The Morgan Hill redevelopment agency and about 400 similar agencies throughout California no longer exist as of today, and local officials have mixed feelings about the RDA’s demise.
Morgan Hill’s RDA was formed in 1981 and has “enjoyed a tremendous track record of success and public support” since then, city manager Ed Tewes said at last Wednesday’s city council meeting, the last meeting of the RDA board.
“Over 1,000 families have been assisted (by RDA funds) with rental and ownership housing,” Tewes eulogized at the meeting. “Monterey Road improvements were initiated by the redevelopment agency in the early 1980s. In the last decade we invested quite a bit in public facilities. A great deal of the infrastructure of the city has been constructed with the assistance of (the RDA), including eliminating traffic bottlenecks. The agency has assisted countless businesses with loans and grants to improve store fronts and help make their business successful.”
The RDA has eliminated and replaced substandard housing in Morgan Hill over the years, including two “squalid” trailer parks, and has been recognized with awards from outside agencies and public support, Tewes added.
“It’s somewhat of a sad day with the passing of the redevelopment agency,” Tewes said.
Santa Clara County officials, on the other hand, sang a sweeter tune today, as the state law that eliminated the Morgan Hill agency and eight other RDAs in the county is intended to benefit county services with more revenue.
“The state’s decision to dissolve redevelopment agencies means that more local property tax revenue will go directly to schools, cities and the county,” said supervisor Mike Wasserman, who represents the county district that includes Morgan Hill.
The state decided last year to eliminate the agencies as a way to redirect a portion of the $5.5 billion in annual redevelopment revenues to more basic services, in response to the budget crunch. In Morgan Hill, the agency received about $23 million in property tax dollars.
An oversight board made up of representatives of the city, county, K-12 schools, community colleges and the water district will enact the state law starting May 1. The county’s auditor-controller will have a substantial say in approving or rejecting expenses of the former agencies, which have morphed into “successor agencies” due to the state law.
The county board earlier this month appointed two oversight board members – county finance director Vinod Sharma and former CEO and longtime Morgan Hill resident Pete Kutras. Mayor Steve Tate has indicated he will appoint himself to the board, and his second appointee to the seven-member body has to be a representative of the AFSCME union who has not yet been determined.
Morgan Hill property tax dollars that went to private developers, road and utility construction contractors, affordable housing builders, organizations such as the Chamber of Commerce and the Downtown Association, and local business owners – all in an effort to eliminate blight and promote economic development – will now be redirected to state and local schools, the county and the city itself.
But first, the oversight board will have to pay off the agency’s outstanding debts, contracts and obligations. After that, an additional $286 million in annual revenue will be directed to “local priorities” such as services provided by the county, city, school districts and special districts, according to a press release which also noted that the board has cut more than $2 billion in service reductions in the last decade.
School districts in the county will receive an additional $143 million annually after the redevelopment debts are paid off, and the county will receive about $81 million, county staff said.
County CEO Jeff Smith said the use of tax dollars for redevelopment, which would otherwise have gone to the county and schools, was one direct reason for budget cuts over the years.
“The redevelopment agencies went beyond their legislated purpose – the elimination of blight – to become economic subsidies for private development,” Smith said. “While there is not argument that many worthwhile buildings were constructed, the question remains, ‘At what cost to basic community services? At what cost to our children? At what cost to our ability to serve as a safety net to those with no other options?'”
Supervisor Dave Cortese noted that the new funds resulting from the dissolution of the RDAs will also benefit senior citizens, health care, transportation, libraries and public safety.
County staff also published a chart estimating how much 1-percent property tax revenue would have gone to the general funds of other taxing agencies last year if there had been no RDA. If the Morgan Hill RDA hadn’t received its share of revenue, for example, $4.4 million would have gone to the county, $2.5 million to the city’s general fund, $9.8 million to public school districts, $1.5 million to special districts such as the water district and libraries.
The Morgan Hill RDA last year claimed a total of about $18.1 million that would otherwise have gone to these other public agencies, according to county staff.
Tonight will be first meeting of the city council serving as the “governing board of the successor agency.” Its only action item is to adopt a resolution directing the city manager to adopt procedures and call meetings for the oversight board.
The meeting will take place at 7 p.m. at City Hall council chambers, 17555 Peak Ave.
