The One Beverly Hills project includes two condominium towers, a luxury hotel and 10 acres of outdoor space. (rendering courtesy of Foster and Partners)

On Aug. 19, the Beverly Hills City Council will consider whether to assist with financing for the $5 billion One Beverly Hills project by establishing a special district at the site and authorizing the issuance of up to $550 million in bonds.

The One Beverly Hills project, an expansive 17.5-acre redevelopment next to the Beverly Hilton between Wilshire Boulevard and Santa Monica Boulevard, includes two new condo towers at 412 and 453 feet tall and the luxury Aman hotel, which will be 124 feet tall. Approximately 10 acres of open landscaped areas, with four acres reserved for condo residents and 4.5 acres open to the public, contribute to the green space. Additional features include a conference center, retail and dining space and the renovation of The Beverly Hilton hotel. The project was approved by the then-City Council on June 8, 2021, in a 4-1 vote, with Councilman John Mirisch voting against it. While most City Council members lauded the project for its transformative vision, Mirisch argued that the project did not provide enough benefits to residents, and took issue with the lack of affordable housing. The project is expected to be completed in 2028.

Property developer Cain International is now asking the city to assist with the financing of One Beverly Hills by authorizing the issuance of bonds that will be repaid by a special tax levied on property owners within the project boundaries.

The city will consider establishing a Community Facilities District on the property site. According to Beverly Hills Director of Finance Jeff Muir, a CFD is “a public financing tool authorized under the state’s Mello-Roos Act that allows for the funding of specific public infrastructure and services through special taxes on the properties that directly benefit,” Muir said. “The special tax is only levied on the properties in the district.”

The planned CFD includes parcels that will contain the Beverly Hilton, conference center, Aman hotel and condominium towers. It does not include the adjacent Waldorf Astoria hotel, Los Angeles Country Club, El Rodeo Elementary School or other properties nearby.

The city will also consider authorizing the issuance of up to $550 million in bonds to finance the project that would be repaid through the taxes levied within the CFD.

“The ‘not-to-exceed’ bond authorization of $550 million provides a conservative ceiling, giving the project flexibility for future market conditions while the developer’s actual target for net proceeds is approximately $260 million,” Muir said.

If the city authorizes the issuance of bonds, the actual bonds issued must still be approved by the City Council at a later date.

Muir emphasized that the bonds will be repaid solely by special taxes levied on the properties within the CFD boundaries. The taxes would be based on residential and non-residential square footage and be paid by property owners, including future condo owners.

According to Muir, the bonds are “special limited obligations of the CFD and not debts of the city or its general fund.”

“The key principle here is that the CFD provides a secure, long-term funding source for these significant public benefits paid for by the development itself,” Muir said. “All costs associated with the formation process are paid for by the developer.”

Additionally, the developer has agreed to a $10 million contribution towards future public facilities improvements to be made in conjunction with the issuance of bonds.

According to Larry Green, development managing director for Cain International, the One Beverly Hills project includes infrastructure that benefits the public like street and sidewalk improvements on Wilshire and Santa Monica Boulevards, new traffic signals, utility improvements, street trees and the realignment of Merv Griffin Way.

“Community Facilities Districts are a proven way across California to fund essential public improvements,” Green said in a statement. “The proposed CFD at One Beverly Hills is crucial for the delivery of critical infrastructure and public benefits – upgraded streets, utilities and public spaces – while costs are borne only by property owners within the project. No other residents or the city take on any financial risk. That is how the Mello-Roos Act is designed to function: helping cities enable developers to finance required public improvements without using public funds. We are fully committed to the project.”

The Beverly Hills City Council voted on July 15 to set an upcoming public hearing to determine whether to create the CFD and authorize the issuance of bonds. Councilman Craig Corman recused himself, stating that he is a member of the Los Angeles Country Club which is within 500 feet of the project. Vice Mayor John Mirisch was the lone “no” vote against moving forward with the possibility of authorizing the bonds.

Mirisch argued that instead of a one-time $10 million reinvestment in the city, the project should consider increasing the annual environmental mitigation and sustainability fee paid to the city, which is a fee paid to offset potential negative impacts the project may have.

“It wouldn’t have to be a huge amount, but it certainly over the years would be a gift that would keep on giving,” Mirisch said.

The city last created a CFD and levied a special tax in the Golden Triangle and on Rodeo Drive in 2002 to finance upgrades to the area.

“This is a new process for us as a council. None of us have really experienced it yet. I think that good things can come out of it. Look at Rodeo Drive and the bond that we created there – the significant impact that it had in a positive way for our community,” Mayor Sharona Nazarian said. “I’m hoping that this will also have the same kind of process.”

The Aug. 19 City Council meeting will be held at 7 p.m. in Beverly Hills City Hall, 455 N. Rexford Drive.