BILL ANALYSIS Ó SENATE COMMITTEE ON BUDGET AND FISCAL REVIEW Senator Mark Leno, Chair 2015 - 2016 Regular Bill No: AB 114 Hearing Date: June 15, 2015 ----------------------------------------------------------------- |Author: |Committee on Budget | |----------+------------------------------------------------------| |Version: |January 9, 2015 Introduced | ----------------------------------------------------------------- ---------------------------------------------------------------- |Urgency: |No |Fiscal: |No | ---------------------------------------------------------------- ----------------------------------------------------------------- |Consultant|Mark Ibele | |: | | ----------------------------------------------------------------- Subject: Budget Act of 2015. Summary: This measure is necessary for the enactment of the 2015 Budget Act and makes various changes relating to public works. Background: The State Public Works Board (SPWB) was created by the Legislature to oversee the fiscal matters associated with construction of projects for state agencies, and to select and acquire real property for state facilities and programs. The SPWB is also the issuer of lease-revenue bonds; a form of long-term financing that is used to pay for capital projects. Through review and approval processes, the SPWB ensures that capital outlay projects adhere to the Legislature's appropriation intent. Voting members of the SPWB include the Director of Finance, the Director of Transportation, and the Director of General Services. The State Treasurer's Office is responsible for administering the state's long-term debt program, including how bids are submitted and the cost of debt service. Proposed Law: The bill makes certain technical and clarifying changes to facilitate the financing of capital projects. Specifically, the measure: a. Reduces the amount of authorized revenue bonds, notes, or bond anticipation notes that may be issued to finance the acquisition, design or construction of approved certain AB 114 (Committee on Budget) Page 2 of ? local jail facilities from $365.8 million to $340.9 million; increases the amount of authorized revenue bonds, notes, or bond anticipation notes that may be issued to finance the acquisition, design or construction of approved other local jail facilities from $854.2 million to $870.1 million; increases the amount of authorized revenue bonds, notes, or bond anticipation notes that may be issued to finance the acquisition, design or construction of approved adult local criminal justice facilities from $500.0 million to $509.1 million. b. Expands the performance criteria for public works projects to include concept drawings, which may include schematic or architectural renderings. c. Repeals the provisions allowing for the appointment of deputies to the SPWB by the Director of Transportation and the Director of General Services. d. Adopts new rules for the conveyance of a public building to the state agency that had jurisdiction of the property prior to the SPWB financing, once the facility is no longer required as pledge for payment. e. Removes the sunset date of July 1, 2015 for the provision that allows the SPWB to enter into an asset transfer and lease for purposes of securing the payment of debt service and facilitate the completion of public works projects. Requires the Department of Finance to report to the fiscal committees of the Legislature, on the use of this asset transfer authority by the SPWB by June 30, 2017. f. Eliminates dated provisions of law that relate to coupon bonds, adjusts provisions relating to the determination of the net interest costs to the state of bond financing, and increases flexibility with respect to issuance of bonds based on par values and how bids are submitted to the State Treasurer. g. Specifies that the method for determining the lowest interest cost bid by the State Treasurer shall be limited to either the net interest cost method (determined to be the total amount of interest, less the total amount of the premium, plus the total amount of the discount) or the true AB 114 (Committee on Budget) Page 3 of ? interest cost method (determined to be the nominal interest rate when compounded semiannually, used to discount debt service payments to the date of the bonds). h. Effectuates certain other technical changes regarding administrative processes for public works projects. Fiscal Effect: Minor fiscal impacts on debt service requirements. Support: None on file Opposed: None on file -- END --