The alarm the city sounded to Wall Street about Proposition A has been received and answered. If you recall, on May 22, the city disclosed information about Prop. A in its bond offering documents that said in part:
“…the State Legislature passed, and the Governor signed, a law that would prohibit the use of State funds on local construction projects where the local agency, including a charter city, prohibits the use of PLAs. If approved, Proposition A could cause the City to lose State funding for City construction projects.”
And according to the fiscal impact analysis for the ballot measure approved by the mayor’s office and Independent Budget Analyst, “Major State funding awarded to the City in fiscal years 2010 and 2011 was approximately $36 million and $158 million, respectively.”
Having access to this major funding has also allowed the city to save more than $70 million in interest since 2007, because it can borrow money from the state at a “low 2.0933% for a 20-year term.” This is the type of funding that is at risk if Prop. A passes.