BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 222|
          |Office of Senate Floor Analyses   |                              |
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                                   THIRD READING 


          Bill No:  SB 222
          Author:   Block (D)
          Amended:  4/15/15  
          Vote:     21  

          SENATE GOVERNANCE & FIN. COMMITTEE:  6-0, 4/8/15
          AYES:  Hertzberg, Nguyen, Beall, Hernandez, Lara, Pavley
          NO VOTE RECORDED:  Bates

           SUBJECT:   School bonds:  school facilities:  statutory lien


          SOURCE:    Author


          DIGEST:  This bill specifies that general obligation bonds  
          issued and sold by local governments, including school  
          districts, are secured by a statutory lien.


          ANALYSIS:   


          Existing law authorizes cities, counties, school districts,  
          community college districts, and some special districts to issue  
          general obligation (GO) bonds, secured by ad valorem property  
          tax revenues, with voter approval.


          This bill:


          1)Defines "local agency" as any city, county, city and county,  
            school district, community college district, authority, or  
            special district. 








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          2)Defines "general obligation bonds" as bonds, warrants, notes  
            or other evidence of indebtedness of a local agency payable,  
            both principal and interest, from the proceeds of ad valorem  
            taxes which may be levied pursuant to Article XIIIA, Section  
            1(b)(2) or Section 1(b)(3) of the California Constitution.


          3)Directs that GO bonds issued and sold by or on behalf of a  
            local agency shall be secured by a statutory lien on all  
            revenues received pursuant to the levy and collection of the  
            tax. The lien shall automatically arise without the need for  
            any action or authorization by the local agency or its  
            governing body. The lien shall be valid and binding from the  
            time the bonds are executed and delivered. The revenues  
            received pursuant to the levy and collection of the tax shall  
            be immediately subject to the lien, and the lien shall  
            immediately attach to the revenues and be effective, binding,  
            and enforceable against the local agency, its successors,  
            transferees, and creditors, and all others asserting rights  
            therein, irrespective of whether those parties have notice of  
            the lien and without the need for any physical delivery,  
            recordation, filing, or further act.


          4)Declares that the bill's provisions are intended to neither  
            supplement nor limit a local agency's power to issue GO bonds  
            conferred by any other law.


          FISCAL EFFECT:   Appropriation:    No          Fiscal  
          Com.:NoLocal:    No


          SUPPORT:   (Verified4/14/15)


          California Association of School Business Officials
          California Public Securities Association
          Coalition for Adequate School Housing
          Lemon Grove School District








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          Riverside County School District Superintendents
          Riverside County Superintendent of Schools
          San Diego Unified School District.


          OPPOSITION:   (Verified4/14/15)


          None received


          ARGUMENTS IN SUPPORT:  According to supporters, bond rating  
          agencies perceive that some school districts' distressed  
          financial conditions could pose a threat to those districts' GO  
          bond payments.  As a result, districts in financial difficulty  
          receive lower GO bond ratings than do districts in more stable  
          financial condition.  Fiscally distressed school districts are  
          often among those districts that most need the kinds of  
          facilities renovation or rehabilitation that can be financed  
          through GO debt.  Lower bond ratings increase those districts'  
          borrowing costs, creating an additional obstacle to financing  
          their facilities projects.  By enacting language that  
          unambiguously attaches statutory liens to GO bonds issued by all  
          local governments, including school districts, SB 222 will  
          improve some local governments' bond ratings.  Higher ratings  
          will reduce the bonds' interest rates, allowing taxpayers to  
          finance more public improvements at lower costs.






          Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
          4/15/15 16:29:09


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