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Lennar’s woes not seen as Great Park hurdle
May 22nd, 2008, 5:00 am · 5 Comments · posted by Jeff Collins
Is the housing slump threatening funding for Orange County’s Great Park?
Officials at the Great Park Corp. and private home developer Lennar Corp. insist that it is not. The park has more than $100 million in available funds, enough to pay for development for several years, they said. “We are in excellent shape,” said Larry Agran, an Irvine city councilman and chairman of the Great Park board.
But some critics argue that Lennar’s decision to postpone construction of 3,625 park-area homes until at least 2010 will delay bonds needed to pay for park infrastructure. The decision also affects the ability to raise property taxes earmarked for park development, they said.
“That’s going to affect their ability to build the backbone system and generate money through tax imcrements,” complained Dick Sim, a former Irvine Co. executive who resigned from the park board in 2005 over differences with Agran. “They’re going to have a lot less money to work with and the project is going to drag out a lot longer.”
Lennar, which bought the former Marine base in 2005, transferred 1,300 acres to Irvine for the park and plans to build 3,625 homes in neighborhoods around the park, plus a new golf course. It also paid $200 million in development fees to the city.
But park planners now are trying to determine when and how to issue $201 million in bonds to raise more cash for park and housing infrastructure. The bonds will be repaid from a Mello Roos tax on the future homes.
Read more:
- Will Lennar’s housing woes delay the Great Park?
- PR spending dominates Great Park conservancy’s budget
May 22nd, 2008 at 7:31 am
More bad news for the housing market. OFHEO just released their home price index.
Home prices in California are down 10.6%
OUCH!!!
Read the report
May 22nd, 2008 at 7:37 am
I’m gonna make a prediction here.
Lennar, who cut its teeth in the prior housing bust, when it purchased the then, de-funked, Coto de Caza, for dirt cheap, will not survive this bust. Isn’t it ironic, that Lennar of all builders, could suffer the same fate that they so benefited from in the nineties.
There’s a saying that nothing hurts a balance sheet more than leveraged dirt in a depreciating market. And when that dirt was bought at extraordinary prices (now probably worth 30% to 40% of what Lennar paid), the pain and decent to insolvency can be that much more formidable.
May 22nd, 2008 at 7:50 am
The OFHEO data for Orange County SFRs shows -14.3% YOY. That’s precisely what my own price per square foot analysis showed last week. Not bad, eh? Of course, this is not cherry-picked data, so it’s not as good as pulling an a REO here or an REO there.
May 22nd, 2008 at 8:10 am
good job Thoughtful. I’m glad to see that you are joining us on predicting huge home prices declines for Orange County.
-14.3% YOY in OC ain’t bad at all.
The good news for future home buyers is that the price declines are going to accelerate this year. Maybe another 16%?
May 22nd, 2008 at 10:52 am
Larry Agran is a tool and the most corrupt out of all the Irvine City Council. Don’t believe a word this guy says.