In the wake of a Voice of OC series that looked into how homeowners in Irvine’s Great Park are financing one of Orange County’s most iconic public works projects, the City of Irvine has sent out multiple letters to Irvine residents condemning the coverage as factually false and biased.
Voice of OC stands behind its reporting on the Great Park.
The Great Park series outlined how special Mello-Roos taxes pay for the development of the park, highlighting the fact that many of the residents don’t understand that their tax dollars go towards developing the park, or that the city council had placed bonds on their neighborhoods to finance the development.
After the series was released, a rising tide of residents have been asking questions.
Meanwhile, councilmembers have generally been defensive when speaking about how the Great Park’s Mello Roos special tax financing was developed, stating that the process has been very clear and that the approvals have been discussed thoroughly in public.
“What we’re really seeing here is there a reporter working with Orange County Voice writing articles going to residents and scaring them, saying your taxes are going up,” Mayor Christina Shea said at a council meeting last month. “It’s really unfortunate that a blog newspaper is, in my opinion, being very political, making things up and not being honest with the public.”
Right after multiple members of the council stated how clear and apparent the disclosures were, Great Park resident Eugenio Zheng stepped to the mic during public comments.
“When we bought a house, nobody told me my taxes were actually paying for Great Park facilities. I thought all we were paying was for the schools, for the best amenities exclusively used by residents,” Zheng said. “The Great Park won’t affect the city financially or the rest of the community, but we’re taking 100% responsibility.”
“We’re just like a cow being milked.”
The Public Letter
The city’s most recent response came in a letter published on the city’s website earlier this week titled “City of Irvine Refutes Inaccuracies and Omissions by the Voice of OC.”
“The Voice of OC asserts numerous narratives and omits significant and substantial detail in various articles,” reads the letter, sent out by the city’s public information office. “Since the City’s inception, correcting the record has not been as problematic as it is with the Voice of OC.”
City Manager John Russo did not respond to requests for comments about the action.
The city letter claims that reporting by the Voice of OC inaccurately stated that the city had issued $1.1 billion in bonds to fund the construction of the Great Park, and that the articles advanced a narrative that the bonds were inadvisable.
Voice of OC stands by its reporting, which clearly stated that the council had simply authorized $1.1 billion as the current maximum number of bonds that could be placed on Great Park homeowners, although that number will continue to increase as development continues.
The series did not take sides in advocating for or against the city’s development plans, or offer an opinion on what direction the city should take in developing the park.
The city’s response also didn’t state the actual costs of what homeowners are already on the hook for.
Currently, the city council has issued $285 million in bonds on residents living near the Great Park, but with interest, the cost climbs to over half a billion dollars. On two of the three bonds issued by the city, the interest costs more than the original dollar amount on the bond.
That also leaves over $800 million in potential bonds – already authorized – the council could place on residents, before factoring in interest.
These bonds do not raise taxes on the homeowners in the Great Park: their tax rate was increased in 2013, before residents ever moved into the homes, and that increased rate was disclosed to them in documents that came when they bought the property.
However, Voice of OC’s reporting revealed that many homeowners don’t understand those disclosures when they bought the home, saying they thought it would go towards a variety of amenities in their neighborhoods, not to the Great Park.
The letter also said that it was unreasonable to expect a breakdown of how much the potential bonds would cost when the special tax districts that the bonds are based on were created.
But a review of staff reports shows that a maximum amount of bonds was created for every special tax district: but the majority of districts did not have that maximum discussed in open session when it was approved by the council.
The letter also complained that the articles had not presented alternatives to issuing bonded debt.
The articles included multiple quotes from Bill Marticorena, a partner at Rutan & Tucker, the city’s contracted law firm. Marticorena laid out the benefits and downsides of approving new bond maximums at a city council meeting in March.
“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.
The letter’s final complaint revolved around a $250 million facility for USA Water Polo that will be built in the Great Park, largely at the expense of homeowners from their special taxes.
The facility will include multiple pools, indoor basketball and volleyball facilities, and a new parking structure. Public access has been promised, but no details have been established on when the public will or won’t have access to the center.
According to emails obtained by Voice of OC, the original plan was to just build the training center and pools, splitting the costs of $50 million between the city and USA Water Polo at $25 million each.
Over two years, the project swelled to include the new facilities with a price tag five times the original projections. Over that time, USA Water Polo’s contribution dropped from $25 million to $10 million, with no explanation stated in the emails. City officials have not responded to questions over why their contribution decreased.
Voice of OC explained the complete timeline of the training center’s budget in multiple articles, and never claimed that the price increased
Private Letter to Homeowners
The city also sent out a different letter to Great Park homeowners that was not published on the city’s website, featuring a FAQ style format to answer residents’ questions about the Park.
City Manager John Russo had originally said that the letter sent to homeowners would be made available online, but it’s unclear which letter he was referencing.
The letter to residents was sent almost two weeks earlier than the letter posted online.
The primary message of the letter was to reassure homeowners that their taxes would not be increasing as the result of further Great Park construction, stating multiple times that the higher tax rates for the Great Park area were set in 2013, before anyone moved in.
The letter also asks and answers the question regarding whether the Great Park was created legally, saying that multiple public hearings, meetings, and opportunities for public comment were offered before landowners approved the special tax districts.
However, the letter does not disclose that the owner of the land when the special taxes were implemented was FivePoint Holdings, a developer partnered with the city to build the Great Park and the homes surrounding it.
The special tax districts are created at FivePoint’s request, and are implemented before the homes are constructed and sold to homeowners.
After they move in, the homeowners are on the hook for the special Mello Roos taxes each year that go towards paying for further development of the Great Park Neighborhoods new housing developments and the Great Park itself.
Those special taxes go to FivePoint for developing infrastructure in the park.
Some of the special tax even goes toward building streets that will later be used for more houses by the developer. According to Emile Haddad, FivePoint’s CEO, due to the fact that the Park is a “scrambled egg,” of public and private land there is no way to avoid the mixing.
“It’s a street that’s benefitting the park and might benefit us because a street is a street, but anything that’s infrastructure purely to our development is not part of the (special taxes),” Haddad said. “Anything that’s pure to the home is being funded by us.”
FivePoint is not mentioned once by name in the letter.
However, the letter failed to answer some of the questions it raised for residents.
One of the questions asked where the money from the special taxes could be spent, and the city’s response listed no specifics on the restrictions.
“The services and facilities that can be paid for or purchased by (the special tax districts) are described in detail in the (special tax district) formation documents, and disclosures provided to each property owner before purchase.”
The formation documents for each special tax district are not organized in any one place on the city’s website, and are spread over seven years of city council agendas. The city’s website does not have a search tool to look for specific city council items.
The city does have the original contract establishing the special tax district structure on their transparency portal, but the 250 page legal document holds no table of contents and is not text searchable in the format provided by the city.
However, the complete list is available on the city of Irvine’s website under the annual reports on special tax districts, and can be found here, under the label “CFD 2013-3 (Great Park).”
The list includes the development of streets, storm and sewer drain construction, a variety of utilities and landscaping, water features and improvements and demolition. There were also several other terms including “administrative fees” that were not strictly defined.
The annual reports were not mentioned in the letter to homeowners, and provide a yearly breakdown on the total revenue created by the special taxes, and an itemized breakdown of what items the money was spent on.
The reports do not clearly delineate whether the money is being spent on developing infrastructure in the Great Park Neighborhoods or the Great Park itself.
The exact cost to send the letter to homeowners is still unknown. Russo said it would cost “less than $10,000,” at a city council meeting in March, but no further updates on the letter were ever discussed.
Noah Biesiada is a Voice of OC Reporting Fellow. Contact him at nbiesiada@voiceofoc.org or on Twitter @NBiesiada.