Irvine leaders are pushing ahead with the purchase and closure of the controversial All American Asphalt plant, officially signing off on over $300 million in bonds to cover the costs.
A final number on the total cost of the bonds has not been announced, but will be between $320-360 million according to a city staff report, and will be released for purchase in June.
The council voted 4-0 Tuesday night to approve the bonds, with Councilman Mike Carroll out of the room at the time of the vote.
While the city has been talking about shutting down the factory for months, the approval of the bonds represents the first concrete step the city has taken to lock themselves into the deal.
The closure comes after years of Irvine residents from the neighborhood of Orchard Hills calling out city leaders for a failure to act, claiming the factory is polluting the air around their homes and ruining their quality of life.
[Read: Something’s In the Air: Irvine Residents’ Yearslong Battle For Breathable Air]
City leaders announced they made a deal with the Irvine Company and All American Asphalt in February that would have the developer donate land to the city, which the city could then sell to pay off the costs of closing the asphalt plant.
The leftover land will be converted into a nature reserve dubbed the Gateway Preserve, bringing pre-existing open land owned by the city together with the Irvine Company land for 700-acres of open space.
Irvine is set to buy the factory for $285 million, along with everything at the site and closing it down to potentially turn it into a park in the future, according to city staff.
No cost analysis was performed according to a city staff report because All American Asphalt wouldn’t budge on the price, meaning it’s unclear if the city is getting a market-rate deal.
[Read: Irvine Looks to Buy Out Controversial Asphalt Plant for $285 Million]
The Irvine Company is giving the city 375 acres of land that will go into the Gateway Preserve.
To pay for the bonds, city officials are looking to sell a 91-acre parcel on the corner of Jeffrey Road and Portola Parkway – land that was also donated to the city by the Irvine Company.
City staff estimate the total value of that donated land at around $330 million, which would be enough to cover the costs of the factory’s buyout price if purchased for what it’s worth.
Any leftover land from that sale will be pushed into the Gateway Preserve.
With the shutdown of the factory, the Irvine Company can continue developing the Orchard Hills neighborhood without interference from the residents, who have shown up at multiple planning commission meetings protesting any new housing until the factory is shut down.
The company will also have the opportunity to bid on the 91-acre parcel they donated to the city, if they want the opportunity to develop on it.
But city staff have also been clear that the deal the city is now locked into is not without its risks.
Irvine officials have had almost no ability to examine the site for any environmental damage from the factory’s presence, and won’t until after most of the buyout money has already been paid out according to a staff report.
The city is planning on buying environmental insurance to cover any potential costs of cleaning up the site, but the details still haven’t been finalized.
City staff also noted that if they can’t sell off the land from the Irvine Company or are otherwise incapable of completing the deal, they’ll be stuck with hundreds of millions of debt in the general fund and no plan on how to budget around it.
“If the City elects not to entitle the Gateway Land parcel … or if the ultimate sale of the property is delayed or market conditions change negatively, the City could be left with a significant financial obligation that is not currently contemplated in our long range financial plans,” city staff wrote in a staff report on April 11.
Noah Biesiada is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at email@example.com or on Twitter @NBiesiada.
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