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<br />REQUEST FOR <br />COUNCIL ACTION <br /> <br />~ <br />~ <br /> <br />CITY COUNCIL MEETING DATE: <br /> <br />CLERK OF COUNCIL USE ONLY: <br /> <br />FEBRUARY 7, 2005 <br /> <br />TITLE: <br />FINANCING RELATED <br />LICENSE FEES <br /> <br />TO VEHICLE <br /> <br />APPROVED <br /> <br />0 As Recommended <br />0 As Amended <br />0 Ordinance on 151 Reading <br />0 Ordinance on 2nd Reading <br />0 Implementing Resolution <br />0 Set Public Hearing For <br /> <br />¡ <br /> <br />~. <br />/..--- ì .. ! <br /> <br /> <br />u~ ;1(2~~ <br /> <br />CITY MANAGER <br /> <br />CONTINUED TO <br /> <br />FILE NUMBER <br /> <br />RECOMMENDED ACTION <br /> <br />1. Adopt a resolution authorizing the execution of a Joint Exercise of <br />Powers Agreement related to the California Statewide Communities <br />Development Authority. <br /> <br />2. Adopt a resolution authorizing the execution of a purchase and sale <br />agreement for the City of Santa Ana Vehicle License Fee receivables <br />from the State of California and approving all related documents and <br />actions. <br /> <br />DISCUSSION <br /> <br />Over the past 14 years, the State's approach to addressing its own fiscal <br />crisis has resulted in a decrease of over $117 million in city revenues <br />such as vehicle license fees (VLF) , property taxes, and mandated <br />reimbursements. During FY 03-04, in an attempt to reduce its deficit by <br />$1.2 billion, the State redirected three months of VLF paYments from <br />cities and counties to fund other State obligations. The impact of this <br />action was a reduction of $5.9 million to the City of Santa Ana. <br /> <br />Due to subsequent State and local government budget negotiations, the <br />State agreed to reimburse the cities and counties by making a lump sum <br />paYment on August 15, 2006. Additionally, the legislature enacted a bill <br />which permits the local agencies to declare the amount loss by this <br />action as a receivable which may be sold, less capitalized interest and <br />issuance costs, in order to accelerate the receipt of the funds. The <br />State would remain liable for all paYments to the new owners of the <br />receivable. <br /> <br />With its financial crisis not yet resolved, there remain doubts that the <br />State will honor the repaYment to cities and counties by August 2006. The <br />sale of the receivable mitigates the risk to the city and establishes the <br />amount as debt for the State in the financial marketplace. <br /> <br />55A-1 <br />