Measure on tax increases will go on November ballot in Newport; debt measure won’t

A proposed charter amendment aiming to tighten controls over Newport Beach’s future debt won’t make the local ballot in November.

However, voters will be asked to consider whether the city charter should require approval from at least five of the seven City Council members before a general tax increase could be placed on a ballot for voter consideration. Currently, four council votes are required.

The City Council voted 6-0 on Tuesday, with Councilman Keith Curry abstaining, to move forward with the portion of the Newport Beach Taxpayer Protection Act concerning proposed tax increases. The council signed off last year on that aspect of the measure — requiring a supermajority council vote to approve tax increases — which Curry spearheaded.

Mayor Pro Tem Kevin Muldoon, Mayor Diane Dixon, Councilman Scott Peotter, city Finance Committee member and council candidate Will O’Neill and Carolyn Cavecche, chief executive of the Orange County Taxpayers Assn., will write the argument for the measure that will appear on the ballot.

Curry said that while he is “pleased they’ve seen fit to put it on the ballot,” he abstained from Tuesday night’s vote “out of protest to the fact [that other council members] hijacked it and took my name off the proposal.”

The deadline to place measures on the ballot is Friday.

Muldoon had asked his colleagues last month to consider adding a restriction on capital improvement bonds. He proposed that the measure ask voters whether they want to require public approval before the city can use a certificate of participation or lease revenue bond greater than $10 million. That proposal also would require that at least five of the seven City Council members approve before the question would go to voters.

The council voted 4-3 in July to direct staff to craft a proposed charter amendment that would combine the two issues on the Nov. 8 ballot. Curry and council members Ed Selich and Tony Petros dissented.

On Tuesday, Muldoon said he favors holding off on sending the debt question to voters to allow the Finance Committee, city staff and the public more time to review the proposed amendment.

“This plan was a little bit last minute,” Muldoon said. “Although we had bond counsel have a say and sign off on it, I think it’s good to have the community be involved in it.”

After the Finance Committee’s review, the measure could return to the council as an ordinance that, if passed, would sunset in 2018 if voters approve the ballot measure during that election, Muldoon said.

“Public agencies, including the city, are limited under state law regarding the amount of debt they may incur without prior voter approval,” according to a city 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.”

A certificate of participation, a financial instrument for issuing bonds to fund capital improvements, was used in funding part of the Newport Beach Civic Center project. 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.

Lease revenue bonds are secured by lease payments made by the party leasing the facilities that were paid for by the bonds. Newport does not have any lease revenue bonds.

In July, 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.

“I’m very pleased to see [Muldoon] withdraw the debt proposal, which clearly had some major issues,” Curry said.

Twitter: @HannahFryTCN