What it does
This Charter amendment introduced by Board of Supervisors President Tom Ammiano authorizes the issuance of revenue bonds for renewable energy and energy conservation facilities without majority voter approval, as is currently the case.
Why it is on the ballot
Certain types of revenue bonds are presently exempted from the city Charter requirement of voter approval, such as housing revenue bonds, Port revenue bonds secured solely by Port revenues and airport bonds secured solely by airport revenues. This Charter amendment would add to the list of exemptions any revenue bonds issued to finance or refinance the acquisition, construction, installation, equipping, improvement or rehabilitation of equipment or facilities for renewable energy and energy conservation.
The passage of this Charter amendment would allow for the issuance of revenue bonds for renewable energy and energy conservation facilities without voter approval but would not require the issuance of such debt. Revenue bonds usually require investment-grade ratings to be sold at reasonable interest rates, which means proving a prospective issue's credit-worthiness to independent rating agencies such as Moody's and Standard & Poor's. A debt service coverage ratio (showing net revenues in excess of debt service by a certain specified margin) and rate covenants to maintain revenues at a level that sustains the covenanted coverage ratio are requirements for an investment-grade rating of Baa/BBB (the rate which slipping below would cause our debt costs to increase) and above.
Those who support this measure state:
- Proponents of this Charter amendment argue that it will encourage solar and other forms of renewable energy by providing attractive financing for both public facilities and private homes and businesses. No direct public subsidies are provided for in this ballot measure (other than potential tax exemption, which impacts the U.S. Treasury but not the city general fund). Revenue bonds will have to be proven to be self-sufficient before they can be sold in the municipal market, with operating revenues sufficient to cover all debt service, and the Board of Supervisors will have to approve any future revenue bond issuance in advance.
Those who oppose this measure state:
- Opponents believe the public should keep its vote on each bond issue in order to keep a check on city spending by forcing greater scrutiny of individual projects.
The measure allows for future financing flexibility in issuing revenue bond debt, and the market will dictate financial feasibility before any such debt can be sold. The authority permitted by this Charter amendment is already enjoyed by most other Charter cities in California, where the issuance of revenue bonds does not require voter approval.
SPUR recommends a "Yes" vote for Proposition H.