September 30, 2004

San Jose’s Redevelopment Agency comes with eminent domain power

Agency is largest in the state responsible for construction of
major downtown landmarks

Editor’s Note: The following is the 11th article in an ongoing series about the city’s departments and appointed officials. Next week: San Jose’s Office of Emergency Services Director Frannie Edwards-Winslow.

By Sheila Sanchez
Staff Writer

Harry S. Mavrogenes, interim executive director of San Jose’s Redevelopment Agency, began his career with the city in 1971. Photo by Sheila Sanchez

Harry S. Mavrogenes has seen the negative side of redevelopment. Born in Bricktown, Chicago, his neighborhood was gutted when the University of Illinois built a campus at Congress Circle.

“It took the heart out of the community,” he recalls of the project. “It wiped out a viable community.”
Amazed by the government’s power to overhaul a major section of town, he became interested in planning and urban studies at an early age.

He’s now on the other side of the issue, serving as interim executive director of San Jose’s Redevelopment Agency (SJRA), appointed to the position by the San Jose City Council in December when Susan Shick retired.

A job he loves, Mavrogenes, 55, hopes to nail it after the council concludes its candidate selection process, which has included community focus groups and reviews. The council is expected to appoint a new director in November.

“I’m very much committed to this city,” he said during an interview from his office on the 11th floor of the downtown Knight Ridder building on west San Fernando Street. “I feel that it’s critical that we continue our efforts to improve the downtown and the neighborhoods. I would be honored if I had the opportunity to be appointed permanently.”

He said there’s no other city in the state or country that has done as much redevelopment as San Jose. “The commitment this city has made to job creation, to downtown revitalization and to housing is just superior to other agencies.”

Wielding its powerful eminent domain authority, the agency, governed by the city council, helps implement revitalization efforts for the city allowed by redevelopment law contained in the state health and safety code.

“There’s a fear when we come in,” he said. “Our plans for the neighborhoods are to not take anyone’s land, but there’s some limited eminent domain that may be used to acquire a park site, a community center site or to clear out some difficult areas, but we’re not going to wipe out neighborhoods. The idea is to help those neighborhoods around and preserve them.”

The agency is governed by the San Jose City Council, who sits as a separate board. “It makes it really easy. You have very few arguments when they’re sitting together. They can look at the broader citywide priorities,” he said.
The board meets as necessary, but often convenes every other week after Tuesday city council meetings.

The SJRA is the largest redevelopment agency in the state, with a tax increment of more than $150 million annually and a $450 million capital budget, which has provided Santa Clara County with 80 percent of its affordable housing in the last four years, $35 million in small business assistance and more than $1 billion in public facilities and infrastructure in downtown San Jose.

Tax increments are determined by the county controller based on the value of redevelopment project areas at the original time they’re assessed. The law allows the agency to receive increments for up to 45 years, or until the property is made whole. The revenue is determined from the frozen base value of the property.

An example: In 1973, an acre of a pear orchard was valued at $10,000 in North San Jose after it was designated as a redevelopment area. Any increase in property taxes from that initial price tag is accrued to the agency, which uses the money for capital project improvements.

Called “Rincon de los Esteros,” which translated means “corner of the swamps,” Mavrogenes said, “If we had not been aggressive in doing the improvement in that area much of the revenue we see today would not have occurred here. It would have been passed over and the area would have filled with mobile home parks and the industrial development would have gone up to Freemont and the East Bay. We would have missed out on that major job opportunity.”

Thanks to that vision the city today enjoys the 80,000 jobs there “because the agency had the foresight in the 1970s to put in the sewers and the improvements, which led the private sector to come in.”

Started in the late 1950s as an idea; the SJRA spawned in the 1960s the Park Center project—the two-block area across the street from the Knight Ridder building, which became the first office developments to revitalize the downtown.

As the city grew all the major elements that made the downtown wonderful started leaving. The department stores, City Hall and the newspaper left.

Little by little all of the life was sucked out of the downtown. Mavrogenes said San Jose resembled, “the hole in the doughnut.”

It wasn’t until 1980 that redevelopment took a dramatic step forward when the city created a citizen’s taskforce to create a redevelopment plan. More than a half a billion dollars were spent on the downtown in road improvements, land acquisition, construction of the convention center, the arena, the technology museum, the repertory theater and the Guadalupe River Park project.

The agency also induced hotel and office development to support the convention center. “Where it not for that tool a lot of that would probably have never happened,” he said.

By law 20 percent of the agency’s funds have to go into affordable housing. The agency gives the money to San Jose’s Department of Housing, about $30 million a year to build affordable housing.

The agency is also trying to build housing in the downtown. Mavrogenes said about 8,000 units have been built in the last 20 years in the area, many in the last three to four years.

“Housing is what’s going to make this a 24-hour city and it’s going to build the retail base. It’s the last piece of he equation,” Mavrogenes said, touting the city’s creation of the Strong Neighborhoods Initiative, an ambitious program that promised to pump $135 million over five years into 19 needy communities.

Budget woes
Instead of doing $70 million in neighborhood projects over a two-year period, the agency is going to do $50 million worth of projects in the next few years. It has moved about $20 million into a future list.

The agency is also being impacted by another $20 million reduction this year from the county assessor who reevaluated property. To handle the deficit, Mavrogenes said he’s shifting programs around and being creative.

The agency received $148 million in tax increments this year. It was also careful by closing some contracts and refinancing some old bonds to save money and will use some of its $40 million cash reserve.

That’s helped the agency to put together a $163 million capital program this first year and another $63 million in the second year. “It’s still a good budget in terms of being able to deliver,” he said. “We can meet all of our financial commitments,” including the ambitious downtown CIM retail-residential project, the Edenvale Technology Park bioscience incubator and the development of the southeast corner of Story and King roads.

Mavrogenes landed his first full-time job with the city in 1971 with the city’s Planning Department and began working for the city’s Redevelopment Agency in 1980 as deputy executive director.

Prior to becoming interim executive director, Mavrogenes was deputy executive director of the SJRA.

In 1990, he joined the City of Miami Beach, Fla., initially as economic and community development director and ultimately as assistant city manager.

Mavrogenes received his degree in urban studies from San Francisco State University. Mavrogenes enjoys wine making and classic car rebuilding. He is married and has three daughters.