Editorial: Council makes best of two bad choices

Governor Jerry Brown has thrown down the gauntlet.
”
Pay us nearly $20 million over the next five years and Morgan
Hill can keep its Redevelopment Agency.
”
Governor Jerry Brown has thrown down the gauntlet. “Pay us nearly $20 million over the next five years and Morgan Hill can keep its Redevelopment Agency.”

That ultimatum puts the city between the proverbial rock and a hard place. Pay the “ransom” as City Manager Ed Tewes and Mayor Steve Tate characterize it in a recent video posted on You Tube, or close up shop and lose the RDA.

It’s a decision in which there is no good outcome for taxpayers.

To keep the RDA, the city is looking at moving all employees to the Development Services Center and leasing City Hall, shutting off about 500 street lights, eliminate promotional funding for the 4th of July parade and activities, and leave two vacant positions open in the police department.

If the city declined to pay the state, the city loses $40 million in bond proceeds, projects that would have been financed by bonds would not be able to proceed, including the Hale Avenue extension or the downtown projects and likely the south Butterfield Boulevard extension. Real estate assets acquired at a cost in excess of $20 million would have been subject to forfeit to the state which would seek to liquidate it for the best possible price in order to buy back bonds and reduce debt service. 

For years, the city has collected the tax increment allowed by the RDA to build Butterfield Boulevard, the Outdoor Sports Center, the Third Street Promenade, the Centennial Recreation Center, the Community and Cultural Center, update sewer and drains, facade facelifts in downtown, affordable housing for middle class residents and other projects that have contributed greatly to Morgan Hill’s quality of life. Has Morgan Hill made mistakes? Probably. Abuses? Not likely. But Brown has won the public relations battle and convinced the public that all RDAs are evil. The state has taken the group punishment approach. There have been abuses of RDAs by some cities, so they’ve punished all the nearly 400 RDAs.

But it’s a violation of Proposition 22, which prohibits the state from using local redevelopment funding for the state’s general fund expenses, and looks more like extortion than a legitimate way to balance the budget. 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 Prop 22.

That brings us to the recent video posted on YouTube at http://www.youtube.com/watch?v=W9LyjfNYHVw starring City Manager Tewes and Mayor Tate. It’s a clever spoof that illustrates the state’s egregious behavior in a humorous, if not clever, way. There were nearly 1,100 views as of Thursday morning, as opposed to a far more serious effort to educate the public about the importance of the RDA that accumulated just 107 views in five months.

It appears the council made the best of two bad choices.

However, it sure would be nice if this much creativity and energy were put into accomplishing the RDA’s goal of eliminating blight and building affordable housing for the middle class instead of saving the RDA.