BILL ANALYSIS                                                                                                                                                                                                    Ó




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          |SENATE RULES COMMITTEE            |                        SB 222|
          |Office of Senate Floor Analyses   |                              |
          |(916) 651-1520    Fax: (916)      |                              |
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                                 UNFINISHED BUSINESS


          Bill No:  SB 222
          Author:   Block (D)
          Amended:  5/19/15  
          Vote:     21  

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

           SENATE FLOOR:  38-0, 4/23/15
           AYES: Allen, Anderson, Bates, Beall, Berryhill, Block, De León,  
            Fuller, Gaines, Galgiani, Hall, Hancock, Hernandez, Hertzberg,  
            Hill, Hueso, Huff, Jackson, Lara, Leno, Leyva, Liu, McGuire,  
            Mendoza, Mitchell, Monning, Moorlach, Morrell, Nguyen,  
            Nielsen, Pan, Pavley, Roth, Runner, Stone, Vidak, Wieckowski,  
            Wolk
           NO VOTE RECORDED: Cannella

           ASSEMBLY FLOOR:  79-0, 6/25/15 - See last page for vote

           SUBJECT:   Local agencies:  school bonds:  general obligation  
                     bonds:  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.




          Assembly Amendments specify that school bonds issued and sold to  








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                                                                     Page  2



          be secured by a statutory lien on all revenues received pursuant  
          to the levy and collection of the tax, as provided.


          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)Requires all GO bonds issued and sold by or on behalf of a  
            local agency, including a school district, to be secured by a  
            statutory lien on all revenues received, pursuant to the levy  
            and collection of the tax.  


          2)Requires the lien to automatically arise without any further  
            action or authorization by the local agency or its governing  
            board 


          3)Requires the lien to be valid and binding from the time the  
            bonds are executed and delivered.  


          4)Requires the revenue received, pursuant to the levy and  
            collection of the tax, to be immediately subject to the lien  
            and requires the lien to immediately attach to the revenues  
            and be effective, binding, and enforceable against the local  
            agency, its successors, transfers, and creditors, irrespective  
            of whether those parties have notice of the lien and without  
            the need for any physical delivery, recordation, filing or  
            further act.  


          5)Specifies that this section is not intended to supplement or  








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                                                                     Page  3



            limit a local agency's power to issue GO bonds conferred by  
            any other law.  


          6)Defines local agency to mean any city, county, city and  
            county, school district, community college district,  
            authority, or special district.  


          7)Defines GO bonds to mean bonds, warrants, notes, or other  
            evidence of indebtedness of a local agency payable from the  
            proceeds of ad valorem taxes that may be lived, pursuant to  
            the California Constitution Article XIII A, Section  
            1(b)(2)(3).  


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


          SUPPORT:   (Verified6/26/15)


          California Association of School Business Officials
          California Public Securities Association
          Coalition for Adequate School Housing
          Lemon Grove School District
          Riverside County School District Superintendents
          Riverside County Superintendent of Schools
          San Diego Unified School District


          OPPOSITION:   (Verified6/26/15)


          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  








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                                                                     Page  4



          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.



          ASSEMBLY FLOOR:  79-0, 6/25/15
           AYES: Achadjian, Alejo, Travis Allen, Baker, Bigelow, Bloom,  
            Bonilla, Bonta, Brough, Brown, Burke, Calderon, Campos, Chang,  
            Chau, Chávez, Chiu, Chu, Cooley, Cooper, Dababneh, Dahle,  
            Daly, Dodd, Eggman, Frazier, Beth Gaines, Gallagher, Cristina  
            Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez,  
            Gordon, Gray, Grove, Hadley, Harper, Roger Hernández, Holden,  
            Irwin, Jones, Jones-Sawyer, Kim, Lackey, Levine, Linder,  
            Lopez, Low, Maienschein, Mathis, Mayes, McCarty, Medina,  
            Mullin, Nazarian, Obernolte, O'Donnell, Olsen, Patterson,  
            Perea, Quirk, Rendon, Ridley-Thomas, Rodriguez, Salas,  
            Santiago, Steinorth, Mark Stone, Thurmond, Ting, Wagner,  
            Waldron, Weber, Wilk, Williams, Wood, Atkins
           NO VOTE RECORDED: Melendez

          Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119
          6/26/15 15:30:14


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