BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 692
Author: Hancock (D)
Amended: 8/12/13
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-0, 4/17/13
AYES: Wolk, Knight, Beall, DeSaulnier, Emmerson, Hernandez, Liu
SENATE FLOOR : 37-0, 4/29/13 (Consent)
AYES: Anderson, Beall, Berryhill, Block, Calderon, Cannella,
Corbett, Correa, De León, DeSaulnier, Emmerson, Evans, Fuller,
Gaines, Galgiani, Hancock, Hernandez, Hill, Hueso, Huff,
Jackson, Knight, Lara, Leno, Lieu, Monning, Nielsen, Padilla,
Pavley, Price, Roth, Steinberg, Walters, Wolk, Wright, Wyland,
Yee
NO VOTE RECORDED: Liu, Vacancy, Vacancy
ASSEMBLY FLOOR : 72-3, 8/19/13 - See last page for vote
SUBJECT : Local government: community facilities districts
SOURCE : Author
DIGEST : This bill amends numerous provisions of the
Mello-Roos Community Facilities Act.
Assembly Amendments allow county recorders to charge a fee for
expenses incurred in recording notices.
ANALYSIS : The Mello-Roos Community Facilities Act allows
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counties, cities, special districts, and school districts to
finance public works projects and a limited list of public
services by levying special taxes (parcel taxes). A Mello-Roos
Community Facilities District (CFD) issues bonds against these
special taxes to finance the public works projects. Like all
special taxes, Mello-Roos Act special taxes, require 2/3 - voter
approval. If there are fewer than 12 registered voters, the
affected landowners vote.
This bill makes the following changes to the Mello-Roos
Community Facilities Act and the Mark-Roos Bond Pooling Act:
Special taxes for maintenance : Mello-Roos Act special taxes for
services can pay for police protection services, fire protection
and suppression services, ambulance and paramedic services,
recreation program services, library services, maintenance
services for elementary and secondary school sites and
structures, operation and maintenance of museums and cultural
facilities, maintenance and lighting of parks, parkways,
streets, roads, and open space, flood and storm protection
services, and hazardous waste cleanup services.
This bill additionally allows Mello-Roos Act special taxes to
pay for maintenance and operation of any real or other tangible
property with an estimated useful life of five years or longer
that is owned by the local agency or by another local agency
through an agreement entered into pursuant to a specified
statute. This bill defines "maintenance" as including
replacement and the creation and funding of a reserve to pay for
replacement.
Marks-Roos lease financing : The Joint Exercise of Powers Act
allows two or more public agencies to exercise their common
powers by signing joint powers agreements. Sometimes an
agreement creates a joint powers authority (JPA). The
Marks-Roos Local Bond Pooling Act allows public agencies to use
JPAs to finance infrastructure. These JPAs issue Marks-Roos Act
bonds and loan the capital to local agencies for public works,
for working capital, and for insurance programs. The Marks-Roos
Act allows a JPA to take title to, and sell, lands, structures,
real or personal property, rights, rights-of-way, franchises,
easements, and other interests in lands that are located within
the state that the authority determines are necessary or
convenient for the financing of public capital improvements.
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This bill adds leases to the list of property interests that
JPAs can use to finance public capital improvements.
Joint exercise of powers : A CFD can finance facilities to be
owned or operated by a public agency other than the agency that
created the district pursuant to a joint community facilities
agreement or joint exercise of powers agreement.
This bill declares that specified provisions in the Mello-Roos
Act must not be construed to limit a joint powers authority's
ability to exercise powers authorized by the Joint Powers Act.
Special tax prepayment provisions : A local agency's legislative
body can form a CFD that initially consists solely of territory
proposed for future annexation to the CFD, with the condition
that a parcel or parcels within that territory may be annexed to
the CFD and subjected to the special tax only with the unanimous
approval of the parcel owner or owners at the time of annexation
(SB 555, Hancock, Chapter 493, Statutes of 2011). Under this
alternate CFD formation procedure, the resolution of intention
to form the CFD need not specify the rate or rates of special
tax, provided that:
1.The resolution of intention and the resolution of formation
include a statement that the rate must be established in an
amount required to finance or refinance the authorized
improvements and to pay the district's administrative
expenses.
2.The maximum rate of special tax applicable to a parcel or
parcels must be specified in the unanimous approval provided
by parcel owners when they annex to the CFD.
This bill similarly provides that a resolution of intention need
not specify the conditions under which a special tax obligation
may be prepaid and permanently satisfied if the prepayment
provisions are included in the unanimous approval by parcel
owners when they annex to the CFD.
Eliminating facilities and services : A local agency's
legislative body, after conducting a public hearing, can
eliminate one or more types of facilities and services specified
in a CFD's resolution of formation.
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For a CFD formed under the alternate procedure, consisting
solely of territory proposed for future annexation to the CFD,
this bill allows facilities and services to be eliminated with
the unanimous approval of affected parcel owners and written
consent of the local agency. No additional hearing or
procedures are required.
This bill requires that the unanimous approval must contain
specified provisions if the unanimous approval relates to the
reduction of the special tax rate and the special tax proceeds
are being used to retire debt.
Special tax rate ordinances : This bill allows a local agency's
legislative body, after creating a CFD that includes territory
proposed for annexation in the future by unanimous approval, to
provide by ordinance for the levy of special taxes on parcels
that will be annexed to the CFD at the rate or rates to be
approved unanimously by parcel owners and for apportionment and
collection of the special taxes in the manner specified in the
resolution of formation.
Improvement areas : Existing law allows a local agency's
legislative body to designate, by resolution, a portion or
portions of a CFD as one or more improvement areas. After the
designation of an improvement area, all proceedings for purposes
of a bond election and for the purpose of levying special taxes
for payment of the bonds, or for any other specified changes
apply only to the improvement area.
This bill, in connection with the annexation by unanimous
approval to a community facilities district of a parcel that was
included in territory proposed for annexation in the future to
the community facilities district, allows a local agency to
designate a parcel or parcels as an improvement area within the
CFD. Designation of a parcel or parcels as an improvement area
shall be specified and approved by the unanimous approval of the
owner/owners of each parcel or parcels at the time that the
parcel or parcels are annexed to the community facilities
district. After the designation of a parcel or parcels as an
improvement area, all proceedings for approval of the
appropriations limit, the rate and method of apportionment and
manner of collection of special taxes, and the authorization to
incur bonded indebtedness for the parcel or parcels apply only
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to the improvement area.
Continuing disclosure notice : Federal law requires some
property owners in a CFD to disclose certain information on a
continuous basis through an information clearinghouse
established by the Municipal Securities Rulemaking Board (MSRB).
This bill allows a local agency to execute and record in a
county recorder's office a notice of the owner's disclosure
agreement for the purpose of providing notice to a subsequent
transferee. The owner's written consent must be attached to the
notice. This bill requires a subsequent transferee of the
property to be subject to the disclosure obligation. Upon the
termination of the disclosure obligation, the bill allows a
local agency to record a notice of termination with the office
of the county recorder in which the original notice was
recorded. The county recorder may charge an appropriate fee for
expenses incurred in recording notices.
Bond refunding requirements : A certified public accountant must
certify that proceeds and investment kept in a fund for a CFD's
refunding bonds are sufficient to meet specified statutory
requirements.
This bill provides that an accountant's certification is not
required if:
1.The proceeds and any other cash in the refunding fund are held
uninvested, or shall be invested, in noncallable obligations
of, or obligations guaranteed as to principal and interest by,
the U.S. government or any agency or instrumentality thereof,
when those obligations are backed by the full faith and credit
of the U.S. government.
2.The amount invested is sufficient to pay the principal,
interest, and redemption premiums, if any, on the refunded
bonds as they become due or at designated dates prior to
maturity.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
ASSEMBLY FLOOR : 72-3, 8/19/13
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Bigelow, Bloom,
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Bocanegra, Bonilla, Bonta, Bradford, Brown, Buchanan, Ian
Calderon, Campos, Chau, Chávez, Chesbro, Conway, Cooley,
Dahle, Daly, Dickinson, Eggman, Fong, Fox, Frazier, Garcia,
Gatto, Gomez, Gonzalez, Gordon, Gorell, Gray, Grove, Hagman,
Hall, Harkey, Roger Hernández, Holden, Jones, Jones-Sawyer,
Levine, Linder, Lowenthal, Maienschein, Mansoor, Medina,
Melendez, Mitchell, Mullin, Muratsuchi, Nazarian, Nestande,
Olsen, Pan, Perea, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NOES: Beth Gaines, Logue, Morrell
NO VOTE RECORDED: Donnelly, Patterson, V. Manuel Pérez,
Vacancy, Vacancy
AB:ej 8/21/13 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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