Dear Editor,
I believe the Times editorial board erred in their recent 0pinion regarding redevelopment, posted Jan. 10. The opinion is factually incorrect according to a study conducted by the Legislative Analyst Office and published Feb. 8, 2011. That office studied the CRA allegation of economic development and job creation. Here is what they concluded: “While redevelopment leads to economic development within project areas, there is no reliable evidence that it attracts businesses to the state or increases overall regional economic development. Instead, the limited academic literature on this topic finds that – viewed from the perspective of an entire city or region – the effect of this program on property values is minimal,” and “The California Redevelopment Association recently circulated a document asserting that eliminating redevelopment agencies would result in the loss of 304,000 jobs in California. We find the methodology and conclusion of CRA’s report to be seriously flawed. In our view, it vastly overstates the economic effects of eliminating redevelopment and ignores the positive economic effects of shifting property taxes to schools and other local agencies.”
These findings of course were challenged by the CRA Director John Shirley. The LAO reviewed the findings and on Feb. 16 issued a letter to Mr. Shirley affirming their position: “In our report ‘The 2011-12 Budget: Should California End Redevelopment Agencies?’ We analyzed the California Redevelopment Association’s study regarding the economic effects of redevelopment … While we appreciate the additional information on this study, the information provided does not change our criticisms of the study or our finding that it vastly overstates the employment effects of redevelopment.”
It does not appear that the Editorial Board was aware of the in-depth factually-based studies undertaken by the LAO, a non-partisan office that provides legislative direction on tough decisions.
RDA’s were originally created to provide a funding source for affordable housing – period. Post Proposition 13, California cities and some counties were able to take advantage of the loopholes and RDA’s became a funding source for projects that were never originally intended.
Proposition 13 aside, the old traditional funding sources for many of the projects that the Times concluded are beneficial to the community, contrary to the findings of the LAO are still available.
In the 1990s a group of local realtors undertook to determine whether RDA had a positive affect on property values. They compared home values in the Gilroy area, a city that does not have an RDA and Morgan Hill which did have an RDA. They concluded, through an extensive comparison of like home sales that there was no added value to the properties in the RDA rich city of Morgan Hill.
Recently I asked some realtor associates if there has been an updated study and they were unaware of any such recent studies.
Today we have a higher property value in Morgan Hill but they attribute it to location and the fact we have controlled growth. We are a harder community to get into which naturally drives property values up. They did state that in their findings the BMR program that is in place in Morgan Hill actually lowers the property values of homes surrounding the BMR units.
The Times cites there may be abuses in other areas. There are abuses here. I’ll give two.
Case No. 1. When the city undertook to construct the recreational facilities we were promised they would break even. In 2006, when the City/RDA was nearing completion of the Centennial Recreation Center it became clear that facility would not break even. It was projected to sustain a $300k loss in it’s first year of operation.
Well, now we are being told they operate at a loss, exactly how much we do not know but we are told “our losses are less than similar facilities in other communities.” Since we are losing less than someone else doesn’t make it right. These are nice facilities but they operate at costs to the users that are artificially low and the overrun on costs is a burden on all taxpayers whether you use the facilities or not. These functions should be privatized and the users of the facilities should pay a rate that sustains the facilities. There is no reliable evidence that the recreational facilities add to our “quality of life” or to our “property values.”
Case No. 2. The Spring Hill subdivision was inadvertently included in the RDA area in 1981. In 1981 this subdivision was only a few years old. That though was somehow lost in the record and the RDA collected the tax increment from the Spring Hill community to this date. This was brought to the attention of the City Manager Ed Tewes and he confirmed the oversight. He though felt it was made right when the plan was extended in 2006. When it was extended, the then sitting City Council/RDA did not look at the specifics of that portion of the plan, the error was simply carried forward. I have been unable to determine how much this error has taken from our schools and other local agencies but it could be in the 100’s of thousands of dollars. The RDA has made no effort to fix the error – an abuse.
So the abuses that the Editorial Board indicates may occur elsewhere have occurred right here.
It is unfortunate the Editorial Board presented an opinion that is factually incorrect and lacks the merit that we expect from an unbiased source for the people to understand what happens in our community.
Rich Jensen, Morgan Hill
