California Legislature—2015–16 Regular Session

Assembly BillNo. 1195


Introduced by Assembly Member Ridley-Thomas

February 27, 2015


An act to amend Sections 8869.80, 8869.81, 8869.82, 8869.85, 8869.86, and 8869.93 of the Government Code, relating to bonds.

LEGISLATIVE COUNSEL’S DIGEST

AB 1195, as introduced, Ridley-Thomas. California Debt Limit Allocation Committee: American Recovery and Reinvestment Act of 2009.

Existing law establishes the California Debt Limit Allocation Committee for the purpose of implementing the volume limit for the state on private activity bonds established pursuant to federal law. The committee’s duties include annually determining a state ceiling on the aggregate amount of private activity bonds that may be issued, and allocating that amount among state and local agencies. Existing law defines the terms “private activity bond” and “state ceiling” for those purposes with regard to an amount specified in federal law.

This bill would revise the findings and declarations with regard to, and the purpose for, the provisions relating to the California Debt Limit Allocation Committee to reflect the American Recovery and Reinvestment Act of 2009. The bill would revise the definition of “private activity bond” and “state ceiling” to also include certain amounts reserved to the state for qualified educational facilities bonds and would make conforming changes with regard to those bonds.

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

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

P2    1

SECTION 1.  

Section 8869.80 of the Government Code is
2amended to read:

3

8869.80.  

The Legislature hereby finds and declares all of the
4following:

5(a) The Tax Reform Act of 1986 (Public Law 99-514)
6establishes abegin delete unifiedend delete volume ceiling on the aggregate amount of
7private activity bonds that can be issued in each state. Thebegin delete unifiedend delete
8 volume ceiling is the product of seventy-five dollars ($75)
9multiplied by the state population in 1987 and fifty dollars ($50)
10multiplied by the state population in each succeeding calendar
11year.

begin insert

12(b) Sections 1112 and 1401 of the American Recovery and
13Reinvestment Act of 2009 (26 U.S.C. Secs. 54a and 1400U-1)
14establish an aggregate amount of bond authority that can be issued
15in each state. Said amount may be determined from time to time
16by federal law, federal notice, or both federal law and notice.

end insert
begin insert

17(c) Section 142(k) of the Internal Revenue Code establishes a
18volume ceiling on the aggregate amount of qualified education
19facility bonds that can be issued in each state. The qualified
20educational facilities volume ceiling is the product of ten dollars
21($10) multiplied by the state population in each calendar year.

end insert
begin delete

22(b)

end delete

23begin insert(d)end insert The federal act requires each state to allocate its volume
24ceiling according to a specified formula unless a different procedure
25is established by Governor’s proclamation or state legislation.

begin insert

26(e) Section 142(k)(5)(B)(i) of the Internal Revenue Code
27authorizes each state to allocate the qualified educational facilities
28volume ceiling in the manner the state determines appropriate.

end insert
begin delete

29(c)

end delete

30begin insert(f)end insert Therefore, it is necessary to designate a state agency and
31create an allocation system to administer the statebegin delete unifiedend delete volume
32ceiling.

begin delete

33(d)

end delete

34begin insert(g)end insert A substantial public benefit is served by promoting housing
35for lower income families and individuals.

begin delete

36(e)

end delete

P3    1begin insert(h)end insert A substantial public benefit is served by preserving and
2rehabilitating existing governmental assisted housing for lower
3income families and individuals.

begin delete

4(f)

end delete

5begin insert(i)end insert A substantial public benefit is served by providing federal
6tax credits or reduced interest rate mortgages to assist teachers,
7principals, vice principals, assistant principals, and classified
8employees who are willing to serve in high priority schools to
9purchase a home.

begin insert

10(j) A substantial public benefit is served by constructing
11educational facilities for the state’s children.

end insert
12

SEC. 2.  

Section 8869.81 of the Government Code is amended
13to read:

14

8869.81.  

This chapter is enacted to implement the statebegin delete unifiedend delete
15 volume limit established in Section 1301 of the Federal Tax Reform
16Act of 1986 (Public Law 99-514)begin insert, Sections 1112 and 1401 of the
17American Recovery and Reinvestment Act of 2009 (26 U.S.C. Secs.
1854a and 1400U-1),end insert
andbegin delete Sectionend deletebegin insert Sections 142(k) andend insert 146 of the
19Internal Revenue Code.

20

SEC. 3.  

Section 8869.82 of the Government Code is amended
21to read:

22

8869.82.  

(a) As used in this chapter, unless the context
23otherwise requires, the terms defined in this section shall have the
24following meanings:

25(1) “Committee” means the California Debt Limit Allocation
26Committee established pursuant to Section 8869.83.

27(2) “Fund” means the California Debt Limit Allocation
28Committee Fund created pursuant to Section 8869.90.

29(3) “Internal Revenue Code” means the Internal Revenue Code
30of 1986 (26 U.S.C. Sec. 1 et seq.), as amended from time to time.

31(4) “Issuer” means any local agency or state agency authorized
32by the Constitution or laws of the state to issue private activity
33bonds.

34(5) “Local agency” means any political subdivision of the state
35within the meaning of Section 103 of the Internal Revenue Code
36(26 U.S.C. Sec. 103), or any entity that has the power to issue
37private activity bonds on behalf of that political subdivision.

38(6) “MBTCAC” means the California Tax Credit Allocation
39Committee created by Section 50199.8 of the Health and Safety
40Code.

P4    1(7) “Private activity bond” means a part or all of any bond, or
2other instrument, required to obtain a portion of the state’s volume
3cap pursuant tobegin delete Sectionend deletebegin insert Sections 142(k) andend insert 146 of the Internal
4Revenue Code (26 U.S.C.begin delete Sec.end deletebegin insert Secs. 142(k) andend insert 146) in order to
5be tax-exempt, including, generally, all of the following, as those
6bonds are defined in the Internal Revenue Code:

7(A) Exempt facility bonds, except bonds for airports, docks and
8wharves, and certain solid waste facilities.

9(B) Qualified mortgage bonds.

10(C) Qualified small issue bonds.

11(D) Qualified student loan bonds.

12(E) Qualified redevelopment bonds.

13(F) The nonqualified amount of an issue of governmental bonds
14(including advance refunds) exceeding fifteen million dollars
15($15,000,000), as provided in Section 141(b)(5) of the Internal
16Revenue Code (26 U.S.C. Sec. 141(b)(5)).

17(8) “Private activity bond limit” means any portion of the state
18ceiling allocated or transferred to a state agency or local agency
19pursuant to this chapter.

20(9) “State” means the State of California.

21(10) “State agency” means the state and all state entities,
22including joint powers authorities of which the state or agency or
23instrumentality thereof is a member, empowered to issue private
24activity bonds, the interest on which is exempt from income tax
25under Section 103(a) of the Internal Revenue Code (26 U.S.C.
26Sec. 103(a)), including nonprofit corporations described in Section
27150(d) of the Internal Revenue Code (26 U.S.C. Sec. 150(d)),
28authorized to issue qualified scholarship funding bonds.

29(11) “State ceiling” includesbegin delete bothend deletebegin insert allend insert of the following:

30(A) The amount specified by Section 146(d) of the Internal
31Revenue Code (26 U.S.C. Sec. 146(d)) for each calendar year
32commencing in 1986.

33(B) The amount reserved to the state pursuant to Sections 1112
34and 1401 of the American Recovery and Reinvestment Act of 2009
35(26 U.S.C. Secs. 54a and 1400U-1).

begin insert

36(C) The amount specified by Section 142(k) of the Internal
37 Revenue Code (26 U.S.C. Sec. 42(k)).

end insert

38(b) Pursuant to Section 146(e) of the Internal Revenue Code
39(26 U.S.C. Sec. 146(e)), this chapter governs the allocation of the
P5    1state ceiling among the state agencies and local agencies in this
2state having authority to issue private activity bonds.

3(c) Any portion of the state ceiling allocated or transferred by
4or under the authority of this chapter shall become the private
5activity bond limit for the issuer of which that portion is allocated
6or transferred for any private activity bonds issued by that issuer.

7

SEC. 4.  

Section 8869.85 of the Government Code is amended
8to read:

9

8869.85.  

(a) Each state agency shall apply to the committee
10for allocation of a portion of the state ceiling, supplying any
11information which the committee may require. The application
12may be for a specific project, or it may be for a designated dollar
13amount, to be utilized for projects or programs at the discretion of
14the state agency. No private activity bonds issued by any state
15agency shall be deemed to receive the benefit of any portion of
16the state ceiling unless the committee has allocated or permitted
17the transfer of a portion of the state ceiling to the state agency. The
18allocation may be on any terms and conditions as the committee
19may determine.

20(b) Any local agency may apply to the committee for an
21allocation of a portion of the state ceiling, supplying any
22information which the committee may require. Applications from
23local agencies may only be for specific projects or programs. No
24private activity bond issued by a local agency shall be deemed to
25receive the benefit of any portion of the state ceiling unless the
26committee has allocated or permitted the transfer of a portion of
27the state ceiling to the local agency. The allocation may be upon
28any terms and conditions as the committee may determine.

29(c) Any allocation made pursuant to this section shall be
30irrevocable upon issuance of bonds pursuant thereto at least to the
31extent of the amount of the bonds so issued. No allocation shall
32permit the state agency or local agency which receives it to use all
33or any portion of the allocation for a carryforward pursuant to
34Section 146(f)begin insert or Section 142(k)(5)(B)(ii)end insert of the Internal Revenue
35Code, unless the committee expressly allows use of the allocation
36for a carryforward.

37(d) No allocation made to a state agency or a local agency
38pursuant to this section may be transferred by the initial recipient
39thereof to any other state agency or local agency unless the
40committee expressly permits the transfer. With the committee’s
P6    1permission, any state or local agency may, by resolution, transfer
2to any other local agency or to any state agency or back to the
3committee all or any portion of the agency’s private activity bond
4limit. Any such transfer shall be made in writing and may be
5general or limited and subject to any terms and conditions as may
6be set forth in the resolution or under the committee’s permission,
7as long as the transfer is irrevocable upon issuance of bonds
8pursuant to the transfer, at least to the extent of the amount of the
9bonds so issued. Each transferee shall maintain a written record
10of the transfer in its records for at least the term of all private
11activity bonds issued pursuant to the transfer. No transfer may be
12made pursuant to this section in return for any payment of cash,
13property, or other marketable thing of value.

14

SEC. 5.  

Section 8869.86 of the Government Code is amended
15to read:

16

8869.86.  

(a) Subject to any limitations on transferred private
17activity bond limit as may be provided in subdivision (d) of Section
188869.85, any state agency or local agency may utilize its private
19activity bond limit for any of the following:

20(1) The issuance of private activity bonds.

21(2) If permitted by the committee, to make a carryforward
22election pursuant to Sectionbegin insert 142(k) or Sectionend insert 146(f) of the Internal
23Revenue Code.

24(3) If permitted by the committee, to make a transfer to any
25state agency, local agency, or the committee.

26(b) Prior to issuing any private activity bonds, the issuer shall,
27in the bond resolution or other similar action giving approval for
28the issuance of bonds, specifically designate to the bond issue a
29portion of the private activity bond limit available or expected to
30be available to that issuer. The designation shall be irrevocable
31upon the issuance of the bonds to the extent of the amount thereof.

32(c) Each state agency and local agency shall notify the
33committee in writing, as directed by the committee, after any of
34the following:

35(1) The issuance of any private activity bonds.

36(2) Any action taken pursuant to subdivision (d) of Section
378869.85 to transfer any portion of its private activity bond limit.

38(3) Any election to treat all or any portion of the state agency’s
39or local agency’s private activity bond limit as a carryforward
40pursuant to Sectionbegin insert 142(k) or Sectionend insert 146(f) of the Internal
P7    1Revenue Code. The committee shall keep the notices in its records
2for a period no less than the term of all private activity bonds issued
3as described in the notices.

4

SEC. 6.  

Section 8869.93 of the Government Code is amended
5to read:

6

8869.93.  

The Treasurer, or his or her designee, is designated
7as the state official to certify that an issue of private activity bonds
8meets the requirements of Sectionbegin insert 142(k) or Sectionend insert 146 of the
9Internal Revenue Code of 1986, as amended, and to take any and
10all actions as may be necessary or appropriate in connection
11therewith.



O

    99