IRVINE — The first-phase plans for the development of nearly 5,000 homes and 1.2 million square feet of commercial space to ring around the Orange County Great Park was submitted to the city by project officials this week.
Five Point Communities LLC, the development manager of Great Park Neighborhoods, announced that the formerly stalled project would be moving forward with land-grading and infrastructure to begin as early as the end of this year.
The announcement comes in the wake of a $400-million recapitalization in new cash and credit signed by a new lender, Boston-based State Street Bank & Trust Co.
Under the agreement, Lehman Brothers Holding Inc., which formerly held the loan, wrote down debt on the development from $625 million to $210 million and State Street provided a $180-million line of credit. Additionally, about $200 million in fresh capital was invested by Lennar Corp., LNR Property LLC, Rockpoint Group LLC and MSD Capital LP.
"It is very unusual in today's world to be talking about a project of this magnitude as one that is moving forward," Emile Haddad, chief executive officer of Five Point, said at a press conference this week. "We are now looking at one of the few projects of this size in the country that … has fresh capital that is ready to propel it forward."
The first phase of home construction is expected to be complete, with homeowners already moving in, by 2013, Haddad said.
Plans have been submitted for homes that range in sizes and price ranges from $400,000 to "north of a million," Haddad said.
However, Haddad could not say how many homes would be built in the first wave of construction; that will depend on the number of homes that the housing market can absorb at that time.
"If you are telling me that we're still going to be in a recession in 2013, then what that means is that we might have to adjust how many homes we put up," Haddad explained. "I, for one, believe that 2013 is going to be a healthier year than 2010 and 2011."
Along with homes, the developer will also be creating more than 1 million square feet of space designed for retail, recreational, office, research and development, and education purposes, according to a press release.
Included throughout the development will be neighborhood parks with trails and bike paths that connect to the adjoining Great Park.
Five Point will be working with the Irvine Unified School District to determine future school needs as the development is ongoing, according to Five Point spokeswoman Carol Wold.
Homeowners will pay a Mello-Roos tax to offset the development cost, but the amount can not be set until the time homes are ready to sell, according to Wold.
Irvine Mayor Sukhee Kang, who lauded Five Point for bringing in jobs and economic growth to the city, said that members of the City Council would be working closely with the school district during development.
"One of the reasons why Irvine has been a successful model is because of our excellent school systems, so that is always on top of our priorities in moving forward," Kang said.
Five Point and the city have been engaged in a public-private partnership since the 2005 sale of the El Toro Marine Corps Air Station by the U.S. Navy, with Five Point responsible for developing the Great Park Neighborhoods and the city responsible for developing the Orange County Great Park.
While initially the housing development was to be built first, and the resulting tax revenue would help fund the park, the bankruptcy of Lehman Brothers in 2008 stalled the project.
"The whole country realized that Lehman was an 8.5 earthquake that was going to shake the whole world, and it didn't matter anymore if you were residential, commercial, institutional or anything else — everything was connected," Haddad said. "That obviously meant that we had to go back to the drawing board with city staff and revisit our thinking."
In August 2009, council members approved an amended development agreement that would require that Five Point provide $40 million in park infrastructure and three months later made the decision to go ahead with a nearly $70-million development plan of the Western sector of the park.
"Clearly, if we had not gone ahead with our comprehensive master plan, if we had not decided to activate some small portion of the great park, we would have more money in the bank right now," said Councilman Larry Agran, chairman of the Great Park Corp. "But, we would be starting from zero."
While members of the Great Park Board were hard-pressed to admit any mistakes, Councilwoman Beth Krom credited current development at the park in playing a role in securing the restructuring agreement and pointed out the complexity of the project.
"Had we not gone forward with the public side of the project … I think it would have been more difficult for Five Point Communities to sell to their financial backers the viability of the project," Krom said.
"There's no roadmap, no magic wand, no crystal ball, no big book of How to Build a Great Metropolitan Park," Krom later continued. "So nobody gets it right 100 [%] of the time, but I really believe that we have been fortunate to have a city that has been focused in a particular direction and has remained committed."
The completion of public hearings and city approvals is expected by late summer 2011.
"I hope that we never have another question to answer of, 'Where is the great park?' and, 'Where are we in the process?' and 'When will it be built?'" Haddad said.Copyright © 2015, Los Angeles Times