BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1620|
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THIRD READING
Bill No: AB 1620
Author: Assembly Budget Committee
Amended: 10/6/10 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Act of 2010: State Public Works Board
SOURCE : Author
DIGEST : Senate Floor Amendments of 10/6/10 delete the
prior version of the bill which expressed the intent of the
Legislature to enact statutory changes relating to the
Budget Act of 2010, and add the current content relating to
the State Public Works Board.
This bill now authorizes the Public Works Board to utilize
asset transfers as an interim financing mechanism for
lease-revenue bond financed projects and make other
technical, clarifying, and conforming changes to Public
Works Board oversight of capital outlay projects.
ANALYSIS : Since the Pooled Money Investment Board
stopped authorizing upfront interim financing loans for
lease-revenue bond financed capital outlay projects, the
Public Works Board has changed its processes for issuing
lease-revenue bonds from selling the bonds near the end of
project construction to near the end of design. This
results in the need to capitalize the costs of the project
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until the completion of construction which is when
occupancy occurs and rent revenue becomes available.
Historically, the ability to capitalize one asset and use
the proceeds to build another has been restricted to higher
education and was used only in very limited situations.
The asset transfer authority provided in these amendments
would allow the Public Works Board to capitalize one state
building that is not otherwise encumbered by debt and use
the proceeds to fund the design and/or construction of one
or more different state buildings.
There are currently 50 projects stalled in the design phase
that are not far enough along to issue bonds to complete
the project. The ability to utilize asset transfers would
enable the Public Works Board to restart some of these
projects and decrease the cost of financing these assets by
eliminating the need for capitalized interest costs.
This bill adds a five-year sunset clause applicable only to
the asset transfer authority.
This bill makes technical, clarifying and conforming
changes to Public Works Board oversight of capital outlay
projects.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
DLW:nl 10/6/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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