The City and County will spend the rest of the summer working with private downtown organizations to craft a long-range plan to pick up where the now-defunct Redevelopment Agency left off in trying to revitalize the downtown area.
The Long-Range Property Management Plan, or LRPMP as the effort is known, is a requirement by the state Department of Finance for cities that want to use their remaining RDA assets to continue the agency’s work.
In Morgan Hill, that means being able to restart the process to develop about $14 million worth of downtown property – including the Downtown Mall and Granada Theater – to enact the City’s long-term goal to create a “vibrant” downtown that is ideal for a mix of residential and commercial uses, and connected to public transportation options. The City will also be able to use up to $19 million in leftover RDA bond proceeds from 2008 to finance existing downtown development plans.
Downtown projects identified by the Council last year as priorities for the $19 million remaining in bond proceeds include a multi-story parking structure on Depot Street, improved streetscapes on Monterey Road through downtown and points south, and assistance to potential private sector developers. The City has access to those funds – after they were previously placed on hold by the state – due to the recent receipt of a “certificate of completion” authorizing use of the funds by the state.
The governor shut down RDAs statewide as of Feb. 1, 2012 in order to divert their annual property tax revenues to schools, community colleges and the general funds of cities, counties and special districts. RDAs were devoted primarily to urban renewal and economic development, and were funded by state property taxes. In Morgan Hill, the RDA received about $22 million per year in property tax revenues.
What has followed since the RDA was eliminated is a labyrinth of previously uncharted bureaucratic processes – including the creation of new boards and agencies, conflicting interpretations of the complicated 2012 state RDA law, and the juggling of properties and cash among multiple parties as a result of the unsettled view of the law.
The murkiness was largely cleared earlier this year, at least in Morgan Hill, when the City, Santa Clara County and the state Department of Finance – among other parties – settled a lawsuit that might otherwise have vastly restricted the City’s use of former RDA properties.
That settlement allowed the City, in partnership with the County, to move forward on the LRPMP, which is also a part of the 2012 state RDA law which spells out how the agency will be liquidated, and will help the City enact its 2008 Downtown Specific Plan, according to City staff.
The plan must be turned in to the state by Dec. 4, but City staff hope to submit a final draft by November, according to Assistant City Manager Leslie Little. The plan will list all the properties owned by the RDA Successor Agency (the City) in the downtown area, and their “proposed disposition” or use. Those uses will likely be sale to a private party who will develop them in accordance with the City’s downtown plan, development by the City itself, or a combination thereof.
“We’ll need to figure out the method and timing for which we’ll dispose of property,” Little said. “(The plan will include) looking at the market conditions, deciding whether or not we might have to hold a site, so you don’t saturate the market. We’ll identify any constraints, any (current) leases that require relocation, utilities that have to be relocated, and determine what properties might sell first.”
These properties include the Downtown Mall/Granada Theater site, the Royal Clothier building, the former site of Simple Beverages at the corner of Monterey Road and Third Street, and a number of parking areas in downtown Morgan Hill. They also include properties the City owns a share of or a claim to – such as the six-acre VTA lot on Butterfield Boulevard that is owned jointly by the City and VTA, and the property housing BookSmart at Depot and Third streets which the City purchased an option on before the RDA shut down.
The LRPMP will require approval from the Morgan Hill RDA Oversight Board and, ultimately, from the state Department of Finance, according to City staff.
The Morgan Hill Economic Development Corporation – an entity created by the RDA board in 2011 in order to protect the downtown properties from the unknown effects of the 2012 law eliminating RDAs – will work hand in hand with the City and County on the LRPMP, according to EDC board chair and City Councilman Larry Carr.
And the City and County have already enlisted the help of two key local nonprofits – the Morgan Hill Downtown Association and the Chamber of Commerce – to offer advice and recommendations during the formation of the LRPMP.
“So much of this work has already been done,” Carr said, noting the preparation of the LRPMP will rely on information already gathered from previous attempts by the RDA to improve the downtown. These include an effort in 2010 to improve the Monterey Road streetscape, and a host of public hearings and workshops conducted by the Council and City staff the last time they tried to redevelop the Granada Theater in 2009.
The RDA transferred these properties to the EDC in 2011. Then the state ordered them transferred back to the City when the 2012 RDA law kicked in. The City sued the state to prevent that transfer, then in May agreed to settle that lawsuit in order to begin the LRPMP process.
“I think (the City) has a very good process they’ve developed to engage the stakeholders and the community, and making sure the assets they hold have the maximum value for the City, County and other taxing agencies,” said Santa Clara County Asset Development Manager Glen Williams, who sits on the Morgan Hill Oversight Board.
The zoning guidelines of the City’s downtown plan are geared to creating a “sustainable” downtown with a mix of uses. For example, for properties such as the Downtown Mall/Granada Theater, the plan requires a minimum of two-story and maximum of four-story developments, with retail or restaurant uses required on the ground floors, Little said. The plan also includes significant residential development, particularly on the upper floors of any new buildings.
Once the LRPMP is approved, the City will begin to work on finding potential developers or sending out “requests for proposals” from interested buyers for some of the sites, Little said. But the market still might not allow any immediate movement.
“It’s possible there won’t be any interest” in the requests for proposals, Little said.
