Redevelopment Agency Gears Up for $150M Bond Sale

SAN DIEGO-In a move slated to foster additional development Downtown, the city’s redevelopment agency has decided to sell approximately $150 million worth of tax allocation bonds in a sale scheduled to commence this Thursday, July 8. According to the Centre City Development Corp., which serves as operating manager of the Downtown redevelopment projects, the sale will benefit a variety of redevelopment activities in Downtown’s 1,400-acre Centre City project area. This type of bond sale is able to occur because of the California law regarding redevelopment project areas. “The year in which a redevelopment project is established becomes its base year and the redevelopment agency is then allocated the property taxes that are derived from the ‘incremental value’ of taxable property beyond its base year value,” according to a statement from CCDC. “The law provides that a redevelopment agency may then pledge a portion of the taxes allocated to it as security for its bonds.” In the case of this year’s $150-million bond sale, the incremental value of taxable property in the Centre City project area has more than doubled since the 1999/2000 fiscal year, when it was $1.6 billion, according to CCDC’s CFO Frank Alessi. According to Alessi, the value has shot up to $3.9 million for the 2003/04 fiscal year that ended on June 30. As Alessi tells GlobeSt.com, “property taxes in the Downtown redevelopment area of San Diego have been increasing tremendously with the positive growth that we have had with the condominium development in Downtown and the success of Petco Park.”The redevelopment projects that have been targeted for funds include the Main Library development, construction of a new pedestrian bridge across Harbor Drive, and the establishment of additional community parks. “An important element of this particular financing is that we are leveraging our low- and moderate-income housing revenues (basically 20% of the tax increment) and enabling a lot more of these monies to be used for project activities related to low- and moderate-income housing,” Alessi tells GlobeSt.com.The bonds are being sold to an underwriting syndicate consisting of Stone & Youngberg as senior manager and Backstrom McCarley Berry & Co. as co-manager. Bond counsel for the issue is Nossaman, Guthner, Knox & Elliot. Standard & Poor’s Rating Service and Fitch Inc. are rating the bonds “AAA” and Moody’s Investors Service is rating them “Aaa,” based on a policy of municipal bond insurance that will be provided by XL Capital Assurance Inc.