Following publication of a Voice of OC investigation into the issuance of debt on behalf of local homeowners to build the Great Park, Irvine officials insisted that there had been broad public discussion about the special tax districts that finance the iconic public works project.
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“There have been many public hearings,” said city attorney Jeff Melching at a city council meeting last month. “There were public hearings when (special tax districts) four, five, six, seven, eight, nine and 10 were formed, so we’re several public hearings into the process.”
But city council meeting videos show the council spent less than five minutes discussing the Great Park special tax districts, including opportunities for public comment, over the last six years since they were approved in 2013, according to an analysis by Voice of OC.
In 2014, Irvine Council members approved $184 million in potential bonds with just under a minute and a half of discussion.
In 2015, Council members approved $520 million in potential bonds with nearly two minutes of discussion.
In 2018, the council approved $75 million in potential bonds with just under a minute’s discussion.
In February 2019, the council approved the tenth special tax district, approving a potential bond ceiling of $120 million in under a minute, with no requests from the public or council to speak.
The combined amount of potential bond indebtedness approved in these meetings was almost $900 million, before factoring in interest according to city records.
The only other discussion on the structure of the special tax districts came in 2013, when the structure was approved, and at a council meeting last month following the release of Voice of OC’s investigation.
During those two approvals (March 2013 and March 2020), council members approved over $250 million in potential bond indebtedness, bringing the total amount to over $1.1 billion including the meetings that happened from 2014-2019.
The 2013 talks took place over several meetings, with extensive discussion on the Great Park’s financing and how homeowner special taxes would pay for construction, but the next six years saw almost no discussion on the issue.
Only one comment was made in that time, when then Councilwoman, now mayor, Christina Shea clarified at the March 2018 meeting that the vote would not raise taxes, and only authorized the area to take on bond indebtedness once homeowners move in.
The process to approve the new special tax districts requires that the council pass three resolutions and an ordinance, and host a special election from the landowners to implement the tax.
As a whole, 21 resolutions and seven ordinances were passed by the council unanimously establishing new special tax districts, with Shea’s comment serving as the only discussion during the public hearings.
The entire Great Park already has special taxes in place, but the bonds are not decided until the land is set to be sold to homeowners. The special taxes pay off the bonds over several decades.
The land surrounding the Great Park is owned by the developer FivePoint Holdings, the city’s partner in developing the Great Park.
As the only landowner in the area, they are the only voters in the special election to approve the potential bond indebtedness.
After FivePoint sells the land to homeowners or housing developers, the taxes are transferred to them, and while the homeowners understand they’re taking on additional taxes in those homes, Voice of OC reporters found that many didn’t understand where the money was being spent.
The money raised from those special taxes and bonds goes to paying FivePoint for developing further infrastructure in those neighborhoods and the development of the Great Park.
In addition to the short discussion, city staff also presented reports at each meeting approving the new districts, but only one of those presentations discussed the potential cost to homeowners in the 10th special tax district, worth $120 million.
At their most recent meeting discussing the development of the 11th special tax district, the council discussed the item for just under an hour, the longest discussion of the special tax structure since it was approved in 2013.
The primary comments during that discussion revolved around the fact that the approval of a special tax district does not function as a tax increase on the homes, but did not break down the total cost of the potential bonds that were being discussed, or that the approval of this new district would pass the $1 billion benchmark.
Shea made it clear that the council had discussed the item numerous times in the past, and that it was a “standard process” for the city.
“There’s nothing the city council is doing that’s inappropriate. We’ve done this for the Irvine Company and other developers, it’s like a passthrough,” Shea said.
Councilmembers also seemed to be confused over what the council’s role in approving the special tax districts was despite having voted on them in the past.
Councilwoman Farrah Khan asked when the public hearing would be held to consider the establishment of another district during the public hearing.
Khan also asked for clarification on who would be voting to approve the special tax districts, despite having voted to approve the last special tax district a year earlier.
Councilwoman Melissa Fox, who had also voted in support of several of the special tax districts, asked for clarification over what the council’s vote could affect.
“If we were to try and change or oppose (the special tax district) being formed, what would the repercussions be, and what is our actual authority?” Fox said.
The primary argument in support of creating the special tax districts is the ability to get the money to develop the park upfront according to Bill Marticorena, a partner at Rutan and Tucker, the city’s contracted law firm.
“By selling bonds for the (special tax districts), it allows you, and I’m just going to make up some numbers here, but the reality is you can probably get in the range of 10 to 20 times the annual special tax up front,” Marticorena said.
However, the council and city staff did not discuss the cost of the interest on those bonds, which routinely cost as much or more than the original bonds in the Great Park.
Currently, around 3,250 Great Park homeowners are responsible for close to $280 million in bonds. But with interest, the cost rises to almost over half a billion dollars once the bonds are paid off by 2050.
That leaves over $800 million in potential bonds still untapped, before factoring in interest.
The council didn’t respond to many of the questions put forward by public commenters at the second reading of the ordinance establishing the 11th special tax district. Currently, Irvine City Hall is closed to the public, but residents can still submit public comments online.
Multiple commenters asked if it was possible for a homeowner in the Great Park to have a seat on the Great Park Board, but the council didn’t respond to the question from the dais.
There were also several commenters asking about the price of the proposed aquatics facility in the Park that would serve as the new home for the Team USA Olympic Water Polo team. The facility is projected to cost $250 million for a new aquatics center, several indoor basketball and volleyball courts and a parking structure.
Team USA has pledged $10 million towards the project, but the remaining construction costs will be paid for by the special taxes. Irvine has promised that the public will have access to the center, but no specifics have been confirmed at this time.
According to emails between city staff and USA Water Polo obtained by Voice of OC, there was a preliminary proposal in November 2017 to establish the center for just $50 million, half of which would be paid for by USA Water Polo. The deal got as far as a preliminary draft, but was never shown to the public.
The exact details of how the new home for the water polo team went from $50 million to over five times that in less than two years are still unknown. Team USA’s contribution also dropped $15 million.
The council also declined to respond to that question.
After public comments were read, Shea announced that she had instructed city manager John Russo to begin drafting a letter to Great Park residents explaining that there would be no tax increases, criticizing a series published by the Voice of OC that explained the cost of the special taxes.
Russo said that the cost of sending out the letters would come to less than $10,000, but no other specifics about the content of the letter or a date when it would be released were discussed.
Until now, Great Park residents have not received any communication from the city regarding the special taxes according to homeowners.
Noah Biesiada is a Voice of OC Reporting Fellow. Contact him at nbiesiada@voiceofoc.org or on Twitter @NBiesiada.