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SR-6F (12) 6r- , t- - - R1vID KMB f\leglslat\sbI47sr MAR 1 8 1997 CouncIl Meetmg March 18, 1997 51 AFF REPORT TO Mayor and CIty CouncIl FROM Cny Staff SVBJECT RecommendatIon to Oppose Senate BIll 14 7 and Assembly ConstItutIOnal Amendment No 6 Local Agency ReqUIrement for Voter Approval Before Acqumng Debt IntroductIOn ThiS staff report recommends City CounCIl oppose Senate Bill 147 and Assembly ConstItutlonal i\mendment 6 regardmg the authonty of local agencies to Incur debt DISCUSSIOn Senate BI11147 (Ayala) would prohibIt a CIty, county. redevelopment agency or other local agency from mcurnng mdebtedness WIthout pnor approval of a maJonty of the voters on the questIOn of mcumng each speCIfic mdebtedness For purposes of thiS legislatIOn, mdebtedness mcludes any certIficate of partICipatIOn. the share of an mstallment sale purchase contract. leaseback, lease sale purchase. or SImIlar transactIon ThIS legislatIOn would severely Impact Santa Moruca' s abIlIty manage Its fiscal operatIOns by removmg the ablhty of elected representatives to make deCISIOns on whether to mcur debt and Imposmg a lengthy process that would prevent the local junsdtctIon from respondmg qUIckly to fiscal opporturutIes and CIrcumstances CIty offiCIals have worked dIhgently over many years to ensure that fiscal pohCIes are sound and responSIble ThIS bill would remove an Important declSlon-makmg authonty from those offiCIals 6::' I.. ~i , . MAR 1 8 1997 ACA6 (Thompson) would prohIbIt a CIty. county, redevelopment agency or other local agency from mcumng mdebtedness that exceeds 110% of the aggregate fWIds of the local agency that are borrowed through such Indebtedness as of the effectlve date of tills provIsIOn The lImItatiOn can only be Increased by adoptIon of an ordmance or resolutIon to that effect of the govemmg body and approval by a maJonty of the voters ThIS provIsIon applIes to a broad defimtIOn of Indebtedness that mcludes general obhgatIOn bonds, lease revenue bonds, lease-purchase agreements or other eVidences of Indebtedness m whIch repayment IS secured by reference to specIfied revenues or the encumbenng of specIfic assets ThIS constItutIOnal amendment would have SImIlar Impacts as SBl47 m that It would severely restnct the fiscal optlOns avaIlable to the Cny to meet the serVice demands of the commumty both by potentlally removmg a tool now possIble and requmng a lengthy and WIcertam process before bemg able to Issue mcremental debt Therefore, ACA6 would also remove an Important declSlon-makmg authonty from local offiCIals SB147 has been aSSIgned to the Senate Local Government CommIttee, ACA6 has not been assIgned to a commIttee but may be heard by referred to commIttee soon It IS beheved that a coahtlOn of local government agencIes \\'111 coalesce m opposltlon to tills leglslatlOn Santa Momca's oppOSltlOn to SB147 should be regIstered WIth the Senate Local Government CommIttee and WIth the Assembly (for ACA6) The CIty \Vlll work III conjunctIon WIth other local governmental agencIes to defeat these bIlls Budget and F manClal Impact There IS no dIrect budget or financIal Impact As stated above, the enactment of these bIlls would have senous ImphcatlOns on the ablhty of the CIty 10 respond to ItS fiscal reqUIrements In the future RecommendatIon Staffrecommends that the CIty CouncIl oppose SB147 and ACA6 and dIrect the CIty lobbYIst to advocate defeat of these measures Prepared by: C MIchael Denms, DIrector ofFmance Jeff MathIeu, DIrector of Resource Management KeIth Breskm, Redevelopment Manager Kathryn K Vemez, Semor ~1anagement Analyst ["- .5bI4~st"pd - -----