NEWPORT BEACH — Revealing its latest Civic Center price, the Newport Beach City Council approved $123 million in bonds Tuesday night to finance its largest public works project.
The final cost won't be known until all the construction bids have been submitted in December, but the city wants to issue the bonds before the end of the year to take advantage of favorable market conditions.
After an election season where some criticized the council for approving such a large project, the city is pushing forward. The Civic Center will not require new taxes, but the city will be making interest payments for 30 years.
Some of that interest will be subsidized by the federal government, through a stimulus package program called Build America Bonds. By financing the Civic Center using these special municipal subsidies, the city plans to save $9.2 million over the life of the bonds.
"The stars have aligned, and I feel very confident that our finance team and our staff is going to deliver great value for the city," said Mayor Keith Curry, who works at a municipal finance consulting firm.
The stimulus program is expected to expire at the end of the year, so the city has hurried the project along and is in the unusual situation of issuing bonds before all construction bids have been submitted.
If the bids bring the total higher, Public Works Director Steve Badum said the city would look at where it could trim, for instance by using less expensive materials, and as a last resort it would defer one or more components of the project.
If the bids are lower, City Manager Dave Kiff said the council would have to allocate some of the bond proceeds to another project, such as the Marina Park Development.
"I fully expect this number to come down," Kiff said.
The current estimate is actually lower than earlier estimates for the Civic Center, which were closer to $140 million, he said.
Some, particularly during election season, have criticized the ballooning scope and price. The original concept discussed in 2008, when voters approved the new city hall, was a "City Hall in a park."
Since then, a citizen design committee and the City Council decided to expand the adjacent Central Library ($10.1 million), build three parks ($18 million), and a parking structure ($7.4 million), among other aspects. In this estimate the City Hall building, which includes a disaster preparedness center, is the largest component, at $56 million.
At times, the city has considered building a bridge over San Miguel Drive to connect the City Hall with a park on the north side of the street. The cost for a bridge was not factored into the $123 million estimate.
As collateral for the bonds, the city plans to secure the new OASIS Senior Center the Central Library, the Central Police Station and other public buildings. Their liens would be released when the Civic Center is finished, which is expected to be in late 2012.
In the past 50 years, the U.S. Treasury note interest rates have never been lower than now, except for in the depth of financial downturn in November 2008.
"This is the right time in the market," said City Treasurer Tracy McCraner.
In other Civic Center news, the City Council Tuesday night also approved an additional $3.9 million contract with San Francisco-based architect Bohlin Cywinski Jackson, bringing the total design cost to $14.5 million. This would cover the architect's role during the bidding and construction phases.