Though it still promises to be “an uphill battle,” in the words of one council member, the city’s plan to develop downtown Morgan Hill became more concrete with the approval of a list of specific projects to be funded by remaining redevelopment bonds.
With the $19.3 million remaining from the 2008 bond issue of about $110 million, the city hopes to build a new multi-story parking structure and improve existing public lots, enhance the downtown Monterey Road streetscape, renovate downtown side streets, hire a private developer to develop properties the city owns and to improve the Monterey media south of Dunne Avenue.
The council took a series of votes at last Wednesday’s meeting to exhaust the last of its cash resources on the downtown projects. The money was transferred from the RDA last year to the Downtown Economic Development Corporation – which was created as a shelter for the RDA’s resources and properties such as the Granada Theater, Downtown Mall, former Simple Beverages site and other properties purchased by the RDA in 2008. The state announced its plan to eliminate RDAs statewide more than a year ago, and the law was finally enacted Feb. 1.
But the only projects on which the council agreed unanimously were a new $7.6-million, 275-space-plus parking garage (to be constructed on Depot Street between Second and Third), $1.8 million worth of improvements to existing parking areas, and about $1.9 million for improvements to the Monterey Road median between Tennant and Dunne avenues.
The council was split 3-2 on the motion by council member Larry Carr to spend $5 million on Monterey Road and downtown side-street improvements. Council members Rich Constantine and Gordon Siebert voted against those projects.
“I didn’t think the streetscape was the best use of funds to stimulate economic development,” Siebert said. “While I’m all for making the downtown vital, I think there are better ways to spend it than on streetscapes.” One way to do that is by working with private developers to establish and encourage a viable family-oriented entertainment scene, such as by incorporating space for entertainers in whatever new restaurants or book stores, for example, that such partners might develop.
And the council voted 4-1 for spending up to $3 million on such investment with private developers, with Constantine against it.
The city has tried to enter such a partnership several times since 2008, when the RDA bought the downtown properties, but the economic downturn that followed has made it difficult to secure a pricey deal. City manager Ed Tewes said Wednesday that an agreement with a developer is “feasible, but unlikely in the next 180 days.”
Constantine said he voted against using $3 million of bond proceeds to invest with a private partner because of the unlikelihood of finding a developer or investor to build downtown in the near future. And he voted against the Monterey Road and side-street streetscapes because “we don’t really know what our downtown is going to look like yet.”
“I would rather see that money going toward something like (the) Hale Avenue (extension through the west side of town), or more parking, or even beautification for facades – anything that could help businesses that we already have in the redevelopment area,” Constantine said.
But the whole plan might end up being rejected by the Santa Clara County oversight board, which is in charge of approving expenditures of all former redevelopment agency assets. Anything the EDC or city council serving as the RDA successor agency votes to spend money on will have to be approved by that seven-member body, according to city staff.
That’s why Siebert called the downtown plan “an uphill battle.”
“There will be tremendous pressure from the oversight board to take the money and use it for what the state should be paying for otherwise,” he said.
As part of the state’s redevelopment plan upheld by the state Supreme Court in December, the state and county could end up seizing all the cash held by RDAs as of Jan. 1, 2011, even if it was later transferred to another entity like the EDC. That could even include taking possession of properties and liquidating them in order to, first, pay off the RDA’s existing debts and contracts and, second, to redirect the resources to education and the general funds of the city, county and special districts.
Views on what the state law requires or allows differ vastly between opponents and proponents, but city staff think they can keep the bond proceeds and spend them on the downtown plan. Tewes said one provision of the state law is that RDAs can spend bond proceeds for the purpose specified in the original bond-issuing documents. In Morgan Hill’s case, that includes redeveloping the downtown.
The first meeting of the oversight board – whose members include Mayor Steve Tate, the county finance director and former CEO Pete Kutras, and representatives of public education districts serving this area and the water district – is May 1. That timeline is one reason Tewes told the council that their approval of a detailed downtown spending plan was urgent last week.
“We want to have real projects (approved), and not just a set-aside,” Tewes said.
In other council news, the council voted unanimously to make about $615,000 in mid-year budget adjustments. Most of those unexpected additions to the budget were for higher-than-usual pay-outs in the previous six months for employee benefits, workers compensation and liability insurance claims, according to city staff. As a result, most of the costs were paid for with reserves in those respective funds.
The council also approved a city staff plan to redistribute about $250,000 worth of employee wages and benefits, and about $900,000 on administrative overhead costs mostly to the general fund and community development fund, at least until the end of the fiscal year June 30. Those costs were formerly funded by part of the $23 million in annual redevelopment revenue that will be redirected to other services as part of the state RDA law which abolished RDAs as of Feb. 1.
The city council, acting as the board of the Downtown EconomicDevelopment Corporation, approved the following plan to spend theremainder of its 2008 redevelopment bond proceeds:
– $7.6 million: Three-level parking garage on Depot Street,providing 275 or more new parking spaces
– $1.8 million: Renovate existing downtown parking lots
– $2.9 million: Monterey Road streetscape enhancement
– $2.1 million: Downtown side street renovation (First, Second,Fourth, Fifth streets)
– $3 million: Private downtown development investment
– $1.9 million: Improve and beautify Monterey Road median southof Dunne Avenue
– $19.3 million total
