General obligation bond
Placed on the ballot by the Board of Supervisors
Requires a 2/3 vote for passage
Should the City of San Francisco issue $400 million in general obligation bonds to finance seismic upgrades to specific public safety and emergency response facilities?
The City owns and operates facilities that provide for public safety and first response to emergencies. Presently, these facilities do not meet current building code seismic standards and would probably cease to function in the event of a major disaster.
The City’s 10-year Capital Plan adopted in 2006 cites the repair and relocation of public facilities as a high priority. Funding for repairs and seismic upgrades to the City’s infrastructure is accomplished through the sale of general obligation bonds. Property tax revenues are used to repay the principal and interest and property tax rates would not increase above the 2006 level.
Proposition A is a general obligation bond measure that would authorize the City to sell up to $400 million in
and audits – to improve specific public safety and emergency response facilities.
The bond proceeds could only be used to:
- Improve and retrofit neighborhood police and fire stations;
- Upgrade, repair and retrofit the Emergency Firefighting Water System including pump stations, pipes, and related facilities;
- Relocate the police crime lab and motorcycle unit to seismically secure facilities; and
- Build a seismically secure building for the Medical Examiner.
Proposition A would allow an increase in the property tax and landlords would be permitted to pass through 50% of the cost increase to tenants.
An independent Citizen Oversight Committee would review spending of bond funds. Bond programs, progress, and activity updates would be tracked online and available to the public.
A “YES” Vote Means: you authorize the City to sell up to $400 million in general obligation bonds to finance improvements to fire, earthquake and emergency response facilities.
A “NO” Vote Means: you do not authorize the City to sell bonds to finance improvements to fire, earthquake and emergency response facilities.
The City Controller states:
Should the proposed $400 million in bonds be authorized and sold under current assumptions, the approximate costs will be as follows:
- In fiscal year 2015–2016, following issuance of the first series of bonds, and the year with the lowest tax rate, the estimated annual costs of debt service would be $13 million and result in a property tax rate of $0.0069 per $100 ($6.79 per $100,000) of assessed valuation.
- In fiscal year 2020-2021, following issuance of the last series of bonds, the estimated annual costs of debt service would be $33.9 million and result in a property tax rate of $0.0149 per $100 ($14.69 per $100,000) of assessed valuation.
- The best estimate of the average tax rater for these bonds from fiscal year 2014-2015 through 2039-2040 is $0.0097 per $100 ($9.61 per $100,000) of assessed valuation
- Based on these estimates, the highest estimated annual property tax cost for these bonds for the owner of a home with an assessed value of $500,000 would be approximately $74.53.
These estimates are based on projections only, which are not binding upon the City. Projections and estimates may vary due to the timing of bond sales, the amount of bonds sold at each sale, and actual assessed valuation over the term of repayment of the bonds. Hence, the actual tax rate and the years in which such rates are applicable may vary from those estimated above. The City’s current debt management policy is to issue new general obligation bonds only as old ones are retired, keeping the property tax impact from general obligation bonds approximately the same over time.
ARGUMENTS IN FAVOR OF PROP A:
- This bond continues seismic upgrades started by the voter approved 2010 Earthquake Retrofit Bond and ensures neighborhood firehouses and police stations remain functional after an earthquake.
- First responders are in seismically unsafe buildings, which require improvements that cannot be funded by the City’s general fund.
- Property taxes will not increase because the City will only issue bonds after it pays off previous bonds that funded improvements made on public assets.
ARGUMENTS AGAINST PROP A:
- The ballot argument for Prop A makes inconsistent statements regarding whether or not property taxes will be raised to fund the improvements.
- The City should establish a major improvement fund and incorporate this fund into the annual budget rather than issuing an expensive bond project.
- The expected costs for seismic upgrades will most likely double, increasing the amount taxpayers will contribute to the bond program.
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