BILL NUMBER: AB 1883 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 29, 2014
AMENDED IN ASSEMBLY APRIL 10, 2014
INTRODUCED BY Assembly Member Skinner
(Coauthors: Assembly Members Ammiano, Buchanan, Chesbro,
Garcia, Gordon, and Ting)
FEBRUARY 19, 2014
An act to amend Section 5898.28 of the Streets and Highways Code,
relating to public improvements.
LEGISLATIVE COUNSEL'S DIGEST
AB 1883, as amended, Skinner. Public improvements: contractual
assessments.
Existing law, under the Improvement Act of 1911, authorizes the
legislative body of a public agency to designate an area within which
the public agency and property owners may enter into voluntary
contractual assessments to finance certain public improvements.
Existing law authorizes the public agency to advance its own funds to
finance work to be repaid through the voluntary assessments, and to
issue bonds in that regard. Existing law provides that assessments
levied in this manner constitute a lien against the property on which
the assessments are made, and, in the case of delinquency, provides
for collection of assessments and associated interest and penalties,
as specified.
This bill would authorize a public agency to transfer, as defined,
its right, title, and interest in any voluntary contractual
assessments if bonds have not been issued in that regard, subject to
an agreement identifying the specific period of time during which the
transfer will be operative, not to exceed 3 years. The bill would
not authorize the transferee to initiate and prosecute a foreclosure
action resulting from a delinquency in the payment of the voluntary
contractual assessment , which . The
foreclosure action would remain the responsibility of the
public agency , which would retain the sole right to enforce its
senior lien status . The bill would also not affect
the senior lien status of a lien resulting from that delinquency.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Energy efficiency, renewable energy, and water efficiency
upgrades to residential, commercial, industrial, and other properties
are integral to furthering the state's goals of reducing greenhouse
gas emissions, insulating the state from the impacts of dwindling
water resources, and helping Californians save money.
(b) Not-for-profit entities and other third parties are
increasingly important partners with local governments in funding
Property Assessed Clean Energy (PACE) upgrades.
(c) The closing costs associated with bond issuance can make PACE
financing for small projects cost-prohibitive.
(d) By pooling small to medium size PACE projects into one bond,
the closing costs for each project can be drastically reduced.
(e) In order for a third party to pool projects, it is necessary
to enable local governments to assign the revenue from a PACE
assessment to an investor prior to the issuance of a bond.
(f) The right to foreclose on delinquent voluntary assessments,
and the senior lien status of those assessments, should remain with
the local government.
SEC. 2. Section 5898.28 of the Streets and Highways Code is
amended to read:
5898.28. (a) A public agency may issue bonds pursuant to this
chapter, the principal and interest for which would be repaid by
voluntary contractual assessments. A public agency may advance its
own funds to finance work to be repaid through voluntary contractual
assessments, and may from time to time sell bonds to reimburse itself
for those advances. A public agency may enter into a relationship
with an underwriter or financial institution that would allow the
sequential issuance of a series of bonds, each bond being issued as
the need arose to finance work to be repaid through voluntary
contractual assessments. The interest rate of each bond may be
determined by an appropriate index, but shall be fixed at the time
each bond is issued. Bond proceeds may be used to establish a reserve
fund, and to pay for expenses incidental to the issuance and sale of
the bonds. Division 10 (commencing with Section 8500) shall apply to
any bonds issued pursuant to this section, insofar as that division
is not in conflict with this chapter.
(b) (1) Notwithstanding any provision of this division or the
Improvement Act of 1915 (Division 10 (commencing with Section 8500)),
a public agency may transfer its right, title, and interest in and
to any voluntary contractual assessments, if bonds have not been
issued pursuant to subdivision (a). The public agency and the
transferee shall enter into an agreement that, among other things,
identifies the specific period of time during which the transfer of
voluntary contractual assessments will be operative, not to exceed
three years. Except as provided in paragraph (2), a transfer of any
voluntary contractual assessments under this subdivision shall be
treated as a true and absolute transfer of the asset so transferred
for the period of the transfer and not as a pledge or grant of a
security interest by the public agency for any borrowing. The
characterization of the transfer of any of those assets as an
absolute transfer by the public agency shall not be negated or
adversely affected by the fact that only a portion of any voluntary
contractual assessment is transferred, nor by any characterization of
the transferee for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever. As used in this
section, "transfer" means sale, assignment, or other transfer.
(2) Nothing in this subdivision shall be construed to authorize
the transferee to initiate and prosecute a foreclosure action
resulting from a delinquency in the payment of the voluntary
contractual assessment, and nothing in this subdivision
shall affect the senior lien status of a lien resulting from that
delinquency. assessment. Initiation and
prosecution of a foreclosure action shall remain the responsibility
of the public agency , which shall retain the sole right to
enforce its senior lien status .