hall – a Promise Kept or a Promise Broken?

Conclusions 3

• CL1 Page 10
  The language of the 1996 Measure I seemed clear and simple, a reasonable promise by the City to the voters. However, it failed to provide for long-term accountability to the taxpayers.
• CL2 Page 10
  The City can perform a compliance update but has chosen to not certify ongoing compliance of the Civic Center Project to Measure I, meaning taxpayers are not able to determine whether the City met the will of the voters.
• CL3 Page 9
  The reported total cost to the City to build city hall was $510M. Measure I required that this cost would be paid by using the proceeds from the sale or lease of the old civic complex and other land, savings from the elimination of leased office space, and consolidation of city facilities and services. The City spent the money but has not provided the taxpayers with the final accounting, or an interim accounting if the financial analysis period runs for 40 more years. The City has stated they do not intend to produce any future report. This determination to not report is important, because if taxpayers are to trust the City with future decisions of a similar matter, there is no credibility for the voters to grant the City that privilege in the future. Voters understand circumstances will change, but to avoid the conversation with taxpayers is disingenuous to the intent of the Measure. The new Civic Center Project authorized by the 1996 ballot measure is a case study of good intentions. What began as a reasonable upgrade of the old city hall appears to have become a project that was far beyond what the voters intended. At $178M, as initially estimated in 1997, the new Civic Center Project would probably have been entirely compliant with Measure I and the resources would probably have balanced the costs. But as the project became more ambitious and expensive, and as economic conditions continued to deteriorate, the resources available to cover its costs remained static or declined. Even using the City’s model that looked out 55 years, it became apparent before construction began that real-world revenues were not going to match real-world costs. Measure I was concise and clear. Although the Measure failed to detail safeguards, limits and controls, voters expected that the City would do what was necessary to fulfill the promise of Measure I. This did not happen. Rather, it appears that the City feels it had the latitude to broker the new Civic Center Project, notwithstanding the simple intent of Measure I. The Grand Jury concludes the City has not fulfilled its Measure I promise and in the future City measures should include appropriate safeguards to prevent the City from engaging in the latitude it did with Measure I. 9 Findings and Recommendations Finding 1 The language of the 1996 Measure I seemed clear and simple, a reasonable promise by the City to the voters. However, it failed to provide for long-term accountability to the taxpayers. Recommendation 1 The City should ensure that future measures include citizen oversight committees and should require periodic accounting reports to demonstrate compliance with the measure. Finding 2 The City can perform a compliance update but has chosen to not certify ongoing compliance of the Civic Center Project to Measure I, meaning taxpayers are not able to determine whether the City met the will of the voters. Recommendation 2 The City should commission an independent audit of the project to determine compliance to Measure I. 10 Appendix A: 1999 - 2000 Santa Clara County Civil Grand Jury Report and the City of San Jose Response 11 12 13 14 Appendix B: List of Documents Reviewed City of San Jose, Ordinance No. 14224.1, Determining The Location Of City Hall, June 4, 1948 City of San Jose, City Clerk’s Office, N SC Ballot Type 056 – Page 040-053 (1996 ballot measure and supplemental text as delivered to voters) City of San Jose, Minutes of the City Council, December 3, 1996, “Strategic Planning: Phase One San Jose Civic Operations Master Plan,” Simon Martin-Vegue, Winkelstein Moris, Sedway Kotin Mouchly Group and The Steinberg Group, 1996 City of San Jose, Council Agenda: 6/1/99, Item 11D(1) Memorandum from John Guthrie, Director of Finance, to Mayor and City Council (City Hall Relocation Economic Analysis Update) May 28,1999 City of San Jose, Minutes of the City Council, Tuesday, June 8, 1999, Item 15a, Public Hearing On Appeal Of The Certification by the Planning Commission of the EIR City of San Jose, City Council Presentation, Updated Measure I Analysis, November 6, 2001. City of San Jose, Minutes of the City Council, November 6, 2001. http://www.sanjoseca.gov/clerk/2001_CnclMins/11_06_01min.htm City of San Jose, Memo and Draft Resolution from Mayor Gonzales et. al., to City Council Regarding the New Civic Center Project, May 14, 2002. http://www.sanjoseca.gov/clerk/agenda/5_14_02docs/5_14_02_4.2_NewCivicCent er.htm City of San Jose, SJFA Agenda: 10-15-02, Memorandum from Scott P. Johnson and Katy Allen to Mayor and City Council and City of San Jose Financing Authority Board, Civic Center Project Lease Revenue Bonds, October 9, 2002. City of San Jose, Office of the City Manager, Manager’s Budget Addendum #8, May 17, 2006. http://www.sanjoseca.gov/budget/fy0607/MBA/MBA08.pdf City of San Jose, New City Hall Fact Sheet, December 11, 2011. Walton, M., June 20, 1997, Coming Soon: S. J. City Hall? Fast Action: The Council Has Ok’d A Proposed Site But Some Opposition To The Move Remains, San Jose Mercury News. Herhold, S., October 29, 1996, “Bid To Move City Hall Downtown Would Rectify A 1950s Mistake,” San Jose Mercury News. 15 Appendix B – continued Santa Clara County 1999-2000 Civil Grand Jury, Final Report, “Inquiry Into Economic Evaluation of the Cost of Relocating San Jose City Hall to the Downtown Area,” July 3, 2000. Also the City of San Jose’s Response to this report. Santa Clara County, Office of the County Counsel, Form Deed Of Trust, between the Redevelopment Agency of the City of San Jose and the County of Santa Clara County, March 16, 2011. Superior Court of California, County of Santa Clara, Stipulation By All Parties For Judicially-Supervised Settlement And [Proposed] Order, County of Santa Clara vs. City of San Jose, Redevelopment Agency of the City of San Jose, March 9, 2011. Court of Appeal, Sixth District, California; Albert Ruffo, et al. Plaintiffs and Appellants v. Redevelopment Agency of The City of San Jose, May 1, 2000. 16 This report was PASSED and ADOPTED with a concurrence of at least 12 grand jurors on this 3rd day of May, 2012. Kathryn G. Janoff Foreperson Alfred P. Bicho Foreperson pro tem James T. Messano Secretary 17