City races to spend downtown improvement cash

The 18-acre site at Juan Hernandez Drive and Tennant Avenue was

With the long arm of the newly created Morgan Hill oversight board threatening to lay claim to what’s left of the former redevelopment agency’s 2008 bond proceeds, the city council is poised to quickly spend the remnants of the $110 million in loans to spruce up the downtown. 

Remaining from the bond proceeds is about $19.3 million. The city council voted last week to spend it on downtown parking improvements ($9.4 million) including a multi-level parking structure, Monterey Road streetscape and downtown side street improvements ($5 million), assistance to private developers to improve properties owned by the RDA-turned-Economic Development Corporation ($3 million) and utility undergrounding and median work on Monterey Road south of Dunne Avenue ($1.9 million). 

The council voted unanimously to approve the plan at their March 21 meeting. 

But timing is key, and city staff are determined to get the projects moving as soon as they can to spend the money in accordance with the original bond issuing documents and the 2008 council-adopted Downtown Specific Plan. 

The longer they wait, the more likely council members fear the money might be diverted by the oversight board to schools, social services, public safety, and the general funds of the city and Santa Clara County. 

“These schedules (for the individual projects) are contingent on getting the proper approval of the oversight board,” city engineer Karl Bjarke said at the March 21 meeting. 

The oversight board, which conducted its first meeting March 21 as well, was created by the state law that dissolved redevelopment agencies as of Feb. 1. Its job is to “wind down” the assets of the former RDA, ensuring that outstanding debts and contracts are paid off, and directing what would have been RDA revenues to more basic services. 

Any expenditures made by the city using former RDA assets, like the $19.3 million remaining in bond proceeds, have to be approved by the oversight board, according to the state law. 

A gray area is whether or not the $19.3 million in cash bond proceeds is subject to takeover and diversion to debts or other services by the oversight board. City staff say the state law allows the city, as the new redevelopment successor entity, to use the bond proceeds for their original stated purposes. 

The county and state are currently conducting an audit of the former Morgan Hill RDA’s assets, and the council will know more about whether or not it can still spend the $19.3 million as it wishes in the coming weeks. 

Some residents, including councilman Rich Constantine, wanted to use some of the cash to build the Hale Avenue extension on the west side of town – a project that was approved last year but got pushed to the bottom of funding priorities when the state dissolved RDAs and crippled their ability to finance such projects. 

I don’t really hold out a lot of hope that we’re going to get to keep this money,” Constantine said. “I am still for the Hale Avenue project. It would help with overall circulation of downtown as a whole.” 

He nevertheless voted with the rest of the council to approve the downtown plan. 

Councilman Larry Carr tried to lend a more optimistic note to the future of the cash, in order to convince the oversight board – which is made up of representatives of the city, county, community colleges, Morgan Hill Unified schools, and the water district – that the city knows what the best use for the money is. 

“Our best approach is to be as assertive as possible, and to live up to the commitments we made to our citizens,” Carr said. 

For Wednesday’s council meeting, city staff is already preparing plans for the multi-level parking structure, which would be located at the site of the existing Caltrain parking lot on the west side of the railroad tracks, along Depot Street. 

City staff will present a consultant’s report about the conceptual design and feasibility of the project at Wednesday’s meeting. 

Leave your comments