"Ignorance is Strength"

When is an office development a winner, and when is it a loser?

If you're Councilmember Moore or Casserta, that depends on whether it's a project that competes with the stadium, or a project to make money for building the stadium. The San Jose Mercury News highlighted this Orwellian double-speak today. Here is a quote:

A few weeks ago, consultants said the city of Santa Clara could generate $3.3 million in annual rent if it built office buildings instead of a proposed San Francisco 49ers stadium.

Councilman Dominic Caserta challenged how legitimate the idea was, given the empty office buildings in other parts of the city.

And Councilman Kevin Moore, one of the first to approach the 49ers, joked that a sign advertising a strip of real estate across from the stadium site has been up so long that it's faded.

Last week, the same city consultants researched the idea of developing that very slab across the street and found it could generate as much as $2 million a year to help support the stadium or other city projects.

So why didn't Moore and Caserta have questions this time about how viable the option is?

You can read the full article here.

Note also that Councilmember Moore finally admitted that the stadium will sit empty and unused 300 days a year. Is that really what we want to spend $287 million to subsidize?

Doing City Council's homework

Since City Council is not doing much comparison shopping, everyone should help them out by examining other alternatives.

On June 1, Stadium Facts highlighted a successful development that was built entirely with private financing, Santana Row.

On June 5, the KMA report pointed out that a hypothetical Class A office project can generate up to 5 times the fiscal benefits, with zero public subsidy.

Here's another possibility.

Have you ever wondered where all the 1's and 0's of the Internet hang out? Those YouTube videos, the latest movie trailers, the satellite maps at Google Earth, your vacation pictures on Flickr -- they all add up to a lot more 1's and 0's than simple emails. All this data is driving up the need for more and more data centers to store the bits and bytes, and to handle the traffic when grandma wants to see the one that got away in Idaho.

According to the SJ Mercury News, data centers are

... a lucrative place to be. While prime office space in downtown San Jose costs about $2 a square foot per month, David Dunn, senior vice president of Los Angeles-based CRG West, said space in a data center rents from $15 to $30 a square foot per month. Even at that price, it took just nine months last year for CRG to fully lease its newly opened 16th-floor data center at Market Post Tower in downtown San Jose.

And the forecast is for more of the same:

"Do we think this is a gamble? Absolutely not. The forecast for the next 24 months shows demand is rising," [CRG vice president Jameson] Agraz said. "Every TV show you watch will be stored on hard drives so you can have video on demand."

Of course, your mileage may vary. But the point is, there is more than one way to invest $297 million. We would be fools if we didn't check out at least some of them.