Orange County Grand Jury • 2009-2010

Financing the Great Park: Now You See It, Now You Don’t 1. Summary

Published: June 03, 2010 23 pages
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Findings and Recommendations 5 findings

F1
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.
Related Recommendations (1)
R1
Repayment of $134 million loan. Irvine Redevelopment Agency Board members (who also are Irvine City Council members) should decide whether they will commit to repaying the $134 million which they borrowed from the City. If they will not make that commitment, they should amend the Loan Agreement by removing conditions that make full repayment extremely difficult.
F2
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. 19
Related Recommendations (1)
R2
Forgiving the loan. The City Council and the Redevelopment Agency Board should consider amending the forgiveness clause in the Loan Agreement to ensure that the $134 million loan is repaid. 20
F3
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.
Related Recommendations (1)
R3
Business cycle ignored. Tax increment revenue projections made by the Redevelopment Agency should be revised to take into account the business cycle that regularly puts the economy through predictable periods of recession and recovery.
F4
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.
Related Recommendations (1)
R4
Promises of no new taxes. City officials should inform Irvine residents that new taxes and/or increases in existing taxes may be needed for Great Park construction.
F5
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. Responses to Findings F.1 and F.2 are required from the Irvine City Council and Irvine Redevelopment Agency. Response to Finding F.3 is required from the Irvine Redevelopment Agency. Responses to Findings F.4 and F.5 are required from the Irvine City Council. 7. Recommendations. In accordance with California Penal Code 933 and 933.05, each recommendation will be responded to by the government entity to which it is addressed. The responses are to be submitted to the Presiding Judge of the Superior Court. Based on the findings, the 2009-2010 Orange County Grand Jury makes the following recommendations:
Related Recommendations (1)
R5
Potential conflict of interest. The five Irvine City Council members should make the boards of the Great Park Corp. and the Redevelopment Agency and the Council independent of one another. Responses to Recommendations R. 1 and R. 2 are required from the Irvine City Council and Irvine Redevelopment Agency. Response to Recommendation R.3 is required from the Irvine Redevelopment Agency. Responses to Recommendations R.4 and R.5 are required from the Irvine City Council. 8. Required Responses The California Penal Code specifies the required permissible responses to the findings and recommendations contained in the report. The specific sections are quoted below: 933.05 1. For purposes to Subdivision (b) of Section 933, as to each grand jury finding, the responding person or entity shall indicate one of the following: (1) The respondent agrees with the finding. (2) The respondent disagrees wholly or partially with the finding, in which case the response shall specify the portion of the finding that is disputed and shall include an explanation of the reasons therefore. 21 2. For purposes of subdivision (b) or Section 933, as to each grand jury recommendation, the responding persons or entity shall report one of the following actions: (1) The recommendation has been implemented, with a summary regarding the implemented action. (2) The recommendation has not yet been implemented but will be implemented in the future, with a timeframe for implementation. (3) The recommendation requires further analysis, with an explanation and the scope and parameters of an analysis or study, and a timeframe for the matter to be prepared for discussion by the officer or head of the agency or department being investigated or reviewed, including the governing body of the public agency when applicable. This timeframe shall not exceed six months from the date of publication of the grand jury report. (4) The recommendation will not be implemented because it is not warranted or is not reasonable, with an explanation therefore. Appendix: Financing the Great Park The following documents and written sources were used in the preparation of this report: American City & County. June 1, 2009. “Grand Plans for the Great Park,” by Larry Agran. Contract Compliance Review of Agreement for Master Designer Services. Oct. 1, 2009. Orange County Great Park Corp. Financial Statement, with Report on Audit, Irvine Redevelopment Agency. June 30, 2007. Financial Statement, with Report on Audit, Irvine Redevelopment Agency. June 30, 2008. Great Park Corp. Board of Directors Meeting. Dec. 5, 2003. Los Angeles Times. Jan. 5, 2005. “Great Park to Get Tax Funds?” by Daniel Yi. Los Angeles Times. Aug. 14, 2008. “Designers underestimate Orange County Great Park building costs, firm says,” by Paloma Esquivel. Orange County Great Park Proposed Strategic Business Plan. Nov. 12,, 2009. Orange County Register. March 14, 2008. “Great Park board discusses cash flow,” by Cameron Bird. Orange County Register. March 14, 2008. “Great Park will costs $377 million more,” by Sean Emery. Redevelopment Plan, Orange County Great Park Redevelopment Project. Adopted by Irvine City Council March 8, 2005. (Ordinance No. 05-04) Purchase and Sale and Financing Agreement Between the Irvine Redevelopment Agency and City of Irvine. Adopted by Irvine City Council, Aug. 14, 2007. Redevelopment Tax Increment Projections. Heritage Fields, Sept. 4, 2009, scenario. State of the City Speech. Jan. 27, 2004. Larry Agran. State of the Park Speech. July 9, 2009. Larry Agran. What Is Mello-Roos? www.californiataxdata.com ##### 23

Additional Recommendations 1

These recommendations are not explicitly linked to specific findings.

Agency Responses 1

Government agencies' official responses to this report's findings and recommendations. Click on a response to see the structured breakdown.