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REQUEST FOR <br />COUNCIL ACTION <br />CITY COUNCIL MEETING DATE: <br />November 2, 2009 <br />TITLE <br />FINANCING RELATED TO <br />PROPOSITION lA SECURITIZATION <br />PROGRAM <br />~~ <br />,- <br />CITY MANAGER <br />RECOMMENDED ACTION <br />CLERK OF COUNCIL USE ONLY: <br />APPROVED <br />^ As Recommended <br />^ As Amended <br />^ Ordinance on 15' Reading <br />^ Ordinance on 2"d Reading <br />^ Implementing Resolution <br />^ Set Public Hearing For_ <br />CONTINUED TO <br />FILE NUMBER <br />1. Adopt a resolution authorizing the execution of a purchase and sale <br />agreement for the City of Santa Ana Proposition lA receivables from <br />the State of California and approving all related documents and <br />actions. <br />DISCUSSION <br />Over the past decade, the State's approach to addressing its own fiscal <br />crisis has resulted in a loss of millions of dollars in city revenues <br />such as vehicle license fees (VLF), property taxes, and mandated <br />reimbursements. In 2004, California voters passed Proposition lA to <br />protect local government revenues thereby safeguarding funding for public <br />safety, libraries, parks and other city services. Although Proposition <br />lA contains revenue protection provisions, these provisions can be <br />temporarily suspended if the Governor declares a fiscal emergency and the <br />Legislature enacts an urgency statute and law providing for full <br />repayment of the borrowed funds, plus interest within three years. <br />As part of the State of California 2009-2010 budget package, the <br />emergency suspension of Proposition lA was passed by the Legislature and <br />signed by the Governor on July 28, 2009. Under the provision, the State <br />will borrow eight percent (8%) of the amount of property tax revenue <br />apportioned to cities, counties and special districts. They are required <br />to repay these obligations plus interest by June 30, 2013. The total <br />amount the State borrowed from the City of Santa Ana is estimated at $5.5 <br />million. Recognizing the budget crisis many cities are facing, the <br />Legislature enacted a bill which permits the sale of property tax <br />receivables though a securitization program to assist cities in this <br />payment. <br />55A-1 <br />