Amended in Assembly April 21, 2015

Amended in Assembly March 25, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 581

Introduced by Assembly Member Gomez

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(Principal coauthor: Assembly Member Bigelow)

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February 24, 2015

An act to add Chapter 11.2 (commencing with Section 8852) to Division 1 of Title 2 of the Government Code, relating to financing deferred maintenance on state facilities, by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds.


AB 581, as amended, Gomez. State Facilities Renewal Bond Act of 2016.

The annual Budget Act appropriates funds to state agencies for operations as part of their respective agency budgets. Existing law requires the Department of General Services to report to the Legislature, as specified, on expenditures for seismic hazard abatement for state buildings and facilities, in connection with the Earthquake Safety and Public Buildings Rehabilitation Bond Act of 1990.

This bill would enact the State Facilities Renewal Bond Act of 2016, which, if adopted by the voters at the June 7, 2016, statewide primary election, would authorize the issuance of bonds in the amount of $2,000,000,000, pursuant to the State General Obligation Bond Law, to finance deferred maintenance on state-owned property, subject to appropriation by the Legislature in the annual Budget Act.

Vote: 23. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1


Chapter 11.2 (commencing with Section 8852)
2is added to Division 1 of Title 2 of the Government Code, to read:


4Chapter  11.2. State Facilities Renewal Bond Act of 2016


6Article 1.  General Provisions




This chapter shall be known as the State Facilities
9Renewal Bond Act of 2016.



As used in this chapter, the following terms have the
11following meanings:

12(a) “Committee” means the State Facilities Renewal Bond
13Finance Committee created pursuant to Section 8852.31.

14(b) “Fund” means the State Facilities Renewal Bond Fund
15created pursuant to Section 8852.2.

16(c) “State agency” means any state agency, department, office,
17division, bureau, board, commission,begin insert district agricultural
18association,end insert
the California State University, the University of
19California, and the Judicial Council.

20(d) “Deferred maintenance projects” means delayed projects to
21replace infrastructure and building components in order to preserve
22or maintain these assets in an acceptable condition.


24Article 2.  State Facilities Renewal Bond Fund and Program




(a) The proceeds of bonds issued and sold pursuant
27to this chapter shall be deposited in the State Facilities Renewal
28Bond Fund, which is hereby created. Fund moneys shall only be
29used to address deferred maintenance projects on state-owned
30property and shall be made available for expenditure only upon
31appropriation by the Legislature in the annual Budget Act. Funds
32shall be appropriated to state agencies as part of their respective
33agency budgets for state operations. Fund moneys appropriated to
34a state agency shall supplement, not supplant, an agency’s existing
35deferred maintenance expenditures. It is the intent of the
P3    1Legislature that the projects funded by these bonds shall have a
2useful life of at least 20 years.

3(b) The Governor shall propose appropriations from the State
4Facilities Renewal Bond Fund as part of his or her January 10
5budget proposal.

6(1) Within 10 days following release of the budget proposal,
7the Department of Finance shall report all of the following to the
8respective budget committees of the Legislature:

9(A) The administration’s methodology for allocating the bond
10funds among the various state agencies.

11(B) The criteria used for establishing deferred maintenance
12project funding priorities.

13(2) A state agency for which the Governor proposes an
14appropriation from the State Facilities Renewal Bond Fund shall
15report, within 30 days following the release of the budget proposal,
16the following to the respective budget committees of the

18(A) The agency’s total deferred maintenance backlog.

19(B) The agency’s deferred maintenance expenditures in the prior
20fiscal year.

21(C) A list of deferred maintenance projects proposed to be
22undertaken by the agency with moneys from the fund proposed
23for appropriation.

24(D) The agency’s expenditures in the prior fiscal year for
25maintenance other than deferred maintenance.

26(E) The extent to which the agency’s current budget for
27maintenance is insufficient to prevent an increase in the agency’s
28deferred maintenance backlog.


30Article 3.  Fiscal




Bonds in the total amount of two billion dollars
33($2,000,000,000), or so much thereof as is necessary, not including
34the amount of any refunding bonds, or so much thereof as is
35necessary, may be issued and sold to provide a fund to be used for
36carrying out the purposes expressed in this chapter and to reimburse
37the General Obligation Bond Expense Revolving Fund pursuant
38to Section 16724.5. The bonds, when sold, shall be and constitute
39a valid and binding obligation of the State of California, and the
40full faith and credit of the State of California is hereby pledged
P4    1for the punctual payment of both principal of, and interest on, the
2bonds as the principal and interest become due and payable. The
3bonds issued pursuant to this chapter shall be repaid within 20
4years from the date they are issued.



The bonds authorized by this chapter shall be
6prepared, executed, issued, sold, paid, and redeemed as provided
7in the State General Obligation Bond Law (Chapter 4 (commencing
8with Section 16720) of Part 3 of Division 4 of Title 2), and all of
9the provisions of that law apply to the bonds and to this chapter
10and are hereby incorporated in this chapter as though set forth in
11full in this chapter, except subdivisions (a) and (b) of Section



(a) Solely for the purpose of authorizing the issuance
14and sale pursuant to the State General Obligation Bond Law of
15the bonds authorized by this chapter, the State Facilities Renewal
16Bond Finance Committee is hereby created. For purposes of this
17chapter, the State Facilities Renewal Bond Finance Committee is
18“the committee” as that term is used in the State General Obligation
19Bond Law. The committee consists of the Controller, Director of
20Finance, and Treasurer, or their designated representatives.

21(b) The Treasurer shall serve as chairperson of the committee.

22(c) A majority of the committee may act for the committee.



The committee shall determine whether or not it is
24necessary or desirable to issue bonds authorized pursuant to this
25chapter in order to carry out the actions specified in Section 8852.2
26and, if so, the amount of bonds to be issued and sold. Successive
27issues of bonds may be authorized and sold to carry out those
28actions progressively, and it is not necessary that all of the bonds
29authorized to be issued be sold at any one time.



There shall be collected each year and in the same
31manner and at the same time as other state revenue is collected,
32in addition to the ordinary revenues of the state, a sum in an amount
33required to pay the principal of, and interest on, the bonds each
34year. It is the duty of all officers charged by law with any duty in
35regard to the collection of the revenue to do and perform each and
36every act that is necessary to collect that additional sum.



Notwithstanding Section 13340, there is hereby
38appropriated from the General Fund in the State Treasury, for the
39purposes of this chapter, an amount that will equal the total of the

P5    1(a) The sum annually necessary to pay the principal of, and
2interest on, bonds issued and sold pursuant to this chapter, as the
3principal and interest become due and payable.

4(b) The sum necessary to carry out Section 8852.36,
5appropriated without regard to fiscal years.



For the purposes of carrying out this chapter, the
7Director of Finance may authorize the withdrawal from the General
8Fund of an amount not to exceed the amount of the unsold bonds
9that have been authorized by the committee to be sold for the
10purpose of carrying out this chapter. Any amounts withdrawn shall
11be deposited in the fund. Any moneys made available under this
12section shall be returned to the General Fund, with interest at the
13rate earned by the moneys in the Pooled Money Investment
14Account, from proceeds received from the sale of bonds for the
15purpose of carrying out this chapter.



All moneys deposited in the fund that is derived from
17premium and accrued interest on bonds sold shall be reserved in
18the fund and shall be available for transfer to the General Fund as
19a credit to expenditures for bond interest.



Pursuant to Chapter 4 (commencing with Section
2116720) of Part 3 of Division 4 of Title 2, the cost of bond issuance
22shall be paid out of the bond proceeds. These costs shall be shared
23proportionally by each program funded through this bond act.



The committee may request the Pooled Money
25Investment Board to make a loan from the Pooled Money
26Investment Account, including other authorized forms of interim
27financing that include, but are not limited to, commercial paper,
28in accordance with Section 16312, for purposes of carrying out
29this chapter. The amount of the request shall not exceed the amount
30of the unsold bonds that the committee, by resolution, has
31authorized to be sold for the purpose of carrying out this chapter.
32The committee shall execute any documents required by the Pooled
33Money Investment Board to obtain and repay the loan. Any
34amounts loaned shall be deposited in the fund to be allocated by
35the board in accordance with this chapter.



The bonds may be refunded in accordance with Article
376 (commencing with Section 16780) of Chapter 4 of Part 3 of
38Division 4 of Title 2, which is a part of the State General Obligation
39Bond Law. Approval by the voters of the state for the issuance of
40the bonds described in this chapter includes the approval of the
P6    1issuance of any bonds issued to refund any bonds originally issued
2under this chapter or any previously issued refunding bonds.



Notwithstanding any other provision of this chapter,
4or of the State General Obligation Bond Law, if the Treasurer sells
5bonds pursuant to this chapter that include a bond counsel opinion
6to the effect that the interest on the bonds is excluded from gross
7income for federal tax purposes, subject to designated conditions,
8the Treasurer may maintain separate accounts for the investment
9of bond proceeds and for the investment of earnings on those
10proceeds. The Treasurer may use or direct the use of those proceeds
11or earnings to pay any rebate, penalty, or other payment required
12under federal law or take any other action with respect to the
13investment and use of those bond proceeds required or desirable
14under federal law to maintain the tax exempt status of those bonds
15and to obtain any other advantage under federal law on behalf of
16the funds of this state.



The Legislature hereby finds and declares that,
18inasmuch as the proceeds from the sale of bonds authorized by
19this chapter are not “proceeds of taxes” as that term is used in
20Article XIII B of the California Constitution, the disbursement of
21these proceeds is not subject to the limitations imposed by that


SEC. 2.  

Section 1 of this act shall take effect upon the approval
24by the voters of the State Facilities Renewal Bond Act of 2016, as
25set forth in Section 1 of this act.


SEC. 3.  

Section 1 of this act shall be submitted to the voters
27at the June 7, 2016, statewide primary election in accordance with
28provisions of the Government Code and the Elections Code
29governing the submission of a statewide measure to the voters.