BILL ANALYSIS                                                                                                                                                                                                    


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                                 THIRD READING

          Bill No:  AB 185
          Author:   Assembly Budget Committee
          Amended:  9/4/09 in Senate
          Vote:     27 - Urgency


           SUBJECT  :    Budget Act of 2009:  Proposition 1A borrowing  
          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  


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             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  


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             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 


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