City hires more help to find $50 million

June Casagrande

Nearly a year after the city retained two lawyers to find out what

happened to up to $50 million in Newport Coast tax money, officials

have hired a financial consultant to join the team.

With the hiring of financial consultant Jennifer Branin, officials

and residents hope they can finally get solid answers to some

puzzling questions by early next year.

“We’re finally moving into the next phase of this investigation,”

said Gerry Ross, a Newport Coast resident who serves on the advisory

committee looking into the question of how millions of dollars of tax

money assessed in the late 1980s and early 1990s was spent.

In 2000, the city posed a series of questions to county officials

to find out what happened to some of the residents’ tax dollars set

aside to build roads, a library and provide police and other

services. City officials and community leaders are also looking into

why residents who paid about $13 million to build a stretch of

Newport Coast Drive were only compensated about $3.5 million when the

transportation corridor agency took possession of that stretch of

road. Items such as these could add up to about $50 million.

But the answers city officials got left them even more confused.

For more than a year, officials have been working on a list of

questions to pose to the county and other agencies that they hope

will nail down precise answers to there questions about where the

money went.

The financial consultant, who specializes in municipal finance,

will help finalize this list of questions before submitting them to

the county and other agencies.

Preliminary questions include: How much money did the Irvine Co.

pay in the 1980s and 1990s to provide a library and law enforcement

for homes to be developed in Newport Coast? Did assessment district

funds also go toward the same facilities and services? Did the Irvine

Co. receive any reimbursements for these initial costs? Who arrived

at the $3.5 million figure for reimbursing residents for Newport

Coast Drive construction, and how was that figure arrived at? Did the

Orange County bankruptcy affect the Newport Coast assessment

districts?

A rough draft of questions, which may or may not be revised by the

consultant and attorneys, asks for a copies of agreements,

environmental reports and basic information on the assessment

districts’ formation.

Assessment districts are formed to finance improvements within a

designated area. Bonds are issued to pay for work, and then the

property owners in the assessment districts are taxed for years in

the future to pay off the bonds.

In Newport Coast, the districts were formed when the area was

almost completely undeveloped. The sole property owner, the Irvine

Co., created the district in anticipation of homes to be built on the

site. Homeowners in the area will continue to pay off the assessment

district bonds for about 20 years.

The city is obligated by its Pre-Annexation Agreement with Newport

Coast residents to help them find out what happened to their tax

money. The consultant will be paid up to $30,000 by the city. In

January, the city committed up to $93,750 to hire attorneys Robert

Messinger and William Mitchell to work on the matter.

Assistant City Manager Dave Kiff said that part of the reason the

process has been so slow is because the city wants to maintain good

working relations with county officials.

“This somewhat puts the city in a difficult relationship with the

county, with whom we work on a variety of different things,” Kiff

said. “So part of my pacing on this has been to work with them rather

than be more aggressive and confrontational.”

Kiff said he expects that the questions will be completed and

submitted to the county in January. Sometime afterward, there will be

a meeting at which members of the public can pose their questions

directly to county and transportation corridor officials.