The Santa Ana City Council voted Tuesday to proceed with a $125-million financing plan for capital improvements that involves handing over ownership of much of the city's real estate holdings to a new corporation and then leasing the buildings for 30 years.
The anticipated $125 million generated over the next three years through the sale of bonds would be used for a variety of projects and would spark an additional $1 billion in private development, city officials said.
The projects include more than $9 million for facilities and communications for the police and fire departments, almost $20 million in improvements to cultural facilities like parks, the Bowers Museum, the zoo and the library, close to $5 million in new housing and $13.1 million for a new area for storage of city equipment.
Tuesday's 6-1 council action authorizes City Atty. Ed Cooper to file the documents necessary to form the new corporation, the Santa Ana Financing Corp., with council members serving as the board of directors.
Additionally, City Manager Robert C. Bobb, who presented the "master financing plan" to the council, was authorized to proceed with negotiations with Goldman, Sachs & Co., a New York underwriting firm helping to put together the financing and marketing aspects of the bond plan.
The council also authorized its staff to retain Jones Hall Hill & White, a San Francisco law firm that deals with large bond issues.
Properties to be assigned to the new corporation include City Hall, fire stations, police headquarters, the Police Annex, Santa Ana Stadium and municipal parks and libraries, all now owned by the city, Bobb said.
The properties would be used as collateral to back the $125-million bond issue. The city would then lease all of the facilities back for about $11.6 million annually.
Although the properties would not technically be sold to the corporation, Cooper described the plan as a "typical sale and lease-back, used in California for a very long time." He said, however, that the concept is not widely known in Southern California.
The bonds created by the plan would be federal tax-exempt certificates amortized over 30 years. At the end of 30 years, the properties would be returned to city ownership and the corporation dissolved.
Plan Based on 8.5% Rate
Lawrence Shaffer, the city's finance director, said the plan presented to the council is based on a fixed interest rate of 8.5%.
Since the passage of Proposition 13 in 1978, Santa Ana has spent between $5 million and $7 million annually in capital improvements, Bobb said. Most of those funds come from general revenue-sharing funds and federal grants, both of which are threatened with extinction in President Reagan's proposed federal budget.
In granting the city staff the authority to proceed with the plan, the council also directed Bobb to draw up a detailed schedule for apprising the business community of the plan's implications. All segments of the community need to be aware of costs, benefits and any long-term ramifications of the plan, the council members said.
Councilwoman Pat McGuigan cast the lone dissenting vote after saying she expects "complete community misunderstanding."
The council will be asked to grant final approval to the plan sometime in April, Bobb said.
Private Spending Expected
Bobb and Mayor Daniel E. Griset said the $125-million public investment would prompt private investors to spend at least eight times that amount on related projects. They noted, for example, that the plan calls for the city to spend $4.2 million to improve the area surrounding the Fashion Square shopping center, while private investors are planning to spend up to $400 million to expand and upgrade the center in the next several years.
The $4.7 million in new housing is expected to generate $50 million in private investment, Bobb said.