City sues CEMEX, Cal Am over desal plan
Eight structures within development site marked for demolition with portion of bond funds
Marina argues that the city already has an agreement with CEMEX to limit groundwater pumping on the site.
SEASIDE >> With the June 30 Fort Ord Reuse Authority sunset on the horizon, the Seaside City Council unanimously approved a Fort Ord Reuse Authority bond agreement at its meeting last week that would allow the city to receive bond proceeds should the reuse authority go through with the bond issuance and investors buy the bond needed for building removal left from the closure of the former Army base.
Seaside City Councilman Jon Wizard said the Fort Ord Reuse Authority is projected to obtain between $25 million and $55 million in bond proceeds, which would be distributed to Seaside, Marina, Monterey County, the Transportation Agency for Monterey County, Monterey-Salinas Transit and Marina Coast Water District
“Seaside’s portion of the bond is 32.25% of the proceeds, and we plan to use that money to remove the hammerheads in the Campus Town project,” said Wizard.
The bond agreement includes the indenture, the formal contract between a bond issuer and the bondholders. It sets forth the details of all the terms and conditions of the bonds. The Fort Ord Reuse Authority requires agreements from each of the six entities sharing in the proceeds in order to satisfy the bond investors’ need for security in their investment.
“The (Fort Ord Reuse Authority board) is considering issuing tax revenue bonds to fund building removal on the former Fort Ord, as a ‘parting gift’ from FORA to the local jurisdictions and Monterey Bay community,” said Fort Ord Reuse Authority Executive Officer Josh Metz. “As FORA fades into the sunset, it has the opportunity to bring funds to the table today to pay for significant amounts of remaining building removal needs.”
Metz explained that while FORA has the authority to issue the bonds under its unique authorizing legislation, the local jurisdictions will not have this ability after June 30.
As Fort Ord was being shuttered in 1994 at the direction of Congress’ Base
Realignment and Closure process, the Fort Ord Reuse Authority was created to plan for, finance and manage the transition of the former Army base to civilian use. The Fort Ord Reuse Authority Act, created by the California Legislature, provides for the ability to issue debt to support base reuse efforts, but that ends on June 30.
Each of the six entities that will be apportioned a slice of the bond money will presumably approve their version of the agreement, send it back to FORA, and wait for the bond to be issued, said Wizard.
“One wrinkle in the transaction, is the need for FORA to address any unfunded liability to CalPERS by the end of the year,” said Metz.
The bond documents must be explicit in describing the use of the proceeds. Though the desire of the majority of FORA directors is to limit the use of the bonds to building removal, there is a willingness to designate a portion of the bond proceeds to provide a buffer in case CalPERS, the state retirement system, sends FORA a bill for an amount larger than the amount set aside to pay off FORA’s retirement obligations.
To pay off the bonds after issuance, each member agency of FORA, by approving the bonds, will allow some of its tax increment to be intercepted to repay the bonds. People and businesses will not be paying additional taxes to cover the
bonds. Instead, a portion of future property taxes charged to each person or business interest located within the boundary of the former Army base will cover the bond repayment. Property tax revenue increases as the value of land increases and would go to paying off the bond first before the rest is folded into general funds.
“The cost of the debt has not yet been established since the bond is not yet on the market,” said Wizard.
The Army left behind approximately 3,500 buildings that offered little or no use to the civilian community, ranging in age from the 1930s to the late 1980s, according to the Fort Ord Reuse Authority.
The reuse authority has provided approximately $48.3 million in funding or land-sales revenue reduction to remove buildings or assist jurisdictions and their land reuse developers with removal. To date, FORA, CSU Monterey Bay, the Army’s Residential Communities Initiative and the jurisdictions (with the help of their developers) have coordinated to reuse or remove buildings on Fort Ord.
Of the buildings the Army left in 1994, about 47% have been removed, 34% have been reused and there are about 19% left to be removed.
“There are eight hammerhead buildings between Sixth and Seventh avenues between Gigling Road and Colonel Durham Street, and each hammerhead building costs about $1.2 million to remove,” said Wizard.
The hammerhead buildings were Army structures that still stand within Seaside’s Campus Town development site. The Campus Town project will be built on about 122 acres and include 1,485 housing units, 250 hotel rooms, 75 hostel beds, 150,000 square feet of retail, dining and entertainment uses, and 50,000 square feet of office, flex, collaborative workspace, and light industrial floor space, as well as park and recreational areas including about 9 acres of public open space and 3.3 acres of private open space, roadways, parking and supporting infrastructure.
“If the bond proceeds are lower than anticipated, we may need to use other funds to complete removal of the buildings,” said Wizard.
The Seaside City Council has not yet discussed what it will do if there is not enough money to remove the eight hammerhead buildings in the Campus Town project area, but the conversation would most likely take place as soon as the city knows what portion of the bond proceeds it will receive.
“The goal is to maximize the value of these bonds to accomplish the most possible building removal,” said Metz. “There will likely be some that remain and will have to be funded through other means.”