2/8/13 - SF Bay Flyway Festival starts today and runs through the weekend. INFO 

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Ed. note: A rally in support of Vallejo's Police will be taking place at the same time and in the same location. 

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Fairgrounds redevelopment project,

city finances

By Dan Levin

2/7/13

Ed. note: The following was originally adressed to the Vallejo Chamber of Commerce.

I am writing about the Fairgrounds redevelopment project (Solano360). In case you didn't know, there is an important meeting Thurs. evening regarding the financial aspects.  I believe that local business people can greatly affect the success of the project if they make their voices heard.  Please allow me to explain why.

The Fairgrounds project is advancing very quickly. The original vision, adopted in June 2009, went through some changes after the release of a marketing study in June 2010, which was not generally in favor of the retail and office components.  The changes culminated with the release of a Specific Plan about ten weeks ago.  Its new emphasis on hospitality and commercial entertainment is a big improvement and something that we can rally behind.

The devil, unfortunately, is in the details. It appears that the financial side the project, as outlined in the Specific Plan, is not so good for Vallejo. Please understand that this is separate from what is proposed for the property; as a concept, there's much to like. The reason I'm reaching out and asking for help is to make sure that the deal is equitable, does not hurt our city budget, and gives us years of sustainable revenue.

Here's a one-page PDF file that provides a quick overview of the
finances: http://bit.ly/WvVsRn

The two charts are taken directly from the Specific Plan.  It's certainly possible to highlight the revenue figures and start thinking about all the things Vallejo could do with that extra money. But
something else that's apparent is a huge difference in operating leverage between the City and County.

Please observe, first, how the City's Expenses are greater than the County's, especially in later years.  Then consider the ratio between Revenue and Expenses (lightest and darkest bars).  By the third phase,
the ratio for the City barely reaches 3:1. The County's ratio starts above 4:1. By the third phase, which is the most distant and hardest to predict---more than 15 years from now---the County's ratio is nearly 7:1.  I think it's not hard to see the problem for Vallejo. The County's revenue stream is relatively safe, years into the future,
while a small miscalculation in forecasts, perhaps combined with an economic downturn, can send the City into the red.

There are other things that make the disparity a little worse.  (1) The County's revenue stream is better protected against a downturn, because it's based on property taxes, leaseholds, and parking fees.
(The latter is all but assured, at least from Six Flags.) The City's revenue is more tied to sales tax and the success of the master developer, who's not yet known. (2) The County, not the City, gets the 2.5% entertainment tax from a new 30-acre EC parcel. (3) The charts do not take into account the revenue-sharing agreement that the City and County are negotiating separately. This has to do with repayment of the $4.5 million already spent. By all indications, it will come out of the City's revenue stream.

I think you can see that the current deal is not necessarily so great for Vallejo.  Can it be made better?  Almost certainly, and the project can still go forward as contemplated in the Specific Plan. But that's where you come in.  That's where we all come in.  Local officials need to know that we're behind them if they argue for a
better deal, that we understand what they're doing and think it is necessary.  My worry is that they feel boxed in right now: if they ask for more they may lose what they have, and they will be accused of being "anti development".

Personally, I think this is not a typical pro- or anti-development debate at all.  It's about negotiating the best possible deal for the City.  As business people, we know that the best deal comes from a willingness to walk away from a poor deal.  Thus, we have to give elected officials the political backing they need, so they can hold
firm, so the party on the other side of the table takes them seriously.  With 150 acres of prime land up for development, requiring about $90M of public funds, a good portion coming from Vallejo, I have to believe a much more equitable deal is possible. The County surely knows the same thing and won't walk away.

If you share the concerns I've raised in this letter, please come to Thursday's meeting (2/7) and make your voice heard. The meeting is taking place from 6:30 to 8:30 pm at the Kennedy Library (Joseph Room).

Thank you very much for considering this information.

 Note: All opinions expressed in the "Primal Scream" column are those of the writer and not necessarily those of the Vallejo Independent Bulletin