Guess what won't be on your ballot as you vote on Tuesday ... any option for you to approve or reject the Oxnard City Council's plans to put us over HALF A BILLION dollars in bond debt.
Yes, you read that right. The City Council wants to spend your money like drunken sailors with a credit card –– and without seeking your approval.
City council members –– past and present –– have repeatedly approved pension benefit promises that far exceed what the city can actually afford to pay out, knowing that the chickens will eventually come home to roost. Well, we recently heard them clucking. A March 1, 2022 staff report presented to the city council revealed that:
“Over the last 11 years, the City’s unfunded accrued liability (“UAL”) for its CalPERS Miscellaneous and Safety Plans has grown from approximately $94 million (6/30/2010 valuation) to approximately $322 million (6/30/2021 valuation).”
And due to unrealistic discount rates (i.e., overinflated investment return expectations) used in those calculations, that unfunded pension amount is likely greatly understated.
At that same March meeting, the Oxnard City Council voted to take a financial gamble by authorizing the issuance of up to $330 million of pension obligation bonds ... betting that the state's pension board will generate investment returns greater than the interest costs of the bond debt.
That's like taking out a loan to go to the casino.
It wasn’t that long ago that the Oxnard City Council was complaining that a prior council had approved a complicated interest rate swap agreement that (in hindsight) hadn’t worked to our benefit.
Well, the council apparently hasn’t learned much from that experience, and is prepared to do it again on a much larger scale.
Even City Hall knows that incurring this pension bond debt –– without a public vote –– would be vulnerable to a legal challenge.
So, the city filed what's called a validation lawsuit against ALL INTERESTED PERSONS. It advertised the lawsuit in a local newspaper, expecting to receive a default judgment when nobody replied to challenge the bond's legal validity.
Well, we believe the California Constitution requires voter approval to incur this debt, so we (represented by the Howard Jarvis Taxpayer Association, and joined by the Ventura County Taxpayers Association) answered the city’s lawsuit and expect to be in front of a judge later this year. Stay tuned.
But that’s just the beginning of Oxnard City Hall’s plans for issuing bond debt. Just in the past few months we’ve seen them discuss several other expensive projects that they want to bond out without voter approval in the near future:
- On October 18, 2022, the council authorized $45 million of bonds.
- The Oxnard City Council also recently approved a design for an aquatic center –– a community pool idea that ballooned into a water park –– with a rough estimated construction cost of almost $59.3 million, financing about $46 million of that with bonds.
- The city wants to build a new senior center, which the city manager also says would be a bonded project. The current Capital Improvement Plan puts a $45m price tag on that.
- The city’s seawalls will need some repair work, and the city thinks bonds will be needed. If we assume council’s hope will come true for cutting a deal for the general fund to pay only half of that cost, the current Capital Improvement Plan puts an $80 million price tag on the project…which likely means $40 million of bonds.
Combine those ideas ($330m + $45m + $46m + $45m + $40m = $506m), and this City Council is on a path to put us into HALF A BILLION DOLLARS of bond debt … without voter approval. Over the lifetime of those bonds, with interest costs added, residents would likely be on the hook for about $1 BILLION.
Of course, the city's bond consultants LOVE all those ideas.
Remember all those things the city promised would be done with the $50 million raised annually by the recent 1.5% sales tax increase (Measure E)?
Well, at the rate the city plans to go into debt, soon we’ll be hearing Oxnard City Hall again say that they don’t have the cash available to make good on such promises because we’ll be stuck for 30 years paying the minimum payments on the city’s version of credit cards – bond debt.
We urge the city to cut out the gambling with tax money, and put residents' NEEDS before the City's WANTS. So long as the public must endure paying for this new stream of tax dollars, the proceeds should be spent as collected for current expenses, not used as leverage to take on outrageous bond debts.