13 November, 2012

Dear Vallejo City Councilmember,

As you know, I’ve been closely following the Solano 360 (fairgrounds) projectsince the first public forum in April 2009. I wish to call your attention to somefiscal and legal problems that have arisen with the just-released Solano 360Specific Plan, EIR and Fiscal Impact Analysis.

The problems arise for a simple reason: the Specific Plan does not conformto the Project Vision. One of the documents, the EIR, comes to the sameconclusion, as I explain below.

The Specific Plan deviates from the Project Vision in many ways. A list isattached, along with pages from official documents. Here is a quick summary:

• The retail/commercial part of the project has been scaled down by morethan two-thirds, compared to the land use description in the Solano 360Vision Report. Hotels are gone. Office space is gone. In place of thosethings is about 20% more parking, including a multi-level garage.

• The project no longer includes a major anchor tenant. The 150,000 sq ftentertainment retailer proposed for the north end—one of the main revenuegenerators—is gone, leaving only a 100,000 sq ft exposition hall for phaseone. (The hall will be built with $65 million in County-issued bonds, abouttwice as much as originally envisioned!)

• The City of Vallejo will need to issue $24 million in municipal bonds beforethe project can enter phase two. It will take 30 years to repay this debt,according to the Fiscal Analysis. And the debt service will be in addition toa split of sales tax with the County. Vallejo’s debt obligations in the originalplan: exactly $0.

For about 18 months, since a not-very-supportive marketing study was released,project consultants and County officials have said that the changes are actuallya “refinement”. The EIR contradicts those statements. The EIR calls the VisionPlan an “alternative”. More incredibly, it comes to this conclusion:

5.6.1 - Vision PlanSubsequent to development of the Vision Plan and prior topreparation of the [Specific] Plan, a market demand studywas conducted by the County (Gruen Associates, 2011).Among other findings, the market demand study forecastthat development of retail commercial land uses depicted inthe Vision Plan could compete with local retail commercialuses to point of potentially causing store closures, therebycontributing to urban blight. Because of the lack of a sufficientlystrong market for retail commercial uses and the potential forcausing urban blight, the Vision Plan was rejected as a projectalternative. [emphasis mine]

Prior to the release of the marketing study, all of the resolutions adopted by theCity Council and Board of Supervisors, as well as agency reports, emphasizeda “shared commitment to implement the Project Vision”, and the Vision Report(accepted by both parties in June 2009) shall guide the Specific Plan andentitlement process. This policy was made concrete in the City/County revisedMOU of 2/9/2010. See section 6b among others: “The Project Vision willserve as the basis to move forward with the completion of a specific plan andfor the development of the Project Description for purposes of beginning theenvironmental review.”

Now, twenty months later, the consultant who did the environmental review tellsus the Vision Plan that he was supposed to review was, at some unknown time,rejected. This situation is almost surreal. It makes me wonder:

• Does the City-County MOU still govern the process, or have the partiesentered into another agreement that may be described euphemistically as“less public”?

• In three and a half years, why were Vallejo residents never told about the$24 million in bonds necessary for the project? Was this information heldback until the city emerged from bankruptcy? Was it known to Council?

• When did the consultant reject the original plan, what kind of notice wasgiven to the Solano 360 oversight committee, and why did the processgo forward without a new Vision Report being approved by the City andCounty?

The above questions are not academic. They raise serious concerns aboutwhether the MOU in general, or the quitclaim and entitlement sections inparticular, are still binding on either party. The former is relevant to the CEQAprocess, the latter to reimbursements.

You might recall that the City of Vallejo, in its 1/25/2011 amended MOU,agreed to reimburse the County for direct and indirect expenses related to thefairgrounds redevelopment project, and it gave the County a “vested right” toentitlements. Some $4.5 million has already been spent on the Vision Reportand the documents described in this letter. That money was all borrowed by theCounty from its general fund.

Significantly, the Fiscal Impact Analysis does not include the $4.5 million alreadyspent on the project—it says so explicitly in the document—and provides nodetails about how that debt will be repaid. Is Vallejo on the hook for it, even ifthe plan has changed? The answer may possibly explain why consultants andCounty officials have been so adamant that the Specific Plan is just a refinementof the original plan.

I should conclude by saying that this letter is not about the merits of the project.That’s a debate for another time. My concerns are about fiscal responsibilityand whether the Vallejo City Council is properly protecting the interests of itsresidents. I don’t claim to speak for everyone, but I think we can all agree:

there should be no massive public debt tied to an uncertain future, no enteringinto shadow agreements, no more messy legal fights.

Thank you for your attention to this matter. I expect you’re going to hearfrom many Vallejo residents about changes to the project, particularly aboutthe proposed $24 million in municipal bonds. Perhaps at the next City Councilmeeting you can provide a forum for addressing my/our concerns.

Sincerely,

Dan LevinVallejo Resident & Local Business Owner

Attachments (7 pages)

Differences between the Project Vision and Specific Plan

1. In the new plan, commercial/retail space is reduced by more than two-thirds,from about 1.3 million down to 325,000 sq ft. There is no major entertainment/retailanchor in the north end, and no hotels or office space. Additions include a 30-acreamusement park and 50 housing units.

2. In the new plan, build-out takes twice as long. The three phases of developmentare slowed from 15 years to 30 years. Financing is extended to 50 years.

3. In the new plan, the master developer pays much less of the infrastructure costs.Public financing was originally estimated at $31M total. Although the new plan has farless revenue generating capacity, it assumes $95M in public financing.

4. In the new plan, Vallejo issues $24M in municipal bonds for a Community FacilitiesDistrict (CFD). Original plan: no debt for either Vallejo or its Redevelopment Agency.

5. The original plan envisioned a major commercial/entertainment and shoppingdestination that would produce $12M in tax revenue per year at full build-out. Thenew plan lowers expectations a bit. In the land use description of the Specific Plan,you can read what Vallejo can expect for its $24M investment:

“Family Entertainment Centers” (FEC’s) as well as associated restaurant andretail activities. Examples of FEC anchor uses within the EMU area includeJohn’s Incredible Pizza, Dave & Buster’s, and other businesses that combineeating, entertainment, small amusement park, gaming, animatronic shows,and similar uses, either within buildings and/or as outdoor venues.

Presumably an animatronic show is something like Chuck E. Cheese.

6. The original plan envisioned synergy with Six Flags. The new plan includes nohotels and a 30-acre amusement park that may compete with Six Flags. (The 30 acresmay be reserved for a Six Flags expansion, we don’t know.)

7. The original plan envisioned 50%–90% of tax revenue as a net gain to the countyand city. The Fiscal Impact Analysis for the new plan makes no mention at all of netgain The new plan may syphon revenue that the city and county are already getting.

8. The new plan assumes there will be a master developer for only the familyentertainment/mixed use portion of the fairgrounds. County will act as masterdeveloper for all other portions.

9. The new plan is heavily weighted toward parking, with almost 30 acres of it,including a multi-level garage at the south end (for Six Flags?). New plan does notexplain how free parking for family entertainment/mixed use businesses can co-existwith paid parking for Six Flags and possible new amusement park.

10. The original plan was weighted toward private development. New plan is weightedtoward public financing of infrastructure for unnamed and uncertain tenants. Newplan assumes Vallejo will recoup its $24M in bonds through a special tax levied on the30-acre commercial entertainment business (amusement park). Almost certainly sucha tenant would lobby for and receive tax breaks, leaving the debt to the public.

The lessons of Solano County Fairgrounds economicsPublished By Times Herald

Posted: 03/25/2012 01:01:24 AM PDT

There's a $4 million hole at the Solano County Fairgrounds. You won't see it when driving by, because it's a financialhole. It was dug by the Solano County Board of Supervisors, and almost certainly taxpayers will have to fill it.

There is much we don't know about the Fairgrounds project, officially called Solano360. No public meeting has beenheld and no documents have been released for over six months. Here's what we do know:

* The project has been suspended and possibly canceled by the county after spending close to $4 million on aredevelopment plan.

* The money was spent entirely on consultants, mostly with no-bid contracts ranging from $400,000 to upwards of $1million.

* The losses have not been accounted for. Supervisors borrowed all of the money from the general fund and mustsomehow pay it back. Taxpayers have not yet felt the pain.

How did this happen? The story is complicated. Suffice it to say that the county (and City of Vallejo) had a grandvision for the Fairgrounds but did not properly evaluate it. There were problems right from the start, notably:

* Infrastructure costs -- An early study estimated that highway and other improvements would cost upwards of $80million. There was no way to obtain the funds, so the plan simply shifted the responsibility to the master developer.Oddly, the county never sought a master developer and seemed intent on doing the project itself.

* Parking -- Here the county seems to have gotten things backward, thinking the issue was overflow parking for Six Flags/Discovery Kingdom. The real issue, broughtup by the Times-Herald more than two years ago, was how a 150-acre retail/commercial development could offer anyfree parking directly across the street from Six Flags' paid parking.

* Economics -- The county spent $2 million on a project plan before doing a marketing study. Not surprisingly, thestudy concluded that a new regional mall, with 600,000-plus square feet of retail space, could not be supported nowor in the foreseeable future.

When the county canceled its January public meeting on the Fairgrounds, it gave a terse explanation. Essentially itsaid that the plan had to be reconsidered in light of the state's takeover of the Vallejo Redevelopment Agency (RDA).Local residents should be skeptical. First, the county did not originally want the RDA to be included; the city had topush for it. Second, the county knew of this possibility more than a year ago and continued to spend about $100,000per month on project consultants.

I should mention, before going any further, that I'm a strong advocate for the County Fair. I think it deserves publicsupport, and parts of the redevelopment plan are necessary to sustain it. I also agree that most of the property shouldbe put to other uses, which serve the public and boost the local economy. Unfortunately, no matter what goes there, itwill be awfully hard for the county to recoup what's been spent. With even a scaled-back development, say the size ofNapa Junction, it could take more than a decade to get back $4 million through sales and property tax---and remember,that amount is only the consultants' fees.

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thrown after bad? Why haven't any consultants' contracts been suspended or canceled? Is there a revised plan ornew timeline for the project? And most importantly, when the bills come due, who should taxpayers and local residentshold accountable?

When writing about the Fairgrounds, I'd prefer to end on a high note. If nothing else, there are lessons for any futureproject. Here, in my mind, are the important ones:

* Get the public involved early and in a meaningful way. The democratic process is not an inconvenience; it's a way tomake sure the right policy is put in place.

* Avoid spending lavishly on consultants. Oftentimes their interest is to keep a project going, not to provide completeor objective information to elected officials.

* Governments should not be in the business of building retail/commercial developments. The requisite skills are notthere, as the Fairgrounds project amply demonstrates, and the risks fall on the public.

* When you realize you're digging a hole for yourself, it's best to stop digging.

Dan LevinVallejo

Since elected officials have gone silent about the Fairgrounds, the public can rightfully ask, is good money being

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Do the math -- this project isn't the answerPublished By Times Herald

Posted: 11/20/2012 01:01:24 AM PST

In the national election, "math" was a big topic. There was electoral college math, polling math, and fiscal policy math.

Now math looms large for a local issue: The fairgrounds. What began as a good idea, economic redevelopment, hasbecome a nightmarish idea for taxpayers.

Right after the election -- conveniently right after the supervisor race -- Solano County government released a"Specific Plan" for the fairgrounds. The new plan is so divorced from economic reality, and so different from theoriginal plan, that both city and county residents should be asking, how did it come to this?

Elected officials have spent $4.5 million on project plans so far, starting with a $2 million "vision." And here's wherewe are:

* According to the Specific Plan, the project will require more than $90 million in public funds (county and city bonds).That's triple the amount of debt in the original plan three years ago.

* The fairgrounds will have about 75 percent less retail/commercial/office space than originally proposed. No hotelseither. While taxpayer obligations have skyrocketed, the revenue-generating capacity has plummeted.

* The payback period has been extended from 15 years to 50 years. That's no misprint. By trying to make the mathwork, our local government is admitting, without irony, that the debt will be passed on to our grandchildren.

According to a recent article in the Times-Herald, Solano County Supervisor Jim Spering thinks that Vallejo

officials are slowing down the project by trying to negotiate a better deal. He is being disingenuous. The biggestdelay was due to an unfavorable marketing study. Besides, resistance is not coming from City Hall (though it shouldbe). Resistance is coming from taxpayers, who can easily see what a rotten deal this is.

Here's the question city and county residents should be asking their elected officials: How can you even considerrisking $90 million of public money on so speculative a project? If the money was spent on, say, a high-tech researchpark on Mare Island, that might warrant a 50-year investment. But a restaurant row and family entertainment center?Believe it or not, those are the commercial ventures now planned for the fairgrounds.

While all Solano County residents should object to this boondoggle of a project, it does affect Vallejo residents in anespecially bad way. This is for two reasons:

* The city is being asked to provide $24 million of the total public funds. That's for on-site infrastructure for propertythat the county owns. And it's in addition to off-site improvements and municipal services that Vallejo will have toprovide. Although the project is supposedly being built to create a "fairgrounds of the future" and to boost countyrevenue, no other city is being asked to contribute anything.

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happen? Because after the Vision was adopted by both parties, the city (unadvisedly) agreed to reimburse all of thecounty's direct and indirect expenses through future tax revenue.

That Vallejo should remain on the hook for a $4.5 million reimbursement -- even after the project is scaled down by 75percent -- is appalling. By the time revenue sharing is figured in, it is likely that Vallejo will receive no economicbenefit at all from a $24 million infrastructure investment. Possibly Vallejo will be worse off -- much worse -- if theproject is built to anything less than full capacity or if some restaurant sales shift from other parts of the city, such asfrom Gateway Plaza across Interstate 80. The fiscal Impact analysis rather curiously neglects the topic of "netgain/loss."

It is time to demand that elected officials act in a fiscally responsible manner with regard to the fairgrounds. The firststep is to help them resist temptation, to distinguish what they would like to do from what we can afford to do. Theproject may have some merit, but not $90 million worth -- not even close. There is no better evidence than the countyhaving to act as master developer for nearly the whole thing. If a private developer thought the project wasworthwhile, as was originally proposed, then the public would not have to assume such a massive amount ofdebt-and risk.

As we "do the math," we should keep in mind that city and county government is, in a manner of speaking, just downthe road. If we cannot control our local officials' urge to spend, then we can hardly expect anything different from ournational government 3.000 miles away.

Dan Levin

Vallejo resident and local business owner

Editor's note: The author suggests for supporting documentation, please download http://bit.ly/W6JLwd

* The Specific Plan does not provide a way for the county to get back the $4.5 million that it borrowed from its generalfund and spent already. That's a major change from the Vision Plan, which factored in those costs. How could this