A special meeting on Wednesday will determine if the city should conduct an audit of the San Jose Redevelopment Agency’s incubator program. As San Jose Inside first reported, a study buried for two years shows the RDA spent more than $30 million on start-up companies that often provided a poor return on investment.
Councilmember Sam Liccardo is pushed for the audit in a memo after he discovered a report with less-than exemplary findings on incubators from 1994 to 2009. The report was mysteriously never shown to members of the Community and Economic Development Committee. Liccardo said leaving out some of the study’s findings in lieu of a positive verbal report at a 2009 committee meeting was “the definition of a glaring omission.”
Councilmember Ash Kalra has expressed disinterest in an audit, because, he says, the city plans to stop funding incubator programs within the next year. But Liccardo has said it is in the public’s interest to audit incubators because the city is paying lease agreements for the Bio-center and two other incubator programs—the Environmental Business Cluster (EBC) and the Market Access Center (US MAC)—which will cost the city hundreds of thousands of dollars.
What will be especially interesting on Wednesday is whether or not anyone can answer why the incubator study was never shown to people outside of the RDA or its partner, the San Jose State University Research Foundation. Mayor Chuck Reed said he had knowledge of the report but told the Merc that he doesn’t recall a meeting in which he was allegedly briefed on some of the study’s more negative findings.
A verbal report was given to Liccardo and fellow councilmembers Nancy Pyle, Rose Herrera and Kalra on Dec. 14, 2009, but nothing was mentioned regarding the fact that only 11 percent of the 288 companies that “graduated” from the incubator were still in business and located in San Jose. The study also showed that annual sales tax revenue to the city was about $280,000, or about $4.2 million over a 15-year period, while the RDA gave estimates of $12 million a year.