Irvine, California, to weigh $455M in bonds for Great Park

The Irvine City Council is slated to vote Tuesday night on the issuance of $455 million in dirt bonds to further develop Orange County, California's Great Park.

Plagued by accusations of cronyism and improper management, the park at the site of the former Marine Corps Air Station El Toro hasn't lived up to its original vision. Sports venues were developed, but not the section plugged as a West Coast version of New York's Central Park when the community facilities district for the park was formed a decade ago.

The City Council formed a task force last year after residents who live in the subdivisions surrounding the park complained they are paying a special district tax for park and retail amenities that were never fully developed. In July 2022, the city approved the Great Park Framework Plan to guide the next phase of development.

City of Irvine

The park today has a large sports complex, a soccer stadium, an amphitheater and skating rink. New development proposed in the framework plan includes a 14,000-seat amphitheater, an Olympic aquatics center and a botanical garden.

The bonds will be paid for with the taxes levied on homes surrounding the Great Park that were put in place more than a decade ago when the community facilities district was formed.

California's Community Facilities Act, also known as Mello-Roos after the authors of the legislation, was approved in 1982 to allow the formation of special tax districts to finance infrastructure for private development or schools. The concept behind Mello-Roos bonds is that a developer agrees to pay the special tax in early years, before passing along the obligation to home  buyers as the subdivision is built.

The City Council will also vote to extend by a year the contract for Stifel, Nicolaus & Co. as broker-dealer. The original contract with Stifel expires at the end of this month.

The plan is to issue the bonds through the community facilities district in three tranches of amounts not to exceed $170 million, $220 million and $65 million in a mix of current interest and capital appreciation bonds. The special district taxes, not the city's general fund, would repay the bonds.

The park already has existing bond debt of roughly $280 million. To prepare for the new bond debt, city council members raised the project's debt capacity from just over $1 billion to $2 billion earlier this year.

The bonds would mature no later than Sept. 1, 2058, true interest costs would not exceed 5% and the underwriter's discount would not exceed 0.8%, according to the staff report.