Last Wednesday, I attended both the joint City/Gilroy Gardens
press conference concerning the city’s possible acquisition of the
park and a special meeting of this paper’s editorial board for
further discussion of the matter directly following the press
conference. It was an interesting day, during which a lot of
information was revealed.
Last Wednesday, I attended both the joint City/Gilroy Gardens press conference concerning the city’s possible acquisition of the park and a special meeting of this paper’s editorial board for further discussion of the matter directly following the press conference. It was an interesting day, during which a lot of information was revealed.
In view of that information, it now seems to me that what we may have here is what we who swim in the business-world ocean call a “makeable deal'” and one that could certainly benefit both parties.
Major benefits to the City of Gilroy are apparent. That is, control of an area all of us consider to have great natural beauty in abundance. If we would like that to continue, ownership solves many more problems than it creates. Control by others raises the specter of “Hecker Pass Tire and Brake'” and I doubt there’s anyone reading today who thinks that option bears inspection.
One of my major objections last week was being rushed into a decision. Happily, that will not be necessary. The park’s financials reveal that funds for bond payments are in place through next November, and a compensating balance account is in place, although it is now below the bondholder’s requirement and must be replenished. However, if the city acquires the bonds, that requirement vanishes. The bonds are “callable” in 2010. Per the contract, that’s the earliest the city could buy out the bondholders, but of course these things are negotiable. I’ve been unable to find out if the bonds are publicly traded. If they are, and are selling below par, as is common with the junk bonds, perhaps the city could acquire them for less than face value.
As both Bonfante/Gilroy Gardens board members Bob Kraemer and Joel Goldsmith pointed out at both meetings, the park has never had trouble meeting their operating funds requirements. The debt was always the Sword of Damocles that hung over their heads. Absent the debt, the park can support itself, and there is precedent. Our golf course on city-owned land is contracted out to Don Delorenzo, and the city collects rent. Profits and losses are Delo’s province. The city assumes no risk of loss. This might well be the model if the park is acquired.
But should the city assume that debt? Well, perhaps.
The park is 536 acres, including 350 acres of open space. City funds will have to be juggled; some projects will probably have to be delayed. But the deal works out to about 23K per acre, a steal in these times, and the infrastructure, like sewer, water and electrical are in place and operating. No extra funds would have to be expended there. Also, the 350 acres of open space could be sold for mitigation of other projects by developers, or the development rights sold to the Open Space Authority. In either case, nothing would change except ownership and liability, and the city would garner cash to retire acquisition debt without fear of development. Our walking trail could also be extended down to the park, and no one is likely to complain about that.
As both city administrator and the park representatives pointed out, the devil is in the details. The first question was “can the city legally acquire title to the property?” and the city’s legal staff is investigating that now. It doesn’t seem likely to be an impediment, considering the City of Santa Clara and the Great America amusement park deal.
Philosophically speaking, I am opposed to this deal. But the problem with this is philosophy often doesn’t deal with the real world. As a U.S. president once said, “politics is the art of the possible.” When a councilmember is sitting on the dais, he or she is often forced to deal with the most palatable option of a set of unattractive choices. That’s where I find my thinking now. It’s not as bad as I originally thought, and it’s still unpalatable, but acquisition may be the most palatable option, and is not without it’s benefits.
In closing, a fellow editorial board members mentioned to me last week after the special meeting with the park representatives that I was a “little rough” with both Bob Kraemer and Joel Goldsmith during that meeting. Gentlemen, if either of you believes that to be so, my apologies. I admit I can be a bit of an arm-waver when things about which I feel passionate are discussed, and this issue is one of them.
