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Supervisors OK $75 million bond sale to purchase Press Enterprise building, remodel Public Defender's office
Tuesday, May 14th, 2013
Issue 20, Volume 17.
"I think, in general, this is a good deal for the citizens of Riverside County," Board of Supervisors Chairman John Benoit said after hearing a brief report from the Executive Office about the advantages of debt-financing the two projects.
Supervisor Kevin Jeffries initially questioned the wisdom of the county expanding its long-term indebtedness before joining his colleagues in a 4-0 vote to support the plan.
"I'm a little concerned about why we're going with this," Jeffries said. "It doesn't spell out the savings or justify how we're going to come out ahead."
CEO Jay Orr and other Executive Office administrators explained that the county was facing increasing rents at two Riverside facilities that house the Department of Information Technology's operations.
"The payments we're making now are not toward ownership positions," Economic Development Agency Director Rob Field told the board.
The lease payments total around $2 million a year, he said.
The IT department is in the process of a sweeping consolidation that entails taking over computer networking functions spread among a variety of county agencies. The county is seeking to locate the IT data center under one roof. In this case, the Press-Enterprise newspaper building at 3450 14th St. in Riverside was selected as the best, most affordable location.
A.H. Belo Corp., which owns the PE, announced last month that it was selling the five-story 150,000-square-foot complex to the county for $30 million. The newspaper, which has undergone staff reductions due to financial issues, began occupancy of the building in 2007. The paper will be moved to a smaller facility within the city,likely before year's end, according to A.H. Belo.
Under the board-authorized debt issuance, the county will sell lease- revenue bonds to cover the building acquisition and renovation. The same issuance -- capped at $75 million but expected to be closer to $65 million -- will cover costs associated with remodeling and upgrading the former District Attorney's Office headquarters at 4075 Main St., just across from the Riverside Historic Courthouse.
The Office of Public Defender and several units within the Department of Probation are going to be anchored in the eight-story complex, which has been vacant since D.A.'s personnel moved into a modern office building around the corner on Orange Street in 2010.
Inspections of the Main Street building revealed numerous problems, including the need for a seismic retrofit, a new roof and a new elevator system.
The county IOUs, which still await letter grades from bond rating agencies Standard & Poor's and Fitch, will be sold in $5,000 denominations or greater, with interest rates not to exceed 6 percent and a maximum maturity of 30 years, according to Executive Office documents.
In addition to general fund revenue, internal fees generated by the beneficiary agencies will be used to cover the semi-annual debt service obligations, documents indicated.
Temecula resident Paul Jacobs, a self-described member of the "Government-Spends-Enough-Already" party, criticized the bond sale.
"The county of Riverside is letting the PE unload their building onto taxpayers," Jacobs said. "Was this building listed on the open market, or was this more of an insider deal? How is such a large space for the IT department justified? These expenditures seem to be spur of the moment."
Benoit said the county was making the right move for the long haul and regretted the "bad situation" that precipitated the newspaper's decision to sell its downtown asset.
"Obviously, they had a different objective in mind originally," the chairman said.
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