Great Park / Grand Jury

It’s rather interesting now that both Frank Matarrese and Doug deHaan have both now — publicly — announced that they would be totally interested in a non-profit city led development corporation to move forward with Alameda Point.   Frank Matarrese also placed this as a Council Referral last night.   Frank Matarrese mentioned in the Island article that one could be formed in the vein of the Great Park in Orange County.   If you will remember  Frank Matarrese, Beverly Johnson, and the Interim City Manager paid a visit to Orange County to check out the Great Park lats November.   In a Sun article describing the visit to Great Park, Frank Matarrese said the reason why they paid a visit was:

“We are hoping to get a little background on what they have been doing,” said City Councilman Frank Matarrese, who is traveling south for the one-day visit. “They have been dealing with the Navy and that’s something we also must do.”

Which is a laughable excuse since the deal between the Navy and the City of Irvine about the El Toro base was extremely straightforward.   The Navy did an outright auction of the land in parcels.   Lennar won all the parcels and then the City of Irvine and the private developer worked out an agreement on their own.  $200 million to the Great Park folks and 1300 acres for their “Great Park” and Lennar can pretty much do whatever it wants with the rest of their land (in excess of 3000 acres).

What makes the “Great Park” model even more suspect is the recent (and past) Grand Jury scrutiny about (1) the structure (2005-2006 report) and (2) the financing (2009-2010 report)

The first time the Grand Jury looked into the Great Park, according to this post from the  OC Register, OC Watchdog blog:

In 2006, the grand jury complained that Irvine had seized control of the park planning from the county. The panel’s report also criticized the city for issuing no-bid contracts, such as the one that so far has paid $3.5 million to public relations firm Forde & Mollrich.

The interesting thing is even after that critique by the Grand Jury in 2006, as late as December of 2009, the issue of no-bid contracts were again in the news regarding the Great Park.

The most recent Grand Jury report highlights the financing issue and the smoke and mirrors of how the non profit development corporation is funding the Great Park, from a June 3 OC Register article:

Coming under particular scrutiny is a complicated $134 million loan between the city and Irvine Redevelopment agency approved back in 2007, which allowed the redevelopment agency to purchase 35 acres, and which Great Park leaders expect to net the park up to $500 million over 45 years.

The deal called for the Great Park Corporation to loan the Irvine Redevelopment Agency $134 million, money the redevelopment agency used to purchase 35 acres of city-owned land near the Irvine train station. The city transferred the $134 million it received from the land sale to the Great Park Corporation, which is still owed the money it paid to the redevelopment agency, plus interest.

While Great Park officials expect to begin receiving several million a year from the redevelopment loan payback beginning in the 2011-12 fiscal year, the grand jury argues that the terms of the loan will make it difficult for regular payments to be made.

The grand jury pointed out that Irvine’s own estimates suggest that there won’t be enough money in the redevelopment agency’s budget to begin making sizeable payments to the Great Park for the foreseeable future. The agency only makes the payments when its yearly revenue exceeds its yearly expenses, or, as the report describes the agreement, “if we don’t have the cash, we don’t have to pay.”

The money used to pay back the loan comes from tax increment funding based on the expected rise in value of Lennar Corps. private Great Park Neighborhoods project, which will surround the city-run park.

But the tax increment funds will also be used to bankroll a series of redevelopment bonds, proceeds of which would go toward park construction, meaning the city is “last in line to get a repayment on its loan when the tax increment pie is divvied up,” the grand jury wrote. If not enough money is raised through the tax increment funds, the city could cancel the payback of the redevelopment loan.

And tangentially related, but the Great Park also has its share of in-fighting and bickering: last year about $200,000 in legal fees were expended over the search process for Great Park’s new CEO and access to documents.   The worse part was the two members of the Great Park Board (also two members of the Irvine City Council) were blocked from accessing certain documents and they sued.

Although considering the drama Alameda is going through right now, the Irvine issues seem relatively benign in comparison.

Finally, according to this article in the LA Times the scope of the Lennar project, developed by Five Point Communities (a spin off of Lennar which is developing Hunters Point and Treasure Island) has changed:

Real estate market conditions prompted a renegotiation of the development agreement with the city of Irvine, which called for construction of 3,600 homes on the site and included plans for 45 holes of golf (two courses of 18 holes and one of nine). The developer was to front the city about $400 million in cash and infrastructure improvements as construction proceeded.

The new deal, approved by the Irvine City Council late this summer, scraps the golf courses along with a 171-acre agricultural preserve, and requires Haddad to put up $58 million for site improvements in the next three to five years — in effect, guaranteeing infrastructure development regardless of how the real estate market fares over that time.

The council simultaneously approved an expansion of the residential limit to about 4,900 homes, including about 500 affordable units…

“We created a better mix” of uses, [Haddad] says. The original residential limitation, imposed by a growth-wary community, was too meager, he argues — roughly a fifth of Irvine’s existing average density. That would have driven up the average price of Great Park homes to unmarketable levels. Homes in Haddad’s planned first phase will sell in the $400,000-$750,000 range, and he expects the average price to be about $600,000 when the project is built out.

What he described was something very different from the quintessential automobile-oriented suburb erected here by Irvine Co. over the last half-century, with single-family homes or town homes clustered together, separated by broad thoroughfares from shopping centers and by freeways from the residents’ jobs. Haddad’s vision more resembled a European population center — or even one resembling the Beirut of his youth — that not only places home and commerce in walking proximity to one another but supports a heterogeneous socioeconomic residential mix.

“The two highest-growth population segments today are 55-plus and generation Y [that is, those now in their late 20s or early 30s],” he says.

“They have more in common than you’d think. They don’t want to go to suburbia. So we want to create a new element here.”

What he has in mind, he says, is “a mixed-use, higher-density retail and entertainment area here, where the runway becomes an element attracting people to walk. We have to train people to stay out of their cars.”

So which part of the Great Park is Alameda going to attempt to model itself after?