Rancho Palos Verdes City Council
   

AUGUST 15, 2006 RANCHO PALOS VERDES CITY COUNCIL AGENDA- PROPOSITION 84 CLEAN WATER, PARKS AND COASTAL PROTECTION BOND AUGUST 15, 2006 RANCHO PALOS VERDES CITY COUNCIL AGENDA- PROPOSITION 84 CLEAN WATER, PARKS AND COASTAL PROTECTION BOND AUGUST 15, 2006 RANCHO PALOS VERDES CITY COUNCIL AGENDA- PROPOSITION 84 CLEAN WATER, PARKS AND COASTAL PROTECTION BOND


TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS

FROM: ASSISTANT TO THE CITY MANAGER

DATE: AUGUST 15, 2006

SUBJECT: PROPOSITION 84 CLEAN WATER, PARKS AND COASTAL PROTECTION BOND

RECOMMENDATION

Consider taking a position on Proposition 84, Clean Water, Parks and Coastal Protection Bond.

EXECUTIVE SUMMARY

Proposition 84 is a statewide ballot measure authorizing $5.4 billion in general obligation bonds to fund critically needed improvements and programs to ensure safe drinking water, local water supply reliability, flood protection, and preservation of California’s natural landscapes, including parks, forests, lakes, rivers, beaches, bays, ocean and coastline.
Proposition 84 has qualified for the November 2006 ballot. The League of California Cities supports Proposition 84 and requests its member cities to do the same.

BACKGROUND

According to the State Legislative Analyst, the state operates a variety of programs to conserve natural resources, protect the environment, provide flood control, and offer
recreational opportunities for the public. The state also operates a program to plan for
future water supplies, flood control, and other water-related requirements of a growing
population. In addition to direct state expenditures, the state also provides grants and
loans to local governments and nonprofit organizations for similar purposes.

Funding for these various programs has traditionally come from General Fund revenues, federal funds, and general obligation bonds. Since 1996, voters have authorized approximately $11 billion in general obligation bonds for various resources purposes. Of this amount, approximately $1.4 billion is projected to remain available for new projects as of June 30, 2006, primarily for water-related purposes. Legislation enacted earlier this year provides $500 million from the General Fund for emergency levee repairs and other flood control-related expenditures.

According to initiative proponents, the State’s investment in infrastructure is not keeping pace with population growth. Current funding for water quality, water supply reliability, natural resources and environmental protection programs is critically low. Proposition 84 will make critical investments in both water systems and natural resource and environmental programs.

Who’s Supporting Proposition 84?
Proposition 84 is supported by a broad, non-partisan coalition of interests – water
districts, conservation and environmental groups, local government entities, museum
and park interests, elected officials, and civic organizations. Supporters include,
California Governor Arnold Schwarzenegger, U.S. Senator Dianne Feinstein, California
Assembly Speaker Fabian Nunez, California Senate President pro Tem Don Perata,
California State Parks Foundation, Association of California Water Agencies, League of
California Cities, Los Angeles Area Chamber of Commerce, California Labor
Federation, AFL-CIO, The Nature Conservancy, Audubon California, Monterey Bay
Aquarium, Natural History Museum of Los Angeles County, and The Ocean
Conservancy.

No organized opposition has been identified at this time.

DISCUSSION

Councilmember Larry Clark requested Proposition 84 to be placed on the agenda for consideration by the City Council.

According to the California Legislative Analyst, Proposition 84 allows the state to sell $5.4 billion in general obligation bonds for safe drinking water, water quality, and water supply; flood control; natural resource protection; and park improvements. Sample projects include, $90 million in grant funds for Natural Community Conservation Planning; water quality protection of the Sacramento-San Joaquin Delta; protection of the San Francisco, Santa Monica and San Diego bays and their watersheds; identification and mapping of high-risk flood areas; creation of local and regional parks in communities at that are park-poor; and preservation of working forests, farms and ranches.

Attachment “One” summarizes the bond expenditures by various state agencies and for loans and grants, primarily to local agencies and nonprofit organizations. In order to spend most of these bond funds, the measure requires the Legislature to appropriate them in the annual budget act or other legislation.

Attached to this staff report is a Fact Sheet on Proposition 84 and the Initiative Text.

Should Council adopt a favorable position on Proposition 84, staff will register the City as a supporter for the “YesOn84” campaign website.

FISCAL IMPACT

According to the California Legislative Analyst, the cost of the Prop 84 bonds would depend on interest rates in effect at the time they are sold and the time period over which
they are repaid. The state would likely make principal and interest payments from the state’s General Fund over a period of about 30 years. If the bonds were sold at an average interest rate of 5 percent, the cost would be about $10.5 billion to pay off both the principal ($5.4 billion) and interest ($5.1 billion). The average payment would be about $350 million per year.

Property Tax-Related Impacts. The initiative provides funds for land acquisition by governments and nonprofit organizations for various purposes. Under state law, property owned by government entities and by nonprofit organizations (under specified conditions) is exempt from property taxation. To the extent that this initiative results in property being exempted from taxation due to acquisitions by governments and nonprofit organizations, local governments would receive reduced property tax revenues. We estimate these reduced property tax revenues would be several million dollars annually.

Operational Costs. State and local governments may incur additional costs to operate or maintain the properties or projects, such as new park facilities, that are purchased or developed with these bond funds. The amount of these potential additional costs is unknown, but could be tens of millions of dollars per year.

PREPARED BY

Gina Park
Assistant to the City Manager

APPROVED BY

Les Evans
City Manager

Attachments:
1. Use of Bond Funds
2. Fact Sheet on Prop 84
3. Initiative Text

Attachment One: