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
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|Author: |Committee on Budget |
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|Version: |January 9, 2015 Introduced |
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|Urgency: |No |Fiscal: |No |
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|Consultant|Mark Ibele |
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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
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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
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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
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