New plan could bring close to $2 billion in Redevelopment
funding to Morgan Hill
With funds running low and more projects on their list, the Morgan Hill Redevelopment Agency Wednesday agreed to spend $250,000 on a consultant and legal fees to prepare an amendment that would open the door to a larger pool of money to accomplish RDA goals.
“I think it’s an important step,” said Councilman Greg Sellers. “I believe we’ve been good stewards of RDA funds in the last 25 years. It’s become a well-respected tool. Right now is the time to do it.”
Without the amendment, the current RDA would lose the ability to collect money from property taxes by fiscal year 2008 and lose the ability to incur debt by 2014.
City Council members, who double as the RDA board, want to finish projects they started.
“I think it’s very important to extend the RDA,” said Mayor Dennis Kennedy, who also serves as chair of the RDA agency. “We’re running out of funds and the RDA has provided a tremendous amount of funds for worthwhile projects. We’ve had to cut back on projects we’ve started because we simply didn’t have enough money. We’d like to go back and finish these projects as they were originally intended.”
Projects that have been funded by RDA money include affordable housing units like Via Ciolino and the new Jasmine Square, road improvements like Butterfield Avenue, the construction of the Morgan Hill Community and Cultural Center, the Morgan Hill Aquatics Center, and the indoor recreation center. RDA money was also used to purchase land for an outdoor sports complex.
The RDA plan, initially adopted in 1981, administers 2,739 acres of land in Morgan Hill which it considers “blighted.” Money from all property tax increment within the designated project area goes directly to the RDA for projects that would eliminate blight. If the RDA did not exist, only a portion of the tax increment – 10 percent – would go to the city’s general fund. The remaining 90 percent would head to county and state coffers.
Business Assistance and Housing Services director Garrett Toy said the agency currently has $190 million, but the RDA needs a total of about $546 million to complete desired improvements over the life of the Redevelopment Plan, which ends in the year 2031. The tax increment collection limit of $247 million will be reached in 2007-08; it would need to be expanded in order to provide more funds to accomplish the projects.
Kathleen Rosenow of Rosenow Spevacek Group, Inc., the firm which conducted a study about the feasibility of an amendment, noted, “If an amendment to increase the cap is not passed, you will lose between $670 million to $1.9 billion for projects.” She based her figures on three scenarios depicting between a 3 percent and 10 percent growth in the increment cap.
According to state law, in order to justify the creation or expansion of a redevelopment area, or an amendment to the tax increment cap, a city needs to declare an area “blighted,” a word that has a very broad definition even for RDA members.
Councilman Mark Grzan indicated, “We, as a city, are at the edge of the definition of blight. … Vacant land, when it collects trash, can be considered blighted.”
RDA spending is not without controversy, even among agency members.
Though he is in favor of extending the tax increment cap for the RDA, Grzan is not happy with the way some RDA money has been spent.
“I don’t think $147 million the RDA has spent so far has benefited us a dime,” said Grzan. “I have not seen an economic return on the community center, the aquatics center, and I don’t think we’ll see it in the indoor recreation center. If we had invested this money in the bank, we would have probably made enough money to solve the deficit.”
However, Grzan said, “There’s still a lot we can do with regard to economic development that would be a great benefit.”
He mentioned improvements to utilities “that bring revenues,” and restoring little Llagas Creek as a linear park that would extend from Dunne Avenue to Watsonville Road, linking it to the new indoor recreation center with a jogging and wildlife trail, are worthwhile RDA projects.
“If we are able to build a linear park up to Main, it would allow students from Britton, Walsh and St. Catherine’s school access on a trail to the indoor recreation center without having to walk on the city streets. That would be a true economic development project,” said Grzan.
Councilman Steve Tate said he would like to make sure “the goals of redevelopment are accomplished and finished. We don’t have nearly enough money and aren’t able to complete projects we started. There are still lots of possibilities of additional projects.”
He feels projects like the new library have been short-changed due to rising costs of construction.
Some of the other projects on the RDA list include completing flood control efforts, revitalizing downtown, completing Butterfield Avenue north and south, constructing more affordable housing units, and an outdoor sports complex.
“We can continue our efforts toward flood control,” said Councilman Larry Carr. “It affects the way downtown develops. Downtown in the federal flood plan restricts development. We need to get all of downtown out of the flood plan to entice development.”
Rosenow said an amendment could address the time limit to incur debt, bonding capacity, expanding the RDA project area and eminent domain. At a 5 percent increase in assessed value, the city could receive an additional $212 million by 2014 and as much as $743 million by the time the RDA expires in 2031. Without the RDA, the city’s share of the property tax would mean an increase to the general fund, she said, but only by about $100 million over the life of the agency. Hundreds of millions of dollars more would be lost to the county and state.
Likewise, she said creating the ability to bond projects would allow the RDA to build projects sooner and avoid expense in rising real estate and construction costs in the coming decades.
The RDA project area also could be expanded to include the DePaul Health Center to improve segments of Monterey Road and some properties on Condit Road.
These possibilities will be further explored once the amendment is prepared, said Toy, but he also quickly noted, the city is not considering implementing the eminent domain authority with a new plan amendment.
Toy said the amendment process would take about a year. He said hiring a consultant and preparing the amendment would take about 60 to 90 days. The recommendation would then be presented to the RDA for further and more detailed discussion in January.
Rose Meily covers City Hall for the Morgan Hill Times.
