City considers options to pay off Shores loans

DEL MAR — By the end of a two-hour special meeting June 15 to discuss options for retiring the Shores property debt, some things were certain. Most residents and council members seemed to support the purchase, and many said now that the city owns the property it must find a way to pay it off.
To do so, however, the majority agreed with resident Dwight Worden, who said the council must honor its commitment not to use general fund money.
“That was what you said when you went into it,” Worden said. “I would say it again.”
“When we made this leap of faith … we promised the community that we were not going to obligate the general fund,” Councilman Carl Hilliard said. “I … will re-affirm that promise.”
The property, bounded by Camino del Mar, Ninth Street and Stratford Court, was home to the Del Mar Union School District’s first school, Del Mar Shores Elementary, which closed in the mid-1970s. The city bought the 5.3-acre site from the district in May 2008 for $8.5 million. The $5 million down payment came from donations solicited by a fundraising group now called Friends of Del Mar Parks, and the private Winston School, which is located on the property.
The goal was to pay off the balance within a year, but since the close of escrow, the fundraisers have been able to give the city less than $150,000. To give itself some flexibility, the city refinanced the $3.5 million balance in November 2008. According to the terms of that loan, the city must make quarterly payments of $75,000 for three years, with a balloon payment of $3.2 million due Nov. 13, 2011.
Assuming no new donations from the fundraising group, the city could use open space acquisition funds, but that account would be drained by 2011. “The city cannot afford to carry the $300,000 per year,” City Manager Karen Brust said.
Brust presented several options for paying off the debt, including renegotiating the loan or amortizing the debt for 30 years, but both would require the use of general fund money, which pays for city services such as fire, police and road maintenance.
Alternatives that wouldn’t obligate the general fund include a general obligation bond or selling unproductive city property, such as the 22,000-square-foot Balboa lot.
Council members supported the disposal of surplus land, but Councilman Mark Filanc noted that selling assets could take longer than the two years the city has before the balloon payment is due. Most also agreed with Councilman Don Mosier that selling prime real estate such as the ocean-view Balboa site during a down market may not be the most fiscally responsible move.
Council members also supported the general obligation bond, but that would require passage by a two-thirds vote. Brust said of all recent city debt, including the library and Powerhouse Community Center, the only one supported by a general obligation bond was the wildfire protection district, which paid for safety improvements on Crest Road.
General obligation bonds are very difficult to pass in any community, Brust said. “They have a daunting rate of approval.” Hilliard said he “would love to be wrong,” but doubted the measure would be successful.
If it did pass, the bond would be paid with an annual assessment on property tax bills. The amount could range from as little as about $55 per year to a high of nearly $600, depending on interest rates, the assessed property value and the length of the loan.
The city will hold individual workshops to discuss each option in depth. Council members will also use community outreach programs to determine if a general obligation bond on the June ballot would be successful.
Since he wasn’t on the council when the purchase decision was made, Mosier said he’s been trying to gauge the level of support for the acquisition. He said he’s received mixed messages. “Most people would love it if they didn’t have to pay for it,” he said.
Prior to the meeting, resident David Pike sent an e-mail to council members clearly stating his opinion.
“I do not want this project to be funded by a scheme that will force me to have an increase in my property taxes,” he wrote. Other residents can weigh in by contacting City Hall or attending a community connections event. They are also encouraged to participate in one of the upcoming workshops, which will be listed on the city Web site.
Brust said she will report back in July with timelines and costs associated with the options presented. Council members said they hope to make a decision by November.

Share

Filed Under: NewsRancho Santa Fe NewsThe Coast News

Tags:

RSSComments (0)

Trackback URL

Leave a Reply




If you want a picture to show with your comment, go get a Gravatar.