County to sell park improvement bonds this May: tax assessments vary depending on type of property.

The county plans to sell about $175 million worth of 21-year bonds early next month to fund its Regional Park and Open Space District, a benefit assessment district that encompasses the entire county.

A benefit assessment district is a legal entity with the authority to tax property owners to pay for a specific benefit. The formation of this particular district was approved by voters in November 1992.

According to an order by the Los Angeles County Board of Supervisors, the mandate of the district is to improve neighborhood and regional parks, restore beaches, wildlife, park and natural lands, plant trees, prevent and intervene with gangs, and improve recreation facilities for the county's youth and senior citizens.

"What makes this assessment district different is its size," said Jan Takata, the county finance analyst most closely associated with the project. To his knowledge, it's the biggest in the nation. "We have other benefit assessment districts in the county, but nothing of this geographical size," Takata noted. "This district is 4,083 square miles. It's roughly the size of the state of Connecticut."

As such, the task of launching the bonds was monumental. Takata said the county spent eight months organizing the district, staffing it with six employees and, he said, "getting the assessment on the (tax) rolls."

The last item, he said, was "nothing like you've ever seen," since the bond issue is "sort of a hybrid."

"It's not like a county general tax issue," Takata explained. "It's (revenue is) derived from benefit points based on the perceived benefit and use of each parcel."

In other words, the amount of tax levied on county businesses and homeowners is determined by the perceived benefit to each taxpayer and the size of the parcel of land where the taxpayer's residence or business is located.

The perceived benefit or "use" factor was calculated in a March 16, 1992 engineer's report compiled by BSI Consultants Inc. and Wilden Associates. The report assigned benefit "points" to properties, based on their type and on assumptions regarding which types of properties would benefit most from the district.

Takata noted: "you've got about 2.2 million parcels, each differing in size." The various "use" and "size" factors result in many different tax rates which, in turn, makes revenue projections more difficult than they would be ordinarily.

Once the district was listed on the tax assessment rolls last July, the county's Department of Parks and Recreation put together procedural guidelines for the disbursement and use of funds, following federal regulations and state statutory requirements. A district budget was enacted, and last December the district's first revenues were meted out from the county's tax collections.

"Before we went forward with the (bond) funding, we wanted to see how much would actually be collected initially," said Takata.

He said county officials reasoned that having some actual revenues in hand would bolster their revenue projections in the eyes of credit rating agencies, making up somewhat for the issue's lack of any financial history in terms of collections, delinquencies and expenditures.

The county approached the rating agencies in February, and held extensive discussions with them through March. More meetings are expected this month and summary sheets, said Takata, are slated to be distributed this week, describing the bond sale and the district to rating firms and prospective investors. The bond sales are tentatively scheduled for the first week of May.

Russell Goings III, the Los Angeles-based point man handling the transaction for underwriter Lazard Freres & Co., said he does not think the bond market's recent decline should hamper the offering.

"We'd be more nervous if this were a refunding issue," he explained, pointing out the high credit quality of the district. He foresees an AA bond rating for the issue from the nation's rating agencies.

Spokesmen for the two rating agencies said it's too early to tell.

Moody's Investors Service spokesman David Brodsley noted that this is a complicated transaction that will take time to analyze.

He also noted that, despite its shared location, this issue was unrelated to any of the issues that Moody's reviewed for the county last month.

On March 15, Moody's lowered the rating on the county's fixed asset-secured debt to A from A-1, and the rating on its equipment leases to Baa1 from A. The Aa rating for the county's general obligation bonds stayed intact -- it had been lowered from Aa-1 in January 1993.