Costa Mesa council OKs issuing bonds to finance Lions Park projects

Costa Mesa City Council members signed off Tuesday on a plan to issue bonds to finance the in-progress makeover of Lions Park and refinance debt taken out a decade ago.

The council voted 4-0, with Councilman Jim Righeimer absent, to issue $28.6 million worth of lease revenue bonds, a type of financing cities can use to build new facilities.

Those will carry an estimated interest rate of 3.5% and run for a term of 25 years, according to interim Finance Director Stephen Dunivent.

Proceeds from the sale of the bonds will be used to cover roughly half the cost of the Lions Park projects, about $18.5 million. The rest will be paid using city cash.

At the center of the city’s $36.5-million blueprint for the park is a new 22,860-square-foot library.

The existing Donald Dungan Library branch in the park will be converted to a community center to replace the adjacent Neighborhood Community Center, which is being torn down.

The bond issuance also includes refinancing outstanding debt the city took out in 2007 to improve the civic center and expand the police station on Fair Drive.

Doing so, Dunivent said Tuesday, will allow the city to secure a lower interest rate and save an estimated $500,000 a year.

All told, the new bonds are expected to cost the city about $2.9 million annually through 2026.

At that point, the 2007 debt will be paid off and the estimated annual payment on the bonds will decrease to approximately $1.14 million through 2042.

“Looking at how this is structured, looking at the cash flow, I think staff has done a very responsible job at keeping the costs down, keeping the borrowing down, structuring it in a manner where we’re keeping our annual costs reasonable,” Mayor Pro Tem Sandy Genis said Tuesday. “I really think the city is at very, very little risk here.”

She also said she’d like to see the council form an audit committee for the library project.

Mayor Katrina Foley said council members — both past and present — “had a role to play in making sure that this project moved forward in a way that was fiscally responsible and in a way that provided a sustainable, long-term project for our whole community.”

During Tuesday’s meeting, City Manager Tom Hatch noted that Standard & Poor’s recently raised the city’s credit rating from AA to AA+ — “the highest possible rating issued by the financial services company … for this type of financing.”

“It’s a good day for Costa Mesa when we’re looked at as being in a strong financial position,” he said.

For more information on the city’s plans for Lions Park, visit lionsparkprojects.com.

luke.money@latimes.com

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