BILL ANALYSIS Ó
AB 612
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Date of Hearing: May 11, 2011
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 612 (Gordon) - As Amended: May 2, 2011
SUBJECT : Parks and recreation districts: repayment of
indebtedness.
SUMMARY : Provides that indebtedness that is incurred by the
Midpeninsula Regional Open Space District, on or after January
1, 2012, be repaid during a period that does not exceed
30 years. Specifically, this bill :
1)Provides that indebtedness that is incurred by the
Midpeninsula Regional Open Space District (MROSD), on or after
January 1, 2012, be repaid during a period that does not
exceed 30 years.
2)Requires MROSD to identify the source of revenue to be used to
repay the indebtedness.
3)Specifies that the interest rate on indebtedness not exceed
the rate allowable under provisions governing issuance of
local general obligation bonds for all regional park
districts, regional park and open-space districts, and
regional open-space districts.
EXISTING LAW :
1)Provides that indebtedness that is incurred in that manner on
or after July 1, 1982, is generally required to be repaid
during a period that does not exceed 20 years from the date on
which it is incurred.
2)Provides that all indebtedness for acquisition of lands and
facilities designated in the East Bay Regional Park District's
master plan shall be repaid during a period not to exceed
30 years.
3)Requires each indebtedness to be authorized by a resolution
adopted by the affirmative votes of at least two-thirds of the
members of the district board.
4)Requires each indebtedness to be evidenced by a promissory
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note or contract signed by the president of the board and
attested by the secretary or treasurer.
5)Requires each indebtedness to be sold at not less than 95% of
the principal amount in the manner determined by the board at
a discount that equals the underwriter's spread.
6)Requires the board to determine that the discount reflects an
underwriter's spread that is both reasonable and customary
under the prevailing market.
FISCAL EFFECT : None
COMMENTS :
1)Under existing law, many kinds of special districts are
authorized to borrow money by issuing promissory notes.
Currently, regional park and open space districts can issue
promissory notes for the acquisition of land and facilities.
These districts can borrow up to five years of anticipated
property tax revenues or 20 years of anticipated special tax
revenues, or both. The district must repay the promissory
note within 20 years.
MROSD was established to permanently protect and restore
lands, preserve wilderness, wildlife habitat, watershed, and
fragile ecosystems, and provide opportunities for public
recreation and environmental education. Over nearly 40 years,
MROSD has permanently preserved nearly 60,000 acres of open
space and created 26 open space preserves. MROSD covers an
area of 550 square miles in San Mateo, Santa Clara, and Santa
Cruz Counties.
2)AB 612 would extend the term from 20 to 30 years that MROSD
has to repay promissory notes authorized under existing law.
It would not increase the property taxes paid by property
owners. Allowing MROSD to amortize borrowing costs of
promissory notes over a 30 year period rather than a 20 year
period would provide approximately 20% more in funds to
purchase and save open space each time the district issues
notes. According to the author's office, being able to use
existing revenues to accelerate the purchase of open space is
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the goal of the proposed change and consistent with the wishes
of residents for more open space and recreation. However, if
terms are not favorable for long term issuance, the district
would still have the flexibility to issue shorter term notes.
Because MROSD buys land that the public owns in perpetuity,
the change provides a benefit for residents today as well as
future generations.
3)Support arguments: Supporters, including the MROSD, state
that this bill would greatly help the MROSD use taxpayer money
more effectively and increase resources to purchase and
preserve vital public natural open space lands.
Opposition arguments: Opposition could argue that it may be
more prudent to just expand the debt limit on securitized
limited obligation notes (SLONs) instead of increasing the
promissory note debt capacity on individual special districts.
REGISTERED SUPPORT / OPPOSITION :
Support
Midpeninsula Regional Open Space District ÝSPONSOR]
Acterra
Bay Area Open Space Council
Bay Area Ridge Trail Council
Committee for Green Foothills
Hidden Villa
Peninsula Open Space Trust
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Santa Clara County Parks and Recreation Department
Santa Clara County Open Space Authority
Santa Clara Valley Audubon Society
Save Mount Diablo
Save the Redwoods League
Sempervirens Fund
The Nature Conservancy
Trust for Public Land
Opposition
None on file
Analysis Prepared by : Katie Kolitsos / L. GOV. / (916)
319-3958