San Juan Capistrano

                    Commission to Explore More Public Access  
                                     to Eastern Open Space 

                                                                       By Kim Lefner

 After six years and numerous requests to open up the publicly owned but privately controlled “Riding Park” property to the general public, the issue will finally be discussed by the City Parks and Recreation Commission at their meeting on December 21.  

Background
The problem began in 2008, when City leaders “sold” voters on the concept of taxing themselves to buy open space in the City of San Juan Capistrano. In 2009, San Juan voters approved a $30 million bond to purchase open space in town, and property taxes were increased to pay for the purchase.

What City leaders did next was inexplicable. They allowed three private citizens (one of whom is friends and former business partners with the seller) to negotiate behind closed doors the purchase of property outside the City, from the Rancho Mission Viejo Company (“the Ranch”).

As the deal was negotiated behind closed doors, the public was not aware of what the City was buying with their tax dollars. To make maters worse, nearly half of the property was already protected open space thus obviating the need to buy this property to "protect it" from development. The planned development of up to 14,000 homes and approximately 5 million square feet of commercial and retail space is continuing across the street from the "open space".  

“Open Space” is restricted
The biggest bone of contention is that the most valuable and usable portion of the 132-acre “open space” property, the approximate 70-acre “Riding Park”, is leased to a private, for-profit equestrian events promoter. The company, Blenheim Equisports, uses the publicly owned property to generate substantial revenue from equestrian events. As a result, the public is only “granted” access to the property that they own six days per year.

Possible bond violations
One potentially serious problem for the City is the fact that a “Public Purpose Bond” was used to purchase the open space. Because it is tax-exempt, it has restrictions on the amount of revenue that can be generated on the property (see definition of “Public vs. Private Purpose Bonds” at end of article). It also restricts the percentage of public property that can be allocated (leased) to a private business. As stated previously in the CCS, we believe the City may have violated the terms of the bond by leasing such a large portion of the property to a for-profit company that generates revenue far in excess of what is allowed by a Public Purpose Bond – especially when such lease restricts the general public from accessing or using the property. The CCS has joined residents in questioning whether this arrangement constitutes a gift of public funds.
At the November 16, 2015 Parks and Recreation Commission meeting, several speakers encouraged the Commission to keep the Riding Park in private hands. The problem, according to San Juan residents, is that the vast majority of these supporters are equestrians from out of town. Thus, they enjoy the benefits but do not pay the increased property taxes to purchase the park. 

One out-of-town equestrian, who owns a horse products retail store in San Juan, addressed the commissioners at the meeting, emphasizing the amount of money she generates from equestrians who attend events at the Riding Park, including some from Europe. But that is exactly the problem, says Commissioner Kim McCarthy. “This open space was never intended to generate revenue for retailers or service providers; it was intended to directly benefit the residents of San Juan who are paying for it.” Another San Juan resident who asked to remain unnamed asked, “Why should we pay for a park that we can’t use? The only ones benefitting from this Riding Park are Blenheim [the private equestrian events company] and an elite group of equestrians from out of town.”

Another beneficiary is the seller of the “open space”, the Rancho Mission Viejo Company. They are selling the surrounding acreage to developers to build 14,000 homes and 5 million square feet of commercial and retail business. The developers are listing San Juan’s “open space” including the riding park, as an amenity in their marketing material. 

Another speaker from out of town whose daughter is an equestrian, expressed concern for the homeowners living across the street from the Riding Park should the property be used for sports like baseball, for example. “If I lived in those houses [across the street], that would be a major problem for me…” But the houses she is referring to are not in San Juan Capistrano. Neither she nor those homeowners pay the increased property taxes for the Riding Park property, yet derive the benefit from the park located directly across the street from the new development outside our city limits.

The issue of public access has been raised repeatedly over the years by residents however, the previous council majority of Sam Allevato, Larry Kramer and John Taylor, stymied efforts to allow free public access. In 2013, then-Councilman Roy Byrnes requested that the council re-visit the many restrictive clauses in the purchase contract that negatively impact San Juan residents. However, despite the fact that the seller, Tony Moiso of the RMV Company, agreed to discuss possible re-negotiation of some of the restrictive clauses in the purchase agreement, Allevato, Kramer and Taylor refused to review the contract. They also refused to terminate the lease agreement with Blenheim which would open up the riding park property to the general public. In fact, the out-going “old guard” council majority, which was soundly rejected by voters in the last election, increased Blenheim’s lease from one to two years, and reduced the lease amount.

The Commission intends to discuss the issue at their December 21 meeting. 

The Parks and Recreation Commission meeting will be held in the Council chamber at City Hall, beginning at 6pm on Monday, December 21. The public is encouraged to attend, or watch it on streaming video on the City website at: www.sanjuancapistrano.org.

 Definition of 'Private Purpose Bond'*

A type of municipal bond that is issued to finance a project for which at least 10% of the benefit will go to a private sector entity.

Municipal bonds are usually associated with tax-free income. However, the Tax Reform Act of 1986 requires municipal bonds to be categorized as either public purpose or private purpose, and makes the interest payments that investors receive from private purpose bonds taxable unless the bonds are specifically exempted.

 Breaking Down 'Private Purpose Bond'
A bond used to finance a sports stadium would be considered private purpose because much of the income generated by the stadium will go to sports team owners. 

Definition of 'Public Purpose Bond'
This type of bond is used by municipalities to finance public works facilities and improvements. However, the vast majority of the benefit provided by the project being financed by a public purpose bond must be directed at the public at large, and not at private individuals. Public Purpose Bonds are generally employed to fund such projects as road construction and maintenance, libraries, swimming pools and other municipal facilities. 

Breaking Down 'Public Purpose Bond'
As with all other types of municipal bonds, the interest paid from Public Purpose Bonds is exempt from federal income taxes (and often state and local taxes as well). Public Purpose Bonds were first defined in the Tax Reform Act of 1986. Municipalities that are authorized to issue this type of bond must have the ability to tax their residents, plus eminent domain or police power.

Source: Investopedia; http://www.investopedia.com/terms/p/public-purpose-





1 comment:

Rose Stone said...

SJC Voters in 2008 were led to believe that the Vermeulen property (Armstrong Garden) was the open space to be purchased with this bond money to came from our taxes. When residents began to get wind of what had happened behind closed doors, with the land purchase in Mission Viejo, resident became livid. One woman told me, "Moiso needed money." Residents were commenting on Patch, writing letters, and speaking at the city council. Finally residents tried to recall Allevato. This is the why you saw people sitting in front of Vons collecting signatures the first time. Later the CC hall was filling up as residents took their turn to speak out about this land deal, water, developers, land lease to Blenheim, big money collected for Allevato. This is also why residents volunteered their time to carry picket signs on Del Obispo and sit and collect signatures for the referendum to undo the rezone and development of the 500 senior condos on Del Obispo. It was also the time when 70K was collected by Allevato from local businesses and "stake holders", to keep Allevato in his seat on the city council. And, this is why we carried picket signs and elected new city council members who were NOT bought by developers, and business interests. As it stands our taxes pay for that purchase blunder. And, our city pays to maintain that land (about 30K a years). Residents (me included) were told this property would bring in an income by way of an events location. This was never true. Please keep in mind all of this happened during the worst drought in history. The golf course was drying up. The city was using ground water allocated for the golf course to fill the gap in need for other city purposes. Ground water was used for city landscape but it was never piped into a system usable for residents landscaping. Yet, residents were billed for ground water on their water bills.It took a lawsuit and a judge to stop the fees and outrageous water bills. People always ask me, "What is going on in San Juan Capistrano, there is always trouble up there?" And, then it takes me a while to explain it them. In my opinion city council members should not be allowed to receive money from anyone who say...needs a rezone. The corruption has to stop. The old timers liked things the way they were..why not? no accountability. I was shocked to see the names on the list of people who donated to STOP the Allevato recall. So, naturally I would not vote for anyone who was on that list. Not for anything. It may not be against the law but it is unethical.

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