Following a public hearing, a majority of the council agreed not to place on the June ballot a $37 million bond measure that would have been a scaled-back version of Measure H, a
$44-million measure that narrowly failed in last November's election.
The new measure would have paid for $35 million in upgrades to the city's flood-control infrastructure, including levees, pump stations and catch basins. An additional $2 million would have gone toward a seismic retrofit of the city's recreation center.
The Council also considered an alternative method of paying for the flood-control fixes known as a Mello-Roos tax or community facilities district, an option that would allow the city to distribute the tax burden in a variety of different ways.
Councilwoman Rosalie O'Mahony was the sole council member in favor of moving forward with a June vote. O'Mahony introduced a motion to proceed with a general obligation bond, but it did not receive a second.
"It's really a matter of timing," said Councilman Russ Cohen, explaining his opposition to the June election. "Quite frankly, whatever tax we come up with is going to be unfair to somebody, and someone is going to be complaining."
Lorne Abramson, a leader of a group of new homeowners who opposed Measure H, said he was gratified by the council's decision not to proceed with a new bond measure at this time.
"We'll see how things continue to unfold, but we're very pleased," Abramson said.
The group told the council in advance of Wednesday's vote that they would support a community facilities district but "vigorously oppose" a general obligation bond in the vein of Measure H.
The opponents argued that general obligation bonds, which are supported by taxes based on assessed property values, put too much of the financial burden on new homeowners.
Because Prop. 13 means that assessed property values are basically frozen at the time a home is purchased, there is often a gap between the assessed value and the market value of an older home. Accordingly, residents who have owned their homes for years or decades stand to fare better under a general obligation bond than those who bought their homes recently.
Proponents of general obligation bonds counter that they are the fairest available form of taxation. And they maintain that the tax burden shifts over time: New homeowners may pay more now, but they'll pay less when the next bond measure comes around.
City Manager Jim Nantell noted that, while wealthy homeowners would pay less under a community facilities district, the 30 percent of homeowners whose properties are worth $300,000 or less would likely pay more over the duration of the 30-year tax.
The city paid $5,000 in January for a preliminary analysis that compared the tax structures of a general obligation bond and a community facilities district. The report compared estimates in which residents paid roughly 70 percent of the tax, with commercial properties making up the rest.
In one scenario laid out in the report, all owners of single-family homes would pay a flat rate of $175 per year under a community facilities district, while under a general obligation bond, the owner of a home assessed at $548,000 would pay a fluctuating amount, ranging from a maximum of $206 per year to a minimum of $23 per year over the 30-year cycle, averaging $125 per year.
The council did not address how it will proceed with the storm drainage fixes but is likely to study the issue further in the coming months.
Staff writer Aaron Kinney can be reached at (650) 348-4302 or by e-mail at firstname.lastname@example.org.