With Morgan Hill staring down the barrel of a $4 million budget deficit, residents deserve straight answers—especially when it comes to how our public funds are being spent.
It’s troubling that just last year, Mayor Mark Turner and a narrow city council majority approved a tax-sharing agreement worth up to $6 million in present-day dollars for the Granada Hotel project, now branded as Hotel MOHI. This deal allows the developer, Frank Leal, to pocket a significant portion of the city’s future hotel and sales tax revenue for up to 15 years.
The goal? To help him cover financing overruns.
Mayor Turner has publicly praised the project and Frank Leal’s “continued investment” in Morgan Hill. But as city programs and services now face potential cuts, one has to ask: Should our financial priorities really be this upside down?
If this feels familiar, it’s because we’ve seen it before.
Years ago, the city struck a questionable deal with the owners of El Toro Brewing Company, selling them the old police station for far below its appraised value and giving them an additional $400,000 loan to open a downtown brewpub. That venture collapsed.
The building now sits vacant, unused and listed for millions more than the city ever saw from the deal. Once again, taxpayers were left to absorb the fallout.
So here we are—again—cutting essential services while private developers benefit from public generosity. These “investments” in private enterprise may look shiny on the surface, but when they don’t pay off, it’s our streets, libraries, parks and workers that take the hit.
Morgan Hill needs leadership that puts the community first—not political back-patting or high-risk handouts.
Before the city hands out another tax dollar to anyone with a glossy development pitch, we deserve full transparency, accountability and a long overdue reckoning with the consequences of past mistakes.
Karen Fitch
Morgan Hill
Nice
El Toro Brewing Company owners should be fined for this downtown eyesore each day it sits unopened, or the city should take it by eminent domain and rent out spaces for small businesses to recoup the loss of taxpayer funds. It is a loss each day that it sits vacant.
What is Mayor Turner doing about this?
The public employees of ‘Team Morgan Hill’ will be indignant at a mere suggestion they don’t already go overboard being transparent. Mark Turner, who has no independent thoughts will agree and back them.
But the fact is, the MOHI ‘Financial Assistance Package’ was half-baked and intentionally thrown over the wall and RAMROD down the throats of residents for no good reason and despite two longstanding city council members opposed the rush and asked for more time to have questions answered.
Not even the MH Chamber of Commerce, who has never seen a development project they don’t like could defend the ‘process’, noting that “as the agreement stage of the process has not yet been finalized for community review, we are in a position tonight to only provide feedback on the outlined deal points under discussion” and “the corresponding proformas core financial categories as submitted have not yet been validated by City staff or the Cities consultant firm, as such the Chamber recommends bringing this back to the council in either a regularly scheduled or special Council meeting for final approval of the contract agreement before executing the agreement.”
It’s time for residents to recognize that as CEO of Morgan Hill, the City Manager is ultimately responsible for how the decision-making process is conducted and what happened with the MOHI Giveaway is NORM not an exception. Decisions are driven by what a few non-elected senior Staff members decide they want, While a City Council majority could and should demand that decisions are based on facts, standard methods of analyses, after the public is given a fair opportunity to conduct due diligence, ask questions and get the input of the community and their elected representatives, and ultimately with Public Interest (i.e. what’s best for most) as the overriding criteria, they don’t. The CEO is ultimately responsible for how the business of our City is conducted and it’s way past time residents get true transparency they deserve or, if that is too much to ask, she step down.
Regarding the cost of the MOHI Giveaway:
The Net Present Value (NPV) analysis that ‘package’ was based on was, not surprisingly, done from an investors perspective. Leal isn’t the only one who wants to benefit (again) from taxpayers, the investors he needs to give him more money to finish the project expect to make a profit and NPV is a standard way for an investor to determine if the risk is worth their expected return on investment.
The NPV used an assumed 6.5% discount rate and Karen is correct that the resulting NPV was valued at a ‘baseline’ / nominal $6.0M, but unlike any other agreement I have ever been able to find from any City, our ‘leaders’ were so willing to put vested interest ahead of public interest, the actual amount could be much higher as they refused to consider a maximum cap which should cause any reasonable person to ask what is really going on here?
From a resident / taxpayer perspective, the projected baseline ‘rebates’ in (real) tax-dollars equates to $10,540,860 over 15-years. With inflation now back down to ~2.4% the cost to taxpayers is closer to ten million than six million, money that could be used to hire more sworn police officers over time instead of dropping down to Leal and his investors bottom-line.
You deserve transparency but when the City and their trained surrogates, aka Engage MH, start pitching why you should approve new Taxes, you WILL be presented with FALSE CHOICES. The arrogance and total disregard for true transparency that saw Mark Turner champion giving away ten and a half million dollars in taxpayer rebates because, he reasoned, if he didn’t somebody else might not want to, a deal dreamed up by staff and rushed to a vote, is the norm not an exception.
Our Town’s largesse knows no bounds, Lets take a trip down memory lane, the following quotes below are from an article in this very publication on September 16, 2015:
https://morganhilltimes.com/new-lease-on-life-for-granada-theater/
“The Morgan Hill Redevelopment Agency purchased the property in 2008 at a cost of about $2.4 million.”
“The five-member Morgan Hill City Council, acting as the Morgan Hill Redevelopment Successor Agency, agreed to sell the theater to developer Frank Leal for $294,476.”
“The council approved the sale unanimously at the Sept. 2 meeting. City staff also recommend granting Leal $704,000 in leftover RDA bond proceeds to assist with the renovation and reopening.”
Essentially, WE PAID HIM $409,000 to take the building!
The good news? We only have to make payments on the RDA bonds ($330Million) for 5 more years (2030). So that $10M+ tax rebate is really $13M not counting the interest on the bonds and all the staff time over the years to put this awesome deal together.