California Legislature—2013–14 Regular Session

Assembly BillNo. 2274


Introduced by Assembly Member Gordon

February 21, 2014


An act to amend Sections 8855 and 8856 of the Government Code, relating to state government.

LEGISLATIVE COUNSEL’S DIGEST

AB 2274, as introduced, Gordon. The California Debt and Investment Advisory Commission.

Existing law establishes the California Debt and Investment Advisory Commission to, among other things, maintain contact with state and municipal bond issuers, underwriters, investors, and credit rating agencies to improve the market for state and local government debt issues, and assist state and local governments to prepare, market, and sell its new debt issues. Existing law authorizes the commission to charge a fee to a lead underwriter or purchaser, as specified, with the funds collected to be used, upon appropriation, for the expenses of the commission and the Treasurer.

This bill would modify the reporting and notice requirements an issuer of debt is required to make to the commission before a proposed sale of debt issue and after a sale of debt issue. This bill would also expand the commission’s authorization to charge fees relating to the principal amount of a debt issue to include also charging a fee to a lender. This bill would also make technical, nonsubstantive changes.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 8855 of the Government Code is amended
2to read:

3

8855.  

(a) There is created the California Debt and Investment
4Advisory Commission, consisting of nine members, selected as
5follows:

6(1) The Treasurer, or his or her designee.

7(2) The Governor or the Director of Finance.

8(3) The Controller, or his or her designee.

9(4) Two local government finance officers appointed by the
10Treasurer, one each from among persons employed by a county
11and by a city or a city and county of this state, experienced in the
12issuance and sale of municipal bonds and nominated by
13associations affiliated with these agencies.

14(5) Two Members of the Assembly appointed by the Speaker
15of the Assembly.

16(6) Two Members of the Senate appointed by the Senate
17Committee on Rules.

18(b) (1) The term of office of an appointed member is four years,
19but appointed members serve at the pleasure of the appointing
20power. In case of a vacancy for any cause, the appointing power
21shall make an appointment to become effective immediately for
22the unexpired term.

23(2) Any legislators appointed to the commission shall meet with
24and participate in the activities of the commission to the extent
25that the participation is not incompatible with their respective
26positions as Members of the Legislature. For purposes of this
27chapter, the Members of the Legislature shall constitute a joint
28interim legislative committee on the subject of this chapter.

29(c) The Treasurer shall serve as chairperson of the commission
30and shall preside at meetings of the commission.

31(d) Appointed members of the commission shall not receive a
32salary, but shall be entitled to a per diem allowance of fifty dollars
33($50) for each day’s attendance at a meeting of the commission
34not to exceed three hundred dollars ($300) in any month, and
35reimbursement for expenses incurred in the performance of their
36duties under this chapter, including travel and other necessary
37expenses.

P3    1(e) The commission may adopt bylaws for the regulation of its
2affairs and the conduct of its business.

3(f) The commission shall meet on the call of the chairperson,
4at the request of a majority of the members, or at the request of
5the Governor. A majority of all nonlegislative members of the
6commission constitutes a quorum for the transaction of business.

7(g) The office of the Treasurer shall furnish all administrative
8assistance required by the commission.

9(h) The commission shall do all of the following:

10(1) Assist all state financing authorities and commissions in
11carrying out their responsibilities as prescribed by law, including
12assistance with respect to federal legislation pending in Congress.

13(2) Upon request of any state or local government units, to assist
14them in the planning, preparation, marketing, and sale of new debt
15issues to reduce cost and to assist in protecting the issuer’s credit.

16(3) Collect, maintain, and provide comprehensive information
17on all state and all local debt authorization and issuance, and serve
18as a statistical clearinghouse for all state and local debt issues. This
19information shall be readily available upon request by any public
20official or any member of the public.

21(4) Maintain contact with state and municipal bond issuers,
22underwriters, credit rating agencies, investors, and others to
23improve the market for state and local government debt issues.

24(5) Undertake or commission studies on methods to reduce the
25costs and improve credit ratings of state and local issues.

26(6) Recommend changes in state laws and local practices to
27improve the sale and servicing of state and local debts.

28(7) Establish a continuing education program for local officials
29having direct or supervisory responsibility over municipal
30investments and debt issuance. The commission shall undertake
31these and any other activities necessary to disclose investment and
32debt issuance practices and strategies that may be conducive for
33oversight purposes.

34(8) Collect, maintain, and provide information on local agency
35investments of public funds for local agency investment.

36(9) Publish a monthly newsletter describing and evaluating the
37operations of the commission during the preceding month.

38(i) The issuer of any proposedbegin delete newend delete debt issue of state or local
39government shall, no later than 30 days prior to the sale of any
40debt issuebegin delete at public or private sale, give written notice of the
P4    1proposed saleend delete
begin insert, submit a report of the proposed issuanceend insert to the
2begin delete commission, by mail, postage prepaid, orend deletebegin insert commissionend insert by anybegin delete otherend delete
3 method approved by the commission. This subdivision shall also
4apply to any nonprofit public benefit corporation incorporated for
5the purpose of acquiring student loans. Thebegin delete notice shall include
6the proposed sale date, the name of the issuer, the type of debt
7issue, and the estimated principal amount of the debt.end delete
begin insert commission
8may require information to be submitted in the report of proposed
9debt issuance that it considers appropriate.end insert
Failure tobegin delete give this
10noticeend delete
begin insert submit the reportend insert shall not affect the validity of the sale.

11(j) The issuer of anybegin delete newend delete debt issue of state or local government,
12not later thanbegin delete 45end deletebegin insert 21end insert days after thebegin delete signing of the bond purchase
13contract in a negotiated or private financing, or after the acceptance
14of a bid in a competitive offering,end delete
begin insert sale of the debt,end insert shall submit a
15report of final sale to the commission by mail, postage prepaid, or
16by any other method approved by the commission. A copy of the
17final official statement for the issue shall accompany the report of
18final sale. If there is no official statement, the issuer shall provide
19each of the following documents, if they exist, along with the report
20of final sale:

21(1) Other disclosure document.

22(2) Indenture.

23(3) Installment sales agreement.

24(4) Loan agreementbegin delete or promissory noteend delete.

begin insert

25(5) Promissory note.

end insert
begin delete

26(5)

end delete

27begin insert(6)end insert Bond purchase contract.

begin delete

28(6)

end delete

29begin insert(7)end insert Resolution authorizing the issue.

begin delete

30(7)

end delete

31begin insert(8)end insert Bond specimen.

32The commission may require information to be submitted in the
33report of final sale that it considers appropriate. The issuer may
34redact confidential information contained in the documents if the
35redacted information is not information that is otherwise required
36to be reported to the commission.

37

SEC. 2.  

Section 8856 of the Government Code is amended to
38read:

39

8856.  

(a) In carrying out the purposes of this chapter, the
40commission may charge fees to the lead underwriterbegin delete orend deletebegin insert,end insert the
P5    1purchaserbegin insert, or the lenderend insert in an amount equal to one-fortieth of 1
2percent of the principal amount of the issue, but not to exceed five
3thousand dollars ($5,000) for any one issue. Amounts received
4under this section shall be deposited in the California Debt and
5Investment Advisory Commission Fund, which is hereby created
6in the State Treasury. All money in the fund shall be available,
7 when appropriated, for expenses of the commission and the
8Treasurer.

9(b) Until fees are received by the advisory commission and
10appropriated pursuant to this chapter for the expenses of the
11commission and the Treasurer, the commission may borrow the
12moneys required for the purpose of meeting necessary expenses
13of initial organization and operation of the commission.



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