What downtown Morgan Hill looks like in 10 years could have a lot to do with the disposition of 18 properties formerly owned by the Redevelopment Agency, the futures of which are presented in a long-range real estate proposal that requires state approval.
The draft Morgan Hill Long Range Property Management Plan was published Monday by the City of Morgan Hill. The state-mandated document lays out what the City plans to do with properties that are mostly downtown, formerly owned by the Redevelopment Agency and have long been earmarked for improvements as part of the downtown revitalization effort.
“A lot of this is still unknown – what (the state is) looking for, what makes for an approved document,” said City Councilman Larry Carr. “The good news for us is we’re working with (Santa Clara County), and they’ve been a part of helping us draft this plan.”
Carr is also chair of the Morgan Hill Economic Development Corporation, which was enlisted by the City – along with the Downtown Association and the Chamber of Commerce – to help draft the LRPMP. The draft is based primarily on previous planning documents such as the General Plan, the 2009 Downtown Specific Plan and input gathered at public meetings going back several years.
The 18 properties in the plan were purchased by the RDA between 1999 and 2008. The plan divides the 18 properties into seven sites proposed for future development of varying types. The properties are now owned by a trust fund, where they await the state’s blessing for future use as part of the RDA dissolution process.
“For five of the sites (in the draft), we would be putting them out on the market, so developers and investors can look at (developing) those in accordance with the Downtown Specific Plan, and make an offer on them,” Carr said.
These sites include the Downtown Mall, Granada Theater, Royal Clothier building and others with frontage on Monterey Road in the downtown.
Two sites in the draft that are “not specifically called out for sale” are a site on Butterfield Boulevard designated for a new fire station or other government purpose at an undetermined time, and the BookSmart property where the City wants to build the parking garage.
Some of the proposals in the draft LRPMP will require substantial funding, such as $10.1 million for a new multi-story parking structure where the BookSmart shopping center now stands.
The IRS is requiring the City to hurry up and spend about $25 million in leftover RDA bond proceeds – some of which will be spent on downtown projects – but the state’s lack of a schedule to review the LRPMP is “unlikely” to impact the timing of the downtown projects.
“From a project standpoint, the City will continue its planning efforts while the DOF reviews the LRPMP, so that when the LRPMP is received we will be in a better position to execute projects and fulfill (our) bond obligations to expeditiously spend (our) bond proceeds,” City Manager Steve Rymer said by e-mail.
The City has until the end of 2014 to spend about $9 million of the bond proceeds, and until the end of 2015 to spend the remaining $16 million, due to IRS regulations on tax-exempt bonds, City staff have said.
A DOF spokesman said it will take the state office 60 to 90 days to review and approve the LRPMP, but the exact schedule depends on “… the number of properties on the plan, and when we get it vis-a-vis what’s going on with our workload,” said H.D. Palmer of the DOF.
As of September, the DOF has received LRPMPs from eight California cities holding former RDA properties, Palmer said.
City staff will continue to review it until the Nov. 6 meeting of the City’s Redevelopment Successor Agency, which is run by the City Council.
After that meeting, the Council will forward its approved LRPMP to the Redevelopment Oversight Board, and from there it will go to DOF for final approval, according to City staff.
The Oversight Board has already approved the City’s plan to spend the $25 million in bond proceeds. That plan includes the parking structure, $4 million for investment with private development downtown, $2 million to complete the purchase of the BookSmart property, about $5 million for downtown streetscape improvements and other downtown projects.
The plan is required as part of the 2011 state law that shut down RDAs in an effort to divert their resources to more basic public needs. The law requires a dissolution of all the remaining assets, debts and obligations held by the RDA at the time of its closure Feb. 1, 2012.
Jeff Burrus, an owner of the Morgan Hill Cigar Co. and a former Chamber director, sat in on a series of meetings to draft the LRPMP with insight from the private sector. Burrus said the committee paid close attention to detail when coupling the real estate plans with the remaining bond proceeds.
Looming in the background, at some undetermined time in the future, the Cigar Co. and about a dozen other tenants of the former RDA properties will have to relocate due to the City’s proposed plans.
“It’s as good a solution as we could come out with based on the negative of the RDA going away,” Burrus said.
Some of the key former RDA sites, now sitting in a property trust fund awaiting their disposition, identified for long-range planning in the draft LRPMP are:
– Seven parcels on the 17400 block of Monterey Road, including the Downtown Mall, Granada Theater, Morgan Hill Cigar Co. and parking lots. Proposed is a mixed-use private retail, residential and office project.
– Three parcels on the 17300 block of Monterey Road, including a “pocket park,” the Royal Clothier building and parking lots. Proposed is a mixed-use private retail, residential and office project.
– Four parcels along the 17200 block of Monterey Road and Third Street, including the former Simple Beverages site and parking areas. Proposed is a mixed-use private retail, residential and office project.
– The BookSmart shopping center at 95 E. Third Street (on Depot Street between Second and Third streets). The City plans to complete the purchase of the property for about $2 million in remaining bond proceeds (on top of a $1.7 million option to purchase secured by the RDA in 2011), and then build a multi-story parking structure at the site.
– Community Garden lot, 17295 Butterfield Blvd. The City plans to keep the property, which is identified in the LRPMP as a future site for a new fire station, park or open space.
– VTA parking lot, 17295 Butterfield Blvd., formerly owned jointly by the RDA and VTA. The two agencies are promoting the property as a future site for a high-density residential development (40 or more units per acre).
