Newport council to take up tax amendment
The Newport Beach City Council on Tuesday will consider placing a charter amendment on the November ballot that aims to tighten controls over tax increases and taking on debt.
The measure would ask local voters to consider whether the city charter should require at least five of the seven City Council members to vote in favor of a general tax increase before an increase could be placed on the ballot for voter consideration. Currently, four council votes are required.
Voters would also be asked whether they want to require voter approval before the city can use a certificate of participation, or lease revenue bond, greater than $10 million. The measure would also require at least five of the seven City Council members vote in favor before the question would go to registered voters.
A certificate of participation, a financial instrument for issuing bonds to fund capital improvements, was used in funding part of the Civic Center project. Lease revenue bonds are secured by lease payments made by the party, often a municipality, leasing the facilities that were paid for by the bond. Newport does not have any lease revenue bonds.
Certificates of participation are a common way that municipalities finance the acquisition of land and public infrastructure. COPs are paid for from a government’s existing revenue stream, unlike general obligation bonds, which result in tax increases and therefore require a public vote.
“Public agencies, including the city, are limited under state law regarding the amount of debt they may incur without prior voter approval,” according to the staff report. “In response to this debt limitation, public agencies have used certificates of participation and lease revenue bonds to raise funds to finance certain improvements.”
The City Council voted 4-3 in July to direct staff to craft the proposed charter amendment, the Newport Beach Taxpayer Protection Act, for placement on the Nov. 8 ballot. Council members Ed Selich, Tony Petros and Keith Curry dissented.
The council signed off last year on one aspect of the measure, requiring a super-majority council vote to approve tax increases, which Curry spearheaded.
However, Mayor Pro Tem Kevin Muldoon asked his colleagues last month to consider adding the restriction on capital improvement bonds. City staff consulted with their outside bond counsel to draft the proposed amendment, according to the staff report.
During the July meeting, city Finance Director Dan Matusiewicz cautioned against requiring all COP plans to become ballot initiatives, as he felt it would add uncertainty to financial planning, as well as time and costs associated with ballot measures.
The deadline to place the measure on the ballot is Aug. 12.
The City Council meeting will begin at 7 p.m. at City Hall, 100 Civic Center Drive.
