Oxnard devises unique way to fix streets — sell them

01/08/2008

The Associated Press

OXNARD, Calif.—Lawyers for Ventura County's largest city have come up with a way to repair deteriorating streets—sell them.

Oxnard streets were sold to an investment group for $27.7 million, then the city bought them back through certificates of participation, which were sold on the bond market.

The proceeds are being used to overhaul Oxnard streets and investors are being paid back over 30 years, with annual payments made from the city's state gas-tax allotment.

The certificate-bond hybrid, similar to traditional city bonds but not guaranteed by general fund money, was dreamed up by the city's bond attorneys at the Goodwin Procter firm in Los Angeles.

It's a loophole for cities to take out loans without requiring voter approval. General obligation bonds or street improvement assessments are typically used to finance large projects.

"The gas tax has been bonded before but not in this way, where they can leverage their general funds for other services and not have to place a reserve in back of this special fund," Goodwin Procter chairman Lewis G. Feldman said.

California cities receive a share of the state's 18-cents-per-gallon tax, which can only be used on transportation projects. Oxnard, with nearly 200,000 residents, got $3.4 million last year.

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