Proposition F - Citizen General Obligation Bond Oversight Committee

Voter Guide
March 1, 2002
This measure appeared on the March 2002 San Francisco ballot.

 

What it does

This is a companion measure to legislation already approved by the Board and Mayor that creates a new Entertainment Commission with primary responsibility for permitting places of entertainment. What is at stake in the proposed charter change is not establishment of a commission, but only a narrow question regarding commission governance.

Background

This ballot ordinance would establish a nine member committee to monitor the way general obligation (G.O.) bond monies are spent, conduct audits, and report to the public. Its objectives are to see that bond proceeds are spent only in accordance with the ballot measure under which they were authorized, and that no funds are used for administrative salaries or other general governmental operating expenses unless the bond measure specifically authorizes those expenses. The Oversight Committee's expenses would be funded by .01% of the gross proceeds of the bonds (e.g., $100,000 for a $100 million bond issue). If misappropriation of money is found, the committee could stop additional G.O. bonds from being issued. A supermajority of the Board of Supervisors could reverse the stoppage. The committee would not review bond proposals before public approval, and could not be involved in the selection of vendors to execute bond funded projects.

This measure was placed on the ballot by Supervisor Mark Leno co-sponsored by Supervisors Hall, Maxwell, Newsom and Yee.

Pros

Those who support the measure state:

  • The Committee will address recent breaches of public trust and lack of accountability and oversight regarding how voter-approved G.O. bonds are spent.
  • The Committee will ensure that bond proceeds are expended only in accordance with the will of the voters, and not for unauthorized administrative salaries or general operating expenses.
  • Prop. F will fix the problem of voluntary oversight committees with no money or audit authority which are appointed by and dependent on the organizations they oversee.

Cons

Those who oppose the measure state:

  • Proposition F is a poorly drafted rush job placed on the ballot at the last minute without any public input or review by the city's director of public finance. It gives the appearance of oversight without actually addressing the real and complex issues.
  • This ordinance does not need to be on the ballot. It can and should be enacted through the normal legislative process. The subject is serious and technically complicated and deserves thorough public discussion and amendment to make it as effective as possible.
  • Proposition F is a response to recent disclosures about the S.F. Unified School District and its bonds. Since the city doesn't have jurisdiction over the SFUSD or City College, this committee won't have oversight of the very debt that generated Proposition F. The Supervisors do have existing authority to conduct oversight over the city's G.O. bonds right now, without getting voter approval. Why doesn't the Board try exercising such oversight first, rather than just throwing a an underdeveloped proposal on the ballot?

SPUR's analysis

Proposition F is a response to growing concern over the misuse of local bond monies. In particular, it has recently been discovered that the San Francisco Unified School District (SFUSD), used bond proceeds intended to improve school facilities for payroll and administrative purposes. Concern over the financial problems at the School District has spread to city departments as well, where records of expenditures of city bond proceeds are often incomplete and difficult to obtain. The intent of Proposition F is to ensure that bond proceeds are being used effectively and efficiently, for the purposes that voters approved.

The measure would apply to any future city G.O. bonds, as well as those school bonds issued through the city. Because the SFUSD is not part of general city government, but rather created under state law, Proposition F would not apply to new school bonds that are to be issued directly by the district, nor would it apply to bonds that have already been authorized by voters. While the School District has often issued bonds through the city, it is not required to do so and has the authority to issue bonds directly. Any bond issued directly by the School District would be unaffected by Proposition F.

Prop. F is timely and well-intentioned legislation, but it was hurriedly drafted and has significant flaws:

It is unclear whether the measure would apply only to broad ballot language in future bond measures (e.g., "rehabilitate deficiencies in city buildings and meet life and safety codes") or to more specific promises to the voters (e.g., "will be used to upgrade the North Beach, Mission, Sunset public health facilities").

The measure would provide real money (if perhaps not enough) for audits, and at least some committee appointments with real qualifications for the job. On the other hand, it doesn't require better cost analysis of projects before they're bonded, a major reason so many projects run over budget. It does not explicitly authorize oversight of whether a project is on budget, on time, properly designed or well built.

The measure does not limit the Committee's ability to prohibit future bond sales in order to prevent transactions underway by the Board of Supervisors from being affected. Such a prohibition should take effect only after the Board has had a chance to review it and concur. As it currently stands, the measure would allow the Committee to jeopardize the city's relationship with bond underwriters and bond holders. The Oversight Committee should be prevented from prohibiting issuance of bonds for any remaining bond authorization for which the Board has already approved issuance.

The measure does not provide direction to the Committee on what it should measure as a basis for evaluating expenditures. The Committee should have objective criteria to guide its activities.

The ballot language for bond measures is limited to 100 words. Proposition F does provide a means of balancing this restriction on wording with the need to be completely descriptive of the projects undertaken and limit the scope of the bond expenditures. This problem might be addressed by requiring an accompanying ordinance that would specifically incorporate the list of projects and cost estimates to be filed along with the ballot measure.

No mechanism is developed to use unspent oversight funds, perhaps by allocation to another project or to debt service.

The measure would allow the Committee to implement cost-saving measures for expenditures, but fails to design procedures for those cost-saving measures so that they do not hinder the timely expenditure of funds.

The ordinance is a well-intentioned effort to solve a legitimate problem within city government, but also has significant flaws. If Proposition F is approved by voters in March, the Board of Supervisors should take the necessary steps to address the measure's shortcomings.

SPUR takes "No position" on Proposition F.