By Mario Conde
The Calexico City Council took the final step in moving forward with the construction of the Gran Plaza Outlet Center.
The project that has been ten years in the making established a Community Facilities District thanks to the approval of three resolutions. The cost associated with the formation of the District, including the cost of the CFD’s advisors, special tax consultant and legal assistance have all been paid by Corsair, LLC. When issued, the CFD bonds will be limited obligations of the District, payable solely from the special tax revenue collected by the District. The ultimate security for the Bonds is the Gran Plaza “real estate” as such neither the full faith or credit, nor the taxing power of the City, County or State, or any other political subdivision is pledged to the repayment of the Bonds.
The CFD’s was established as a petition from the developer to designate two improvement areas therein to be known as “Improvement Areas.”
The owner requested that the City Council authorize the issuance of bonds in Improvement Area 1 and Improvement Area 2 in the principal amount not to exceed $20,000,000 for each of the Improvement Areas. The owner also requested that the City Council authorize the levy of special taxes on each improvement area to pay for the cost of the facilities and for those associated with the formation of the district and for engineering, planning and other related costs. The Gran Plaza Developers will need CFD Bonds proceeds to complete certain public improvements in order to open their proposed phase one 250,000 square foot shopping center in the City. The public improvements, upon their completion, will not only benefit the shopping center, but also benefit the Calexico International Airport as well as improving the access to other properties west of the shopping center.
City Consultant Marshall Lynn told the council that in the “unlikely event” that insufficient funds are not available to pay for debt service, the trustee will have the right to foreclose upon the Corsair property. It is fully expected that there will be a lien to value ratio of over 4 to 1 which means that in “worst case” fire sale situation, that there will be sufficient value to pay off the Bonds if there is a default.
Lynn said that this project is a great opportunity for Calexico bring much needed revenue to the City. Lynn added that the projections estimate when Gran Plaza and the Power Center are completed it in 2016 it will bring $3 million annually to the City of Calexico.
Councilman Joong Kim said to be opposed to the bonds since its would be a subsidy for the developer while the City is neglecting the local business people since they will be affected by the opening of the outlet center. Kim mentioned that by approving this, it would be like a “gift of public funds” for the developer.
Mayor Pro Tem John Moreno answered to Kim that there was a vote years ago in Calexico where Calexico residents voted for Walmart to expand and have a grocery store. Moreno mentioned that there was a concern with some merchants saying that it would affect their business but that didn’t happen.
Councilman Luis Castro agreed with Kim saying that is not againts progress but does not agree with the bonds and the lack of support for local business.
In the end, the Council voted 3-2 to approve the CFD District and the drew the applause from the members for the public.