BILL NUMBER: AB 2693 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Dababneh
FEBRUARY 19, 2016
An act to amend Section 167 26054 of the
Public Resources Code, and to amend Sections 5898.15, 5898.28, and
5898.30 of the Streets and Highways Code, relating to
transportation. contractual assessments.
LEGISLATIVE COUNSEL'S DIGEST
AB 2693, as amended, Dababneh. Transportation funds.
Contractual assessments: financing requirements:
property improvements.
Existing law defines "property assessed clean energy bond,"
commonly known as a PACE bond, to mean a bond that is secured by a
voluntary contractual assessment or by certain special taxes on
property, as specified.
This bill would delete the reference to bonds secured by special
taxes.
Existing law authorizes the legislative body of a public agency,
as defined, to determine that it would be convenient, advantageous,
and in the public interest to designate an area within which
authorized public agency officials and property owners may enter into
voluntary contractual assessments to finance certain improvements,
including the installation of distributed generation renewable energy
sources or energy or water efficiency improvements that are
permanently fixed to real property, as specified. Existing law
authorizes the public agency to issue bonds to be repaid by voluntary
contractual assessments, and to enter into a relationship with an
underwriter or financial institution that allows the sequential
issuance of a series of bonds as the need arises. Existing law
requires the interest rate on bonds to be fixed at the time each bond
is issued, unless the bond is issued to finance improvements to
nonresidential private property or residential private property with
4 or more units. Existing law also provides that certain provisions
relating to redemption of bonds prior to their scheduled maturity
date or refinance of outstanding bonds only apply to nonresidential
private property or residential private property with 4 or more
units.
This bill, with respect to residential private property, would
instead require the interest rate on the bonds, when issued, to be
fixed unless the property consists of 5 or more units. The bill would
provide that the provisions relating to redemption of bonds prior to
their scheduled maturity date, or refinance of outstanding bonds,
with respect to residential private property, would apply to property
that consists of 5 or more units.
Existing law provides that an assessment under these provisions,
and any interest and penalties, until paid, constitute a lien against
the property on which the assessment was made. Existing law provides
that certain other provisions, including provisions relating to lien
priority, apply to liens imposed relative to these assessments.
This bill would delete the reference to the other provisions
relating to lien priority, and instead provide that an assessment
under these provisions shall have the force, effect, and priority of
a judgment lien as established by its date of recordation.
Existing law, if bonds have not been issued by a public agency,
authorizes the public agency to transfer its right, title, and
interest to voluntary contractual assessments to another party, as
specified. Existing law, however, provides that initiation and
prosecution of a foreclosure action from a delinquency in the payment
of voluntary contractual assessments remains the responsibility of
the public agency, which shall retain the sole right to enforce its
senior lien status.
This bill would delete the provision that the public agency shall
retain the sole right to enforce its senior lien status, and would
instead provide that a foreclosure action by the public agency shall
have the force, effect, and priority of a judgment lien as
established by the date of its recordation.
Existing law prohibits a public agency from permitting a property
owner to participate in any program established pursuant to these
provisions if the owner's participation would result in the total
amount of any annual property taxes and assessments exceeding 5% of
the property's market value, as determined at the time of approval of
the owner's contractual assessment.
This bill would also prohibit a public agency from permitting a
property owner to participate in a program pursuant to these
provisions unless the property owner has been provided with a Truth
in Lending Act- Real Estate Settlement Procedures Act Integrated
Mortgage Disclosure for the obligation being incurred or if the total
mortgage-related debt and contractual assessment-related debt on the
underlying property exceeds the fair market value of the property at
the time of the agreement.
The bill would provide that the failure of a public agency to
comply with either of these 2 prohibitions voids the contractual
obligations of the property owner for the contractual assessment.
Existing law requires funds in the State Highway Account to be
programmed, budgeted, and expended to maximize the use of federal
funds and according to a specified sequence of priorities. Existing
law requires the Department of Transportation to provide certain
information to the Legislature to substantiate the department's
proposed capital outlay support budget.
This bill would make nonsubstantive changes to these provisions.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 26054 of the Public
Resources Code is amended to read:
26054. "Property Assessed Clean Energy bond" or "PACE bond" means
a bond that is secured by any either
of the following:
(a) A voluntary contractual assessment on property authorized
pursuant to paragraph (2) of subdivision (a) of Section 5898.20 of
the Streets and Highways Code.
(b) A voluntary contractual assessment or a voluntary
special tax on property to finance the installation of
distributed generation renewable energy sources, electric vehicle
charging infrastructure, or energy or water efficiency
improvements that is levied pursuant to a chartered city's
constitutional authority under Section 5 of Article XI of the
California Constitution. improvements.
(c) A special tax on property authorized pursuant to subdivision
(b) of Section 53328.1 of the Government Code.
SEC. 2. Section 5898.15 of the Streets
and Highways Code is amended to read:
5898.15. (a) A public agency shall not permit a property owner to
participate in any program established pursuant to this chapter if
the owner's participation would result in the total amount of any
annual property taxes and assessments exceeding 5 percent of the
property's market value, as determined at the time of approval of the
owner's contractual assessment.
(b) (1) A public agency shall not permit a property owner to
participate in a program pursuant to this chapter unless the property
owner has been provided with a federal Truth in Lending Act-Real
Estate Settlement Procedures Act Integrated Mortgage Disclosure for
the obligation being incurred that is required for mortgages by the
federal Consumer Financial Protection Bureau.
(2) A public agency shall not permit the total mortgage-related
debt and contractual assessment-related debt on the underlying
property to exceed the fair market value of the property at the time
of the agreement.
(3) Failure to comply with the requirements of either paragraph
(1) or (2) voids the contractual obligations of a property owner for
a contractual assessment entered into pursuant to this chapter.
(b) Nothing
(c) Except as provided in subdivision
(b), nothing in this chapter shall be construed to void or
otherwise release a property owner from the contractual obligations
incurred by a contractual assessment on a property,
particularly in the event that the total amount of annual property
taxes and assessments exceeds 5 percent of a property's market value
after the property owner has entered into a contractual assessment
pursuant to this chapter. property
SEC. 3. Section 5898.28 of the Streets
and Highways Code is amended to read:
5898.28. (a) A public agency may issue bonds pursuant to this
chapter, the principal and interest for which would be repaid by
voluntary contractual assessments. A public agency may advance its
own funds to finance work to be repaid through voluntary contractual
assessments, and may from time to time sell bonds to reimburse itself
for those advances. A public agency may enter into a relationship
with an underwriter or financial institution that would allow the
sequential issuance of a series of bonds, each bond being issued as
the need arose to finance work to be repaid through voluntary
contractual assessments. The interest rate of each bond may be
determined by an appropriate index, but shall be fixed at the time
each bond is issued unless the bond is issued to finance improvements
to nonresidential private property or residential private property
with four five or more units. Bond
proceeds may be used to establish a reserve fund for debt service or
paying the costs of foreclosure on properties participating in the
program, to fund capitalized interest for a period up to two years
from the date of issuance of the bonds, to fund the administrative
fee required for participation in the PACE Reserve Program
established pursuant to Chapter 4 (commencing with Section 26050) of
Division 16 of the Public Resources Code, and to pay for expenses
incidental to the issuance and sale of the bonds. Division 10
(commencing with Section 8500) shall apply to any bonds issued
pursuant to this section, insofar as that division is not in conflict
with this chapter.
(b) (1) Notwithstanding any provision of this division or the
Improvement Act of 1915 (Division 10 (commencing with Section 8500)),
a public agency may transfer its right, title, and interest in and
to any voluntary contractual assessments, if bonds have not been
issued pursuant to subdivision (a). The public agency and the
transferee shall enter into an agreement that, among other things,
identifies the specific period of time during which the transfer of
voluntary contractual assessments will be operative, not to exceed
three years. Except as provided in paragraph (2), a transfer of any
voluntary contractual assessments under this subdivision shall be
treated as a true and absolute transfer of the asset so transferred
for the period of the transfer and not as a pledge or grant of a
security interest by the public agency for any borrowing. The
characterization of the transfer of any of those assets as an
absolute transfer by the public agency shall not be negated or
adversely affected by the fact that only a portion of any voluntary
contractual assessment is transferred, nor by any characterization of
the transferee for purposes of accounting, taxation, or securities
regulation, nor by any other factor whatsoever. As used in this
section, "transfer" means sale, assignment, or other transfer.
(2) Nothing in this subdivision shall be construed to authorize
the transferee to initiate and prosecute a foreclosure action
resulting from a delinquency in the payment of the voluntary
contractual assessment. Initiation and prosecution of a foreclosure
action shall remain the responsibility of the public agency, which
shall retain the sole right to enforce its senior lien
status. have the force, effect, and priority of a
judgment lien as established by the date of its
recordation.
(c) Division 10 (commencing with Section 8500) shall apply to any
bonds issued pursuant to this section, insofar as that division is
not in conflict with this chapter. Notwithstanding Part 16
(commencing with Section 8880) of Division 10, if any reserve fund is
established in whole or in part with legally available moneys of one
or more public agencies other than bond proceeds, the public agency
or agencies may provide that a property owner who prepays all or a
portion of the assessment shall not be credited with the public
agency moneys in the reserve fund and there shall be no reduction in
the assessment pursuant to Sections 8884 or 8881, and the public
agency moneys in the reserve account shall not be used to redeem
bonds pursuant to Section 8885 and any public agency moneys remaining
in the reserve fund at the maturity of the bonds shall be disbursed
to the public agency free and clear of the lien of the issuing
instrument. Any excess bond proceeds may be used to pay principal of
and interest on the bonds in addition to any other use permitted by
Division 10 (commencing with Section 8500).
(d) Notwithstanding any other law, the public agency may conclude
that it is in the public interest for bonds issued by the public
agency pursuant to this chapter to not be subject to redemption prior
to their scheduled maturity date except as a result of the
prepayment in whole or in part of contractual assessments.
Notwithstanding any other limitations set forth in law, and with
respect to bonds issued to finance improvements to nonresidential
property or residential property with four
five or more units, the redemption premium associated with a
redemption of bonds as a result of a contractual assessment
prepayment shall be determined by agreement of the public agency
issuing the bonds, the property owner, and the initial purchaser of
the bonds.
(e) (1) Without the prior written approval of the property owner,
and notwithstanding any other law, a public agency may issue bonds
pursuant to this chapter to refinance outstanding bonds payable from
contractual assessments levied pursuant to this chapter if all of the
following are true:
(A) The total interest cost to maturity on the refunding bonds is
less than the total interest cost to maturity on the bonds to be
refunded.
(B) The final maturity date of the refunding bonds is not later
than the final maturity date of the refunded bonds, except that if
the bonds to be refunded are variable rate bonds, the final maturity
date of the refunding bonds may extend to, but not beyond, the useful
life of the financed improvements.
(C) The total interest component of the scheduled contractual
assessment installments to maturity, after issuance of the refunding
bonds, is less than the total interest component of the scheduled
contractual assessment installments to maturity prior to issuance of
the refunding bonds.
(2) For purposes of this section, in connection with the issuance
of fixed rate bonds to refinance variable rate bonds, the interest
rate on the refunded bonds for purpose of demonstrating compliance
with this section may be assumed to be the maximum possible interest
rate on the bonds to be refunded as long as the legislative body
concludes that the public interest will be served by issuing fixed
rate bonds to refinance the outstanding variable rate bonds. In
connection with an issuance of refunding bonds under this chapter,
the legislative body may direct that an amendment to the document
required by subdivision (d) of Section 5898.24 be recorded to reflect
the revised contractual assessment installment schedule.
(f) With the prior written approval of the owner of nonresidential
property or residential property with four
five or more units, and notwithstanding any other law, a public
agency may issue bonds pursuant to this chapter to refinance
outstanding bonds payable from contractual assessments levied
pursuant to this chapter without complying with subdivision (e). The
final maturity date of the refunding bonds issued pursuant to this
subdivision may be later than the final maturity date of the bonds
being refunded as long as the final maturity date of the refunding
bonds does not extend beyond the useful life of the financed
improvements.
SEC. 4. Section 5898.30 of the Streets
and Highways Code is amended to read:
5898.30. Assessments levied pursuant to this chapter, and the
interest and any penalties thereon shall constitute a lien against
the lots and parcels of land on which they are made, until they are
paid. Division 10 (commencing with Section 8500), insofar as those
provisions are not in conflict with this chapter, Article 13
(commencing with Section 53930) of, and Article 13.5 (commencing with
Section 53938) of, Chapter 4 of Part 1 of Division 2 of Title 5 of
the Government Code shall only apply to the
imposition and collection of assessments contracted for
pursuant to this chapter, including, but not limited to,
provisions related to lien priority, the collection of assessments
which may be col lected in the same
manner and at the same time as the general taxes of the city or
county on real property, unless another procedure has been
authorized by the legislative body or by statute, and any penalties
and remedies in the event of delinquency and default.
property. Any assessment levied pursuant to this chapter shall have
the force, effect, and priority of a judgment lien as established by
the date of its recordation.
SECTION 1. Section 167 of the Streets and
Highways Code is amended to read:
167. (a) Funds in the State Highway Account in the State
Transportation Fund shall be programmed, budgeted subject to Section
163, and expended to maximize the use of federal funds and shall be
based on the following sequence of priorities:
(1) Operation, maintenance, and rehabilitation of the state
highway system.
(2) Safety improvements where physical changes, other than adding
additional lanes, would reduce fatalities and the number and severity
of injuries.
(3) Transportation capital improvements that expand capacity or
reduce congestion, or do both.
(4) Environmental enhancement and mitigation programs.
(b) With respect to the funds in the State Highway Account, in the
Public Transportation Account, and in the Passenger Rail Bond Fund,
the proposed budget shall be organized on a program basis. The
proposed budget shall list the proposed expenditures for the
transportation program under the following program elements:
(1) Administration.
(2) Program development.
(3) Maintenance.
(4) State highway operation and protection.
(5) Local assistance.
(6) Interregional improvements.
(7) Regional improvements.
(8) Environmental enhancement and mitigation programs.
(c) State operations expenditure amounts of the department for
interregional and regional transportation improvement projects shall
be listed as required by subdivision (b) of Section 14529 of the
Government Code, but those amounts other than those for the
acquisition of rights-of-way, construction, and construction support
shall not be subject to allocation by the commission.
(d) To align the annual budget with the adopted state
transportation improvement program, the department may submit to the
Department of Finance revised capital outlay support and capital
outlay budget estimates as part of its May Revision process. Budget
proposals related to these changes shall be provided to the
Legislature no later than May 1.
(e) The budget shall not include specific appropriations for
specific transportation improvement projects, and the Legislature
shall not enact legislation containing specific individual
transportation projects.
(f) The basis for defining major and minor capital outlay projects
shall be established by the commission.
(g) The Legislative Analyst shall prepare an analysis of the
proposed expenditures for each program element as a part of the
budget analysis.
(h) The department shall submit to the Legislative Analyst, the
Senate Committee on Budget and Fiscal Review, and the Assembly
Committee on Budget, on an annual basis, supplemental information to
substantiate the department's proposed capital outlay support budget.
The information shall be provided no later than May 1 of each year,
and may be provided at an earlier date. The information shall
include, but not be limited to, the following:
(1) A list of projects for which the department will perform
capital outlay support work in the budget year. For each project, the
department shall include all of the following:
(A) The planned project support budget for support of
environmental, design, right-of-way, and construction phases.
(B) The planned capital costs, including construction capital
costs and right-of-way capital costs.
(C) The estimated or actual construction start date and completion
date.
(D) The name and year of the state transportation program in which
the project is programmed, if applicable.
(E) Total prior fiscal year expenditures for capital outlay
support.
(F) The number of full-time equivalent positions requested to
perform support of environmental, design, right-of-way, and
construction work in the fiscal year of the budget request.
(G) Milestones of project work by phases that are planned to be
completed in the fiscal year of the budget request.
(H) The ratio of support to capital costs based on current
programming.
(2) The capital-to-support ratio for all projects completed in the
prior fiscal year in each program in each district.
(3) The current total number of authorized and vacant positions in
the capital outlay support program in headquarters and in each
district.
(4) A five-year projection of the department's staffing needs to
support the state's transportation capital programs and any workload
performed by the department related to federal or local funding for
highway capital projects.
(5) The average cost of a personnel-year equivalent in each
district based on the department's existing contracts for capital
outlay support work performed by a private company under contract
with the department. For each average cost, the department shall
provide a description of what factors are included in that cost.
(6) The average cost of a state staff personnel-year in the
capital outlay support program in each district and in headquarters.
The cost shall include the salary and wages, benefits, program
overhead, administrative overhead, and other associated costs. The
department shall provide a description of each component of the
average cost.
(7) A summary of expected capital outlay support workload for the
budget year that includes the following:
(A) The total full-time equivalents requested for each type of the
following activities: environmental, design, right-of-way, and
construction.
(B) The total full-time equivalents requested for each type of
project, including, but not limited to, the state transportation
improvement program, the state highway operation and protection
program, bond programs, regional and local agency partnership
workload, and any other program.
(8) The total number of projects with requested resources, as well
as the number of projects in which the department is limited to an
oversight role.
(9) The number of milestones scheduled, including environmental,
design, right-of-way, and construction deliverables, as well as the
number of projects expected to begin construction and reach
completion.
(10) A summary for the most recently completed fiscal year for the
following:
(A) Full-time equivalents and related funding expended, including
support of environmental, design, right-of-way, and construction
activities.
(B) Approved and filled positions as of the end of the fiscal
year.