Transit: El Monte takes on $22M in debt to advance transit village

By Rebecca Kimitch for San Gabriel Valley Tribune

EL MONTE – The City Council took a $22 million leap into debt Tuesday to advance a long-promised development project that could one day surround the El Monte Transit Center.

The council voted unanimously to allow El Monte to issue $21.8 million in bonds to fund the relocation of the city’s public works yard from its current site by the transit center at Santa Anita Avenue and Ramona Boulevard to a vacant property across Valley Boulevard.

The move will open up 5.5 acres near the bus station that city officials hope are destined for greater things: the El Monte transit village, lately dubbed the El Monte Gateway Project.

“You can’t build anything on the transit village project until the city public works yard is relocated … now we have a pretty firm date for when the Gateway site will be available for reuse for true transit-oriented development, and that is huge,” said Dave Gondek, interim general counsel for the city’s redevelopment agency.

Gondek anticipates the relocation project will be complete by the end of the first quarter of 2012.

Once it is, city officials hope its current site off the 10 Freeway will become part of a massive redevelopment project that could include 125,000 square feet of retail space and 650 condominiums and apartments.

Moving the public works yard is one of the biggest public works projects the city has undertaken in years, Gondek said. City officials estimate it will cost $18 million – $9 million to purchase 7.9 acres of land and $9 million for construction, including building a 60,000 square foot public works facility.

The new yard will be at 4000 Arden Drive, on the site of the former Ball jar glass company, and near a new DMV the state recently began building.

The city will repay the bond debt taken on for the project from several sources, including the city’s water and sewer departments. That means some of the funds will come from a special sewer improvement fund approved in 2008, through which residents are assessed a monthly fee for sewer improvements.

Some residents complained Tuesday the fee was intended to fix sewers not pay for a new public works yard.

Finance Director Julio Morales justified the repayment plan saying the water and sewer departments both store maintenance vehicles and supplies at the public works yard. Therefore they should pay their share through a sort of rent.

He called it a “best practice” for such enterprise funds.

That “rent” amounts to approximately 10 percent of the $3.4 million annually collected through the sewer assessment fee.

“Is that a reasonable charge? We think so,” Morales said.

The bonds will also be repaid by a portion of property tax through the city’s redevelopment agency.

Morales anticipates an annual debt service payment of $1.25 million. Credit rating agencies have not yet given El Monte a bond rating.

The taxable bonds are being issued through two federal infrastructure investment programs from last year’s stimulus package. Through the programs, El Monte will receive federal subsidies for its interest payments.

With the council’s approval to issue bonds in hand, the city can finalize purchase of the Ball glass property and begin construction on the yard early next year, Morales and Gondek said.

The plan to redevelop the site around the El Monte Transit Center has faced several setbacks and delays over the years.

In 2009 two executives from the project’s previous developer, Transit Village LLC/Titan Development, were investigated for fraud, embezzlement and theft. No charges have been filed.

That setback resulted in the city losing several state and federal grants, including a $17.5 million grant that would have funded the relocation of the maintenance yard.

City officials have since found new national developers interested in taking over the transit village.

And in September, Metro finally began work on a new $45 million transit center that is to serve as the catalyst for the entire development project.

The city is in the process of working out a development deal with the new developers: Primestor Development and the Related Companies. City officials had anticipated having that disposition and development agreement complete and available for public review by this month. However, that timeline has been postponed until sometime in the first half of next year, Gondek said.

“I don’t know what to say about the timeline. We are moving as promptly as we can. It is a moving target to get all these pieces aligned to fit together,” he said.

[sgvtribune.com]

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