Homeowners around the Great Park are paying tens of millions per
year in extra taxes, yet Irvine city officials rarely tell them where it’s all
going.
City
officials and partners openly debate where hundreds of millions of dollars in
funding has gone, while other project budgets have swelled to five times what
was originally conceived, all without public input.
According
to projections completed by FivePoint Holdings, the city’s partner in
developing the Great Park, homeowners in the park will have paid at least $2
billion in special taxes by the end of the construction.
A
grand jury report released in 2015 was highly critical of the Park’s management
and transparency over the years, wrapping up its findings with the following.
“From
the onset, the Grand Jury found that the City Council and (Orange County Great
Park Corporation) were not transparent with either the process or the relevant
information associated with the Great Park to the public,” the report said.
“There were never definitive budgets, schedules, milestones, or deliverables
open for public review.
Developer Control Over
the Great Park
The
biggest change since the start of the project in 2003 has been the role of the
developer FivePoint Holdings, the city’s primary partner in the development of
the Orange County Great Park.
Originally,
there were two funding sources for the Park—a redevelopment agency and special
taxes levied on homes in the Great Park that were managed by FivePoint.
The
redevelopment agency was intended to be the primary source, which the city
invested $134 million in at 9% interest according to the grand jury report.
Projections showed it would generate millions to invest back in the park.
The other
mechanism was special taxes levied on homes that would be built in the Great
Park through the developer FivePoint, which was licensed to build 3,500 homes
and committed $400 million to the Park.
But when
former Gov. Jerry Brown dissolved the redevelopment agencies statewide in 2011,
it left the city with a massive funding gap to complete the park.
The
chosen solution by the city was to increase the number of homes in the park and
use the increased tax revenue to make up the difference. FivePoint’s stake of
homes increased from 3,500 homes in 2005 to over 9,000 by 2013.
In 2010,
the city instituted the first amendment to the development agreement,
increasing FivePoint’s zoning allowance to 5,000 homes.
But
according to FivePoint CEO Emile Haddad, both the city and the developer knew
the number of homes would rise and did not disclose that to the public.
“In 2010,
(the city council) knew it would be revisited and that more than 5000 homes
would be built. We all knew there would be more homes,” Haddad said. “The city
was absolutely incentivizing, and they were the ones pushing for approval.
Because without more homes, they would have a major problem within the general
fund, because once they built the Great Park, they would never have the money
to maintain it.”
However,
former councilman Larry Agran said in a telephone interview the city was not
endorsing new development in the park and that FivePoint was the one asking for
the expansion.
“The city
was always receptive to development proposals, that’s been the posture of the
city since its founding,” Agran said. “We weren’t spurring it, we weren’t
negative on it, we were just listening.”
FivePoint
also had a role in the design of the park, and in 2013 requested that their
design package be approved by the city, according to a city staff report
presented to the council.
The plan
laid out the details for the western sector of the park, and it requested
anything within its design be considered in line with city standards, and that
any “logical evolution” of the package would be considered approved by the
city, according to the staff report.
The
report said that allowing FivePoint this much control of the park’s operations
was “inconsistent with the City’s historic regulatory practices.”
“The
decision to approve these requests would allow FivePoint to exercise a level of
discretion over the project’s evolution that would otherwise be exercised by
the City Council.”
But in
2016, FivePoint publicly stepped back from the design process, when it saw it
would be “used politically,” according to Haddad.
“We chose
to step back from it and let the city do their thing,” Haddad said. “Once the
city comes to a decision on what they want to see built, and the balance of the
park, then we will sit down with our partner and see how we can help.”
However,
Haddad has said he’d be interested in going back to work on the design of the
park in the future.
The Debate over $200
million
In the
original deal, FivePoint committed $400 million to the park, half of which
would be repaid through special Mello-Roos taxes and the other half would serve
as a developer fee, according to city records.
Haddad
said he still has no idea where the money from the development fee went.
“I never
really looked into where it went. I’m upset it was spent the way it was spent,
but it’s not my business to look into where it was spent,” Haddad said.
Haddad
has said he has no interest in knowing where the money ended up, despite the
fact that it was close to half of FivePoint’s original investment in the park.
“The
minute I gave them the money, I view that as not my money. It’s taxpayers’
money,” Haddad said. “Honestly, if the $200 million wouldn’t have been spent
the way it was spent, and it was spent to build things, the Great Park would be
built today.”
According
to Haddad, he would have grounds to potentially sue the city over the misspent
$200 million, but is not interested in doing so and currently wants to continue
development with the city.
If the
decision was made to sue, he said the only money he could likely receive is the
money from Irvine’s settlement with the state of California over the collapse
of redevelopment, worth $292 million.
According
to Agran, the initial $200 million has all been invested into the park, and
Haddad knows where the funds went.
“It’s all documented where it went,” Agran
said. “If you look at all the audits done over the years, up to this last
audit, every single one of them showed not one penny of unauthorized spending.”
Homeowner Understanding
The form
they’re legally required to be shown states the cost specific for the address,
as well as the range of potential maximum prices for homes in that area based
on square footage.
The form also says the tax can increase by as much as 2%
annually for 40 years after special taxes are put on the home, and can increase
by 3% annually every year after that.
The establishment documents for the Great Park’s special
districts state the cost will increase by 2% annually automatically.
The language in the disclosure also lists what that money
can be spent on, including various infrastructure improvements and, “Bond
related expenses, administrative fees, and reimbursement of costs related to
the formation of the (special tax district),” as well as “costs of services
related to the infrastructure and public facilities that are constructed within
the district.”
No further explanation or definition of those terms is given
to homeowners in the form.
No notification is sent from the city of Irvine to
homeowners when new projects are approved or when new special tax districts are
approved according to city staff.
The Orange County Great Park Board
Another major shift over the life of the park has been the
makeup of the Orange County Great Park Board, the organization in charge of
managing the OC Great Park Corporation.
Originally, the OC Great Park Corporation was set up as a
nine-member executive board, with the members of the city council and four at
large members that controlled operations. The board was officially separate
from city oversight.
But after the 2012 elections, a new council majority made
some major structural changes to the leadership of the park.
In 2013, a 3-2 vote by the City Council reconstituted the
Great Park Board as an advisory body to the city. It also removed the at large
members of the board, leaving only the city councilmembers with a vote. The OC
Great Park Corporation now operates under the city manager’s office
supervision.
Currently, the Great Park Board meets once every month on
Tuesdays at 2:00 and votes on items related to the Great Park to recommend
actions to the council.
Just hours later, those items are incorporated as part of
the city council’s 4:00 meeting under the consent calendar, which means they
aren’t publicly discussed at the council’s meeting unless a councilmember
requests it.
The Board’s meetings are open to the public, but due to
their timing during the workday, see a far lower turnout from the community
than the council’s meetings.
Public Estimates Shift Throughout
the Years
The final cost of the Great Park has remained fluid
throughout its development.
The original estimated budget for the Great Park announced
in a 2003 city press release was set to cost $350 million initially according
to the grand jury report.
Six years later in 2009, the Great Park Board approved a
submission from the design studio for a partial park design that city staff
estimated would cost $1.4 billion to complete.
Because development of the park was always intended to be
developed over several decades, no overall budget for the final park exists.
“No project of this magnitude is all pre-funded. It’s not
like we have a vault where we have a half billion or a billion stored for the
development and operation of the Great Park pre stored. No, you make
arrangements to fund it as you go,” Agran said.
The grand jury report also cited a 2003 planning report
prepared by the city that said “the Orange County Great Park development
strategy…will enable all key elements of the Great Park to be developed within
five to seven years of the sale of the property.”
Agran said any report claiming the park would be completed
within ten years was false and the city never made that claim.
“Any interpretation that there would be a fully developed
great metropolitan park in 6-7 years just totally misunderstands the process
and the expectation,” Agran said. “They never heard it from me or anyone else
in a position of responsibility. You look at any of these parks, 50-100 years,
we believed ours could be built in 40-50 and that’s what redevelopment was
based on.”
Aquatics Center goes from $50
million to $250 million
The city also did not disclose many of the specifics of the
new aquatics center that will be the home of USA Water Polo in the Great
Park.
While public access has been promised, no specifics have
been confirmed.
When the plan was approved by the city council in 2018,
FivePoint CEO Haddad spoke at the meeting, describing the aquatics center as a
“win for the city,” and stating the center would not come at any cost to the
city.
The aquatics center will not cost any city funds, but it
will come from tax dollars collected from Great Park residents, who have no
control over how those taxes are spent, levied, and are not notified by the
city when new projects are approved or debated by the council.
According to emails between city staff and USA Water Polo
obtained by Voice of OC, there was a preliminary proposal in November 2017 to
establish a new home for the Olympic team in the park for just $50 million,
half of which would be paid for by USA Water Polo. The deal got as far as a
preliminary draft, but was never shown to the public.
The exact details of how the new home for the water polo
team went from $50 million to over five times that in less than two years are
still unknown.
Instead of just an aquatics center, the new plan calls for
“a state-of-the-art Olympic-class water polo and indoor volleyball/basketball
facilities, and a supporting parking structure,” almost all of which will be
paid for with special taxes from Great Park residents.
USA Water Polo’s investment also dropped, going from $25
million to a pledge of $10 million for the new center.
According to those emails, which span the last two years,
there was no mention of involvement with the aquatics center from FivePoint
until Sept. 2018.
The idea of where an aquatics center originated is also
unknown. Chris Ramsey, CEO of USA Water Polo, says that the team has been
talking with the city since 2007, while Mayor Christina Shea said that talks
began sometime in the last two to three years.
The homeowners paying for the new aquatics center also
already have access to four other private pools throughout the Great Park
Neighborhoods.
Councilwoman Farrah Khan, chair of the Great Park Board,
said she had had no idea when the talks started on the project. While the
deal’s existence was shared as early as Jan. 2019, it was not discussed at the
Board’s meetings the entire year leading up to the Oct. 22 vote.
FivePoint was asked to return with a design plan and refined
cost projections by the end of March at the meeting where the project was
approved to move forward, but the exact date has not been scheduled yet.
Voice of OC
Noah Biesiada nbiesiada@voiceofoc.org or on Twitter @NBiesiada.
March 10, 2020
Noah Biesiada nbiesiada@voiceofoc.org or on Twitter @NBiesiada.
March 10, 2020
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