San Jose faces decades of City Hall debt
San Jose City Hall is pictured in this file photo.

    It’s been roughly 20 years since San Jose leaders voted to build a new City Hall, rotunda, plaza and parking garage at Fourth and Santa Clara streets in the heart of the city’s downtown. It’ll be nearly another two decades before the full tab is paid.

    Even before the idea became a reality, city leaders including then-mayor Ron Gonzales envisioned the downtown project becoming a landmark for San Jose. But with hundreds of millions of dollars of debt still lingering, opinions are mixed on whether the centerpiece of civic life has been worth it in the long run.

    Gonzales was mayor in 2002 when he and much of the rest of the San Jose City Council voted to approve going forward with the project. The decision followed several years of discussion and debate over whether the city should renovate and expand the existing government building at 801 N. 1st St., or build a new City Hall in downtown, among other alternatives. The downtown civic center opened for business in 2005.

    “I think all in all, it was a positive investment for the people of San Jose,” Gonzales told San José Spotlight.

    The city funded the original cost of the projects through nearly $960 million of bonds primarily issued in 2002. After multiple rounds of refinancing and restructuring, the cost was reduced to nearly $769 million, saving a significant amount of interest. The debt is scheduled to be paid off in 2039, according to Julia Cooper, San Jose’s director of finance.

    The city still owes roughly $413 million as of Nov. 1, having paid off about $355 million, Cooper said.

    Former Mayor Chuck Reed said the civic center is nice to have, but his qualm in 2022 is the same as it was in 2002 when as a councilmember he voted against the high price tag.

    “If you buy a Ferrari, it’s a beautiful vehicle, but the question is what else could you have done with the money,” Reed told San José Spotlight. “Could you have driven a Chevy and used the money for something else?”

    New focal point

    In addition to the new building being a major upgrade from the previous one, Gonzales said the current civic center’s large plaza has served as a key rallying point for residents.

    “That didn’t exist before and I think it’s a vital part of any civic center, to provide a public area for public gatherings, whether they are in protest, demonstration or celebration,” Gonzales said.

    He also said the unique design of the building and rotunda serve as a statement piece for the city.

    “I think people now see that building, whether they live in San Jose, San Francisco, Oakland or any other parts of the Bay Area, they see that building and know exactly where it’s at,” Gonzales said. “That’s in downtown San Jose, the capital of Silicon Valley.”

    Nora Campos, a councilmember in 2002 and current District 5 candidate, said the vote to support the new building was a tough decision, but one she felt was the best move for residents and the city.

    “It has become literally a focal point for the community to be able to do city business and at the same time, to do community business or community activism there,” Campos told San José Spotlight. “What we finally did by making that decision is we created an identity for our city.”

    The building unified most of the city’s services—from permitting to code enforcement to the fire department—under one roof, so residents and others with city business don’t need to visit multiple locations to get things done, she said.

    Campos acknowledged the high cost of the remaining debt, and said if she’s elected again, she’ll look into restructuring the debt to reduce it.

    Santa Clara County Supervisor Cindy Chavez, a San Jose councilmember in 2002 and current mayoral candidate, did not respond to requests for comment.

    An iconic building

    Reed, who would later serve as mayor in the 18th floor office in the new building, was one of two councilmembers who was against it at the time, along with former Councilmember Linda LeZotte, who’s currently on the board of Valley Water.

    Reed told San José Spotlight he has mixed feelings about the building, but recognizes big public works projects take a long time to pay off. He noted the building could serve the city for roughly 50 years.

    In 2002, he suggested the council should explore other options, like building an office tower next to the old City Hall, which would be much cheaper than a building downtown.

    While the downtown building and plaza is unique, Reed said there are many other places for community gatherings or protests in San Jose and the striking design of the building wasn’t necessary.

    “I personally don’t think being iconic is worth a lot,” he said. “I would rather have spent the money on keeping police officers and firefighters on the payroll from 2008 to 2011 when we shrank the workforce because we were running out of money.”

    Gonzalez said in addition to the intangible benefits of the building, it also allowed San Jose to stop leasing expensive office space around the city to accommodate workers that couldn’t fit in the old building.

    “Some 20 years later I think it’s been a plus for the city, and will continue to serve the citizens of the community very well,” Gonzales said.

    Contact Joseph Geha at [email protected] or @josephgeha16 on Twitter.

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