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  







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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  








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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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