authorization, it is likely that multiple series of 30-year bonds would be issued, meaning the tax would be levied for more than 30 years.
The City retained professional services to conduct a Community Priorities Survey to assess community support for a G.O. Bond to finance City infrastructure improvements. The survey of likely November voters occurred in the second half of April 2024, and the results were provided to the City Council at a June 11, 2024 study session. The survey reflects the greatest support for a revenue measure that supports the following projects:
•Repair deteriorating storm drains, preventing system failure, flooding, water pollution/ sinkholes;
•Maintain city streets/repair potholes; and
•Upgrade fire stations to ensure rapid emergency response, accommodate modern firefighting/ life-saving emergency medical equipment, function during earthquakes/ natural disasters.
Placing a G.O. Bond measure on the ballot requires the City Council to take the following actions:
•Adoption of Resolution of Necessity—indicating that public interest and necessity demand the issuance of the G.O. Bond to finance the authorized improvements. (Scheduled for July 9)
•Introduction and Later Adoption of Ordinance Submitting G.O. Bond Measure to Voters – identifying the objects and purposes of the Bonds, the estimated cost of the improvements to be financed, accountability requirements applicable to the Bonds, and related matters. (Introduction scheduled for July 9; adoption scheduled for July 23) •Adoption of Resolution Placing Measure on Ballot – approving the 75-word ballot measure label and other particulars concerning the conduct of the election. (Scheduled for July 23)
Both the Resolution of Necessity and the Ordinance must be approved by the City Council by a supermajority of the full Council (i.e., four affirmative votes). If the City Council votes to place the G.O. Bond measure on the ballot at its July 9th and July 23rd meetings, City voters will be able to vote on the measure in November 2024.
Ballot Measure Approval
Under existing law, passage of a G.O. Bond requires two-thirds of those voting on the measure to vote in favor. However, Assembly Constitutional Amendment No. 1 (ACA 1) is being placed on the November ballot and, if adopted, would lower the necessary voter threshold to 55%. If the voters approve ACA 1 Statewide, this 55% threshold would apply to the City’s G.O. Bond measure. If ACA 1 is not approved, the two-thirds supermajority threshold for the City’s G.O.
Bond measure will remain in effect.
If City voters approve the G.O. Bond measure by the requisite percentage, the City would have funding for unfunded infrastructure projects in the areas listed above. Bond proceeds are restricted to capital projects, so there is no possibility that bond proceeds could fund operations or, for that matter, any other purposes. Given the project management capacity constraints, the
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Honorable Mayor and Members of the City Council
July 9, 2024
bonds will likely be issued in multiple phases over several years. Many of the improvements that bond proceeds could fund would have a multi-decade useful life benefiting future generations of San Bruno residents.
The proposed G.O. Bond measure requires transparency and accountability in addition to the City’s budget requirements. Requirements include an annual, independent audit to ensure transparency, accountability, and proper disbursement of G.O. Bond proceeds as promised to the public. In addition, the City Council would receive an annual report from the Chief Financial Officer on the proper disbursement of the bond proceeds.
Any action the City Council takes to advance this measure to the November ballot is not a vote to support or oppose the measure. While the Council has the right to take a formal position on this measure, this action is limited to advancing the ballot measure for San Bruno voter consideration in the upcoming General Election.
FISCAL IMPACT:
The estimated $40,000 cost to place this item on the ballot is included in the City Council Adopted FY25 Budget. If the G.O. Bond measure is placed on the ballot by the City Council and approved by the voters, the G.O. Bonds would be issued, and a dedicated ad valorem property tax would be levied on all taxable property in the City in an amount sufficient to pay debt service on the bonds each year. No other City funds would be pledged to the bonds.
ENVIRONMENTAL IMPACT:
The action is not a project subject to CEQA. City Council’s action is not considered a “Project” per CEQA Guidelines and therefore no further environmental analysis is required.
RECOMMENDATION:
Adopt a Resolution Determining that the Public Interest and Necessity Demand the Acquisition, Construction and Improvement of Municipal Improvements Projects Constituting Public Infrastructure of the City, and their Financing Through the Issuance of General Obligation Bonds; and Introduce, read by title only and waive further reading of an Uncodified Ordinance Ordering the Submission of a Proposition Incurring Bonded Indebtedness to the Qualified Voters of the City of San Bruno at the General Municipal Election to be held on November 5, 2024, for the Purpose of Financing the Cost of the Acquisition, Construction and Improvement of Certain Municipal Improvement Projects Constituting Public Infrastructure of the City.
ALTERNATIVES:
Take no action.
ATTACHMENTS:
1. Resolution
2. Ordinance
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RESOLUTION NO. 2024 - ___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN BRUNO DETERMINING
THAT THE PUBLIC INTEREST AND NECESSITY DEMAND THE ACQUISITION,
CONSTRUCTION AND IMPROVEMENT OF MUNICIPAL IMPROVEMENT PROJECTS
CONSTITUTING PUBLIC INFRASTRUCTURE OF THE CITY, AND THEIR FINANCING
THROUGH THE ISSUANCE OF GENERAL OBLIGATION BONDS
WHEREAS, the City of San Bruno (the “City”) is a municipal corporation and general law city duly organized and existing under the Constitution and laws of the State of California; and WHEREAS, the City is undertaking the following capital improvement projects:
(1) repairing, replacing, and improving the deteriorating stormwater drain system to prevent system failure, flooding, water pollution and sinkholes, (2) repairing and improving the City streets, and (3) constructing and upgrading fire stations to ensure rapid emergency response, accommodate modern fire-fighting and life-saving emergency medical equipment and allow the stations to function during earthquakes and other natural disasters (collectively, the “Improvements”); and
WHEREAS, the undertaking of the Improvements by the City constitutes the construction, reconstruction, rehabilitation and/or replacement of “municipal improvements” and “public infrastructure” because the Improvements are (1) part of the structures, facilities and equipment owned and operated under the control of the City, (2) part of the basic, underlying features of the City’s physical landscape, community identity, and organization, (3) once completed, open to the public for use and/or benefiting the public, and (4) necessary or convenient to carry out the objects, purposes and powers of the City; and
WHEREAS, the City is authorized to call an election for the proposition of incurring a bonded indebtedness and to issue such bonds to finance municipal improvements constituting public infrastructure of the City pursuant to certain provisions of the California Government Code, including Article 1 of Chapter 4 of Division 4 of Title 4 (commencing with Section 43600) and Article 4.5 of Chapter 3 of Part 1 of Division 2 of Title 5 (commencing with Section 53506) (collectively, the “Bond Law”); and
WHEREAS, the City intends to issue its general obligation bonds (the “Bonds”) under and pursuant to the Bond Law to finance the cost of the acquisition, construction and improvement of the Improvements; and
WHEREAS, in order to initiate proceedings under the Bond Law to provide for the issuance of general obligation bonds, the City Council of the City (the “City Council”) must make certain findings and determinations.
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of San Bruno as follows:
SECTION 1: The public interest and necessity demand, and it is the intention of the City Council to require, the acquisition, construction and improvement of the Improvements, and to issue the Bonds to finance the cost thereof, subject to completion of the proceedings required by the Bond Law.
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2 2
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3 SECTION 2: The City Council hereby finds and determines that the estimated costs of the Improvements will require an expenditure by the City greater than the amount allowed for it by the annual tax levy of the City. The principal amount of the Bonds will not exceed the estimated cost of the Improvements.
SECTION 3: This Resolution is adopted, and the Bonds, if approved by the qualified voters voting on the issuance of the Bonds, are to be issued pursuant to the Bond Law.
SECTION 4: This Resolution shall take effect upon its adoption by two-thirds of all members of the City Council.
---oOo---
I hereby certify that foregoing Resolution No. 2024 -___ was introduced and adopted by the San Bruno City Council at a regular meeting on July 9, 2024, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
_________________________________
Lupita Huerta, City Clerk
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ORDINANCE NO. ____
AN ORDINANCE ORDERING THE SUBMISSION OF A PROPOSITION INCURRING
BONDED INDEBTEDNESS TO THE QUALIFIED VOTERS OF THE CITY OF SAN BRUNO AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON NOVEMBER 5, 2024, FOR
THE PURPOSE OF FINANCING THE COST OF THE ACQUISITION, CONSTRUCTION AND
IMPROVEMENT OF CERTAIN MUNICIPAL IMPROVEMENT PROJECTS CONSTITUTING
PUBLIC INFRASTRUCTURE OF THE CITY
WHEREAS, the City of San Bruno (the “City”) is a municipal corporation and general law city duly organized and existing under the Constitution and laws of the State of California; and WHEREAS, the City is undertaking the following capital improvement projects:
(1) repairing, replacing, and improving the deteriorating stormwater drain system to prevent system failure, flooding, water pollution and sinkholes, (2) repairing and improving the City streets, and (3) constructing and upgrading fire stations to ensure rapid emergency response, accommodate modern fire-fighting and life-saving emergency medical equipment and allow the stations to function during earthquakes and other natural disasters (collectively, the “Improvements”); and
WHEREAS, the undertaking of the Improvements by the City constitutes the construction, reconstruction, rehabilitation and replacement of “municipal improvements” and “public infrastructure” because the Improvements are (1) part of the structures, facilities and equipment owned and operated under the control of the City, (2) part of the basic, underlying features of the City’s physical landscape, community identity, and organization, (3) once completed, open to the public for use and/or benefiting the public, and (4) necessary or convenient to carry out the objects, purposes and powers of the City; and
WHEREAS, the City intends to issue its general obligation bonds (the “Bonds”) to finance the cost of the acquisition, construction and improvement of the Improvements; and WHEREAS, under existing law, approval of the Bonds requires 2/3 of the voters in the City voting on the proposition to vote in favor; and
WHEREAS, Assembly Constitutional Amendment No. 1 (“ACA1”) has qualified for the November 5, 2024 Statewide ballot and would, among other things, change existing law to authorize a city, county, city and county, or special district to levy an ad valorem tax to service bonded indebtedness incurred to fund the construction, reconstruction, rehabilitation, or replacement of public infrastructure if the proposition proposing that tax is approved by 55% of the voters of the city, county, city and county, or special district, as applicable, and the proposition includes specified accountability requirements; and
WHEREAS, the foregoing amendments effectuated by ACA1, if approved at the November 5, 2024 Statewide ballot, would apply to any proposition authorizing general obligation bonds of a city that is submitted at the same election as ACA1; and WHEREAS, the proposition to approve the Bonds complies with all the provisions of ACA1, including all of its accountability requirements, so that, if ACA1 is approved on November 5, 2024, approval of the Bonds shall require that 55% (not 2/3) of the voters in the City voting on the proposition vote in favor; and
WHEREAS, if the ballot measure authorizing issuance of the Bonds is approved by the requisite number of affirmative votes, the City will be authorized to issue the Bonds. 159 of 184
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2 NOW, THEREFORE, the City Council of the City of San Bruno does ordain as follows:
SECTION 1. PURPOSE AND INTENT. Pursuant to the authority provided by the California Government Code and California Elections Code, the City Council proposes to order the submission of a proposition authorizing the City to issue general obligation bonds (the “Bonds”) to the qualified voters of the City at the general municipal election to be held on November 5, 2024.
SECTION 2. FINDINGS. The City Council hereby makes the following findings with respect to the proposed measure for the Bonds:
(i) On July 9, 2024, the City Council adopted, by a two-thirds vote of all its members, a resolution entitled “A Resolution of the City Council of the City of San Bruno Determining that the Public Interest and Necessity Demand the Acquisition, Construction and Improvement of Municipal Improvement Projects Constituting Public Infrastructure of the City, and Their Financing Through the Issuance of General Obligation Bonds,” pursuant to which the City Council has found and determined that the public interest and necessity demand the issuance of general obligation bonds to finance the Improvements, which are municipal improvement projects constituting public infrastructure of the City. (ii) In order to provide for the issuance by the City of general obligation bonds to provide financing for the Improvements, it is necessary for the City Council to adopt an ordinance ordering the submission of the proposition of incurring bonded indebtedness for such purpose to the qualified voters of the City at a municipal election.
(iii) The City Council desires to submit said ballot measure to the qualified voters of the City at the regular election to be held in the City on November 5, 2024, and to consolidate the bond election with other elections held within the City on that date.
SECTION 3. CALL FOR ELECTION. The City Council hereby orders that there be submitted to the qualified voters of the City a proposition on incurring bonded indebtedness for the purposes set forth in this Ordinance, at the regular election to be held on November 5, 2024.
SECTION 4. BALLOT PROPOSITION. The City Council hereby submits to the qualified voters of the City, at the regular election to be held on November 5, 2024, a proposition on issuing the Bonds. The statement of the measure shall be in substantially the form set forth in the resolution of the City placing the measure on the ballot.
SECTION 5. OBJECT AND PURPOSE OF BONDS. The object and purpose of the Bonds is to finance some or all of the costs of the Improvements. The authorized Improvements also include all work, facilities and expenditures necessary and incidental to the projects described above.
Examples of such work, facilities, and expenditures include, but are not limited to: costs of design, engineering, architect and other professional services, inspections, site preparation, utilities, landscaping, construction management and other planning and permitting, legal, accounting and similar costs; a customary construction contingency; demolition and disposal of existing structures; rental or construction of storage facilities and other space on an interim basis for materials and other equipment and furnishings displaced during construction; addressing unforeseen conditions revealed by construction or renovation, and other necessary improvements required to comply with existing building codes and other applicable law, including the Americans with Disabilities Act; costs of the bond election; bond issuance costs; project administration during the duration of such projects; and financing and interest costs on the Bonds.
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3 The final costs, locations, designs, layouts and other components of the Improvements will be determined as plans are finalized, construction bids are awarded, and projects are completed.
Therefore, the City Council cannot guarantee that the Bonds will provide sufficient funds to allow completion of all needed Improvements.
SECTION 6. ESTIMATED COST OF IMPROVEMENTS. The estimated cost of the Improvements is $102,000,000.00. The estimated cost includes legal or other fees, the costs of printing the Bonds, and other costs and expenses incidental to or connected with the authorization, issuance and sale of the Bonds. To the extent the Improvements financed are revenue-producing public works, the cost of the Improvements may also include bond interest estimated to accrue during the construction period and for a period of not to exceed 12 months after completion of construction.
SECTION 7. PRINCIPAL AMOUNT OF BONDS. The amount of the principal of the Bonds shall not exceed $102,000,000.00.
SECTION 8. MAXIMUM INTEREST RATE. The maximum rate of interest to be paid on the Bonds shall be the statutory maximum of 12% per annum. Said interest shall be payable semiannually, except that interest for the first year after the date of the Bonds may be made payable at the end of said year.
SECTION 9. ISSUANCE AND SALE OF BONDS. The City proposes to issue and sell the Bonds pursuant to Article 1, commencing with Section 43600, of Chapter 4 of Division 4 of Title 4 of the California Government Code, or Article 4.5, commencing with Section 53506, of Chapter 3 of Part 1 of Division 2 of Title 5 of the California Government Code, in one or more series, in the maximum amount and for the objects and purposes set forth above if the requisite number of qualified voters voting on the proposition vote in favor thereof. The Bonds will be general obligations of the City payable from and secured by ad valorem taxes levied and collected in the manner prescribed by the laws of the State of California. The revenue generated from the ad valorem tax levied and collected will be used for the payment of debt service on the Bonds. All of the Bonds shall be equally and ratably secured, without priority, by the taxing power of the City.
SECTION 10. MANNER OF CONDUCTING ELECTION. The election on the Bonds held on November 5, 2024 shall be held and conducted, election officers appointed, voting precincts designated, ballots printed, polls opened and closed, ballots counted, and returned, returns canvassed, results declared, and all other proceedings incidental to and connected with the election shall be regulated and done in accordance with the provisions of law regulating the election with which it is consolidated.
SECTION 11. PROCEDURE FOR VOTING ON PROPOSITION. Ballots for the election shall be provided in the form and in the number provided by law. Voters shall be provided an opportunity to vote for or against the proposition on the ballot, in accordance with procedures to be adopted by the authorized officers of the County of San Mateo (the “County”) charged with conducting the election.
SECTION 12. ACCOUNTABILITY REQUIREMENTS. In accordance with ACA1 and Sections 53410 and 53411 of the California Government Code, the City Council hereby adopts the following accountability requirements relating to the Bonds:
(i) The proceeds from the sale of the Bonds shall be used only for the purposes specified in this Ordinance, and not for any other purpose, including City employee salaries and
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4 other operating expenses. The administrative cost of the City for the Improvements shall not exceed 5% of the proceeds from the sale of the Bonds. (ii) The proceeds from the sale of the Bonds shall only be spent on the Improvements, which are projects that serve the jurisdiction of the City. (iii) This Ordinance shall be the ordinance through which projects will be funded and the City hereby certifies that it has evaluated alternative funding sources. (iv) The City shall conduct an annual, independent performance audit to ensure that the Bond funds are expended pursuant to the Ordinance specified in clause (iii). (v) The City shall conduct an annual, independent financial audit of the proceeds from the sale of the Bonds until all of those proceeds have been expended for the projects. (vi) The City shall post the audits required by clauses (iv) and (v) in a manner that is easily accessible to the public.
(vii) The City shall submit the audits required by clauses (iv) and (v) to the California State Auditor for review.
(viii) The City shall appoint a citizens’ oversight committee to ensure that Bond proceeds are expended only for the purposes described in the measure approved by the voters.
Members appointed to the oversight committee shall receive educational training about bonds and fiscal oversight.
(ix) Any entity owned or controlled by a member of the City Council shall be prohibited from bidding on any work funded by the proposition.
(x) A separate account shall be created and held by the City, into which the proceeds of the Bonds shall be deposited and applied solely for the purpose of financing the Improvements.
(xi) The Finance Director of the City shall file a report with the City Council at least annually showing the amount of Bond proceeds collected and expended, and the status of the Improvements.
SECTION 13. IDENTIFICATION OF TAX. The tax imposed by this measure is an ad valorem tax levied upon taxable real property in the City, and will be used to pay the principal and interest on the Bonds.
SECTION 14. OFFICIAL ACTIONS. The Mayor, the City Manager, the Finance Director, the City Clerk, and any of their designees, are hereby authorized to execute any documents and to perform all acts necessary to place the Bond measure on the ballot.
SECTION 15. INTERPRETATION. The provisions of this Ordinance, being necessary for the health, welfare, and safety of the City and its residents, is to be liberally interpreted to carry out its purposes. No error, irregularity or informality, and no neglect or omission of any officer, in any proceeding taken related to the submission of the proposition incurring bonded indebtedness to the qualified voters of the City shall void or invalidate any such proceeding, any Bonds issued by the City or any levy of ad valorem taxes to pay principal of and interest on the Bonds.
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5 SECTION 16. SEVERABILITY. If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect any other provisions or applications, and to this end the provisions this Ordinance are declared to be severable.
SECTION 17. PUBLICATION OF ORDINANCE. This Ordinance shall be published once a day for at least seven days in a newspaper published at least six days a week in the City, or once a week for two weeks in a newspaper published less than six days a week in the City. The first of said publications shall, in either event, be within 15 days after the adoption of this Ordinance. If there are no such newspapers, it shall be posted in three public places in the City for two succeeding weeks. No other notice need be given.
SECTION 18. EFFECTIVE DATE. In accordance with Section 36937(a) of the California Government Code, this Ordinance shall become effective immediately, as an ordinance relating to an election, upon its adoption by two-thirds vote of all the members of this City Council. __________________________________
Rico E. Medina, Mayor
ATTEST:
___________________________
Lupita Huerta, City Clerk
APPROVED AS TO FORM:
__________________________________
Trisha A. Ortiz, City Attorney
--oOo--
I hereby certify that foregoing Ordinance No. _____
was introduced at a regular meeting of the San Bruno City Council on ___________, 2024 and adopted by the San Bruno City Council at a regular meeting on ______________, 2024, by the following vote:
AYES: Councilmembers:
NOES: Councilmembers:
ABSENT: Councilmembers:
__________________________________
Lupita Huerta, City Clerk
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TAX RATE STATEMENT
An election will be held in the City of San Bruno (the “City”) on November 5, 2024, to authorize the sale of up to $102,000,000 in bonds of the City to finance the municipal improvements listed in the bond measure. If such bonds are authorized, the City expects to sell the bonds in one or more series. Principal and interest on the bonds will be payable solely from the proceeds of ad valorem tax levies made upon the taxable property in the City. The following information is provided in compliance with applicable provisions of the California Elections Code. Such information is based upon the best estimates and projections presently available from official sources, and other demonstrable factors.
Based upon the foregoing and projections of the City’s assessed valuation:
1. The best estimate of the average annual tax rate that would be required to be levied to fund the bond issue over the entire duration of the bond debt service, based on assessed valuations available at the time of filing of this statement is $0.03 per $100 (or $30.00 per $100,000) of assessed valuation of all property to be taxed. The best estimate of the final fiscal year in which the tax is anticipated to be collected is 2065-66.
2. The best estimate of the highest tax rate that would be required to be levied to fund the bond issue, based on assessed valuations available at the time of filing this statement is $0.03 per $100 (or $30.00 per $100,000) of assessed valuation of all property to be taxed. The best estimate of the first fiscal year in which the highest tax rate will apply is 2065-66.
3. The best estimate of the total debt service, including the principal and interest, that would be required to be repaid if all the bonds are issued and sold is $313,650,000.
[If applicable: A declaration that the City Council proposes to use revenues other than ad valorem taxes to fund the bond issue, and the best estimate from official sources of these revenues and the reduction in the tax rate levied to fund the bond issue resulting from the substitution of revenue.]
Voters should note that such estimated tax rates are specific to the repayment of bonds issued under this authorization and are and will be in addition to tax rates levied in connection with other bond authorizations approved or to be approved by the voters of the City or any other overlapping public agency.
Voters should note that estimated tax rate is based on the ASSESSED VALUE of taxable property within the City as shown on San Mateo County’s official tax rolls, not on the property’s market value. In addition, taxpayers eligible for a property tax exemption, such as the homeowner’s exemption, will be taxed at a lower effective tax rate than described above. Property owners should consult their own property tax bills to determine their property’s assessed value and any applicable tax exemptions.
Attention of all voters is directed to the fact that the foregoing information is based upon projections and estimates only, which amounts are not maximum amounts or 144 of 145
ATTACHMENT 4
durations and are not binding upon the City. The actual debt service amounts, tax rates and the years in which they will apply may vary from those presently estimated, due to variations from these estimates in the rating for the bonds, the timing of bond sales, the amount of bonds sold and market interest rates at the time of each sale, and actual assessed valuations over the term of repayment of the bonds. The dates of sale and the amount of bonds sold at any given time will be determined by the City based on need for funds and other factors. The actual interest rates at which the bonds will be sold will depend on the bond market at the time of each sale. Actual future assessed valuation will depend upon the amount and value of taxable property within the City as determined by the San Mateo County assessor in the annual assessment and the equalization process.
Alex McIntyre, City Manager
City of San Bruno
_______, 2024
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