Grand Jury Report Blasts Great Park Financing, Accuses Irvine City Council of Lying, Conflicts
|Hot air keeps it afloat.|
- questions whether the Irvine Redevelopment Agency created to usher in development of the Orange County Great Park can fully repay its initial $134 million loan from the city;
- faults the city of ignoring the poor business climate while churning out rosy funding projections;
- blasts the city--and in particular City Councilman Larry Agran--for lying to residents about no new taxes being required to build the park;
- and, accuses the Irvine City Council of conflict of interest.
Otherwise, things are going swell at the former El Toro Marines Corps Air Station.
Here is the exact language of the findings:
- Repayment of $134 million loan. Terms of the loan agreement make it difficult for the Irvine Redevelopment Agency to fully repay its $134 million loan from the City of Irvine.
- Forgiving the loan. After
setting difficult standards for loan repayment, city and redevelopment
officials then agreed to forgive the loan if it is not repaid after the redevelopment agency expires in 45 years.
- Business cycle ignored. In forecasting steadily increasing tax increment revenue over the redevelopment agency's 45-year life, agency officials ignored the periodic recessionary effect that the business cycle has on assessed valuation.
- Promises of no new taxes. Despite pledges that no new taxes would be needed to build the Great Park, much of the park's proposed funding will come from new taxes and the redirecting of increased property taxes.
- Potential conflict of interest. It is difficult for differing views to be adopted in Great Park planning because the five people who are City Council members also are the Redevelopment Agency Board members as well as the majority the Great Park board.
You can read the basis for those findings and the rest of the report titled "Financing the Great Park: Now You See It, Now You Don't" here.
The $134 million loan was generally set up so builders fees and increases in the property's value as it was being developed would flow into the redevelopment agency, which would then repay the loan annually. These so-called tax increments, which were projected as the nationwide recession was taking hold in 2008, "now seem unrealistic," according to the grand jury.
Further, enough wiggle room language is contained in the original agreement that annual loan payments can be missed without penalty--or the entire amount could conceivably be forgiven, the grand jury found.
A chapter titled "How to Pay Back a Loan-Sort Of" begins with this explosive introduction (or at least it should be to city residents):
Whether the $134 million loan ever will be fully repaid to the city by the redevelopment agency is questionable. City and redevelopment officials speak confidently of ultimately satisfying the debt. But city officials and the city's lawyers have woven a web of legal phraseology that seems designed to provide reasons not to make payments on the loan. Irvine's own estimates of income and expenses suggest that for the foreseeable future there may not be enough money in the redevelopment agency's till to make sizable loan repayments.