Malibu weighs $112 million bond plan tied to rebuilt property values Play

When the tax assessor looked at the Malibu fire disaster area, they recomputed the value of the property there. The total assessed value in the fire zone dropped from $29.43 billion down to around $3.3 billion after the fire. But as rebuilding occurs, the assessed values will recover and tax revenue will creep back up.

The Malibu City Council is toying with the idea of borrowing against those future increased tax revenues from down the road to pay for vital improvements now. That's the idea behind the proposed Malibu Disaster Recovery District. It will be discussed Tuesday morning by a City Council subcommittee and then again next week by the entire City Council.

Taxes would not go up. Repeat: taxes would not go up. The idea is to harness the increased amount of property tax that will come in as the reconstruction of private houses generates higher property tax revenue. The Disaster Recovery District would sell bonds now that would be guaranteed by the future tax revenue of tomorrow. That's a common financing technique used in business districts across the country.

The bonds would be sold to pay for road improvements, larger water lines, and critically needed water storage tanks in Malibu. It would be run by the City Council, and any financial decisions would not impact the city's future credit rating or the ability to borrow for other matters by the city itself.

How much money could be borrowed? Maybe a lot — $112 million. But there is a risk: if coastal erosion or another fire disaster were to hit, there may not be that much money to borrow against.

The benefits and risks will be discussed at 10 a.m. Tuesday at a special City Council subcommittee meeting with Bruce Silverstein and Doug Stewart.