West Hollywood is looking to finance several of its major capital improvement projects through the issuance of the 2024 Lease Revenue Bonds. These bonds, which also aim to refund the 2013 Bonds to achieve savings on debt service, mark a pivotal investment in the city’s future.
Cities are more frequently funding projects, like building parks or improving government buildings, by using a method called lease financing. This involves the city making a deal to “lease” or rent these properties from a special agency they help create, which is called a joint powers authority. This authority then sells lease revenue bonds or certificates of participation to investors, using the lease payments it receives from the city to pay back these investors.
Here’s how it works: Imagine a city needs to upgrade a park. The city doesn’t have the cash to pay for it all at once, so it sets up a lease agreement with a joint powers authority it creates. The city promises to pay rent for using the park. Then, this authority issues bonds to investors, promising them returns on their investment from the lease payments it will get from the city. These investors are basically loaning money to fund the project, and they are repaid from the rent the city pays.
The city ensures it has enough money each year in its budget (mostly from the General Fund, which is the city’s main checking account for all its income and spending) to make these lease payments. If the city can’t make the lease payment, the bank managing the bonds (called the trustee) has the power to enforce the lease terms, which might include finding someone else to pay for the lease.
Recently, cities like West Hollywood have been using lease revenue bonds more than certificates of participation because that’s what investors currently prefer. This kind of bond was used to finance big projects like West Hollywood Park and the Werle Building renovations.
Lease financing is like the city renting its own property to itself through a middleman, which helps it manage large projects by spreading costs over time while fulfilling investor requirements for safe investment returns.
Among the key projects set to be funded by these bonds is the construction of the AIDS Monument at West Hollywood Park. Slated to cost approximately $11.5 million, this project is designed to honor those lost to HIV/AIDS and to celebrate the efforts of those fighting the disease. The monument will feature a plaza and a field of vertical bronze pillars with narrative texts and integrated lighting. The construction is expected to commence in June 2024 and conclude by July 2025.
Also in the funding plan is the Design District Undergrounding Project. With a budget of $4.4 million, this project involves the underground relocation of utilities along La Peer Drive and Almont Drive, from Santa Monica Boulevard to Melrose Avenue. The anticipated start and completion dates are May 2024 and July 2025, respectively.
Another significant undertaking is the new surface parking lot at 8120 Santa Monica Boulevard. This project will transform a 40,410 square foot property into a vital parking hub for the mid-city area, featuring 66 parking spaces including those for disabled access and equipped with electric vehicle charging stations. This development, expected to cost around $3.5 million, is scheduled to begin in spring 2024 and be completed by July 2024.
The city is also looking to fund the off-leash dog park at Plummer Park. This $1.2 million project will cater to both large and small breeds and includes accessibility-friendly features alongside non-toxic and drought-resistant landscaping. The project is scheduled to start in May 2024, with completion expected by December 2024.
Further improvements are set for Hart Park, with a budget of $3.7 million dedicated to making the park more accessible. This includes the redesign of parking spaces, paths, and the addition of new amenities such as an accessible drinking fountain and upgraded restrooms. Work is expected to begin in July 2024 and conclude in September 2025.
The Design District Streetscape & Utility Undergrounding Project, part of the West Hollywood Design District Streetscape Master Plan, will commence its next phase in January 2026. With an estimated cost of $28 million, this project will enhance pedestrian and bicycle safety, and integrate new public art and smart city infrastructure, with completion targeted for December 2027.
All government financing schemes, like these and all bond issues, are a boondoggle to investment companies and investors. End. Watch where David Wilson goes after his retirement as city manager. Investment companies will be eager to pay him back for his role in facilitating the silliness that gets foisted upon an unquestioning electorate. Separately, the price tags attached to these projects blows the mind, and that’s before they all come back sucking at the public teat to pay for cost overruns and change orders. These are noble and worthy projects, but none are emergencies for which the city can’t save… Read more »
So, does the entity that facilitates this (like, Raymond James for example) make a profit from it? Never heard of this.
The previous city manager Paul Arevalo , is managing director at Raymond James, Pasadena office.
A good idea.
Enjoy the Hart Park, but it’s been awhile.
Wait a minute…please tell me the $11.5 million for the AIDS Memorial is a typo! While I agree with creating a memorial to honor those lost and celebrate those who continue to fight the disease, spending nearly $12 million of taxpayers’ money on it seems like an egregious waste. I’m certain a fitting tribute could be built for a tenth of the cost.
How much of a percentage increase to the budget using these middlemen to pass money from one City coffer to another? What is the latest grand total if West Hollywood Park makeover. And how does a open air dog park in Plummer cost over $1,000,000.00? Can you break it down please?
With materials and labor provided by any decent landscape designer and contractor in the area it could be done for about $75,000. But you need to figure in the initial study, then the study of the study. Hire several consultants to make sure that the studies are correct and to verify that the study of the consultants is correct and accurate. then there are the many meetings between the City staff and the consultants. After the project starts four months late and continues for a year and a half because they found out that one of the studies were wrong… Read more »
1.2 million dollars to a park for dogs? Dogs. 😐