The city council
’s apparent desire to extend Redevelopment Agency revenues
through an amendment to the tax increment could be a boon or a
burden for the mushroom city.It all depends on how the city council
– who double as the RDA board – spend the money.
The city council’s apparent desire to extend Redevelopment Agency revenues through an amendment to the tax increment could be a boon or a burden for the mushroom city.It all depends on how the city council – who double as the RDA board – spend the money.
Though it will cost the city an estimated $250,000 in consultant and legal fees, increasing the RDA tax increment could bring as much as $1.9 billion dollars into redevelopment coffers by the time the agency expires in 2031, according to a recent feasibility study. That’s an incredible sum that could do wonders for economic development in Morgan Hill.
And it far outweighs the amount of RDA money the city has already spent. Since its inception the city has used $147 million to build a myriad of projects throughout Morgan Hill. The effects of this spending are apparent throughout the city. From the Community and Cultural Center and Aquatics Center to affordable housing and a more pedestrian friendly downtown, the RDA has made a substantial impact on Morgan Hill.
But with most things governmental, the devil is in the details.
Though the RDA projects have improved life for many residents through combating blight and creating new facilities, they are also partially responsible for the city’s budget deficit. The Recreation Department alone was responsible for $1 million of the city’s $1.6 million deficit last fiscal year. The Community and Cultural Center and Aquatics Center comprised roughly $700,000 of the Recreation Department deficit.
The city has a plan to become fiscally solvent again by 2007, but the RDA projects have had trouble making their target revenue this year and expenses have soared out of reach. Originally, the Aquatics Center was estimated to break even in its first year of operation, but lost more than $400,000 last year. The Community Cultural Center is estimated to lose $500,000 this year – roughly a third of the projected $1.5 million deficit. Our reserve fund has fallen from $11 million to $7.4 million in only a few years.
Meanwhile, the city has began it’s community conversations where they hope to determine if residents will support cutting city services or raising the local sales tax. At least of part the need to hold these conversations can be attributed to the RDA projects’ impact on the general fund.
The major problem with RDA money is the city can use it to create facilities, but not to pay for operation and maintenance. It allows us to become RDA rich, but general fund poor – which can be especially problematic if we’re forced to cut essential services in order to keep superfluous facilities.
Of course, a deficit today is certainly no reason to give up hundreds of millions of dollars to the county and state tomorrow, which is essentially what would happen if the RDA is not amended. Increasing the tax increment is a no brainer – deciding what to do with the huge windfall will take some careful thought.
The City Council must remember that just because we could pave our streets with gold from RDA funds, doesn’t mean we could afford to sweep them or keep them safe.
