REPORT TO COUNCIL
SUBJECT
Title
Second Reading and Adoption of Ordinance Ordering the Submission of a Proposition Incurring Bonded Indebtedness to the Qualified Voters at the November 5, 2024 General Municipal Election of a Proposition Incurring Bonded Indebtedness for the Purpose of Financing the Cost of Acquisition, Construction and Improvement of Certain Municipal Improvement Projects (Main Library) and Adoption of a Resolution Placing a Library General Obligation Bond Measure on Ballot and Consolidating the Measure with the November 5, 2024 General Election
Report
BACKGROUND
At the June 18, 2024 City Council meeting, Council held a public hearing and by a 7-0 vote adopted a Resolution of Necessity (Resolution No.1241-24- Attachment 1) determining that the public interest and necessary demand the acquisition, construction and improvement of the City’s Main Library, and its financing through the issuance of General Obligation (GO) Bonds. The public hearing also introduced an ordinance ordering the submission of a proposition incurring bonded indebtedness to the qualified voters of the City of Sunnyvale 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 (Main Library) (the “Library Bond Ordinance”).
To complete the process required by state law to place a general obligation bond measure on the November ballot, the Council must take the following additional actions: conduct the second reading of the Library Bond Ordinance (Attachment 2) (Cal. Gov’t. Code § 43608); and adopt a resolution calling the election for November 5, 2024 (Attachment 3). All actions to place the measure on the ballot must be completed prior to the County Election Clerk’s August 9, 2024 deadline for filing a ballot proposition.
Several measures have been on the ballot in recent Sunnyvale elections. California Elections Code subsection 13116(b) allows the City to request assignment of different ballot measure lettering for new ballot measures to avoid voter confusion. Recent ballot measures include:
• Measure B - Charter Amendment - At-large to Mayor + 6 Council Districts - March 3, 2020
• Measure K - Transient Occupancy Tax - Nov. 6, 2018
• Measure L - Charter Amendment - Councilmember Appointments - Nov. 6, 2018
• Measure M - Public Lands Act - Nov. 8, 2016
• Measure N - Utility Users Tax - Nov. 8, 2016
The City is also able to request a particular order on the ballot when it places multiple measures on the same ballot. In addition to this potential Library General Obligation Bond the Measure, the City has placed a Charter Amendment Ballot Measure on the November 5, 2024 ballot.
EXISTING POLICY
Council Policy, Chapter 7.1B, Revenue Policies, Policy B.1.4 - When considering a new tax or revenue source or an increase in an existing tax or revenue source, the following criteria should be considered:
• Community/Voter Acceptance
• Competitiveness with surrounding communities
• Efficiency of revenue collection and enforcement
• Effectiveness in generating sufficient revenues in the short and long-term to justify its establishment
• Enhancement of revenue diversity to promote stability and provide protection from downturns in business cycles
• Equity/Fairness in distribution of the revenue burden on various segments of the community
Council Policy, Chapter 7.1F, Debt Issuance, Policy F.2.1 - Debt should be used only to finance improvements that cannot be paid for with current revenues, unless the purpose of the debt is to spread improvement costs over a longer period of time and ensure that future users become responsible for portions of the cost.
ENVIRONMENTAL REVIEW
Placing the Library GO Bond measure on the ballot is a fiscal and administrative activity that is exempt from California Environmental Quality Act (CEQA) review pursuant to CEQA Guidelines Sections 15378(b)(4) and (b)(5) because it involves fiscal and administrative activities that will not result in direct or indirect changes to the environment.
On September 25, 2018 (RTC #18-0799), the City Council certified a Draft Environmental Impact Report (collectively, “EIR”) (State Clearinghouse #2017092075), adopted a Statement of Overriding Considerations, and adopted a Mitigation Monitoring and Reporting Program for the Civic Center Master Plan. On July 14, 2020 (RTC No. #2-0505), the City Council approved changes to the Civic Center Master Plan project described in an Addendum to the EIR. The Civic Center Master Plan Environmental Impact Report (EIR) included analysis of a new or renovated library for Phase 2 of the Master Plan. The Council’s recently selected preferred design for the Library has some differences from the Phase 2 library project analyzed in the EIR, but those project changes are not expected to cause new or different significant environmental impacts. Therefore, an addendum to the EIR reflecting the design changes may be prepared pursuant to CEQA Guidelines section 15164 if the measure is approved by voters and the design and construction moves forward.
DISCUSSION
Consistent with Council direction, this report continues the necessary steps required to place a GO Bond measure for construction of a new Main Library on the November 5, 2024, general election ballot.
The proposed GO Bond payable from ad valorem property taxes is a special tax measure that requires voter approval. If approved by voters, the expenditure of proceeds of the GO Bonds, when issued, would be restricted to capital costs associated with the construction of a new Main Library. The revenue derived from the ad valorem property tax levy would be used solely to pay debt service on the GO Bonds.
The process for approving and issuing GO bonds is governed by the California Constitution and California law. The first steps of that process require the City to adopt a Resolution of Necessity and introduce ordinance approving and submitting to City voters the proposition incurring bonded indebtedness. The Council approved both of those items on June 18, 2024. This report presents the final steps necessary to complete the process of submitting the measure to Sunnyvale voters: the second reading and adoption of the ordinance and adoption of a resolution placing the library bond measure on the November 5, 2024 ballot.
Second Reading of Ordinance (Attachment 2)
Government Code section 43610 requires adoption of an Ordinance that includes a description of the object and purpose of bonds, the estimated costs of the improvements, and the manner of holding the election. In addition, the Ordinance will be provided to voters as part of the voter information guide. Adoption of the Ordinance requires a two-thirds vote of all Council members (five yes votes) (Government Code 43608).
Use of the GO bond proceeds will be limited to capital costs for improvements associated with the reconstruction and rehabilitation of the Sunnyvale Main Library. In addition to construction costs, eligible costs include fees for design, engineering, architect and other professional services, inspections, site preparation, utilities, landscaping, construction management, 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.
Under existing law, the measure will be approved only if 2/3 of the voters in the City voting on the proposition vote in favor. However, Assembly Constitutional Amendment No. 1 (“ACA1”) has qualified for the November 5, 2024, Statewide ballot. ACA1 would, among other things, change existing law related to the approval threshold to authorize issuing bonds if a measure is approved by 55% of the voters and otherwise meets specified accountability requirements set forth in ACA1. Therefore, if voters approve ACA1 in the November 5, 2024, statewide election, ACA1 will apply to the City’s GO Bond measure, and approval of the GO Bonds for the Library project will require that 55% (not 2/3) of the voters in the City voting on the proposition vote in favor.
Earlier this week, a bill was introduced in the Legislature (ACA10) that would make amendments to ACA1, but the amendments, as currently proposed, would still allow the GO bond measure to pass with 55% of voters. We have added wording to the Resolution calling the election to reference the possibility that ACA1 may be revised or replaced with another measure before being placed on the ballot. Staff are closely monitoring the situation. If there is a need to revise the Ordinance (which was introduced on June 18, 2024) to address changes to ACA1, there will be time to do so at the regular meetings on July 23 and July 30, 2024. The City has until August 14, 2024 to submit revisions to the Registrar of Voters.
Resolution Calling Election on Library General Obligation Bond (Attachment 3)
The final act necessary to place the Library bond measure on the ballot is adoption of the resolution calling the election, which will consolidate the City’s election with the November 5, 2024 statewide general election, authorize the Santa Clara County Registrar of Voters to provide election services, and provide for other administrative details associated with conducting the election such as ballot arguments, the impartial analysis, and required filings with the County of Santa Clara. In particular, Council should review and provide direction on the following elements of this resolution:
Ballot Question Language
California Elections Code Section 9051 limits ballot questions to no more than 75 words and requires the form “Shall the ordinance (stating the nature thereof) be adopted?” Staff adjusted the ballot question for readability and compliance with state law, so that it currently reads as follows:
To provide residents an accessible, modern, sustainable, earthquake-safe library; expand spaces for: collections, events, educational programs for children, teens and seniors; replace deteriorating plumbing, electrical and roofing; shall the measure of the City of Sunnyvale to issue $290,000,000 in bonds at legal interest rates with a maximum levy of $27.47 per $100,000 of assessed value while bonds are outstanding, generating approximately $18,600,000 annually, with audits, citizen’s oversight, all funds used locally, be adopted?
Ballot Arguments
California Elections Code Section 9282(b) provides for the filing of ballot measure arguments by the following: City Council or any member(s) of the Council authorized by the Council, any individual voter eligible to vote on the measure, bona fide association of citizens or any combination of voters, and associations.
If the Council decides to submit an argument in favor of the ballot measure or authorize certain members to submit an argument, then pursuant to Election Code Section 9287(a) that argument will be given preference over any other argument submitted in favor of the ballot measure. If the Council chooses not to submit an argument, the City Clerk will follow the priorities described in Elections Code Section 9287(a) in selecting an argument to be printed in the Sample Ballot.
The resolution is drafted with three options for the Council’s consideration regarding the submission of the argument in favor or against the measure:
a. Authorize the City Council as a body to submit a written argument [in favor] or [against] the measure;
b. Authorizes __[#]___ member(s) of the City Council to submit a written argument [in favor] or [against] the measure:_[one or more name(s)]_. At [Name(s)] discretion, the argument may also be signed by other members of the City Council, bona fide associations, or individual voters who are eligible to vote on the measure. In the event that an argument is filed against the measure [Name(s)] is also authorized to submit a rebuttal argument on behalf of the City Council, which, at [Name(s)] discretion, may also be signed by members of the City Council, bona fide associations, or individual voters who are eligible to vote on the measure. Signatures on the rebuttal argument may be different from those who signed the primary argument, OR
c. Take no action with regard to authorizing the Council, or member or members of the Council to submit a written argument [in favor] or [against] the measure.
Ballot Measure Letter Assignment and Ballot Measure Order
Should Council believe reusing recent ballot measure letters for this potential ballot measure and the Charter Amendment ballot measure would confuse Sunnyvale voters, Council may direct the City Clerk as the City’s Elections Official to submit a request to the Registrar of Voters to avoid assigning any of the following letters to the November 5, 2024 ballot measures:
• Measure B (Charter Amendment - At-large to Mayor + 6 Council Districts - March 3, 2020)
• Measure K (Transient Occupancy Tax - Nov. 6, 2018)
• Measure L (Charter Amendment - Councilmember Appointments - Nov. 6, 2018)
• Measure M (Public Lands Act - Nov. 8, 2016)
• Measure N (Utility Users Tax - Nov. 8, 2016)
Staff intend to request the potential Library General Obligation Bond Measure be placed before the Charter Amendment Ballot Measure on the on the November 5, 2024 ballot. Council may direct otherwise if desired.
Tax Rate Statement
Section 3 of the Resolution addresses the Tax Rate Statement for the bonds, which provides estimates for the average and highest tax rates that would be required to be levied to fund the bond issue based on current assessed property values. An estimated tax rate statement is provided for the Council’s information as Attachment 4. The Finance Director will work with Bond Counsel to finalize and file the Tax Rate Statement and all required information for bonds with the Registrar of Voters by the appropriate deadlines.
FISCAL IMPACT
If the proposed measure enacting a $290 million GO Bond payable from ad valorem property taxes is passed by Sunnyvale voters, staff estimates that the tax will result in approximately $18.6 million in average annual revenue which would be used to pay for the debt service for the GO Bond, based on assumptions of an average bond interest rate of 4% over 25 years.
The cost to place this Measure on the ballot is estimated by the Registrar of Voters to be $117,887. The FY 2024/25 Recommended Budget includes the cost for up to two potential ballot measures in Project 835020: Sunnyvale Biennial Elections.
PUBLIC CONTACT
Public contact was made by posting the Council meeting agenda on the City's official-notice bulletin board at City Hall, at the Sunnyvale Public Library and in the Department of Public Safety Lobby. In addition, the agenda and this report are available at the NOVA Workforce Services reception desk located on the first floor of City Hall at 456 W. Olive Avenue (during normal business hours), and on the City's website.
ALTERNATIVES
1. Conduct a Second Reading and Adopt an Ordinance Ordering the Submission of a Proposition Incurring Bonded Indebtedness to the Qualified Voters at the November 5, 2024 General Municipal Election for the Purpose of Financing the Cost of Acquisition, Construction and Improvement of Certain Municipal Improvement Projects (Main Library); and Adopt a Resolution Calling a General Municipal Election to be Held in the City of Sunnyvale on Tuesday, November 5, 2024 , for the Purpose of Submitting to City Voters an Ordinance to Approve the Issuance of General Obligation Bonds to Finance Municipal Improvements Constituting Public Infrastructure of the City (New Main Library); Requesting Consolidation with the Statewide General Election and Election Services From Santa Clara County; Directing the City Attorney to Prepare an Impartial Analysis; Setting Priorities for Ballot Arguments; and directing the City Clerk as the City’s Elections Official to submit a request to the Registrar of Voters to avoid assigning any recently used ballot measure letters to the November 5, 2024 ballot measures.
2. Do not adopt the ordinance and resolution required to place the General Obligation bond measure on the ballot and provide staff with further direction on next steps.
STAFF RECOMMENDATION
Recommendation
Alternative 1: Conduct a Second Reading and Adopt an Ordinance Ordering the Submission of a Proposition Incurring Bonded Indebtedness to the Qualified Voters at the November 5, 2024 General Municipal Election for the Purpose of Financing the Cost of Acquisition, Construction and Improvement of Certain Municipal Improvement Projects (Main Library) and Adopt a Resolution Calling a General Municipal Election to be Held in the City of Sunnyvale on Tuesday, November 5, 2024 , for the Purpose of Submitting to City Voters an Ordinance to Approve the Issuance of General Obligation Bonds to Finance Municipal Improvements Constituting Public Infrastructure of the City (New Main Library); Requesting Consolidation with the Statewide General Election and Election Services From Santa Clara County; Directing the City Attorney to Prepare an Impartial Analysis; Setting Priorities for Ballot Arguments; and directing the City Clerk as the City’s Elections Official to submit a request to the Registrar of Voters to avoid assigning any recently used ballot measure letters to the November 5, 2024 ballot measures.
Levine Act
LEVINE ACT
The Levine Act (Gov. Code Section 84308) prohibits city officials from participating in certain decisions regarding licenses, permits, and other entitlements for use if the official has received a campaign contribution of more than $250 from a party, participant, or agent of a party or participant in the previous 12 months. The Levine Act is intended to prevent financial influence on decisions that affect specific, identifiable persons or participants. For more information see the Fair Political Practices Commission website: www.fppc.ca.gov/learn/pay-to-play-limits-and-prohibitions.html.
A check or “Y” in the checklist below indicates that the action being considered falls under a Levine Act category or exemption:
SUBJECT TO THE LEVINE ACT
___ Land development entitlements
___ Other permit, license, or entitlement for use
___ Contract or franchise
EXEMPT FROM THE LEVINE ACT
___ Competitively bid contract
___ Labor or personal employment contract
_x_ General policy and legislative actions
Staff
Prepared by: Dennis Jaw, Assistant Director of Finance
Reviewed by: Tim Kirby, Director of Finance
Reviewed by: Rebecca Moon, City Attorney
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Kent Steffens, City Manager
ATTACHMENTS
1. Resolution No. 1241-24- Resolution of Necessity (Adopted June 18, 2024)
2. Ordinance No. 3229-24
3. Resolution Placing the Library Bond Measure on Ballot and Consolidating the Measure with the November 5, 2024 General Election
4. Tax Rate Statement