The city is being held hostage by the state, said City Manager
Ed Tewes in the third hour of a special city council meeting
Wednesday where the council voted unanimously to pay the
so-called
”
ransom
”
to the state government to preserve Morgan Hill’s Redevelopment
Agency.
The city is being held hostage by the state, said City Manager Ed Tewes in the third hour of a special city council meeting Wednesday where the council voted unanimously to pay the so-called “ransom” to the state government to preserve Morgan Hill’s Redevelopment Agency.
The choice of paying $9.8 million this fiscal year and $2.3 million annually for four more years did not incite indecision among the council – the vote was 4-0, with councilman Rich Constantine absent. The only other option from a set of bills Governor Jerry Brown and lawmakers recently passed – eliminate the RDA altogether and lose $40 million in bond proceeds – was sworn off by the council. The RDA contributes about $2.5 million in revenue each year to the city’s $26-million general fund.
“It’s not going to be easy, but I hope we can find a clear path on this,” Mayor Steve Tate said.
City staff presented a complicated set of options as to how to dole out the cuts for the council to consider in the coming months, but Tewes asked the council not to approve the ordinance without consideration of how the city can pay $9.8 million in the next 12 months.
Councilmembers said they could approve retaining the RDA Wednesday night because the alternative would cost the city even more in cash ($8 million, bond funds $40 million, and $20 million in real estate assets), and what will have to be reduced remains open for discussion, councilman Larry Carr pointed out.
Also, Morgan Hill’s redevelopment agency is winding down, Tewes said Wednesday night. Redevelopment is expected to sunset or “go dark” by 2016, when the agency is expected to reach a previously agreed-upon threshold of tax increment revenue beyond which they cannot collect until they pay off the bond proceeds acquired in 2008.
Brown has planned to bring in $1.7 billion from eliminating RDAs statewide and supporters have said presenting an option for cities to keep RDAs, though at a cost, is better than complete elimination. Morgan Hill’s RDA was created in 1981 and like other redevelopment agencies it diverts property taxes from schools and special districts to improve infrastructure and rectify blight. The city’s RDA has paid for Butterfield Boulevard, resurfaced roads, updated sewers and drains, facade facelifts in downtown, the Third Street Promenade, the Community and Cultural Center, Aquatic Center, Outdoor Sports Center, the library and Centennial Recreation Center.
“This will hurt. This will not be an easy choice. This will change things the council has done as policy and change things the public has come to expect. This will be different,” Tewes said.
Tewes and his staff unveiled a package of eight elements to continue funding for redevelopment while reducing and transferring other funds, and also pay the “ransom” to the state. Most significantly, the Santa Teresa Extension project would be put on hold up until it is shovel-ready, so construction would not begin until funding is available. The extension plan that would connect Hale Avenue with DeWitt Avenue has caused consternation among neighbors along where the two-lane road would extend. It was actually proposed in 1969 and is budgeted in the city’s five-year capital improvement plan at $17.8 million; a large portion of that would be deferred since construction would be stayed indefinitely.
Funding for down payment assistance loans would be affected if the city’s plan was approved, as would redevelopment activities used for storefront loans, marketing and blight elimination that would see its budget dropped from $1.6 million annually to $1.3 million. To continue funding for already approved and moving projects, the plan would allow for an increase of $21.6 million to use for downtown development.
Oct. 1 is the looming deadline for cities that will see their redevelopment agencies dissolved if an ordinance to pay the state and plan for how to pay the ransom has not been approved by local governments.
Though Morgan Hill is not planning to join in, the cities of San Jose and Union City are now part of a lawsuit with the League of California Cities to challenge the state’s budget, claiming that the elimination of redevelopment agencies violates Proposition 22, which prohibits the state from using local redevelopment funding for the state’s general fund expenses.
Certain elements of the city’s proposal were not quite as tangible as the idea of turning off city street lights or closing City Hall to save general fund money.
In their proposal of reducing general fund money, the city levied cuts in three steps and in the first the city would save about $500,000 over the next two years. To do so, the city suggests that the council could close the doors to City Hall and move staff into the Department Services Center, turn off 500 streetlights, eliminate promotional funding for the 4th of July parade and activities, and leave two vacant positions open in the police department.
Steve Rymer, the city’s recreation and community services director, said one-fourth of streetlights could be shut off and still achieve the city’s public safety goals. Police Chief David Swing attended the meeting and told the council members that he would return in a month for a long-term strategy on behalf of the police department; he did say leaving a police officer and dispatcher position vacant would stress the department.
In step two to save about $1.7 million through 2013, the city proposes contracting with CalFire and/or asking voters to approve a bond to pay for fire stations, leasing City Hall and leasing or selling the Friendly Inn. In step three, to save nearly $4 million, the city suggests an employee furlough (though it could not apply to MHPD because of contract stipulations) and possibly negotiate concessions for scheduled raises. These options would require bargaining among employee unions, however.
While the council resisted discussing in detail as to how they might reach the $9.8 million and $2.3 million moving forward, the idea of closing City Hall and leasing it was appealing.
Mayor Tate said that moving city staff from a nearly empty City Hall almost next door to the Department Services Center at the corner of Peak and West Main Avenue was “positive.”
“It’s pretty barren right now. Consolidating is better,” Tate said. Tewes said the city would have save in maintenance bills and council meetings would likely be moved to the Community and Cultural Center.
Councilman Gordon Siebert said moving out of City Hall would send a powerful message, “which is, we don’t have the resources because we don’t the staff to fill this space,” he said.
Carr and Councilwoman Marilyn Librers posed no objection to consolidating staff into one building, though Carr said using the word “close” isn’t accurate. “We’re just moving next door,” he said and added that years ago the public did not receive a Friday closure of City Hall very well. He didn’t want to see the city actually close its doors on citizens.
Librers thought the city would have a tough time renting the space because of its odd layout and age; “I think we’re being overly optimistic,” she said.
