Irvine city leaders could sign up for a massive expansion of the city’s budget for the Great Park, Orange County’s largest civic construction project, on Tuesday night.
The shift would allow the city to take out $2 billion in bonds, which Great Park residents would be on the hook for paying back over decades while the city uses the funds to build out the park.
Those residents are already paying towards the park via a special Mello-Roos property tax on their homes, so prices wouldn’t go up for them, but this vote could change how much they’re responsible for paying back.
So far, the city has issued $280 million in bonds, but after the interest payments residents end up on the hook for paying back over half a billion dollars via those special taxes.
The city’s current cap of $1.1 billion in bond debt was established in 2020, and built up over nearly a decade of city council members establishing new tax districts that would progressively add to the total.
Under the proposed new system, that won’t happen anymore.
Instead of gradually developing new housing around the park and setting the tax ceiling for each district as they go, the proposal is calling to end the old districting system and set up a simpler system that covers the rest of the park that has yet to be developed.
If council members approve the new plan, the city will get rid of the old $1.1 billion cap in 11 existing tax districts and institute a new cap of $2 billion that falls over the entirety of the homes, not individual districts.
“In practical effect, formation of the Overlay (special tax district) will allow for an increase in the amount of bonds sold and secured by the special taxes,” city staff wrote in their report. “The Overlay (special tax district) will not, however, increase the tax rates applicable to any existing development.”
The change comes after the city council approved a new deal last October that removed much of the influence of FivePoint Holdings, the city’s partner in developing the park, and made it so the city could spend the bonds on a much broader range of projects, like a proposed amphitheater.
The city is set to receive $625 million in special tax dollars for the park in the deal, while FivePoint receives $600 million that must be spent on building infrastructure for the homes surrounding the park.
The city is also looking to shift how much residents will have to pay once the bonds are paid off, eliminating the old system that fluctuates depending on each house and instead having each house pay 17.5% of the special property tax permanently to pay for the maintenance of the park.
The exact costs of that tax to each homeowner are unclear, since it varies depending on what the home is worth.
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at firstname.lastname@example.org or on Twitter @NBiesiada.
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