BILL ANALYSIS                                                                                                                                                                                                    ”

                                                                  AB 1292
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          AB 1292 (Roger HernŠndez)
          As Amended  July 12, 2011
          Majority vote
          |ASSEMBLY:  |78-0 |(June 2, 2011)  |SENATE: |29-0 |(August 31,    |
          |           |     |                |        |     |2011)          |
           Original Committee Reference:    E.S. & T. M.  

           SUMMARY  :  Authorizes the California Department of Public Health 
          (CDPH) to contract with California Infrastructure and Economic 
          Development Bank (I-Bank) to sell revenue bonds to assist 
          drinking water systems in meeting their federal Safe Drinking 
          Water State Revolving Fund (SDWSRF) matching fund requirements.  

           The Senate amendments  add the requirement that CDPH must include 
          in their biennial report, beginning in January 1, 2013, the 
          results of a federal survey of California's public water 
          infrastructure needs.

           EXISTING LAW  :

          1)Creates the I-Bank within the Business, Transportation and 
            Housing Agency, to promote economic revitalization, enable 
            future development, and encourage a health climate for jobs in 
            California.  Authorizes the I-Bank to issue tax-exempt and 
            taxable revenue bonds to underwrite the costs of 
            infrastructure development that meets certain public purposes.

          2)Establishes the SDWSRF and continuously appropriates the funds 
            to CDPH to provide grants or revolving fund loans for public 
            water systems to enable suppliers to meet safe drinking water 

          3)Under the federal 1996 Safe Drinking Water Act (SDWA), 
            establishes the Drinking Water State Revolving Fund (DWSRF) to 
            provide states with a financing mechanism to ensure safe 
            drinking water to the public.


                                                                  AB 1292
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           AS PASSED BY THE ASSEMBLY,  this bill was substantially similar 
          to the version approved by the Senate.

           FISCAL EFFECT  :  According to the Assembly Appropriations 
          Committee, this bill would result in the potential issuance of 
          revenue bonds, possibly in the millions of dollars, to provide 
          the state match for SDWA federal money.  The annual cost to CDPH 
          is estimated to be in the range of $100,000 to $150,000 for 
          contract services to provide financial advice regarding the 
          implementation of a revenue bond program SDWSRF.
          COMMENTS  :

           Need for the bill  .  According the CDPH, the sponsors of this 
          bill, the legislation is necessary to assure that California is 
          able to receive the maximum amount of federal funds available in 
          2011, and in subsequent years, to address drinking water system 
          infrastructure needs.  California receives annual funding from 
          the U.S. Environmental Protection Agency (US EPA) for the SDWSRF 
          program.  The annual funding amount has ranged from $66 million 
          to $126 million, and is expected to continue at approximately 
          $90 million per year for 2011 and for the next several years 
          based on recent federal budget actions.  In order for the state 
          to receive these federal dollars, the state must provide a 20% 
          match of state funds.

          With an allocation of approximately $90 million per year, the 
          required state match is projected to be $18 million annually; 
          current state match sources are not enough to provide the full 
          match for the current federal grant or in subsequent years.  
          This increased allocation of federal funds requires the state to 
          put forth a larger match in order to draw down this critical 

          The state match can come from General Fund allocations or from 
          state bond measures (e.g., California has done this with 
          Proposition 13, Proposition 50, and Proposition 84).  As an 
          alternative to these options, US EPA allows states to sell 
          revenue bonds to provide the state match.  States are allowed to 
          use the moneys in the SDWSRF as security for revenue bonds, and 
          to use the interest earned from water system loans to pay 
          principal and interest to bond holders.  CDPH does not currently 
          have statutory authority to issue or sell revenue bonds; this 
          bill would provide such authority.


                                                                 AB 1292
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           Analysis Prepared by  :    Bob Fredenburg / E.S. & T.M. / (916) 

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