BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | SB 222|
|Office of Senate Floor Analyses | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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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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