REPORT TO COUNCIL
SUBJECT
Title
Adoption of Revised Resolution Placing a New Main Library General Obligation Bond Measure on Ballot and Consolidating Measure with the November 5, 2024 General Election
Report
BACKGROUND
At the City Council meetings held on June 18 and 25, 2024, (RTC Nos. 24-0025, 24-0729), the City Council completed the following actions necessary to place a general obligation bond measure to fund design and construction of a new main library:
(1) Adopted a Resolution of Necessity (Resolution No.1241-24) determining that the public interest and necessity demand the acquisition, construction and improvement of the City’s Main Library, and its financing through the issuance of General Obligation (GO) Bonds;
(2) Adopted an ordinance (Ord. No. 3229-24) 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 “Main Library Bond Ordinance”);and
(3) Adopted a resolution placing the main library bond measure on the November 5, 2024 ballot.
Under current law, the Main Library Bond measure will pass if 2/3 of voters voting on the measure vote to approve. However, if Assembly Constitutional Amendment No. 1 (ACA1), a state measure also on the November ballot, also passes, it will reduce the approval threshold for the City’s measure to 55%. As discussed in the June 25 Report to Council, the state legislature was still considering legislation related to ACA1 when the City approved placing the Main Library Bond measure on the ballot. For the reasons outlined in the discussion section below, Staff is recommending that the Council adopt a revised resolution placing the measure on the ballot with small updates related to ACA1 and add a clear statement that the City intends for the Main Library Bond to comply with ACA1 if both measures are approved. The recommended changes will only clarify the impact of ACA1 and do not change the previously approved ballot question or the ordinance.
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 Main 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 main library for Phase 2 of the Master Plan. The Council’s recently selected preferred design for the Main Library has some differences from the Phase 2 main 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
Under existing law, the Main Library Bond measure will be approved only if 2/3 of the voters in the City voting on the proposition vote in favor. However, 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 Main Library project will require that 55% (not 2/3) of the voters in the City voting on the proposition vote in favor.
In the June 25 RTC, staff advised that there was a possibility that ACA1 might be revised or replaced with another measure before being placed on the ballot. Staff planned to closely monitor actions at the state level related to ACA1 and advised that there would be time to address any necessary changes to the City’s documents before the County Registrar’s August 14, 2024 deadline.
Assembly Constitutional Amendment No. 10 (ACA10) proposed amendments to ACA 1 and was introduced only a few days before the City Council’s June 26 meeting. Furthermore, Assembly Bill 2813 (AB 2813) proposed certain requirements for bond oversight committees. ACA10 was ultimately adopted as legislation that would implement ACA1 rather than amend it, and AB 2813 was adopted by both houses of the legislature in early July and is expected to be sent to the Governor for signature.
The last-minute changes introduced by ACA10 and AB2813 to the framework for ACA1 risk creating some confusion about the applicability of ACA1 to the City’s measure. Although the City’s previously adopted ordinance and resolutions are legally sufficient, staff is recommending clarifying updates to minimize the possibility that the City’s measure is challenged if ACA1 passes and the City utilizes the 55% approval threshold for the Main Library Bond measure to also pass. While staff believes that the City would prevail if the existing documents were challenged on the basis of ACA1, a challenge could cause unnecessary delay to the project. The revised resolution updates recitals to clarify the impact of ACA1 to the City’s measure and adds a statement to Section 1 of the resolution stating that the Council intends “that the accountability measures contained in the Ordinance shall comply with ACA1 and any and all other statutory or other requirements determined to be required for compliance with ACA1.” This statement should eliminate any question about the City’s intent for its measure to comply with ACA1 if both measures pass.
The ballot question, the ordinance attached as Exhibit A, and all the Council’s original direction related to ballot arguments and other administrative issues remain unchanged.
FISCAL IMPACT
Approval of the revised resolution does not have further 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. This is 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.
STAFF RECOMMENDATION
Recommendation
Adopt a Revised 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.
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: Melissa Tronquet, Sr. Assistant City Attorney;
Dennis Jaw, Interim Director of Finance
Reviewed by: Rebecca Moon, City Attorney
Reviewed by: Sarah Johnson-Rios, Assistant City Manager
Approved by: Tim Kirby, Interim City Manager
ATTACHMENTS
1. Draft Revised Resolution