January 27, 2006

District 8 Report

$4 million subsidy for Grand Prix excessive

Answers to important questions lacking

By Dave Cortese
City Councilmember
Special to the Times

Many of you are probably aware of the fact that the San Jose City Council recently approved a controversial $4 million subsidy for the San Jose Grand Prix race to be held in downtown San Jose this July. I did not vote for the subsidy.

I was a huge proponent of this event in 2005, and I look forward to attending the race again this summer. In fact, as a board member on the San Jose Sports Authority, I helped bring the Grand Prix race to San Jose for the first time in 2005. The Sports Authority raised $300,000 to support it.

But approving a subsidy with a $4 million price tag was something I couldn’t do. I was one of only three council members who voted “No” on this proposal, and here’s why.

In about four months, the San Jose City Council will be determining the City’s budget for the 2007 fiscal year, which begins in July, the same month as the race. This year, like the last several years, we will once again be wrestling with a $76 million shortfall due to lower tax revenue caused by the economic downturn of the past few years. This has meant lower than anticipated business tax revenue for the city, complicated by state shortfalls.

Cuts impacting school programs, parks, community centers, libraries and essential city services will likely have to be made. The $4 million subsidy for the Grand Prix—rubber-stamped by the mayor, vice-mayor and a majority of the council—could have helped to keep community centers from shutting down.

It could have paid for the parks we have planned but can’t build or service because we don’t have the operations and maintenance money to do so. It could have bought much-needed equipment and resources for critical city services like police and fire protection.

If we can’t trace the investment back to where it actually increases those limited funds, or at least keeps them level, then we shouldn’t be agreeing to this kind of deal. We can’t afford it.

I was elected by citizens who expect me to spend their hard-earned tax dollars carefully and responsibly. It’s unconscionable for a municipality to subsidize and serve as a “corporate” sponsor for a private race. We’re talking about public funds. It just seems as though the priorities of our city government are off track.

Flawed public process
But the high cost of the subsidy is just one reason why I couldn’t support it. There were several other reasons, and none of them have anything to do with whether or not I think the Grand Prix is a good thing.

If I had been given more than 24 hours to study the proposal, I might have considered supporting it. We were asked to approve the subsidy just one day after the details were made public. With that kind of short notice, how could I truly analyze the proposal?

How could San Jose residents participate in the discussions? Since when do a handful of politicians make all the decisions without consulting their constituents?

This is just another example of a pattern of behavior that’s been plaguing San Jose in recent times. It was another back room deal where only a select few got the information in advance.

When you learn about the race the day before or the day of the city council meeting because of a story in the San Jose Mercury News, something is wrong in the public process. This is the public’s business.

It isn’t just a matter of the city council members not getting an opportunity to analyze these decisions, it’s whether each one of you has an opportunity to analyze it, contact us and tell us how you feel about it—before the vote is taken.

On the day that the city council voted on this proposal, I asked why we had to make a decision so quickly. I was told that there had been ongoing negotiations with city staff, the redevelopment agency and the operator of the event. If that’s the case, why weren’t there any interim reports or committee reports to the council?

As a member of the Sports Authority, I don’t remember receiving any reports indicating that the negotiations were winding down. This is in sharp contrast to last year, when the entire Sports Authority board was involved early on. We understood the issues well enough to the point where many Sports Authority members actually came to the city council to explain what was happening with the transaction.

I suggested that we postpone the vote for two weeks to give us more time to evaluate the proposal, to share it with the communities we represent, and to get specifics on how the estimated return on investment was determined. Instead, I was told that if we didn’t approve the deal that day, the race would be put at risk of complete failure. I voted against it anyway.

If I had been provided concrete evidence that this investment would bring an equivalent amount of money directly back into the City’s coffers, I might have supported a subsidy.

Last year the event was a great success without costing the City more than $600,000. Let’s hope that this year the event will draw even more fans, more global media coverage and revenues for downtown retail and hospitality industries.

I strongly support business, economic development and sports here in San Jose; I just think that exploring alternate funding sources, especially private sponsorship, would have been the way to go in light of the painful budget cuts that lie ahead.

The District 8 Council Office welcomes comments and questions from its residents. To contact Councilmember Cortese’s office, please call (408) 535-4908 or email Dave.Cortese@sanjoseca.gov.