Amended in Assembly May 1, 2014

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 amended, 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 lenderbegin insert, and would remove the authority of the commission to borrow moneys required for the purpose of meeting necessary expenses of the commissionend insert. 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
P3    1duties under this chapter, including travel and other necessary
2expenses.

3(e) The commission may adopt bylaws for the regulation of its
4affairs and the conduct of its business.

5(f) The commission shall meet on the call of the chairperson,
6at the request of a majority of the members, or at the request of
7the Governor. A majority of all nonlegislative members of the
8commission constitutes a quorum for the transaction of business.

9(g) The office of the Treasurer shall furnish all administrative
10assistance required by the commission.

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

12(1) Assist all state financing authorities and commissions in
13carrying out their responsibilities as prescribed by law, including
14assistance with respect to federal legislation pending in Congress.

15(2) Upon request of any state or local government units, to assist
16them in the planning, preparation, marketing, and sale ofbegin delete newend delete debt
17issues to reduce cost and to assist in protecting the issuer’s credit.

18(3) Collect, maintain, and provide comprehensive information
19on all state and all local debt authorization and issuance, and serve
20as a statistical clearinghouse for all state and local debt issues. This
21information shall be readily available upon request by any public
22official or any member of the public.

23(4) Maintain contact with state and municipal bond issuers,
24underwriters, credit rating agencies, investors, and others to
25improve the market for state and local government debt issues.

26(5) Undertake or commission studies on methods to reduce the
27costs and improve credit ratings of state and local issues.

28(6) Recommend changes in state laws and local practices to
29improve the sale and servicing of state and local debts.

30(7) Establish a continuing education program for local officials
31having direct or supervisory responsibility over municipal
32investments and debt issuance. The commission shall undertake
33these and any other activities necessary to disclose investment and
34debt issuance practices and strategies that may be conducive for
35oversight purposes.

36(8) Collect, maintain, and provide information on local agency
37investments of public funds for local agency investment.

38(9) Publish a monthly newsletter describing and evaluating the
39operations of the commission during the preceding month.

P4    1(i) The issuer of any proposed debt issue of state or local
2government shall, no later than 30 days prior to the sale of any
3debt issue, submit a report of the proposed issuance to the
4commission by any method approved by the commission. This
5subdivision shall also apply to any nonprofit public benefit
6corporation incorporated for the purpose of acquiring student loans.
7The commission may require information to be submitted in the
8report of proposed debt issuance that it considers appropriate.
9Failure to submit the report shall not affect the validity of the sale.

10(j) The issuer of any debt issue of state or local government,
11not later than 21 days after the sale of the debt, shall submit a report
12of final sale to the commissionbegin delete by mail, postage prepaid, orend delete by any
13begin delete otherend delete method approved by the commission. A copy of the final
14official statement for the issue shall accompany the report of final
15sale. If there is no official statement, the issuer shall provide each
16of the following documents, if they exist, along with the report of
17final sale:

18(1) Other disclosure document.

19(2) Indenture.

20(3) Installment sales agreement.

21(4) Loan agreement.

22(5) Promissory note.

23(6) Bond purchase contract.

24(7) Resolution authorizing the issue.

25(8) Bond specimen.

26The commission may require information to be submitted in the
27report of final sale that it considers appropriate. The issuer may
28redact confidential information contained in the documents if the
29redacted information is not information that is otherwise required
30to be reported to the commission.

31

SEC. 2.  

Section 8856 of the Government Code is amended to
32read:

33

8856.  

begin delete(a)end deletebegin deleteend deleteIn carrying out the purposes of this chapter, the
34commission may charge fees to the lead underwriter, the purchaser,
35or the lender in an amount equal to one-fortieth of 1 percent of the
36principal amount of the issue, but not to exceed five thousand
37dollars ($5,000) for any one issue. Amounts received under this
38section shall be deposited in the California Debt and Investment
39Advisory Commission Fund, which is hereby created in the State
P5    1Treasury. All money in the fund shall be available, when
2appropriated, for expenses of the commission and the Treasurer.

begin delete

3(b) Until fees are received by the advisory commission and
4appropriated pursuant to this chapter for the expenses of the
5commission and the Treasurer, the commission may borrow the
6moneys required for the purpose of meeting necessary expenses
7of initial organization and operation of the commission.

end delete


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