The City’s Charter Review Committee (CRC) proposed changes to the city charter; those six amendments are on the municipal ballot since they are required to be approved by voters.
Ballot question 6 addresses the establishment of a “permanent fund.” However, many specifics regarding the permanent fund are unknown.
The guidelines of the permanent fund will not be determined by the governing body until voter approval.
Do we have to pass the amendment so that we can find out what is in it? Who will manage the fund? Will the fund manager be politically connected? Or will the manager be selected through competitive bidding?
What is the expected rate of return for the fund, after management fees? Why hasn’t the city provided future projections of the permanent fund?
Let’s assume that the permanent fund annual rate of return is 3 percent after management fees, which is a typical yield for a stable value fund.
After one year, the return on $10 million would be $300,000. According to the amendment, $150,000 would be added to the principal and $150,000 added to the city general fund.
The next year the return would be $304,500 and so on. After 10 years, the fund principal would be about $11.8 million generating about $354,000 per year in interest.
Money now is worth more than money later. Inflation is driving the cost of road construction higher than 3 percent.
The fund manager can certainly consider riskier investments in order to provide a higher rate of return, which may result in a loss of principal.
The city has not made prudent investments in the past. Examples are former Santa Ana Star Center in 2006, Green2V in 2010 and the Stolar Research Corporation in 2012.
In 2020, the city ousted the Friends of the Library volunteers in favor of using in-house staff to fund library programs.
The acting city manager was asked if the city did a cost-benefit study. His reply was that such a study would be “hypothetical.”
The legitimacy of the CRC is also questionable. In previous years, elected officials were prohibited from being included in the CRC.
In 2021 two current councilors, a former city councilor and the mayor were members.
The city has about 420 miles of paved roads. About 5 miles per year are rebuilt from the semi-annual GO road bond and about 10 miles per year are rehabilitated via the Neighborhood Streets Improvement Project. At that rate, it would take over 25 years before all of the city’s paved roads are improved.
The 2021 Citizen Survey revealed that only 32 percent rated “street repair” as excellent or good. A better use of $10 million would be to use it to finance road repairs now.
Vote “no” on ballot question 6.