Garden Grove officials are looking to take out a $140 million bond to finance building a new police station, a four-level parking structure and a revamped 2.7 acre civic center park.
If approved, the city will pay roughly $9 million every year for the next 30 years out of its general fund – the city’s main pot of cash made up primarily of tax revenue – to pay off the bond and its interest.
That’s $270 million in total in a city where the gap between tax revenue and expenditures is narrowing.
Officials would also put up city hall, the current police station, the senior center, the public works yard, Garden Grove Park, and other buildings as collateral to avoid capitalized interests and save on borrowing costs as the parking garage and police station are being built.
“The liens on these properties will be released upon the occupancy of the new (police station), at which time the (police) and parking structure will serve as the sole pledge for the Bonds,” reads a staff report.
On Tuesday, city council members will hold a public hearing at their 6:30 p.m. meeting on issuing the bonds to help fund the $152 revitalization project.
Click here to watch the meeting.
The expected vote comes after city officials unanimously voted at the March 26th meeting to approve an agreement with Edgemoor Infrastructure & Real Estate, a developer, to build and design the project.
Police Chief Amir El-Farra says the new station is needed to keep up with growing staffing levels, the current building is outdated and the new building will be a landmark of safety.
“It will be a modern design that allows us to improve productivity, efficiency and effectiveness by allowing all of our operations in one facility ,” said El-Farra at the March 26 city council meeting.
Can Garden Grove Afford it?
Tuesday’s expected vote comes after Patricia Song, the city’s financial director, in January told officials she expects the revenue the city is generating annually will be enough to cover the city’s operating costs over the next five years – factoring the bond costs.
At the same time, she said the gap between how much the city is bringing in and how much it is spending is shrinking every year.
“Therefore, the city’s leadership is focusing its efforts on enhancing revenue base and improving efficiency as we move forward. Of course, none of us have a crystal ball at this point and the projection shown here does not factor in any unforeseen situations,” Song told council members at their Jan. 9 meeting.
Song said that if there is a 3% decrease of the revenue the city is expected to bring in over the next five years, it could mean a $4.2 million deficit year after year.
She also said the city has about $26 million in a stability reserve, $9 million in designated revenue reserve from selling property and a $61 million unassigned fund balance that can all be used to fill gaps if necessary.
The city’s total general fund revenue for 2023-24 was about $175 million and about $169 million was projected to be spent. In 2024-25 the general fund revenue is expected to go up to $179 million and the city expects to spend about $176 million, according to Song’s presentation.
Her presentation also showed a projection that by 2027-28 the city’s general fund revenue would be about $195.2 million with officials expecting to spend $195 million that year.
If approved, the bond is expected to be issued around June 4. The remaining $12 million will come from money city officials set aside in the 2021-22 budget process to use toward the project, according to a staff report.
Developers are expected to break ground on the project in May and finish construction of the new police station and the parking structure in March 2026.
The old police station will then be demolished and a new park will be built on it with a memorial grove and walking trail.
Hosam Elattar is a Voice of OC reporter and corps member with Report for America, a GroundTruth initiative. Contact him at helattar@voiceofoc.org or on Twitter @ElattarHosam.