Developers Agree to Pay Road Money Before Work

After more than a year of negotiations, developers and Orange County officials have hammered out plans for a $235-million program to build and improve roads in eastern Orange County to ease the traffic quagmire, officials said Friday.

In what is billed as an unprecedented program that may serve as a model for other areas, 11 major developers will raise the bulk of the money through bonds and pay it up front to a fund so road building can start before most of the new housing units are built.

The program covers new construction in the foothills of the Santa Ana Mountains, eastward from Interstate 5, from the El Toro area in the north to Mission Viejo in the south.

Permission to put up homes will be tied to roads built and improved, which will provide for “accelerated development of roads, which is obviously critically important,” Supervisor Gaddi H. Vasquez said at a press conference to explain details of what is formally known as the Foothill Circulation Phasing Plan.

“The success of this program is really predicated on the willingness of developers and builders in the foothill area to cooperate with this program,” Vasquez said. “We are talking about a program that is going to develop roads (in the foothill area).”

A county timetable, which officials said was an optimistic, “best-case” projection, showed the bulk of the construction of approximately 34 miles of roads in a 140-square-mile area completed by early 1990.

Nearly all the land in the area is owned by the 11 major firms, including the Santa Margarita Co., Baldwin Co., Hon Development Co. and the Mission Viejo Co.

The 11 companies will pay 100% of the bill for the “backbone one” portion of the program even though they own just 90% of the property, and will receive credits for the amount they overpay. Owners of the remaining 10% will eventually have to pay their share.

The early money is expected to be paid with funds borrowed by the developers, most of it by forming special districts that will issue bonds backed by property.

Less crucial roads in the “backbone two” phase will be funded with fees paid over three years, plus debt financing if more money is needed. Standard county fees levied on developers for roads will pay for roads in an “auxiliary system.”

Although developers would build the roads anyway under the old system, they have been allowed to build them as they completed units. If a developer held off building on property he owned, the roads did not get built, leaving large gaps in the transportation network.

The new method will require developers to put up the money before starting construction of most of the units.

Developers will be allowed to continue building only if the county finds that road construction is proceeding on schedule and new development is not worsening traffic more than expected.

Vasquez declined to compare the program, which the supervisors began considering in May 1986, with the proposed slow-growth initiative planned for June’s ballot. The initiative’s backers contend that the supervisors have allowed development to run rampant and overwhelm the county’s roads.

But Vasquez did stress that the new plan “provides a revenue system” to build roads, while the initiative does not. It’s one thing to identify what roads need to be built, but “it’s another thing to have the revenues to build those roads,” Vasquez said.

When the broad outlines of the program were announced in June, Russ Burkett, a leader of the initiative drive, said it was a good plan and one step in solving the county’s traffic problems.

New construction in the foothill area has been held up since December, when county supervisors were told that the program was badly needed and that construction was overwhelming traffic capacity.

Vasquez’s predecessor as supervisor, Bruce Nestande, who resigned in January, was a key backer of the program. The foothill area is in the district represented by Nestande--who resigned to become vice president of a development firm--and now by Vasquez.

The program will be one of the most expensive public works projects in county history, rivaling the $296-million expansion of John Wayne Airport.

The foothill program lists the roads in order of priority, with the most urgently needed including extensions of Portola Parkway so it eventually runs from El Toro Road to Jeffrey Road, providing a parallel route to Interstate 5.

Other roads in the “highest-priority” category, known as the “backbone one” phase, include filling in gaps in Jeffrey Road so it runs from I-5 to Portola Parkway, and completing both Bake Parkway and Sand Canyon Avenue so they run from Irvine Boulevard to Portola Parkway.

The biggest bill--approximately $80 million--will be paid by the Santa Margarita Co., which now has authorization to build nearly 20,000 housing units in the planned communities of Rancho Santa Margarita and Rancho Trabuco.

“We really are in favor of anything that builds roads,” said Jan Wilson, the company’s director of marketing. “The Foothill Circulation Phasing Plan is such a program. It is a tremendous financial obligation, obviously, for developers, but there is a tremendous need for roads.”

Developers will be assessed depending on how much traffic their projects generate and how much of their property runs along the new roads, among other factors.

The county’s general plan and zoning originally allowed the landowners in the sprawling area that stretches east to the Cleveland National Forest to build 45,000 housing units, county officials said.

But under the new program, actual permission to build will be limited to about 37,000 units, at least until all the new roads are in place. About 47,000 housing units are already in the area.

After a Board of Supervisors vote on approval, scheduled for Tuesday, developers will be allowed to start building about 4,500 units. After bonds are sold to pay for the program, another 5,500 units can be built, probably about March 1988.

Permission to build additional units will be held up until construction contracts for the various roads are awarded.