(July 19, 2008) -- On or about July 17, Vice Mayor Val Lerch and Councilmembers Bonnie Lowenthal and Gary DeLong signed paperwork (under LB's new longer-notice system) enabling city management to avoid the longer notice and agendize for the July 22 Council meeting a change to the proposed property parcel tax supported by city management and Mayor Bob Foster.

The revised enacting ordinance now states:

The proceeds of this special tax may be used only for the following purposes:

All costs incident to the acquisition, improvement, repair, replacement, rehabilitation, relocation, restoration, and preservation of streets, signals, sidewalks, alleys, storm water collection, transportation, detention and discharge systems, fire and police stations and other public safety facilities, parks and recreation and community facilities, open space, and wetlands, libraries and health facilities or for the payment of debt service on and the administration of any bonds issued for any such improvements.

The proposed parcel tax (which requires a 2/3 vote of the Council to put on the ballot, and a 2/3 vote of the voters to enact) is proposed to repay roughly $638 million in new City Hall debt that would be floated after the tax is enacted to fund $571.3 million in the above infrastructure categories.

City Hall would decide the specific projects without a subsequent vote of the people. No legally binding list of projects is expected until after voters vote on the proposed tax.

The proposed parcel tax begins at $120/yr for all LB residential properties (from NLB to Naples; annual increases up to 3%); for non-residential parcels (including industrial and commercial), the special parcel tax varies based on land use classification but is no higher than $0.0878 per square foot.

City management is seeking July 22 Council approval to put the measure the November 2008 ballot. In its agendizing memo (co-signed by Financial Mgm't Director Lori Ann Farrell, Public Works Dir. Mike Conway & Ass't City Attorney Heather Mahood), city management states in pertinent part:

In its first year (FY 2010), it is expected the new parcel tax will generate $31.5 million in revenue It is important to note that Long Beach's current property tax rate of 1.057461 percent is the lowest of California's ten largest cities . Moreover, in comparison to the 88 other cities in Los Angeles County, Long Beach's property tax rate ranks 70th out of the 88 cities placing Long Beach among the cities with the lowest property tax rates in both California's ten largest cities and in Los Angeles County...

FISCAL IMPACT

The City has conducted an extensive analysis, as requested by the City Council, of the City's infrastructure needs over the next ten years . It is clear that the City does not have sufficient resources to address the level of its infrastructure needs over the next decade. In addition, with each passing year, the cost of improving the City's infrastructure increases exponentially, making it even more cost prohibitive to incur unnecessary delays. An annual special parcel tax of $120 per single-family dwelling, and up to $0 0878 per square foot for other properties, adjusted annually for inflation, would allow the City to issue bonds to finance its infrastructure needs over the next 30-35 years .

Based on current market conditions, it is projected that municipal bonds totaling $638 million would be issued to fund $571 million in project costs, a required debt service reserve fund of $62.5 million, and $4.5 million in underwriting fees, attorney's fees, and related costs . The City's financial advisors have reviewed and approved this proposed financing plan . The special tax will sunset in approximately 35 years upon the final maturity date of the Infrastructure Reinvestment Act Bonds . With a City of Long Beach Standard and Poor's rating of AA- with a Stable Outlook, it is anticipated these bonds will be well received by municipal bond investors .

Without this additional revenue, estimated at approximately $31.5 million for Fiscal Year 2010 and adjusted annually for inflation, the City's vital infrastructure assets will continue to rapidly deteriorate, placing the City's residents, businesses and employees at increased safety risk and economic decline . It will cost approximately $13,000 to place the Long Beach Infrastructure Reinvestment Act on the November 4, 2008 ballot [sum is incremental cost since City Hall plans to put another measure on the ballot at a cost of over $400,000]. The Proposed FY 09 Budget for the City Clerk's Department will include this cost.

As presently scheduled, the Council vote on putting the proposed tax on the ballot will come before Councilmembers (and taxpayers) learn what cuts or service reductions (if any) city management and the Mayor propose for City Hall's FY 09 spending budget. The Mayor's deadline for releasing that information is August 1. He's previously indicated that he hopes to do so before then but hasn't done so yet...and isn't expected to do so before the coming Council vote on the proposed tax measure.

Mayor Foster and city management first publicly proposed the parcel tax on July 10 as a General tax (requiring a unanimous Council declaration of an emergency and a 50%+1 vote of the people) that could be spent on any GeneraL Fund purpose...and was officially revised on July 18 to specify certain infrastructure categories (now requires a 2/3 vote of the Council to put on the ballot (no unanimous Council declaration of an emergency to put on the ballot) with a 2/3 vote of the people to enact).