HomeMy WebLinkAboutStaff Report 3.A 06/19/2017JUNE: May 19, 2017
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manag%
Agenda Item #3.A
SUBJECT: Resolution Supporting Assembly Constitutional Amendment 4 and Authorizing
the Mayor to Execute a Letter of Support
RECOMMENDATION
It is recommended the City Council adopt the attached Resolution supporting Assembly
Constitutional Amendment 4 (AC4) and authorizing the Mayor to execute a letter of support.
BACKGROUND
The California State Constitution requires a two - thirds (66 -2/3 %) supermajority vote at the local
level to pass special taxes and general obligation (G.O.) bonds. General taxes, by comparison,
require only a simple majority vote to pass. In 2000, voters approved Proposition 39, which
allowed local school districts to pass bond issues with a 55 percent threshold to finance
construction, reconstruction, or replacement of school facilities.
According to information released by Assemblymember Aguiar- Curry's office, over 2,200 local
revenue measures were placed before voters by cities, counties, school districts and special
districts between 2001 and 2013. General (simple majority) measures, despite their general
nature, were more likely to pass than special purpose measures. Of the special purpose measures
approved by voters, those placed on the ballot by schools (55 % threshold) were the most
successful, with 80 percent passing. In contrast, only half of the special revenue measures
requiring a 2/3 supermajority passed. Also noted was that nearly 80 percent of all supermajority
measures garnered more than 55 percent of votes, and would have passed had they been subject
to the lower threshold.
In 2016, the City conducted a survey to determine the viability of a special revenue measure
dedicated to transportation improvements which would have brought the condition of the City's
streets from "poor" to "good" within a decade. The highest level at which the potential measure
polled was 65 percent, which indicated insufficient support to pass a special purpose measure.
As a consequence, the City Council did not place the matter on the November 2016 ballot and a
stable -based finding source to complete all this work remains unattained.
DISCUSSION
ACA 4, introduced by Assemblymember Aguiar- CulTy in February 2017 (Attachment 3), seeks
to lower the Constitutional threshold to 55 percent for cities and counties and special districts
seeking to pass special taxes or G.O. bonds for "affordable housing" or "public infrastructure"
projects. A 55 percent threshold would place cities, counties, and special districts on an equal
playing field with school districts, and increase the likelihood of obtaining local funding to
improve infrastructure and to increase the stock of affordable housing. ACA 4 defines
"affordable housing" to include:
• Developments, or portions thereof, that provide workforce housing affordable to
households earning up to 150 percent of countywide median income; and
• Developments, or portions thereof, that provide housing affordable to lower, low, or very
low income households, as those terms are defined by state law.
ACA 4 defines "public infrastructure to include:
• Projects that provide or protect water quality, provide sanitary sewer, treat storm water or
reduce pollution from storm water run -off, provide flood control, or protect property from
the impacts of sea level rise;
• Public buildings;
• Parks, open space and recreation facilities;
• Streets, transit, and highways;
• Broadband expansion in underserved areas; and
• Hospital construction.
ACA 4 would also amend the Constitution to require voter protections and accountability
measures, including:
• Proceeds cannot be used for other purposes, including employee salaries or other
operating expenses;
• A list of the projects to be funded must be provided, with certification that alternative
funding sources have been evaluated;
• Annual independent financial audits will be conducted;
• Audit findings will be posted where they are readily accessible to the public; and
• Citizen's oversight boards will be required to assure funding is spent only for the
purposes approved by the voters.
Because the measure would amend the California Constitution, ACA 4 would need approval by
California voters during a statewide election.
Reducing the threshold for special tax measures and G.O bonds from the two - thirds
supermajority requirement to 55 percent would greatly increase Petaluma's chances to pass a
revenue measure dedicated to affordable housing, streets, or other public improvements. For that
reason, the City Council's approval of the recommended action is respectfully requested. An
advocacy letter indicating the City Council's support has been prepared for the Mayor's
signature, and is included as Attachment 2 to this report.
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FINANCIAL IMPACT
There are no financial impacts directly related to the recommended action.
ATTACHMENTS
1. Resolution
2. Draft Letter of Support
3. Text, ACA 4
ATTACHMENT 1
RESOLUTION SUPPORTING
ASSEMBLY CONSTITUTIONAL AMENDMENT 4
WHEREAS, revenue and bond measures are among the few means available for local
agencies to Rind improvements to public buildings and infrastructure; and
WHEREAS, the California State Constitution requires a supermajority threshold of
two - thirds (66 -2/3 %) of voters to approve special purpose and bond measures for local agencies
other than schools; and
WHEREAS, in 2000, voters approved Proposition 39, which allowed local school
districts to pass bond issues with a 55 percent threshold to finance construction, reconstruction,
or replacement of school facilities; and
WHEREAS, since 2001, local schools have passed 80 percent of their measures placed
before the voters; and
WHEREAS, a critical shortage of affordable housing exists today due, in part, to the loss
of Redevelopment as a financing tool and local agencies' corresponding inability to finance
affordable housing projects; and
WHEREAS, local agencies are also confronting a critical shortage of funding to improve
public structures and infrastructure, including streets and roads, water /wastewater /storm water,
and flood control projects, public safety buildings, and parks; and
WHEREAS, Assemblymember Aguiar -Curry has introduced Constitutional Amendment
4 (ACA 4) in the Assembly; and
WHEREAS, ACA 4 would lower the threshold from two - thirds (66 -2/3 %) to fifty -five
(55) percent for cities, counties, and special districts seeking to pass special revenue and bond
measures for affordable housing and public infrastructure projects; and
WHEREAS, ACA 4 would further provide protections and accountability measures to
assure that the proceeds of such measures would be expended on the projects approved by the
voters, and
WHEREAS, reducing the threshold for special tax measures and General Obligation
bonds from the two- thirds supermajority requirement to fifty -five (55) percent would greatly
increase Petaluma's chances to pass a revenue measure dedicated to affordable housing, streets,
or other public improvements.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of
Petaluma supports ACA 4, and authorizes the Mayor to execute a letter expressing that support.
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ATTACHMENT 2
June 20, 2017
The Honorable Cecilia Aguiar -Curry
California State Assembly
State Capitol Building, Room 5144
Sacramento, CA 95814
RE: Support for ACA 4
Dear Assembly Member Aguiar — Curry,
At its regular meeting of June 19, 2017, the City Council of the City of Petaluma approved the
attached resolution supporting Assembly Constitutional Amendment 4, which would lower the
voter threshold requirements for special taxes by a local government from two- thirds (66-
2/3%) to 55% approval, for the purpose of funding affordable housing and public
infrastructure projects.
Local governments have widespread and urgent unmet infrastructure needs, and the high cost
of housing in the state is well - documented. With the loss of Redevelopment as a financing tool
in 2012, local agencies need stable -based local funding sources to promote the development of
affordable housing close to jobs and to continue to provide critical infrastructure for a better
quality of life. Special revenue and bond measures can provide this necessary funding, but are
very difficult to pass due to existing supermajority approval requirements.
ACA 4 provides the voters an opportunity to consider treating investments in local infrastructure
and affordable housing in a similar manner as schools. California voters have demonstrated
through their past approval of major state school, housing, and water bonds that they understand
the importance of investing in their future. With the changes proposed by ACA 4, local agencies
and voters can overcome the significant obstacle a supermajority approval requirement presents,
to deliver our residents both a higher quality of life and a brighter fixture.
Thank you for your leadership in this matter; the City of Petaluma is pleased to support your bill.
Sincerely,
David Glass
Mayor
cc: Assembly Member Marc Levine
Senator Bill Dodd
Nancy Hall Bennett League of California Cities, nbennett@cacities.org
Meg Desmond, League of California Cities, mdesnzond @cacities.org
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CALIFORNIA LEGISLATURE - 2017 -18 REGULAR SESSION
ATTACHMENT 3
Assembly Constitutional Amendment No. 4
Introduced by Assembly Member Aguiar -Curry
(Coauthors: Assembly Members Chiu, Eggman, Eduardo Garcia,
Gloria, Limon, McCarty, Mullin, Rubio, Santiago, and Ting)
February 17, 2017
Assembly Constitutional Amendment No. 4—A resolution to propose
to the people of the State of California an amendment to the Constitution
of the State, by amending Sections 1 and 4 of Article MII A thereof,
by amending Section 2 of, and by adding Section 2.5 to, Article XIII
C thereof, by amending Section 3 of Article XIII D thereof, and by
amending Section 18 of Article XVI thereof, relating to local finance.
LEGISLATIVE COUNSEL'S DIGEST
ACA 4, as introduced, Aguiar - Curry. Local government financing:
affordable housing and public infrastructure: voter approval.
(1) The California Constitution prohibits the ad valorem tax rate on
real property from exceeding I% of the full cash value of the property,
subject to certain exceptions.
This measure would create an additional exception to the 1% limit
that would authorize a city, county, or city and county to levy an ad
valorem tax to service bonded indebtedness incurred to fund the
construction, reconstruction, rehabilitation, or replacement of public
infrastructure or affordable housing, if the proposition proposing that
tax is approved by 55% of the voters of the city, county, or city and
county, as applicable, and the proposition includes specified
accountability requirements.
(2) The California Constitution conditions the imposition of a special
tax by a local government upon the approval of z/ of the voters of the
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local govermnent voting on that tax, and prohibits these entities from
imposing an ad valorem tax on real property or a transactions or sales
tax on the sale of real property.
This measure would authorize a local government to impose, extend,
or increase a special tax for the purposes of funding the construction,
rehabilitation or replacement of public infrastructure or affordable
housing, if the proposition proposing that tax is approved by 55% of
its voters voting on the proposition and the proposition includes specified
accountability requirements. This measure would also make conforming
changes to related provisions.
(3) The California Constitution prohibits specified local government
agencies from incurring any indebtedness exceeding in any year the
income and revenue provided in that year, without the assent of M/ of
the voters and subject to other conditions. In the case of a school district,
community college district, or county office of education, the California
Constitution permits a proposition for the incurrence of indebtedness
in the for in of general obligation bonds for the construction,
reconstruction, rehabilitation, or replacement of school facilities,
including the ftimishing and equipping of school facilities, or the
acquisition or lease of real property for school facilities, to be adopted
upon the approval of 55% of the voters of the district or county, as
appropriate, voting on the proposition at an election.
This measure would similarly lower to 55% the voter - approval
threshold for a city, county, or city and county to incur bonded
indebtedness, exceeding in any year the income and revenue provided
in that year, that is in the form of general obligation bonds issued to
fiend the constriction, reconstruction, rehabilitation, or replacement of
public infrastructure or affordable housing projects, if the proposition
proposing that bond includes specified accountability requirements.
Vote: 2/3. Appropriation: no. Fiscal committee: no.
State - mandated local program: no.
1 Resolved by the Assembly, the Senate concurring, That the
2 Legislature of the State of California at its 2017 -18 Regular
3 Session commencing on the fifth day of December 2016, two- thirds
4 of the membership of each house concurring, hereby proposes to
5 the people of the State of California, that the Constitution of the,
6 State be amended as follows:
7 First That Section 1 of Article XIII A thereof is amended to
8 read:
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1 SECTION 1. (a) The maximum amount of any ad valorem
2 tax on real property shall not exceed -One I percent -(d-%) of the
3 full cash value of -sueh that property. The one 1 percent -(4%) tax
4 to shall be collected by the counties and apportioned according to
5 law to the districts within the counties.
6 (b) The limitation provided for in subdivision (a) shall not apply
7 to ad valorem taxes or special assessments to pay the interest and
8 redemption charges on any of the following:
9 (1) Indebtedness approved by the voters prior to before July 1,
10 1978.
11 (2) Bonded indebtedness —for to find the acquisition or
12 improvement of real property approved on or after July 1, 1978,
13 by two - thirds of the votes cast by the voters voting on the
14 proposition.
15 (3) Bonded indebtedness incurred by a school district,
16 community college district, or county office of education for the
17 construction, reconstruction, rehabilitation, or replacement of
18 school facilities, including the furnishing and equipping of school
19 facilities, or the acquisition or lease of real property for school
20 facilities, approved by 55 percent of the voters of the district or
21 county, as appropriate, voting on the proposition on or after-the
22 effeetive date of the measure adding this paragfaplt. November 8,
23 2000. This paragraph shall apply only if the proposition approved
24 by the voters and resulting in the bonded indebtedness includes
25 all of the following accountability requirements:
26 (A) A requirement that the proceeds from the sale of the bonds
27 be used only for the purposes specified in Artiele X111 ^F1 Section
28 1(b)(3), this paragraph, and not for any other purpose, including
29 teacher and administrator salaries and other school operating
30 expenses.
31 (B) A list of the specific school facilities projects to be funded
32 and certification that the school district board, community college
33 board, or county office of education has evaluated safety, class
34 size reduction, and information technology needs in developing
35 that list.
36 (C) A requirement that the school district board, community
37 college board, or county office of education conduct an annual,
38 independent performance audit to ensure that the fiends have been
39 expended only on the specific projects listed.
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ACA —4—
1 (D) A requirement that the school district board, community
2 college board, or county office of education conduct an annual,
3 independent financial audit of the proceeds from the sale of the
4 bonds until all of those proceeds have been expended for the school
5 facilities projects.
6 (4) (A) Bonded indebtedness incurred by a city, couno), or city
7 and count)) for the construction, reconstratction, rehabilitation, or
8 replacement of public infrastructure or affordable housing, or the
9 acquisition or lease of real property for public infrastructure or
10 affordable housing, approved by 55 percent of the voters of the
11 cio} county, or city and county as appropriate, voting on the
12 proposition on or after the effective date of the measure adding
13 this paragraph. This paragraph shall apply only if the proposition
14 approved by the voters and resulting in the bonded indebtedness
15 includes all of the following accountability requirements:
16 (i) A requuirement that the proceeds fi-oru the sale of the bonds
17 be used only for the purposes specified in this paragraph, and not
18 for any other purpose, including city, county, or city and county
19 employee salaries and other operating expenses.
20 (ii) A list of the speck projects to be finded, and a certfication
21 that the cio3 county, or city and county has evahuated alternative
22 funding sources.
23 (iii) A requirement that the cite, county, or city and county
24 conduct an annual, independent peu formance audit to ensure that
25 the funds have been expended only on the speck projects listed
26 (iv) A requirement that the city, county, or city and county
27 conduct an annual, independent financial audit of the proceeds
28 fi °nn the sale of the bonds until all of those proceeds have been
29 expended for the public infrastrzucture or affordable housing
30 projects, as applicable.
31 (v) A requirement that the cio} count}; or city and county post
32 the audits required by clauses (iii) and (iv) in a manner that is
33 easily accessible to the public.
34 (vi) A requirement that the city, county, or cite and county
35 appoint a citizens' oversight committee to ensure that bond
36 proceeds are expended only for the purposes described in the
37 measure approved by the voters.
38 (B) For purposes of this paragraph, "affordable housing" shall
39 include housing developments, or portions of housing
40 developments, that provide workforce housing affordable to
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1 households earning up to 150 percent of count}nvide median
2 income, and housing developments, or portions of housing
3 developments, that provide housing affordable to lolver, lolv-, or
4 very low income households, as those terms are defined in state
5 law.
6 (C) For pinposes of this paragraph, public infrastructure"
7 shall include, but is not limited to, projects thatprovide any of the
8 following:
9 (i) Water or• protect water quality.
10 (ii) Sanitary server:
11 (iii) Treatment of wastewater or reduction of pollution fr -om
12 stormlvater rrmoff.
13 (iv) Protection of propero from impacts of sea level rise.
14 (v) Parks.
15 (vi) Open space and recreation facilities.
16 (vii) Improvements to transit and streets and highways.
17 (viii) Flood control.
18 (ix) Broadband expansion in underserwd areas,
19 (v) Local hospital construction.
20 (c) Notwithstanding any other provisions of law or of this
21 Constitution, a school ai— district, community college
22 distriets, and district, county effiees office of-e�ron education,
23 city, count); or cite and county may levy a 55 percent vote ad
24 valorem tax pursuant to subdivision (b).
25 Second —That Section 4 of Article XIII A thereof is amended
26 to read:
27 SEC. 4. Except as
28 provided by Section 2.5 ofArticle XIIIC a city, coin7ty, or special
29 district, by a two - thirds vote of the qualified eleetors of stteh
30 district, its voters voting on the proposition, may impose speeial
31 `axes on stteh district, a special tax within that city, count}; or
32 special district, except an ad valorem taxes tax on real property
33 or a tratisaetro ~n transactions tax or sales tax on the sale of real
34 property within that cio} county, or special
35 district.
36 Third —That Section 2 of Article XIII C thereof is amended to
37 read:
38 SEC. 2. T . al Government Tax T i itat t Notwithstanding
39 any other provision of this Constitution:
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ACA —6—
1 (a) A41-taxes-Any tax imposed by-any a local government- shar14
2 be deemed t is either a general faxes tax or a special taxes.
3 Speeial purpose distriets tax. A special district or -agere agency,
4 including a school distriets, shall have no powe district, has no
5 autborio; to levy a general taxes. tax.
6 (b) 4o-A local government may not impose, extend, or increase
7 any general tax unless and until that tax is submitted to the
8 electorate and approved by a majority vote. A general tax- shal-1 is
9 note deemed to have been increased if it is imposed at a rate not
10 higher than the maximum rate so approved. The election required
11 by this subdivision shall be consolidated with a regularly scheduled
12 general election for members of the governing body of the local
13 government, except in cases of emergency declared by a unanimous
14 vote of the governing body.
15 (c) Any general tax imposed, extended, or increased, without
16 voter approval, by any local government on or after January 1,
17 1995, and prior to the effective date of this article, shall inay
18 continue to be imposed only if that general tax is approved by a
19 majority vote of the voters voting in an election on the issue of the
20 imposition, which election shall be held within two years of the
21 effe .tive date of this aftiele no later than November 6, 1996, and
22 in compliance with subdivision (b).
23 (d) NtF - Except as provided by Section 2.5, a local government
24. may not impose, extend, or increase any special tax unless and
25 until that tax is submitted to the electorate and approved by a
26 two - thirds vote. A special tax -shall is note deemed to have been
27 increased if it is imposed at a rate not higher than the maximum
28 rate so approved.
29 Fourth —That Section 2.5 is added to Article XIII C thereof, to
30 read:
31 SEC. 2.5. (a) The imposition, extension, or increase of a special
32 tax by a local government for the purpose of funding the
33 construction, reconstruction, rehabilitation, or replacement of
34 public infrastructure or affordable housing, or the acquisition or
35 lease of real property for public infrastructure or affordable
36 housing, is subject to approval by 55 percent of the voters in the
37 local government voting on the proposition, if all of the following
38 conditions are met:
39 (1) The proposition is approved by a majority vote of the
40 membership of the governing board of the local government.
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(2) The proposition contains all of the following accountability
requirements:
(A) A requirement that the proceeds of the tax only be used for
the purposes specified in the proposition, and not for any other
purpose, including general employee salaries and other operating
expenses of the local government.
(B) A list of the specific projects that are to be funded by the
tax, and a certification that the local government has evaluated
alternative funding sources.
(C) A requirement that the local government conduct an annual,
independent performance audit to ensure that the proceeds of the
special tax have been expended only on the specific projects listed
in the proposition.
(D) A requirement that the local government conduct an annual,
independent financial audit of the proceeds from the tax during
the lifetime of that tax.
(E) A requirement that the local government post the audits
required by subparagraphs (C) and (D) in a manner that is easily
accessible to the public.
(F) A requirement that the local government appoint a citizens'
oversight committee to ensure the proceeds of the special tax are
expended only for the put-poses described in the measure approved
by the voters.
(b) For purposes of this section, the following terms have the
following meanings:
(1) "Affordable housing" shall include housing developments,
or portions of housing developments, that provide workforce
housing affordable to households earning up to 150 percent of
countywide median income, and housing developments, or portions
of housing developments, that provide housing affordable to lower,
low -, or very low income households, as those terms are defined
in state law.
(2) "Public infrastructure" shall include, but is not limited to,
the projects that provide any of the following:
(A) Water or protect water quality.
(B) Sanitary sewer.
(C) Treatment of wastewater or reduction of pollution from
stormwater runoff.
(D) Protection of property from impacts of sea level rise.
(E) Parks.
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I (F) Open space and recreation facilities.
2 (G) Improvements to transit and streets and highways.
3 (H) Flood control.
4 (I) Broadband expansion in underserved areas.
5 (J) Local hospital construction.
6 Fifth —That Section 3 of Article XIII D thereof is amended to
7 read:
8 SEC. 3. Property Rtxes, Assessments, Fees and Charges
9 Limited. (a) Na -Air agency shall not assess a tax, assessment, fee,
10 or charge shall be assessed by any agene upon any parcel of
11 property or upon any person as an incident of property ownership
12 except:
13 (1) The ad valorem property tax imposed pursuant to Article
14 XIII and Article XIII A.
15 (2) Any special tax receiving a two - thirds vote pursuant to
16 Section 4 of Article XIII A-.A or Section 2.5 of Article X111 C.
17 (3) Assessments as provided by this article.
18 (4) Fees or charges for property rela propertyarelated set-vices
19 as provided by this article.
20 (b) For purposes of this article, fees for the provision of electrical
21 or gas serviced are notJoe deemed charges or fees imposed as
22 an incident of property ownership.
23 Sixth —That Section 18 of Article XVI thereof is amended to
24 read:
25 SEC. 18. (a) Flo- A county, city, town, township, board of
26 education, or school district, shall not incur any indebtedness or
27 liability in any manner or for any purpose exceeding in any year
28 the income and revenue provided fore that year, without the
29 assent of two - thirds of the voters of the public entity voting at an
30 election to be held for that purpose, except that with respect to any
31 such public entity which is authorized to incur indebtedness for
32 public school purposes, any proposition for the incurrence of
33 indebtedness in the form of general obligation bonds for the
34 purpose of repairing, reconstructing or replacing public school
35 buildings determined, in the manner prescribed by law, to be
36 structurally unsafe for school use, shall be adopted upon the
37 approval of a majority of the voters of the public entity voting on
38 the proposition at such election; nor unless before or at the time
39 of incurring such indebtedness provision shall be made for the
40 collection of an annual tax sufficient to pay the interest on such
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indebtedness as it falls due, and to provide for a sinking fiend for
the payment of the principal thereof, on or before maturity, which
shall not exceed forty years from the time of contracting the
indebtedness.
(b) Notwithstanding subdivision (a), on of after `he eff etive
date of the meastre adding this subdivision, in the ease of any
editeafiott-, any proposition for the incurrence of indebtedness in
the form of general obligation bonds for the eonstruetion,
ineittding the fitmishing and equipping of sehool f�eilities, or the
aequisition or lease of real property for sehool for• the
purposes described in paragraph (3) or (4) of subdivision (b) of
Section I ofArticle XIII A, shall be adopted upon the approval of
55 percent of the voters of the district or eountr, school district,
community college district, or county office of education, or cit};
county, or city and cottno� as appropriate, voting on the proposition
at an election. This subdivision shall apply -onl-y to a proposition
for the incurrence of indebtedness in the form of general obligation
bonds for the purposes specified in this subdivision only if the
proposition meets all of the accountability requirements of
paragraph (3) or (4) of subdivisions (b), as appropriate, of
Section 1 of Article XIII A.
(c) When two or more propositions for incurring any
indebtedness or liability are submitted at the same election, the
votes cast for and against each proposition shall be counted
separately, and when two - thirds or a majority or 55 percent of the
voters, as the case may be, voting on any one of those propositions,
vote in favor thereof, the proposition shall be deemed adopted.
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