BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 185| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 185 Author: Assembly Budget Committee Amended: 9/4/09 in Senate Vote: 27 - Urgency PRIOR VOTES NOT RELEVANT SUBJECT : Budget Act of 2009: Proposition 1A borrowing and securitization clean-up SOURCE : Author DIGEST : Senate Floor Amendments of 9/4/09 delete the prior version of the bill making statutory changes necessary to implement the Hunan Services portions of the 2009-10 Budget. This bill now provides the necessary statutory changes in the area of Proposition 1A of 2004 borrowing and securitization in order to amend the 2009 Budget Act. ANALYSIS : This bill makes cleanup revisions to the Proposition 1A of 2004 suspension and securitization provisions of the July Budget Agreement. Specifically, it: 1. Increases the minimum size of the Joint Powers Authority (JPA) from 100 local agencies to 250 local agencies. This amendment will ensure the bonds are sold by a single JPA instead of multiple JPAs. Limiting the securitization to a single JPA will minimize costs to CONTINUED AB 185 Page 2 the State. 2. Clarifies and revises various dates and timelines to streamline the process and eliminate any ambiguity for bond investors. 3. Allows bond proceeds to be used to reimburse the State Treasurer for his work in reviewing the bonds. Provides a streamlined contracting process so the Treasurer can quickly procure fiscal advisory services. Under the existing language, the Treasurer and the Director of the Department of Finance have certain oversight responsibilities to protect the interests of the state. 4. Removes the requirement for at least two early call dates. Removing this requirement will provide more flexibility to negotiate terms that minimize interest and other costs. 5. Revises the extreme hardship exemption process, such that the determination is made after the anticipated sales of bonds, but no later than December 1, 2009. If bonds are successfully sold and allocated, locals will see no revenue loss or delay associated with the Proposition 1A suspension, and no hardship exemptions will be granted. 6. Adds "city" and "a city and county" to the existing authority for a county to borrow funds from a Redevelopment Agency (RDA). An RDA would have the option, but not be required, to loan funds to a city, county, or city and county to fully or partially replace their Proposition 1A reduction. No such loan could be made if the Redevelopment Agency has itself borrowed from its Low and Moderate Income Housing Fund. 7. Specifies that bonds may bear interest payable on a periodic interest payment dates or may accrue interest to their maturity date or any combination thereof, subject to the approval of the Department of Finance and the State Treasurer. 8. Makes other technical and clarifying changes requested by local governments, bond counsel, and the State AB 185 Page 3 Treasurer's Office to facilitate the securitization of Proposition 1A receivables. FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes Local: Yes DLW:mw 9/8/09 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END ****