November 19, 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 an article in an ongoing series about the city’s departments and appointed officials.

By Sheila Sanchez
Staff Writer

Harry S. Mavrogenes, 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 Greektown, 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 haul a major section of town he became interested in planning and urban issues at an early age.

He’s now on the other side of the issue.

On Tuesday, Nov. 16, the San Jose City Council and San Jose Mayor Ron Gonzales appointed him as the new executive director of the San Jose’s Redevelopment Agency (SJRA). He had served as interim executive director since November of 2003 replacing Susan Shick who retired. The appointment came after a long and competitive nationwide search that included seven finalists interviewed by panels of 20 people, including City Hall employees, business owners and residents involved in the Strong Neighborhoods Initiative.

A job he loves, Mavrogenes, 55, is honored to have nailed it. He will make $202,000 a year, the same salary Shick earned before she left the city.

“I’m very much committed to this city,” he says during an interview from his office on the 11th floor of the downtown Knight Ridder building on west San Fernado Street. “I feel that it’s critical that we continue our efforts to improve the downtown and the neighborhoods.

He says there’s no other city in the state or country that has done as much redevelopment as San Jose. He’s been recognized for spearheading critical city projects while he served as the agency’s deputy director that included the new Martin Luther King Jr. Library, the restoration of the historic California Theatre, downtown revitalization and renewal of San Jose neighborhoods.

“The commitment this city has made to job creation, to downtown revitalization and to housing is just superior to other agencies,” he says.

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 says. “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.”

“It makes it really easy. You have very few arguments when the city council is also you’re agency board. They can look at the broader citywide priorities,” he says.

The board 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.

The county assessor’s office determines tax increments based on the value of redevelopment project areas at the time they’re assessed. The law allows the agency to receive increments for up to 30 years.

An example: In 1973, an acre of a pear orchard in North San Jose was valued at $10,000 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 says, “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 Fremont 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.”

By law, 20 percent of the agency’s funds must be spent on affordable housing. The agency gives the money to San Jose’s Department of Housing—about $30 million a year.

The agency is trying to build more housing in the downtown. Mavrogenes says about 8,000 units have been built in the area during the last 20 years. In the last three years, the agency has built more than 3,000 housing units.

“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 says, 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.

Started in the late 1950s as an idea; the SJRA spawned in the 1960s the Park Center Plaza project—the two-block area immediately west of Plaza de Cesar Chavez, which became the first office developments to revitalize the downtown.

As the city grew the major elements that made the downtown wonderful started leaving, such as the department stores, City Hall and the San Jose Mercury News’ headquarters.

Little by little the life was sucked out of the downtown. Mavrogenes says downtown 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 half a billion dollars were spent on 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 says.

Budget woes
During the next two fiscal years, instead of spending $70 million in neighborhood improvement projects, it’s going to spend $50 million.

Due to the economic slowdown, property values have declined and the agency’s increment has been reduced by $20 million.

To handle the deficit, Mavrogenes says he’s shifting programs around and being creative.

The agency received $148 million in tax increments this year. To save money, the agency also closed some contracts and refinanced old bonds and will use some of its $40 million cash reserve.

That’s helped the agency 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 says. “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 a principal planner.

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.