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Citrus Heights debt policy item pulled last-minute from agenda

Sentinel staff report–
An expected vote on revisions to the city’s policy regarding debt didn’t end up taking place Thursday night, after staff made a last-minute request during the council meeting to pull the item from the agenda.

City Clerk Amy Van announced the request to pull the item at the beginning of the meeting, during a time when the council is asked to approve the agenda. The request was approved 5-0 by the City Council, with no discussion.

Although a reason for the item being pulled was not stated during the meeting, in response to an inquiry from The Sentinel on Friday, Van said staff had pulled the item “to make further revisions to the debt policy.” She said the revised item is planned to be brought before the council next month, on Dec. 12.

The proposed policy the council was slated to vote on said the city “will promote the use of debt only in those cases where public policy, equity, and economic efficiency favor debt over cash (pay-as-you-go) financing” and “whenever possible, the debt shall be self supporting.”

The proposed policy also said:

  • Long-term Capital Projects: Debt will be used primarily to finance long-term capital projects – paying for the facilities or equipment over their useful life and concurrent with the stream of benefits from these facilities.
  • Special Circumstances for Debt Issuance: Debt may be used in special circumstances for other than long-term capital projects, only after careful policy evaluation by the City Council and management.

The full proposed 11-page debt management policy can be viewed online here. The 2017 version of the policy can be viewed here.

A debt management policy was first adopted by the city in 2017, following the passage of SB 1029, which effectively required cities to have a debt policy in place 30-days prior to taking on debt. The city subsequently voted last year to take out a $12 million line of credit, allowing the city to incur debt for the first time since becoming a city in 1997.

From last year: Citrus Heights City Council approves first-ever $12M line of credit

As previously reported by The Sentinel, the City of Citrus Heights has undergone a controversial shift in policy regarding debt following the retirement of former City Manager Henry Tingle in 2016, who was credited with keeping the city debt-free. Current Mayor Jeannie Bruins called the change a “a big paradigm shift” when voting to authorize the $12 million line of credit last year.

Guest Opinion: How much more debt will taxpayers in Citrus Heights incur without a vote?

In a statement just prior to the vote last year, Bruins said she supported allowing the city to take on short-term debt, “given the current needs that we have, given the very limited scope of this line of credit, and what our priorities are: to continue to be financially sound, to get debt-free again as soon as we can.”

City leaders at the time said the line of credit was needed to get the city by until 2022, when a “revenue neutrality” agreement with the county will end and provide the city with an additional $5-6 million per year from property tax revenue. The credit line has been used to purchase the former Sylvan Middle School lot at Sylvan Corners, as well as provide funding for the second phase of major roadway improvements on Auburn Boulevard.

Related: City votes to buy 11-acre site at Sylvan Corners for $3.43M; Here’s what’s next.

The city has expressed an intent to pay off the line of credit by 2024, using extra funds from property tax revenue.

The “revenue neutrality” agreement dates back to when Citrus Heights first incorporated and reluctantly agreed to have its property taxes be given to the county for 25 years, to compensate for projected negative fiscal impacts the county would incur from Citrus Heights splitting off to govern itself as a city.

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