City OKs Sale of Bonds for Laguna Laurel

Despite the absence of a final sales agreement, the City Council on Tuesday authorized a $20-million bond sale to help the city make its first payment to the Irvine Co. for land in Laguna Canyon.

But before the vote, council members cautioned that they still had the option of backing out of the bond sale if land-purchase negotiations with the developer are not concluded to their liking.

The bond issue--approved by almost 80% of the voters last November--is the cornerstone of the first $33-million payment due June 30 for the 2,150-acre site known as Laguna Laurel.

As part of an agreement worked out just before the election with the company and environmental groups, the city promised to pay $78 million in five years. If the city defaults on its payment schedule, the company retains the right to continue with its planned development of 3,200 homes and businesses.

However, negotiations on the legal document that makes official the agreement-in-principle have taken longer than expected, and officials are scrambling to finish the talks by mid-March.

“We have to come to an agreement with the Irvine Co. or this does not go forward,” Councilman Robert F. Gentry said. “I want a very good agreement for the people of Laguna Beach before we proceed with this bond sale, and we do not have it tonight.”

Council members met in a closed-door session before the council meeting to receive an update on the contract talks.

“If we pass this tonight and we decide not to go through this, we will have an out,” Councilwoman Martha Collison said.

City Manager Kenneth C. Frank said before the meeting that the bond authorization was needed now to get the bond issue rated by financial rating houses in time for a mid-April bond sale.

If the bonds are sold according to schedule, the interest earned on them between April and the June 30 payment deadline would be used to cover the city’s costs of the bond issuance.

In addition to the $20-million bond sale, the city plans to sell $5 million in bonds backed by city parking-meter revenue, and $4 million from state parks and wildlife bond money. The county had tentatively agreed to contribute $2 million toward the first-year payment, but Frank said the city is hoping to receive another $4-million state parks grant in case the county’s money does not come through.