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