Features & Columns
Bill Sherry Readies the New
San Jose Convention Center
Bill Sherry walked into work promptly at 8am on the first day of his job as Aviation Director of Mineta San Jose International Airport. First appointment: greet the staff. Second: meet the city manager. At the time, May 2005, that was Del Borgsdorf, who would resign from the scandal plagued city administration months later.
"I thought it was a meeting to talk about reporting, responsibilities, relationships and what we expect from each other," recounts Sherry, who accepted a cup of coffee from the city manager's secretary before settling his 6-foot-4 frame into a conference table chair.
Just then, the doors swung open and in filed a grim-looking cadre of corporate airline execs—an ambush. For the next hour, airline reps verbally eviscerated the city manager, threatening a class action lawsuit against the overinflated $4.5 billion airport expansion project that just broke ground and threatened to hand down a raft of new costs to airline carriers.
"It was one of the most gruesome meetings I'd ever been in," Sherry says. "There were threats of injunctions. This went on for an hour. The city manager, he didn't say a word until the very end."
Once the public flogging subsided, Borgsdorf spoke.
"Listen, this is the new airport director," he said, motioning toward Sherry. "He'll solve the problem."
And then the city manager walked out.
A complete 180
Sherry, 58, retires in a few months with what seems to be universal accolades from the airline industry, city officials and the business community. The recruitment process to replace him requires double the effort since Sherry is also CEO of Team San Jose—the nonprofit entity that manages the city's hotels, theaters and conference centers, and is also overseeing the $130 million expansion of the San Jose McEnery Convention Center.
The end of the convention center's construction, on track for the second week of September, marks the beginning of Sherry's retirement, much of which he plans to spend on the back of a Harley.
"I think we'll all look back and say that Bill has left his mark on San Jose," says City Manager Debra Figone. "People will really miss him. There's a legacy of the airport project and the convention center, but in my mind there's a professional legacy of leadership and management skills."
Figone refers to the kind of managerial aptitude that allows a guy to come into a new city take over a decade-old project and tell people to stop what they're doing, slash the budget by $3 billion and still remain friendly when the dust settles.
Sherry inherited a trainwreck.
Two decades of planning, piecemeal facilities additions, lax oversight and shoddy management pushed the city's airport construction estimate to $4.5 billion. No one thought to question the price, Sherry says, a fact that still baffles him. Maybe the pre-9/11 cash-flush dotcom boom days flung everyone's expectations outside the realm of reality, he suggests. The parking lot used to be so crowded that people would just leave keys in the rental car by the side of the road in a rush to catch a flight. Waiting in line to return it would take too long.
"I can kind of understand that," he concedes, diplomatically. "Money then was flowing fast and furious. I guess people thought it was going to stay that way." Of course, it didn't. By the time the city hired Sherry, things had fallen into a depressing mire of dysfunction and bad blood.
Six weeks into his new gig, Sherry called off construction, sending everyone home, despite ground being broken and pylons driven. Then, using the kind of methodology usually reserved for negotiating Middle East peace agreements, he gathered a group of 48 stakeholders—the City Council, airline execs, financial consultants, engineers—and holed them up in the city-owned Hayes Mansion for three days. No one could leave until they agreed on how to build the airport on a strict, vastly downsized $1.5 billion budget.
"I call it the infamous September workshop," Sherry says. "I had six tables. Eight people each. I divvied them all up so each table was evenly represented by airlines, engineers, city staff, members of the Airport Commission."
Sherry's team prepared cost estimates for different scenarios, then tasked each table to theoretically "build your own airport." Everybody got a laminated aerial photo of the project with a menu of proposed additions to Sharpie up with ideas.
At the end of day two, Sherry treated the group to the city's HP Pavilion box seats at a Santana concert. People got liquored up and forged a little camaraderie.
"It was a reward for being locked in a room for three days," says Dave Maas, the airport's deputy director. "We joked about being locked up, but it was serious. No one was leaving until we came to a decision."
The next day, it was easier to agree on the price and scope of construction. Sherry insisted on nothing short of unanimous consent.
"Since that day, it wasn't the city's program anymore—it was 'our' program," Sherry says. "We built a collective 'we.' That one element stayed with the program the entire three and a half years. We reconvened that group if anything changed so we could talk it out and come to agreement again."
During planning and construction, Sherry placed the entire team of contractors, regulators and anyone else working on the 2.6 million-square-foot modernization in one office building on First Street in downtown, literally knocking down some office barriers to encourage candid discussions and quick decisions. He used a design-build model, which contracted the same group for both planning and construction and really sped up the project. City Council granted Sherry the authority to approve change-orders and make big purchases at his discretion without having to double-check with the city.
"That saved everyone a lot of time," Sherry says. "Especially when, at one point in the project, we were spending $1 million a day to get this done."
Since that rocky start in the city manager's office seven years prior, the Florida native who once oversaw the $4.2 billion renovation of the Ft. Lauderdale-Hollywood International airport managed to transform San Jose's flight hub into one regarded by industry peers as the most technologically advanced in the nation by merit of it being the most recently renovated and the first to modernize post-9/11. Terminal B's solar farm and and concourse air-conditioning system that only cools the first eight feet from the ground up instead of mixing all the air in the sunny high-ceilinged space helped earn it a silver LEED certification.
All that and $160 million under budget, many months ahead of schedule and no post-project litigation—a rare feat for a public construction endeavor of that magnitude.
When the ribbon was cut at the airport's grand opening in 2010, some guests at the ceremony teared up. People became emotionally invested in the project, says city communications director Dave Vossbrink, who previously was hired under Sherry to handle media relations and marketing for the airport.
"Bill was brought in during a major transition; he knew about partnerships, he knew the industry and the politics of trust," Vossbrink says. "He brought it all together on track and on time, because there was no political micromanagement because of that trust."
"I was really pleased with the way it turned out," Sherry says from his airport office, a sunlit room decorated with elaborate model planes placed neatly on gleaming floor-to-ceiling redwood shelves. "We accelerated the project, which is mainly what kept it under budget."
A low point
The downside to the airport expansion is that it was bought, in part, by a mortgage financed at the height of the market, just before the devastating collapse that begat the Great Recession. The biggest cost, however, was in human capital. Sherry spread out the layoffs over a year, a professional low point, he says. He halved the staff from 400 to 200 and lowered the operating annual operating budget from $130 million down to $79.3 million.
"But after the storm of recession, the skies are parting, the sun's coming out," he says. "I think the outlook for this airport is incredibly bright. You got 7 million people in the Bay Area. You've got three commercial airports that can't take anymore."
SFO is at capacity, cramming in as much metal as they can, he says. Oakland has plenty of land, but is maxed-out on terminal space. It would take a decade to expand, at least. That leaves San Jose in position to emerge as a leader in the region, agrees Russell Hancock, CEO of Silicon Valley Joint Venture, whose board of directors includes Sherry.
San Jose uses only 50 percent of its airfield capacity and 65 percent of terminal capacity, thanks to a money-saving industry innovation to rent out check-in and boarding gate terminals to individual airlines as their flight schedules dictate rather than the previous model of leasing fixed rental space around the clock.
That unrealized potential, which hung over the airport like a fog during economic decline, is now spun as a chance for unprecedented growth. Just this spring, the principals at Google agreed to commence moving its private jet fleet by 2015 from Mountain View's Moffett field to Signature Flight Support's privately developed $82 million facility on the San Jose airport's west side.
Also under Sherry's watch, Japan's All Nippon Airways (ANA) agreed to strike up daily nonstop service, which resumed last month between San Jose and Tokyo, flying its storied Boeing 787 Dreamliner. Federal regulators had halted flights for a number of months because defects in the Dreamliner lithium-ion batteries sparked an electrical fire on board an ANA Dreamliner in January.
Alaska Airlines has doubled its service to San Jose in the past couple years. Heartened by their corporate peers, other airlines including Virgin America and Delta Air Lines have followed suit.
After several years of stagnation, passenger traffic jumped 9.5 percent in May compared to the same time last year, marking the fifth consecutive month of burgeoning growth and a calendar year growth of 4.7 percent. Sherry credits more air service to places Silicon Valley travelers want to go, and, of course, a healing economy.
A bigger mess
The 49ers want to move to South Bay. The Earthquakes want to build a stadium. The Sharks tout their San Jose pride. Sherry believes pro sports have figured it out before the airline industry: South Bay is a legit destination. The money's here, the population's here, it just needs more to do.
With an airport to bring them and of big tech's cash to spend, Sherry's shifted his focus to helping Team San Jose build up the region's reputation as a conference, event and entertainment destination.
"People think so highly of him that they keep heaping responsibility on him," says Hancock. "He knows how to get projects through. So they gave him the biggest project in the city's history: the airport. Now, he gets this other huge project: the convention center."
When the city tapped Sherry to lead the embattled events and facilities management and tourism entity, Team San Jose, it was mired in political infighting, an embattled budget and unmet performance benchmarks.
Founded in 2004 by former Doubletree hotel manager Dan Fenton, the hotel tax-funded nonprofit up to that point had never achieved any notable success, though it was lauded by labor publications for its working partnership with South Bay Labor Council. Otherwise, it fumbled every major project it touched–like expanding the San Jose McEnery Convention Center.
The convention center, built in the late 1980s, was never big enough to meet the demands of Silicon Valley's burgeoning business sector. Companies looking for enough event space would often opt for the Moscone Center in San Francisco, the Bay Area's largest convention facility.
The city knew for a long time it had to expand its own. Team San Jose's answer to that demand: the famously hideous $2 million South Hall, a blue-and-white tent built in 2005. The quick-fix addition lies in downtown's SoFA district, to the chagrin of its neighbors. Tearing it down, which downtown's District 1 councilman Sam Liccardo is still trying to make happen, will cost the city an estimated $1 million.
By 2009, Fenton had already spent $17 million on the permanent expansion—a project that got scaled back from $300 million to $140 million by reducing the scope—with nothing to show for it. It was supposed to be the crown jewel of the city's Redevelopment Agency (which Gov. Jerry Brown shut down months later). But the state seized $75 million of RDA funds, the city owed the county another $72 million and faced a deficit of $96 million. There seemed no way to make it work.
Fenton's group had lost the city's trust. Mayor Chuck Reed criticized the stalled, overpriced construction, but also blasted the way Fenton managed hiring, citing the CEO's decision to use only San Jose Teamsters as detrimental to the company's image. Major corporations canceled events in San Jose and took them elsewhere. San Jose prices were too jacked up and the return not worth the added cost, Reed said at a 2009 council meeting where he called for a freeze on the expansion project until someone got a better hold on the whole deal.
The city finally cut off Team San Jose in 2010 after it overshot its budget by $750,000, in part because of a mismanaged Genghis Khan exhibit at the Tech Museum.
Santa Clara County's Civil Grand Jury as early as 2007 balked at the city's continuing support of Fenton's money-hemorrhaging operation and brought up the issue again months before the city's eventual decision to start looking for someone to replace him. When he resigned, Fenton's annual compensation totaled somewhere in the neighborhood of $320,000.
It took a while before the city acted on the Grand Jury's concerns. Team San Jose's finance department, namely CFO Dan Cunningham, kept brushing off deficits in emails to the city, promising to clean up the mess, reassuring everyone that all was OK. Those money troubles didn't stop the nonprofit from bestowing bonuses on executives and non-management staff alike.
Fenton's mismanagement didn't happen in a vacuum, however. Team San Jose was compromised from the top down, its board of directors usurped by an executive committee co-chaired by then-CEO of the South Bay Labor Council Cindy Chavez and hotelier John Southwell. With Chavez as a shot-caller, power was concentrated into the hands of a small group, says Councilman Pete Constant, who served as city liaison for Team San Jose.
"Cindy Chavez was the co-chair of it at that time—she was the one who steered it in that direction," says Constant, who still works as a liaison for the organization. "I think it's a matter of, well, when you start to take decisions away from a large group and put it in the hands of a small number of people, you lose that democratic input process. You don't have the discussion and deliberation you should."
Instead of the board of directors directing policy and following open-meeting laws, it had atrophied into a glorified social club, says Constant, who remembers being frustrated when he attended those meetings. Things weren't being taken seriously. There was non-compliance in that no one took proper meeting minutes or posted agendas or respected it as a public-interest business endeavor.
"I think that's what happens when you have something that's led by people who don't have the best interest of the organization in mind," says Constant, who eventually took the issue to Reed and Liccardo. "Cindy was ousted along with a number of other people, there had to be some re-organization, we got a new CEO [Sherry] and a new chairman of the board [Mike Mulcahy). I was really confident that the [public-private] model of Team San Jose could and should work with the right leadership."
When the city asked Sherry to manage the expansion construction, Sherry didn't hesitate, he says. He had just seen completion of the airport's final-phase development and would have been content to retire had the recession not taken a 30-percent chomp from his 401k. The prospect of working another few years didn't faze him, he says, even though his salary of $260,000 after a $5,000 annual raise didn't come close to his predecessor's.
"I was actually very excited about the concept of taking on another large project because I love to build," Sherry says. "I love to design. I liked the idea of stepping out of my comfort zone, which for me is airports, to design something I'd never done before."
When Fenton's resignation became imminent, Figone, Constant, Reed and then-Team San Jose Chairman Chuck Toeniskoetter, a developer, met with Sherry to implore him to step up as CEO.
"That's when, as I say, things got out of my control," Sherry recounts. "I was already in the middle of it."
Sherry prefers not to dwell on the dysfunction, he says, crediting his glass-half-full mentality. Instead, he steers the conversation to present-day successes.
"Day one, when I got to the company, I told everybody just hunker down, concentrate on your jobs, we're going to de-politicize, we're going to concentrate on running these facilities," Sherry says. "At the end of the day, the city wants us to get people downtown. The more concerts, the more Broadway shows, the more people we can bring to San Jose—that's really what they want."
Today's Team San Jose is a complete reinvention, Sherry recently reassured city director of finance Julia Cooper.
"I told her, 'Trust me when I say that other than the name of this company, it's entirely different,'" Sherry says. "It's an entirely new company. It operates under a whole new set of guidelines. While I tend to get the credit for that, there were literally hundreds of people involved in the makeover."
The executive committee, one forged in labor union ties with Chavez and successive chair Phaedra Ellis-Lamkins, was abolished. In the past two-and-a-half years, Sherry directed the company to create 250 written standard operating procedures so everyone knows how to do their job.
Hotel rooms are being filled—a must for a business funded by hotel taxes. There's a client advisory board to ensure third-party oversight. The city has full access to the company's books with the click of a button. And 2013, Sherry says, has easily turned out to be best year ever in terms of finances.
"Our real client is the city," says Sherry. "So the reporting and the transparency that we have with the city now is vastly different and such a huge change. There's a lot of trust there."
For a guy professionally raised in the aviation business, there was a learning curve. Sherry remembers sitting in a Broadway exec's office in New York City, looking out the window at all the lights and wondering, "How the heck did an airline guy wind up here?"
Truth is, a lot of what has made Sherry successful transcends business types.
"When I really stop and think about it, I don't do anything," Sherry says with a shrug. "I don't lay bricks, I've never cleared an airplane to land I've never actually hosted an event. I do one thing: I inspire other people to do great work. That's what I do."
Admittedly, Sherry had no convention experience before taking the Team San Jose helm. But operations could be fine tuned with the October arrival of new CEO Karolyn Kirchgesler, who is overseen convention operations in St. Paul, Minn. the last nine years.
The first event scheduled next month for San Jose's newly expanded convention center is the Airports Council International annual North American conference. Call it a cosmic convergence.
Sherry, who meant to retire a few years ago before the offer to head Team San Jose, couldn't have planned it better. When guests gather for the airline industry summit, he'll get to welcome them as outgoing head of the city's airport and the 125,000-square-foot convention center expansion.
"You can bet that right at the end of that conference there's going to be a party," Sherry says. "What a great way to go out."