Over the past two years, Orange County residents have received a number of mailings and heard statements proposing a "Great Park" at the site of the former El Toro Marine Corps Air Station.
The consistent theme of these glossy brochures and pronouncements is that this Great Park--often referred to as "world class" and to include such amenities as a 100-acre lake, a zoo, first-class library, botanical gardens, sports park, concert venue and several museums--can be created and maintained without risk to Orange County taxpayers.
Park supporters contend that taxpayer funds will not be needed to construct and operate the Great Park because private donations and park revenue will cover all costs. However, the facts do not support this contention.
Though park proponents have not estimated the cost of the park, a recent comprehensive fiscal-impact study by independent economists and real estate experts reveals that the amenities promised for the Great Park project will cost more than $2 billion to build and as much as $60 million a year to maintain. Further, the findings of the study clearly do not support the proponents' pledge "to protect Orange County taxpayers from the costs associated with creating and maintaining a major park."
In fact, the fiscal impact study shows it will take more than 60 years to build the Great Park using the non-tax revenue anticipated by park proponents. Thus, without substantially increasing taxes in Orange County, there is little likelihood that many residents will ever see a Great Park within their lifetimes.
Recently, my partner and I were asked to critique the Great Park impact study using the critical and unbiased eyes developed as California's state auditor and chief deputy state auditor over the past decade. After reviewing each assumption, statement, fact and conclusion, we find that the study, "Fiscal Impacts of the Great Park in the Proposed Millennium Phase Three Plan" (by BBC Research & Consulting of Denver for the Airport Working Group), is an accurate, balanced and fair depiction of the cost to acquire, construct and operate the park.
We also find that the study's revenue projections and estimates of taxpayer support needed to fund the park are valid and supportable.
From the taxpayers' perspective, the most telling part of the study relates to the park proponents' plan to use El Toro's existing assets--base housing, industrial and warehouse space--to generate an endowment "to build and to operate, at no taxpayer expense, the Great Park." However, as the impact study points out, expecting to generate $250 million in 10 years by leasing out older military facilities is unrealistic for several reasons.
First, industry leasing formulas suggest that full occupancy, as required to achieve the proponents' proposal, will take several years. Second, to expect to receive the projected 40 to 80 cents per square foot per month does not track with actual lease rates experienced at other California military bases, which are more in the neighborhood of 15 to 20 cents per square foot per month.
Further, it is overly optimistic to project that the facilities will generate the expected revenue for more than four to seven years without major renovation. Yet to build the endowment of $250 million hoped for, the funds could not be touched for 10 years for any purpose, including improving base structures to make them habitable and usable for continued revenue generation.
Moreover, even in the unlikely event that the proposed $250-million endowment was achieved, the study reveals it would not produce sufficient funds to build the Great Park until 2063, after adjusting 2001 costs with a 3% inflation rate
Also, if funds were drawn out periodically to phase in park development as some have suggested, the overall park with all its amenities theoretically would not be completed until 2092.
Consequently, to deliver the promised world-class Great Park to county residents within the next 60 years will take a significant tax increase. Whether by increasing sales or property taxes, park proponents will have to generate a continuous stream of funds to pay for general obligation bonds used to acquire, build and maintain the park. No matter if the tax obligation was borne by Irvine, a group of cities or the entire county, the tax increases to affected residents would be severe--roughly $180 million to $240 million per year for 20 years.
The decision Orange County residents face concerning El Toro is an extremely important one. It is critical that residents from all areas of the county read the recently issued Great Park fiscal impact study as they ponder their choices. I am confident they can rely on the information it conveys about the taxpayer burden a Great Park would create.