Calabasas to explore a money-making proposition

Acorn Staff Writer


In a narrow vote at its last meeting, the Calabasas City Council voted to explore the possibility of refinancing the New Millennium Mello-Roos Community Facilities District (CFD), which could bring income into the city without liability, according to City Manager Donald Duckworth.


The Mello-Roos (named for its legislative sponsors) Community Facilities District Act of 1982 established a method of financing whereby a municipal subdivision can form a special, separate district to finance a long list of possible public services and infrastructure on a pay as-you-go basis. CFDs are formed and bond issues authorized by a two-thirds vote of property owners in the district—in this case New Millennium Homes and Baldwin Properties (which holds only a fraction).


Homeowners pay for the infrastructure taxes either "up front" (through a cost added to the price of their homes) or by assessments or special taxes paid over time.


Currently, the county of Los Angeles administers the CFD in question—servicing the loan for the real estate development company. Property owners now want refinancing at lower rates and simpler terms that could benefit both the developers and homeowners.


If the city of Calabasas were to take over the district, it would serve as a conduit and receive an initial $150,000 fee, with similar yearly payments, according to Duckworth.


"It seems to be a good thing—the income over 30 years is a lot of money. It won’t cost us all that we’d get paid to service the loan," Duckworth told The Acorn.


Calabasas wouldn’t be liable for any debt, he added.


Duckworth said that another benefit to undertaking the project is that the city would control the property and possibly acquire some open space from it.


"There’s some property we might want to have by Las Virgenes Road and the 101 Freeway," he said. Furthermore, the property owned by Baldwin could go into default, he said.


"If we issue the bonds, then when it goes default, we can make sure it is done the right way for the community," Duckworth said.


The county issued the original bonds shortly after Calabasas became a city 10 years ago with a high interest rate of 9.25 percent. In today’s market that would equal between 5.90 and 6.20 percent on a tax-exempt basis, according to Mark Curran, one of the city’s bond advisors.


Some clauses in the bonds also contain what Curran labeled "antiquated" wording, which make it difficult for homeowners to repay their debt ahead of schedule.


If refinanced, the interest rate would drop about 3 percentage points, saving New Millennium about $6 million and making it easier for homes to sell faster, which appealed to some on the council (Dennis Washburn), but not others (Michael Harrison), who made it a political issue.


"I come from Calabasas Park. There’s nobody in Calabasas Park who wants this project built," said Harrison, who, along with Mayor Pro Tem Lesley Devine, voted against further study.


"It would probably be political suicide for me to want to have the city give a $6 million benefit to multimillionaire homeowners when we have families in Calabasas, with children, who live in motels and we can’t even fund more than five block grants a year (to fix) leaky roofs in senior citizens’ homes," said Harrison.


Harrison proposed some possible compromises, such as having New Millennium share the $6 million with the city and decrease the density of its development.


Washburn favored refinancing the project for the money it could bring into the city.


"If we don’t do this, who will and who will get the benefits?" asked Washburn.


"The county has hauled a lot of money out of this community and a lot of private investors are profiteering on the citizens and government of Calabasas. I’m not happy with that. Every opportunity I have to repatriate those funds, I go for it," he said.


Devine was against the issue on grounds that she’d like to see the city get more out of the deal.


"Like most negotiations, if you would like us to help you, we’d like you to help us," she said. "Calabasas Park homeowners are extremely involved in the property … they need to be consulted."


Those homeowners and anyone else interested in the issue will have a chance to speak out when a public hearing, the next step in the process, is scheduled for about a month from now. Meanwhile, the city will have an independent appraisal done on the land.


City Councilman James Bozajian said he voted for the issue because he wanted to hear more about the proposal. He said he wasn’t sure how he’ll vote in the end. Bozajian also said he’d like to see the city benefit more from undertaking the project.


"The entitlements are already there. The project is not going away," he told The Acorn.





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