Project costs at $160 million

A Newport Beach city committee that looked at facilities needs for the next 20 years has put a price tag on all that work: $160 million to renovate or replace 18 city facilities.

The facilities committee, which wrapped up its work Monday, will give the City Council a report that suggests the best way to pay for those projects is with certificates of participation, a financing method that is popular with cities and is the subject of a ballot initiative backed by some Newport Beach residents.

The most important conclusion the committee made is that Newport is financially healthy enough to pay for all the improvements, committee chairman Steve Frates said.

Certificates of participation are the preferred financing method because they don’t cause residents’ property taxes to go up the way bonds do, he said.

The certificates are structured like a lease that ends in a purchase, and the debt is repaid from the city’s general fund. In contrast, general obligation bonds are repaid by charging the debt directly to taxpayers, who are on the hook until the debt is gone.

Another key difference between bonds and certificates of participation is that voters must approve the sale of bonds; however, certificates of participation can be issued based on a vote of the council.

Resident John Buttolph considers that difference a loophole, and he launched a ballot initiative in late 2005 to require voter approval of any city borrowing ? including certificates of participation ? for a public project that would cost more than $3 million or take longer than two years to repay.

Buttolph also served on the facilities committee, and he’s satisfied with its findings, except for the support for certificates of participation, he said.

The committee’s recommendations are biased in favor of the use of certificates of participation, Buttolph says, and he believes Councilman Keith Curry is a major reason for that. Curry works as a financial advisor to state and local governments, and he was one of three council members on the committee.

“He is a major player in the bond industry,” Buttolph said. “His economic interests will suffer if the initiative passes.”

On Tuesday Buttolph sent a letter to the city attorney stating that Curry has a conflict of interest because of his profession and should not participate in any council decisions that have to do with the initiative, such as whether to place it on the ballot.

The initiative is pending while the Orange County Registrar of Voters checks the signatures. If the petition is signed by at least 6,006 Newport Beach voters, the City Council will have to take several procedural votes to place it on the ballot in an upcoming election.

Curry said Wednesday that Buttolph’s complaint about a conflict is unfounded. He works for Public Financial Management, a firm that gives investment and spending advice to governments, corporations and nonprofit organizations, but the city’s financial advisor is a competing firm.

“I have no economic interest in [certificates of participation] sold by the city whatsoever, his analysis is wrong, and the city attorney has opined that it’s wrong,” Curry said.

City Atty. Robin Clauson confirmed that she does not believe Curry has any conflict of interest regarding the ballot measure.