Great Park to Get Tax Funds?

Irvine is poised to direct as much as $1 billion in property tax revenue over the next four decades to redevelop the former El Toro Marine Corps base, a move some say would break a longtime promise that public money wouldn’t be used for the project.

The old base is being auctioned to developers, who are expected to build housing tracts and offices and set aside a swath of land that will be called the Orange County Great Park.

The property tax revenue, which would be expected to come from turning the former base into a redevelopment area, is in addition to $400 million in fees and assessments that the city will charge Great Park developers and eventual property owners for roads, utility lines and other infrastructure.

The additional funds are necessary, Irvine officials say, to safeguard against unforeseen costs such as delays in the environmental cleanup of the property.

The Navy is auctioning the base to developers, but about one-quarter of the 3,700-acre facility is off-limits because of cleanup efforts.

Critics, who favor a commercial airport on the site, say Irvine, which annexed the base in 2003, is reneging on promises to fund the redevelopment entirely with private money.

“I think it is a shame,” said Fullerton Councilman Leland Wilson, who chairs the Orange County Regional Airport Authority, a coalition of cities that supports a commercial airport at El Toro. “The people of Orange County were sold a bill of goods.”

Irvine Councilman Larry Agran defended the move, saying “the promise was that there would be no new taxes required, and that promise has been faithfully adhered to.”

The Irvine City Council will vote tonight on whether to approve the El Toro redevelopment zone, the city’s first.

The zone would allow Irvine to borrow against rising tax revenue as property values in the Great Park area rise over time.

City officials estimate that property tax increments will be $980 million over the next 45 years, the period that the state allows redevelopment agencies to tap property taxes.

Adjusted for inflation and interest, that amount would be about $220 million in today’s dollars.

An arrangement between Orange County and Irvine gives the county about 10% of the tax increments. Other taxing agencies, such as water districts and the Irvine Unified School District, would receive less than their typical share of the tax revenue.

But their total take could increase as property values rise.

The bulk of El Toro redevelopment is expected to happen in the first 10 years, Irvine officials said.

Most of the funding for roads, sewer lines, park amenities and other public facilities will come from more than $200 million in fees developers will pay for building rights; an additional $200 million in special assessments would be assumed by businesses and homeowners locating in the Great Park.

But the tax money “allows us to do more and do it faster,” said Agran, who chairs the Orange County Great Park board of directors. Irvine created a nonprofit park agency to oversee the development and manage the massive community once it’s built.

“We don’t, for example, have any funding for museums,” Agran said. “The funding could come from private sources, but that could take longer.”

The new property tax revenue would be spent only on public projects, said Tina Christiansen, Irvine’s director of community development, “not to increase the profit of private developers.”

The funds also would provide a contingency against possible cost overruns, which could hold up the pace of development, Irvine officials said.

One major concern among potential developers is the cleanup of the base. The Navy is required to clean every acre before transferring the land to civilian use. Navy officials vow that the work will be done.

But “there is a world of difference between the federal government being responsible for it and having it done in a timely [and] acceptable manner for everyone,” said Kathleen Rosenow, a redevelopment consultant for Irvine.

Some local developers question whether the federal government will have the money to finish the job. The more than $500 million that the Navy hopes to raise with the sale of the land will go into a fund for closed-base cleanup efforts nationwide -- not just El Toro.

Redevelopment agency funds could ameliorate some of those concerns, said Greg Hurley, an environmental attorney who has been working with potential Great Park developers. “It shows Irvine is sensitive to the cleanup issue.”

El Toro has been the focus of a decade-long battle over whether to turn the old base into a commercial airport. In 2002, voters decided to keep the base as mostly open space. A year later, Irvine annexed the base and zoned it for 3,600 homes, millions of square feet of industrial and commercial buildings, and a vast park.

Airport proponents say that creation of a redevelopment zone would show that the Great Park was a larger and costlier project than Irvine had led people to believe.

But Reed Royalty, president of the Orange County Taxpayers Assn., said such use of tax funds would be appropriate. He warned, however, against potential abuses since redevelopment agencies have great latitude in how money is spent, and developers may lobby Irvine for some of those dollars.

“Everybody is always eager to have the taxpayer pay for things,” Royalty said.