AB 850, as amended, Nazarian. Public capital facilities: water quality.
Existing law, the Marks-Roos Local Bond Pooling Act of 1985, authorizes joint powers authorities, among other powers, to issue bonds and loan the proceeds to local agencies to finance specified types of projects and programs.
This bill would
begin delete declare the intent of the Legislature to amend the Marks-Roos Local Bond Pooling Act of 1985 to permitend delete joint powers begin delete agencies to more affordably finance mandated capital improvement projects relating to water quality, and also would make a technical, nonsubstantive change to the actend delete.
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
It is the intent of the Legislature to amend the
2Marks-Roos Local Bond Pooling Act of 1985, to permit joint
3powers agencies to more affordably finance mandated capital
4improvement projects relating to water quality.
Section 6585 of the Government Code is amended
The definitions in this section shall govern the
9construction and interpretation of this article.
10(a) (1) Except as provided in paragraphs (2) and (3), “authority”
11means an entity created pursuant to Article 1 (commencing with
14(2) In the case of an authority issuing bonds pursuant to this
15chapter in which VLF receivables, as defined in subdivision (j),
16are pledged to the payment of the bonds, other than VLF
17receivables so pledged for a county of the first class, an authority
18shall consist of not fewer than 100 local agencies.
19(3) In the case of an authority issuing bonds pursuant to this
20chapter in which Proposition 1A receivables, as defined in
21subdivision (g), are pledged to the payment of the bonds, an
22authority shall consist of not fewer than 250 local agencies.
23(b) “Bond purchase agreement” means a contractual agreement
24executed between the authority and the local agency whereby the
25authority agrees to purchase bonds of the local agency.
26(c) “Bonds” means all of the following:
27(1) Bonds, including, but not limited to, assessment bonds,
28redevelopment agency bonds, government-issued mortgage bonds,
29and industrial development bonds.
30(2) Notes, including bond, revenue, tax, or grant anticipation
P3 1(3) Commercial paper, floating rate and variable maturity
2securities, and any other evidences of indebtedness.
3(4) Certificates of participation or lease-purchase agreements.
12 “Cost,” as applied to a public capital improvement or portion
begin delete thereofend delete
14 financed under this part, means all of the following:
15(1) All or any part of the cost of construction, renovation, and
16acquisition of all lands, structures, real or personal property, rights,
17rights-of-way, franchises, easements, and interests acquired or
18used for a public capital improvement.
19(2) The cost of demolishing or removing any buildings or
20structures on land so acquired, including the cost of acquiring any
21lands to which the buildings or structures may be moved, and the
22cost of all machinery and equipment.
23(3) Finance charges.
24(4) Interest prior to, during, and for a period after, completion
25of that construction, as determined by the authority.
26(5) Provisions for working capital, reserves for principal and
27interest and for extensions, enlargements, additions, replacements,
28renovations, and improvements.
29(6) The cost of architectural, engineering, financial and legal
30services, plans, specifications, estimates, and administrative
32(7) Other expenses necessary or incidental to determining the
33feasibility of constructing any project or incidental to the
34construction or acquisition or financing of any public capital
25 “Legislative body” means the governing body of a local
28 “Local agency” means a party to the agreement creating the
29authority, or an agency or subdivision of that party, sponsoring a
30project of public capital improvements, or any city, county, city
31and county, authority, district, or public corporation of this state.
13 “Proposition 1A receivable” means the right to payment of
14moneys due or to become due to a local agency, pursuant to clause
15(iii) of subparagraph (B) of paragraph (1) of subdivision (a) of
16Section 25.5 of Article XIII of the California Constitution and
17Section 100.06 of the Revenue and Taxation Code.
19 “Public capital improvements” means one or more projects
20specified in Section 6546.
33 “Revenue” means income
and receipts of the authority from
34any of the following:
35(1) A bond purchase agreement.
36(2) Bonds acquired by the authority.
37(3) Loans installment sale agreements, and other
38revenue-producing agreements entered into by the authority.
39(4) Projects financed by the authority.
40(5) Grants and other sources of income.
P6 1(6) VLF receivables purchased pursuant to Section 6588.5.
2(7) Proposition 1A receivables purchased pursuant to Section
4(8) Interest or other income from any investment of any money
5in any fund or account established for the payment of principal or
6interest or premiums on bonds.
35 “VLF receivable” means the right to payment of moneys due
36or to become due to a local agency out of funds payable in
37connection with vehicle license fees to a local agency pursuant to
38Section 10754.11 of the Revenue and Taxation Code.
P7 1 “Working capital” means money to be used by, or on behalf
2of, a local agency for any purpose for which a local agency may
3borrow money pursuant to Section 53852, or for any purpose for
4which a VLF receivable or a Proposition 1A receivable sold to an
5authority could have been used by the local agency.
In addition to other powers specified in an agreement
9pursuant to Article 1 (commencing with Section 6500) and Article
102 (commencing with Section 6540), the authority may do any or
11all of the following:
12(a) Adopt bylaws for the regulation of its affairs and the conduct
13of its business.
14(b) Sue and be sued in its own name.
15(c) Issue bonds, including, at the option of the authority, bonds
16bearing interest, to pay the cost of any public capital improvement,
17working capital, or liability or other insurance program. In addition,
18for any purpose for which an authority may execute and deliver
19or cause to be executed and delivered certificates of participation
20in a lease or installment sale agreement with any public or private
21entity, the authority, at its option, may issue or cause to be issued
22bonds, rather than certificates of participation, and enter into a
23loan agreement with the public or private entity.
24(d) Engage the services of private consultants to render
25professional and technical assistance and advice in carrying out
26the purposes of this article.
27(e) As provided by applicable law, employ and compensate
28bond counsel, financial consultants, and other advisers determined
29necessary by the authority in connection with the issuance and sale
30of any bonds.
31(f) Contract for engineering, architectural, accounting, or other
32services determined necessary by the authority for the successful
33development of a public capital improvement.
34(g) Pay the reasonable costs of consulting engineers, architects,
35accountants, and construction, land-use, recreation, and
36environmental experts employed by any sponsor or participant if
37the authority determines those services are necessary for the
38successful development of public capital improvements.
39(h) Take title to, and sell by installment sale or otherwise, lands,
40structures, real or personal property, rights, rights-of-way,
P8 1franchises, easements, and other interests in lands that are located
2within the state that the authority determines are necessary or
3convenient for the financing of public capital improvements, or
4any portion thereof.
5(i) Receive and accept from any source, loans, contributions,
6or grants, in either money, property, labor, or other things of value,
7for, or in aid of, the construction financing, or refinancing of public
8capital improvement, or any portion thereof or for the financing
9of working capital or insurance programs, or for the payment of
10the principal of and interest on bonds if the proceeds of those bonds
11are used for one or more of the purposes specified in this section.
12(j) Make secured or unsecured loans to any local agency in
13connection with the financing of capital improvement projects,
14working capital or insurance programs in accordance with an
15agreement between the authority and the local agency. However,
16no loan shall exceed the total cost of the public capital
17improvements, working capital or insurance needs of the local
18agency as determined by the local agency and by the authority.
19(k) Make secured or unsecured loans to any local agency in
20accordance with an agreement between the authority and the local
21agency to refinance indebtedness incurred by the local agency in
22connection with public capital improvements undertaken and
24(l) Mortgage all or any portion of its interest in public capital
25improvements and the property on which any project is located,
26whether owned or thereafter acquired, including the granting of a
27security interest in any property, tangible or intangible.
28(m) Assign or pledge all or any portion of its interests in
29mortgages, deeds of trust, indentures of mortgage or trust, or
30similar instruments, notes, and security interests in property,
31tangible or intangible, of a local agency to which the authority has
32made loans, and the revenues therefrom, including payment or
33income from any interest owned or held by the authority, for the
34benefit of the holders of bonds issued to finance public capital
35improvements. The pledge of moneys, revenues, accounts, contract
36rights, or rights to payment of any kind made by or to the authority
37pursuant to the authority granted in this part shall be valid and
38binding from the time the pledge is made for the benefit of the
39pledgees and successors thereto, against all parties irrespective of
40whether the parties have notice of the claim.
P9 1(n) Lease the public capital improvements being financed to a
2local agency, upon terms and conditions that the authority deems
3proper; charge and collect rents therefor; terminate any lease upon
4the failure of the lessee to comply with any of the obligations of
5the lease; include in any lease provisions that the lessee shall have
6options to renew the lease for a period or periods, and at rents as
7determined by the authority; purchase or sell by an installment
8agreement or otherwise any or all of the public capital
9improvements; or, upon payment of all the indebtedness incurred
10by the authority for the financing or refinancing of the public
11capital improvements, the authority may convey any or all of the
12project to the lessee or lessees.
13(o) Charge and apportion to local agencies that benefit from its
14services the administrative costs and expenses incurred in the
15exercise of the powers authorized by this article. These fees shall
16be set at a rate sufficient to recover, but not exceed, the authority’s
17costs of issuance and administration. The fee charged to each local
18obligation acquired by the pool shall not exceed that obligation’s
19proportionate share of those costs. The level of these fees shall be
20disclosed to the California Debt and Investment Advisory
21Commission pursuant to Section 6599.1.
22(p) Issue, obtain, or aid in obtaining, from any department or
23agency of the United States or of the state, or any private company,
24any insurance or guarantee to, or for, the payment or repayment
25of interest or principal, or both, or any part thereof, on any loan,
26lease, or obligation or any instrument evidencing or securing the
27same, made or entered into pursuant to this article.
28(q) Notwithstanding any other provision of this article, enter
29into any agreement, contract, or any other instrument with respect
30to any insurance or guarantee; accept payment in the manner and
31form as provided therein in the event of default by a local agency;
32and assign any insurance or guarantee that acts as security for the
34(r) Enter into any agreement or contract, execute any instrument,
35and perform any act or thing necessary, convenient, or desirable
36to carry out any power authorized by this article.
37(s) Invest any moneys held in reserve or sinking funds, or any
38moneys not required for immediate use or disbursement, in
39obligations that are authorized by law for the investment of trust
P10 1(t) At the request of affected local agencies, combine and pledge
2revenues to public capital improvements for repayment of one or
3more series of bonds issued pursuant to this article.
4(u) Delegate to any of its individual parties or other responsible
5individuals the power to act on its behalf subject to its general
6direction, guidelines, and oversight.
7(v) Purchase, with the proceeds of its bonds or its revenue, bonds
8issued by any local agency at public or negotiated sale. Bonds
9purchased pursuant to this subdivision may be held by the authority
10or sold to public or private purchasers at public or negotiated sale,
11in whole or in part, separately or together with other bonds issued
12by the authority.
13(w) Purchase, with the
proceeds of its bonds or its revenue, VLF
14receivables sold to the authority pursuant to Section 6588.5. VLF
15receivables so purchased may be pledged to the payment of bonds
16issued by the authority or may be resold to public or private
17purchasers at public or negotiated sale, in whole or in part,
18separately or together with other VLF receivables purchased by
20(x) (1) Purchase, with the proceeds of its bonds or its revenue,
21Proposition 1A receivables pursuant to Section 6588.6. Proposition
221A receivables so purchased may be pledged to the payment of
23bonds issued by the authority or may be resold to public or private
24purchasers at public or negotiated sales, in whole or in part,
25separately or together with other Proposition 1A receivables
26purchased by the authority.
27(2) (A) All entities subject to a reduction of ad valorem
28tax revenues required under Section 100.06 of the Revenue and
29Taxation Code pursuant to the suspension set forth in Section
30100.05 of the Revenue and Taxation Code shall be afforded the
31opportunity to sell their Proposition 1A receivables to the authority.
32(B) If these entities offer Proposition 1A receivables to the
33authority for purchase and duly authorize the sale of the Proposition
341A receivable pursuant to documentation approved by the
35authority, the authority shall purchase all Proposition 1A
36receivables so offered to the extent it can sell bonds therefor. If
37the authority does not purchase all Proposition 1A receivables
38offered, it shall purchase a pro rata share of each entity’s offered
39Proposition 1A receivables.
P11 1(C) The authority may establish a deadline, no earlier than
2November 3, 2009, by which these entities shall offer their
3Proposition 1A receivables for sale to the authority and complete
4the application required by the authority.
5(3) For purposes of meeting costs incurred in performing its
6duties relative to the purchase and sale of Proposition 1A
7receivables, the authority shall be authorized to charge a fee to
8each entity from which it purchases a Proposition 1A receivable.
9The fee shall be computed based on the percentage value of the
10Proposition 1A receivable purchased from each entity, in relation
11to the value of all Proposition 1A receivables purchased by the
12authority. The amount of the fee shall be paid from the proceeds
13of the bonds and shall be included in the principal amount of the
15(4) Terms and conditions of any and all fees and expenses
16charged by the authority, or those it contracts with, and the terms
17and conditions of sales of Proposition 1A receivables and bonds
18issued pursuant to this subdivision, including the terms of optional
19early redemption provisions, if any, shall be approved by the
20Treasurer and the Director of Finance, who shall not unreasonably
21withhold their approval. The aggregate principal amount of all
22bonds issued pursuant to this subdivision shall not exceed two
23billion two hundred fifty million dollars ($2,250,000,000), and the
24rate of interest paid on those bonds shall not exceed 8 percent per
25annum. The authority shall exercise its best efforts to obtain the
26lowest cost financing possible. Any and all premium obtained shall
27be used for either of the following:
28(A) Applied to pay the costs of issuance of the bonds.
29(B) Deposited in a trust account that is pledged to bondholders
30and used solely for the payment of interest on, or for repayment
31of, the bonds.
32(5) (A) In connection with any
financing backed by Proposition
331A receivables, the Treasurer may retain financial advisors, legal
34counsel, and other consultants to assist in performing the duties
35required by this chapter and related to that financing.
36(B) Notwithstanding any other provision of law, none of the
37following shall apply to any agreements entered into by the
38Treasurer pursuant to subparagraph (A) in connection with any
39Proposition 1A financing:
40(i) Section 11040 of the Government Code.
P12 1(ii) Section 10295 of the Public Contract Code.
2(iii) Article 3 (commencing with Section 10300) and Article 4
3(commencing with Section 10335) of, Chapter 2 of Part 2 of
4Division 2 of the Public Contract Code, except for the authority
5of the Department of Finance under Section 10336 of the Public
6Contract Code to direct a state agency to transmit to it a contract
7for review, and except for Section 10348.5 of the Public Contract
9(C) Any costs incurred by the Treasurer in connection with any
10Proposition 1A financing shall be reimbursed out of the proceeds
11of the financing.
16 Set any other terms and conditions on any purchase or sale
17pursuant to this section as it deems by resolution to be necessary,
18appropriate, and in the public interest, in furtherance of the
19purposes of this article.
The authority may, from time to time, issue its bonds in
20the principal amount as the authority determines necessary to
21provide sufficient funds for its purposes, which may include, but
22shall not be limited to, providing funds for bond purchase
23agreements, payment of the purchase price of VLF receivables,
24payment of the purchase price of Proposition 1A receivables,
25 payment of interest on bonds of the
26authority, establishment of reserves to secure the bonds, and other
27expenditures of the authority incident to issuance of the bonds.
28The authority may also issue bonds for the purpose of making
29loans to local agencies, to the extent those local agencies are
30authorized by law to borrow moneys, or to purchase VLF
31receivables from local agencies as provided in Section 6588.5, or
32to purchase Proposition 1A receivables as provided in Section
336588.6, and the loan or sale proceeds shall be used by the local
34agencies to pay for public capital improvements, working capital,
35or insurance programs. The aggregate principal amount of all bonds
36issued pursuant to this section that are backed by Proposition 1A
37receivables shall not exceed two billion two hundred fifty million
38dollars ($2,250,000,000), and that issuance shall be approved by
39the Department of Finance and the Treasurer.
P22 1In the case of any authority in existence on January 1, 1988, no
2loans shall be made to local agencies for working capital or
3insurance, unless that purpose is first approved by resolution of
4the governing body of the authority by unanimous vote of all
5members of the governing body.
(a) The authority is authorized from time to time to issue
9bonds to provide funds to achieve its purposes.
10(b) Bonds may be authorized to finance any of the following:
11(1) A single public capital improvement, working
12capital, purchase of VLF receivables, purchase of Proposition 1A
13receivables, or insurance program for a single local agency.
14(2) A series of public capital improvements,
15 working capital, purchases of VLF receivables, purchase of
16Proposition 1A receivables, or insurance program for a single local
18(3) A single public capital improvement, working
19capital, purchases of Proposition 1A receivables, or purchases of
20VLF receivables or insurance program for two or more local
22(4) A series of public capital improvements,
23 working capital, purchases of VLF receivables or purchases of
24Proposition 1A receivables or insurance programs for two or more
26(c) Bonds issued for the purpose of financing
27shall be used to make loans to local agencies for any of the
28purposes for which a local agency may borrow money pursuant
29to Section 53852. The loans shall be repaid in accordance with the
30terms of Section 53854.
31(d) Except as otherwise expressly provided by the authority,
32every issue of its bonds shall be general obligations of the authority
33payable from any revenues or moneys of the authority available
34therefor and not otherwise pledged. These revenues or moneys
35may include the proceeds of additional bonds, subject only to any
36agreements with the holders of particular bonds pledging any
37particular revenues or moneys. Notwithstanding that the bonds
38may be payable from a special fund, these bonds shall be deemed
39to be negotiable instruments for all purposes, subject only to the
40bond registration provisions.
P23 1(e) (1) The bonds may be issued as
serial bonds or as term
2bonds, or the authority may issue bonds of both types. The bonds
3shall be authorized by resolution of the authority and shall, as
4provided by the resolution or indenture pursuant to which the bonds
5are issued, meet all of the following conditions:
6(A) Bear the date of issuance.
7(B) Bear the time of maturity, not exceeding 50 years from their
8date of issuance.
9(C) Bear the rate of interest, either fixed or variable, and, if
10variable, not in excess of the maximum rate of interest specified
12(D) Be payable as to principal and interest at the time or times
14(E) Be in the denominations and in the form provided.
15(F) Carry the registration privileges provided.
16(G) Be executed in the manner provided.
17(H) Be payable in lawful money of the United States at the place
18or places provided within or without the state.
19(I) Be subject to the terms of redemption provided.
20(2) Notwithstanding paragraph (1), the bonds backed by
21Proposition 1A receivables shall have a maturity date no later than
22August 1, 2013.
23(3) For bonds backed by Proposition 1A receivables, both of
24the following shall apply:
25(A) The option to call shall be exercised upon receipt by the
26authority of a timely written notification from the Director of
27Finance, but no earlier than 30 days after delivery by the director
28of a written notice of the intent to do so to the Joint Legislative
30(B) The bonds may bear interest payable on periodic interest
31payment dates or may accrue interest to their maturity date or any
32combination thereof, subject to the approval of the Department of
33Finance and the State Treasurer pursuant to subdivision (x) of
34 Section 6588.
35(f) The bonds shall be sold by the authority at the time and in
36the manner set out in the authority’s resolution. The sale may be
37a public or private sale, and for price or prices, and on terms and
38conditions as the authority determines proper, after giving due
39consideration to the recommendations of any local agency to be
40assisted from the proceeds of the bonds. Pending preparation of
P24 1the definitive bonds, the authority may issue interim receipts,
2certificates, or temporary bonds which shall be exchanged for
3definitive bonds. For bonds backed by Proposition 1A receivables,
4the authority shall use its best efforts to obtain the lowest overall
5cost of the bonds, and shall certify that it so used its best efforts.
6The authority shall, in consultation with the Treasurer and
7Department of Finance, structure the sale of the bonds backed by
8Proposition 1A receivables and shall include those terms and
9conditions approved by the Treasurer and the Department of
11(g) In the case of bonds issued by an authority, on or after
12January 1, 1995, for the purpose of purchasing bonds of a local
13agency, all of the bonds of the local agency shall be purchased by
14the authority from the proceeds of the authority bonds within 90
15days of the date of issuance of the authority bonds. Nothing in this
16subdivision shall be construed to preclude an authority from issuing
17parity bonds at any time.
Any resolution authorizing any bonds or any issue of
21bonds may contain the following provisions, which shall be a part
22of the contract with the holders of the bonds to be authorized:
23(a) Provisions pledging the full faith and credit of the authority,
24or pledging all or any part of the revenues of any public capital
25improvements, or any revenue-producing contract or contracts
26made by the authority with any local agency, any VLF receivables
27purchased pursuant to Section 6588.5,
28 any Proposition 1A receivables purchased pursuant to Section
296588.6, or any other moneys of the authority, to secure the payment
30of the bonds, and of any special account, subject to those
31agreements with bondholders as may then exist.
32(b) Provisions setting out the rentals, fees, purchase payments,
33loan repayments, and other charges, and the amounts to be raised
34in each year thereby, and the use and disposition of the revenues.
35(c) Provisions setting aside reserves or sinking funds, and the
36regulation and disposition thereof.
37(d) Limitations on the right of the authority or its agent to restrict
38and regulate the use of the public capital improvements to be
39financed out of the proceeds of the bonds or any particular issue
P25 1(e) Limitations on the purpose to which the proceeds of sale of
2any issue of bonds may be applied, and pledging the proceeds to
3secure the payment of the bonds or any issue of the bonds.
4(f) Limitations on the issuance of additional bonds, the terms
5upon which additional bonds may be issued and secured, and the
6refunding of outstanding bonds.
7(g) The procedure, if any, by which the terms of any contract
8with bondholders may be amended or abrogated, the amount of
9bonds and the holders thereof that are required to give consent
10thereto, and the manner in which the consent may be given.
11(h) Limitations on expenditures for operating, administrative,
12or other expenses of the authority.
13(i) Definitions of acts or omissions to act which constitute a
14default in the duties of the authority to holders of its obligations,
15and providing the rights and remedies of the holders in the event
16of a default.
17(j) The mortgaging of any public capital improvements and the
18site thereof for the purpose of securing the bondholders.
19(k) The mortgaging of land, improvements, or other assets
20owned by a local agency for the purpose of securing the
22(l) Procedures for the selection of public capital improvements
23to be financed with the proceeds of the bonds authorized by the
24resolution, if the bonds are to be sold in advance of designating
25the public capital improvements and the local agency to receive
Notwithstanding any other provision of law, an action
30may be brought under Chapter 9 (commencing with Section 860)
31of Title 10 of Part 2 of the Code of Civil Procedure, to determine
32the validity of any bonds issued under this article to finance the
33purchase of bonds for local agencies, the financing of public capital
34improvements, or the purchase of VLF
35receivables pursuant to Section 6588.5 or Proposition 1A
36receivables pursuant to Section 6588.6 and any contracts of sale
37of VLF receivables or Proposition 1A receivables entered into by any local agency, and any related
39documents. If an action is commenced, the action shall be brought
40in the jurisdiction in which the authority maintains its principal
P26 1office and is not required to be brought in the jurisdiction or
2jurisdictions of any of the local agencies. However, publication of
3summons, as provided in Section 861 of the Code of Civil
4Procedure, shall be made in the county in which the authority
5maintains its principal office and in each county in which any local
6agency that has sold bonds to the authority, for which a public
7capital improvement is being financed or that has entered into a
8sales agreement for a VLF receivable or a Proposition 1A
9receivable where the authority is located.