The same city staff that incurred $281 million in debt service to finance the Civic Center complex doesn’t want voters to have a say in the amount of debt financing required for large projects.
If you watched the July 26 Newport Beach City Council meeting, you probably saw the exchange between staff and myself regarding certificates of participation (COPs). When a municipality seeks to fund large projects using debt financing without getting voter approval, it circumvents the two-thirds popular vote required to issue bonds by using COPs instead.
COPs do not require a vote of the people, but they have the same effect bonds have of dedicating future revenue to make payments on the loan. In the case of our Civic Center, lease payments are made by the city to occupy its own City Hall.
Although the city had managed to operate for almost 100 years without using COPs, city staff stated that it would be a bad idea to require a popular vote to do so going forward: “We have a highly educated constituency, but they generally don’t have the time or interest to get into the minutia of mundane public infrastructure projects.”
I respectfully disagree. There is nothing minute or mundane about incurring $281 million in debt service on a Civic Center.
I believe Newport Beach residents are educated and interested enough to have a say in large projects that require debt financing.
With the assistance and vetting of our outside bond counsel, we have drafted the Newport Beach Taxpayer Protection Act to include a vote of residents to approve new projects more than $10 million when financed with COPs. This would not apply to the refinancing of existing debt.
Should the charter amendment pass, COPs may be used for large projects more than $10 millionif a compelling case is made to a majority of the residents in a general or special election. If the case can’t be made, then the council can still use the cash on hand, reserves, a line of credit, or simply wait for sufficient funds to commence a project.
If you would like a say in large projects that require debt financing, then I ask for your support for the Newport Beach Taxpayer Protection Act.
KEVIN MULDOON is mayor pro tem of Newport Beach.