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September 2009 home page

Cake, and Eat It Too! 

Brian Huster and Bettina Experton, current and immediate past member of the City Finance Committee

City Hall: A "Blighted" Property.
Photo Art Olson

 

In March 2007, the City stepped in to help finance the acquisition of the Shores property with the fundraisers’ assurance that it would be reimbursed. After two and a half years of tireless fundraising efforts and the City’s securing of a $3.5 million loan, the repayment promise has fallen short. Should the City now expect a two-thirds tax payer approval of an envisioned General Obligation bond for the repayment of that debt?

The Shores property and its shared use park with a private school cannot be compared to the Powerhouse Park or the Library, properties of community-wide use previously acquired through General Obligation bonds. One could also argue that other urgent needs compete for scarce public dollars: the crumbling City Hall and Lifeguard Headquarters, eyesore and accident-prone sidewalks, and bare-bone while costly fire fighting and police services.

Retiring the Shores property loan would be best done via self-financed and non-tax means while also addressing community-wide needs. With this approach in mind, here is what the City Finance Committee has been proposing under the guidance of a dedicated Sub-Committee:

Create a City of Del Mar Redevelopment Agency, authorized under California State law for “blighted” properties for which the Shores and the City Hall site properties will definitely qualify;

Master plan the City Hall property through an RFP process whose development criteria will permit the underwriting allowed by the Property Tax Increment generated by the redevelopment of the property. The master plan will also permit the development of a needed South end anchor of the City with a mixed use retail and residential development of the required density to make it feasible;

The newly created Redevelopment Agency will issue a tax-free redevelopment bond (authorized only by this type of Agency) for the financing of “any off site” and “only on site” parking requirements;

Bond underwriters will determine the bond amount and Third Party Credit Enhancing, so that the City will not have any financial obligation under this arrangement;
Upon entitlement and developer financing of the redeveloped property, funding of the bond will take place. The higher the density of the redeveloped property, the more revenue (sales tax, ground lease rent, and parking fees) will be generated to satisfy the City’s needs;

Based on the Finance Committee’s prior analysis, the City Hall redevelopment could generate $680,000 in annual Property Tax Increment revenues which could debt service 15 to 20 million dollars for the City-needed capital improvements (new City Hall, new Lifeguard Center, streetscape), debt retirement (the Shores) and City ownership of an underground parking structure under the redeveloped City Hall site to serve and support the redevelopment of the entire downtown, and which will generate $800,000 in annual parking revenues.

Such an approach will not only permit the City to meet its short-term financing needs (with the retirement of the Shores property loan), but and foremost help it secure its long-term financing and redevelopment goals with a revitalized downtown, adequate parking and a sustainable source of revenue to fund its services and maintain its unique community assets.

   
 

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