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Home My WebLink AboutAgenda Report - May 18, 2011 C-15A 15 AGENDA ITEM '' &% CITY OF LODI COUNCIL COMMUNICATION AGENDA TITLE: Receive Report Regarding League of California Cities Communications Pertaining to Assembly Bill 506 and Senate Bill 286 MEETING DATE: May 18,2011 PREPARED BY: City Clerk RECOMMENDED ACTION: Receive report regarding League of California Cities (League) communications pertaining to Assembly Bill 506 and Senate Bill 286. BACKGROUND INFORMATION: The City received a request for communications from the League on May 2, 2011 pertaining to AB 506 and SB 286. Letters of opposition on AB 506 and support on SB 286, signed by the Mayor, were needed by May 4,2011, the date of the hearings on both bills in the State Legislature. As you may be aware, AB 506 (Wieckowski) would provide that a local public entity shall not file under federal bankruptcy law unless the local public entity has participated in mediation with certain interested parties has received a certificate of good faith participation, and if the mediation results in either an agreement for debt readjustment, or if the mediator certifies in writing that continued mediation will not contribute to a resolution of the parties' dispute, under certain circumstances. The bill would also require the California Debt and Investment Advisory Commission to adopt specific mediation guidelines. SB 286 (Wright) would, until January 1, 2013, prohibit the legislative body of a city, county, or city and county from adopting an ordinance to adopt or amend a redevelopment plan. The bill would also impose new requirements on the agency with respect to implementation plans and evidentiary standards and expand existing prohibitions on agency direct assistance to certain projects. This bill is the alternative proposal to the Governor's proposal to eliminate redevelopment agencies. Both letters were sent as requested on May 3, 2011 and this report is provided for informational purposes only. FISCAL IMPACT: None. FUNDING AVAILABLE: Not applicable. edi Johl city Clerk APPROVED: Konra t Bartlam, City Manager CITY COUNCIL BOB JOHNSON, Mayor JOANNE MOUNCE, Mayor Pro Tempore LARRY D. HANSEN PHIL KATZAKIAN ALAN NAKANISHI May 3,2011 CITY OF LODI CITY HALL, 221 WEST PINE STREET P.O. BOX 3006 LODI, CALIFORNIA 95241-1910 (209) 333-6702 / FAX (209) 333-6807 www.l od Lg ov citycl erk() lod i.ci ov Honorable Bob Wieckowski: State Capitol Building, Room 4162 Sacramento, California 95814 Dear Assembly Member Wieckowski: KONRADTBARTLAM, City Manager RANDI JOHL, City Clerk D. STEPHEN SCHWABAUER City Attorney The City of Lodi regrets to inform you that the City strongly oppose this latest attempt to remove our ability to make our own financial decisions. AB 506 attempts to prevent any local government from filing for bankruptcy under Chapter 9 of the federal bankruptcy code without first receiving the permission from what can oniv be called a State- controlled non-governmental arbitrator. Puts Local Services at Risk. The purpose of filing for Chapter 9 bankruptcy protection is to effectively suspend payments by granting an automatic stay of financial obligations in order to formulate a debt readjustment plan. Without this protection, fiscally vulnerable cities with the inability to continue payments may face interruptionsto vital services and residents will suffer. Subverts Effective and Neutral Process for State-ControllerArbitrator. Current bankruptcy proceedings are managed by expert bankruptcyjudges who have no stake in the outcome. The proposed State Commission which would manage the new process is comprised of elected officials who will face special interest and politic pressures. Furthermore the use of an outside "mediator" with all the powers of an arbitrator has far larger implications that will threaten local control. This process is clearly being stacked against municipalities. Limits Negotiations. Excluding collective bargaining agreements, and their high price tags, severely limits the options available to cities. Essentiallythe only thing left on the table is to reduce payments to bondholders and other debtors. It's no surprise that this bill is being co-sponsored by the California Professional Firefighters Association. "Good Faith" Gone. As defined in your bill, "good faith" no longer represents a city's sincere efforts to find a solution to disputes unless it is also acting to adjust payments as the "mediator" defines. If the "mediator" decides that a city has not acting in "good faith" they will lose their ability to file for bankruptcy. Municipal Bankruptcy is a Last Resort. Since the adoption of Chapter 9 of the State Bankruptcy Code in 1949-60 years ago—only two cities (and qne county) have petitioned for its use: the City of Desert Hot Springs in 1994, Orange County in 1994, and in 2008 the City of Vallejo. Bankruptcy is not an attractive alternative for local communities, nor k it an easy process, and is a last desperate resort. Furthermore, it is the chronic mismanagement of the state's budget and raids on local governments that has left cities in fiscal distress. The State should get its own fiscal house in order before interjecting itself in city affairs. Forthese reasons the City cf Lodi is opposed to your AB 506. cerely, C Bob Johnson Mayor C: Natasha Karl, League of California Cities (Fax: 916-658-8240) CITY COUNCIL BOB JOHNSON, Mayor JOANNE MOUNCE, Mayor Pro Tempore LARRY D. HANSEN PHIL KATZAKIAN ALAN NAKANISHI May 3, 2011 CITY OF LODI CITY HALL, 221 WEST PINE STREET P.O. BOX 3006 LODI, CALIFORNIA 95241-1910 (209) 333-6702 / FAX (209) 333-6807 www.lodi.gov cityclerkalodi.clov Senator Rod Wright State Capitol Building, Room 5064 Sacramento, California 95814 Dear Senator Wright: KONRADTBARTLAM, City Manager RAND! JOHL, City Clerk D. STEPHEN SCHWABAUER City Attorney On behalf of the City of Lodi, I am writing to express our support for Senate Bill 286. This bill would impose tough new reforms to increase accountability and limit the size and scope of redevelopment in California. It will also ensure redevelopment is being used responsiblyto maximize job -creation, revitalize rundown communities, clean-up contaminated properties, finance infrastructure improvements, and build affordable housing. We are opposed to the Governor's proposal to eliminate redevelopment, a move that would have disastrous consequences on local communities throughout the State, harm local economies and kill tens of thousands of jobs. Instead, we support your SB 286 to reform redevelopmentto maximize its effectiveness and accountability, while preserving redevelopment as a powerful tool for local economic growth and job creation. `Sincerely, Bo ohnson M or C: Dan Carrigg, League of California Cities (Fax: 916-658-8240) Senate Governance and Finance Committee Members (Fax: 916-322-0298)