RES 02047 - Laserfiche WebLink

Right to Vote on Taxes Initiative On November 5,1996, the voters of the State approved Proposition 218. the "Right to Vote on Taxes Act." Proposition 2] 8 added Articles XlIIC and XlIID to the State Constitution. which contain a number of provisions affecting the ability of the City to levy and collect both existing and future taxes. assessments. fees and charges, Proposition 218 also extends the initiative power to reducing or appealing any local taxes. assessments. fees and charges. This extension of the initiative power is not limited to taxes. assessments. fees and charges imposed on or after November 6. 1996. the effective date of Proposition 2] 8, and could result in retroactive repeal or reduction in any existing taxes. assessments. fees or charges except those which are pledged to the repayment of debt. If such a repeal or reduction in City fees or charges were to occur. and it was held that any such taxes. assessments. fees or charges were not pledged to any debt repayment. the City's ability to make debt service payments could be adversely affected, In addition, while the matter is not free frorn doubt. Proposition 2 18 imposed restrictions on the levy of charges for "propeny-related services." which a number of jurisdictions have interpreted to include charges for water and sewer services. The City's sewer rates described herein were not adopted in compliance with the provisions of Proposition 2 18, since, pending funher clarification by the couns, the City has taken the position that its rates and charges are not a "propeny-related fee or charge" subject to the provisions of Proposition 2] 8, Therefore, the City believes that its fees for service provided by the sewer system will not be adversely affected by Proposition 218. The interpretation and application of Proposition 2] 8 will ultimately be determined by the courts with respect to a number of the matters discussed above. and it is not possible at this tirne to predict with cenainly the outcome of such determination or its effect on payment of the debt service payments, Initiatives In recent years several initiative measures have been proposed or adopted which affect the ability oflocal governments to increase taxes and rates. There is no assurance that the electorate or the state legislature will not at some future time approve additionallimi- tations which could affect the ability of the City to implement future rate increases which could reduce net revenues and adversely affect the security for the Bonds. CONCLUDING INFORMATION Continuing Disclosure The City has covenanted for the benefit of the holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the City'S sewer enterprise, These covenants have been made in order to assist the underwriters in comply- ing with SEC Rule 12c2-12(b)(5). The City is in compliance with its disclosure require- ments. A form of continuing disclosure cenificate is attached in Appendix D. 19