Amended in Senate May 12, 2015

Senate BillNo. 710


Introduced by Senator Galgiani

(Coauthors: Senators Cannella and Huff)

(Coauthors: Assembly Members Chávez, Gomez, and Jones)

February 27, 2015


An act to amend, repeal, and add Section 6588 of the Government Code, relating to joint exercise of powers.

LEGISLATIVE COUNSEL’S DIGEST

SB 710, as amended, Galgiani. Joint exercise of powers: financing.

The Joint Exercise of Powers Act authorizes the legislative or other governing bodies of 2 or more public agencies to jointly exercise by agreement any power common to the contracting parties, as specified, and authorizes a joint powers authority to exercise various powers, including, among others, the power to issue bonds, including bonds bearing interest, to pay the cost of any public capital improvement, working capital, or liability or other insurance program, as specified.

This bill would, until January 1, 2022, authorize a joint powers authority to issue or cause to be issued bonds and enter into a loan agreement for the financing or refinancing of a project that is situated in another state, including working capital related to that project, if the project and its financing meets certain conditions. This bill would require the Legislative Analyst, on or before January 1, 2021, to prepare and submit to the Legislature a report on the issuance of those bonds and the financing of those projects. This bill would require, no later than July 1, 2020, authorities that issue those bonds to provide information concerning the bonds, the projects financed, the public benefits accruing to this state and such other information requested by the Legislative Analyst’s Office for the purpose of preparing the report.

begin insert

The Personal Income Tax Law imposes a tax on an individual taxpayer’s taxable income for the taxable year, but excludes certain items of income from the computation of tax. That law, in conformity with federal income tax laws, exempts from tax interest on bonds issued by this state or a local government in this state. The Joint Exercise of Powers Act also provides that all bonds issued by a joint powers authority and the interest thereon or income therefrom are exempt from all taxation in this state, except as otherwise provided.

end insert
begin insert

This bill would provide that the interest on an issue of bonds as authorized by this bill would not be exempt from tax.

end insert
begin insert

This bill would include a change in state statute that would result in a taxpayer paying a higher tax within the meaning of Section 3 of Article XIII A of the California Constitution, and thus would require for passage the approval of 23 of the membership of each house of the Legislature.

end insert

Vote: begin deletemajority end deletebegin insert23end insert. Appropriation: no. Fiscal committee: begin deleteno end deletebegin insertyesend insert. State-mandated local program: no.

The people of the State of California do enact as follows:

P2    1

SECTION 1.  

Section 6588 of the Government Code is amended
2to read:

3

6588.  

In addition to other powers specified in an agreement
4pursuant to Article 1 (commencing with Section 6500) and Article
52 (commencing with Section 6540), the authority may do any or
6all of the following:

7(a) Adopt bylaws for the regulation of its affairs and the conduct
8of its business.

9(b) Sue and be sued in its own name.

10(c) (1) Issue bonds, including, at the option of the authority,
11bonds bearing interest, to pay the cost of any public capital
12improvement, working capital, or liability or other insurance
13program.

14(2) (A) In addition to paragraph (1), for any purpose for which
15an authority may execute and deliver or cause to be executed and
16delivered certificates of participation in a lease or installment sale
17agreement with any public or private entity, the authority, at its
18option, may issue or cause to be issued bonds, rather than
P3    1certificates of participation, and enter into a loan agreement with
2the public or private entity.

3(B) (i) Notwithstanding Sections 6586 and 6586.5 or any other
4law, an authority may issue or cause to be issued bonds and enter
5into a loan agreement, pursuant to subparagraph (A), for the
6financing or refinancing of a project that is situated in another
7state, including working capital related to that project, if all of the
8following apply:

9(I) The project is owned, developed, or operated by a private
10entity.

11(II) The issuance of bonds by the authority and the financing
12of the project is approved by resolution, order, or other official
13action of the city, county, or other public body with land use
14planning authority over the project, or of the state in which the
15project is situated. This clause does not apply to the issuance of
16refunding bonds if a prior financing or refinancing of the project
17was approved by the city, county, public body, or state.

18(III) The authority has at least 25 local agency members and
19the authority has issued bonds and entered into loan agreements
20 to finance at least 25 separate projects.

21(IV) The authority finds, based on the facts and circumstances
22attendant to the project or the financing or refinancing of the
23project, that the issuance of the bonds or the financing or
24refinancing of the project will result in a substantial public benefit
25to this state because one or more of the following is satisfied:

26(ia) At least 20 percent of the net proceeds of the issue are
27allocated to the financing of one or more projects, including
28working capital related thereto, located in this state.

29(ib) The borrower of the bond proceeds has its principal place
30of business in this state and, if that borrower is subject to income
31or franchise tax in this state or any other state, that borrower has
32paid to this state for the most recent tax year income or franchise
33tax of at least fifty thousand dollars ($50,000) or one-half of its
34total income or franchise tax liability to all states, whichever is
35less. If the borrower has little or no assets other than the project
36to be financed and is owned by another company or companies,
37then the company or companies that own a majority of interest in
38the borrower shall have its or their principal place of business in
39this state.

P4    1(ic) The borrower of the bond proceeds or a controlled group
2of which it is a member has at least 50 full-time equivalent
3employees in this state.

4(id) The borrower of the bond proceeds or a controlled group
5of which it is a member has paid to this state for the most recent
6tax year income or franchise tax of at least one hundred thousand
7dollars ($100,000).

8(ie) In the case of the financing of one or more multifamily
9rental housing projects, the developer of that project or projects
10has its principal place of business in this state, and any such
11developer subject to personal or corporate income tax in California
12or other states has paid to this state for the most recent tax year
13income or franchise tax of at least fifty thousand dollars ($50,000)
14or one-half of its total income or franchise tax liability to all states,
15whichever is less.

16(ii) For purposes of this subparagraph, the following definitions
17apply:

18(I) “Controlled group” means a group of corporations,
19partnerships, limited liability companies or other persons that are
20wholly owned or controlled by a single corporation, partnership,
21limited liability company, or other person.

22(II) “Developer” means a corporation, partnership, limited
23liability company, or other person that is the initial controlling
24party within the legal entity that owns the multifamily rental
25housing project to be financed with proceeds of the bonds and that
26is expected to be the primary economic beneficiary of, and to take
27the primary economic risks related to, development and
28performance of the project.

29(III) “Financing” shall include refinancing of bonds of the
30authority or of bonds issued by any other state or local entity
31located within this state.

32(IV) “Issue” shall have the same meaning as inbegin delete U.S.end deletebegin insert United
33Statesend insert
Treasury Regulations Section 1.150-1(c), as in effect on
34July 1, 2014.

35(V) “Net proceeds of an issue” means the aggregate principal
36amount of that issue, less the amount of that issue allocated to
37original issue discount, issuance costs, reserve funds, and credit
38enhancement costs.

P5    1(VI) “Principal place of business” of an entity means the
2principal place from which the trade or business of the entity is
3directed or managed.

4(iii) The Legislative Analyst shall, on or before January 1, 2021,
5prepare and submit to the Legislature a report on the issuance of
6bonds and the financing of projects pursuant to this subparagraph.
7No later than July 1, 2020, authorities that issue bonds pursuant
8to this subparagraph shall provide information concerning those
9bonds, the projects financed, the public benefits accruing to this
10state, and such other information requested by the Legislative
11Analyst’s Office for the purpose of preparing the report. The report
12may include recommendations for modifying or extending the
13application of this subparagraph.

begin insert

14(iv) There shall be no exclusion from California state income
15taxes for interest on bonds issued pursuant to this subparagraph.

end insert

16(d) Engage the services of private consultants to render
17professional and technical assistance and advice in carrying out
18the purposes of this article.

19(e) As provided by applicable law, employ and compensate
20bond counsel, financial consultants, and other advisers determined
21necessary by the authority in connection with the issuance and sale
22of any bonds.

23(f) Contract for engineering, architectural, accounting, or other
24services determined necessary by the authority for the successful
25development of a public capital improvement.

26(g) Pay the reasonable costs of consulting engineers, architects,
27accountants, and construction, land-use, recreation, and
28environmental experts employed by any sponsor or participant if
29the authority determines those services are necessary for the
30successful development of public capital improvements.

31(h) Take title to, sell by installment sale or otherwise, or lease
32lands, structures, real or personal property, rights, rights-of-way,
33franchises, easements, and other interests in lands that are located
34within the state that the authority determines are necessary or
35convenient for the financing of public capital improvements, or
36any portion thereof.

37(i) Receive and accept from any source, loans, contributions,
38or grants, in either money, property, labor, or other things of value,
39for, or in aid of, the construction financing, or refinancing of public
40capital improvement, or any portionbegin delete thereofend deletebegin insert thereof,end insert or for the
P6    1financing of working capital or insurance programs, or for the
2payment of the principal of and interest on bonds if the proceeds
3of those bonds are used for one or more of the purposes specified
4in this section.

5(j) Make secured or unsecured loans to any local agency in
6connection with the financing of capital improvement projects,
7working capital or insurance programs in accordance with an
8agreement between the authority and the local agency. However,
9no loan shall exceed the total cost of the public capital
10improvements, working capital or insurance needs of the local
11agency as determined by the local agency and by the authority.

12(k) Make secured or unsecured loans to any local agency in
13accordance with an agreement between the authority and the local
14agency to refinance indebtedness incurred by the local agency in
15connection with public capital improvements undertaken and
16completed.

17(l) Mortgage all or any portion of its interest in public capital
18improvements and the property on which any project is located,
19whether owned or thereafter acquired, including the granting of a
20security interest in any property, tangible or intangible.

21(m) Assign or pledge all or any portion of its interests in
22mortgages, deeds of trust, indentures of mortgage or trust, or
23similar instruments, notes, and security interests in property,
24tangible or intangible, of a local agency to which the authority has
25made loans, and the revenues therefrom, including payment or
26income from any interest owned or held by the authority, for the
27benefit of the holders of bonds issued to finance public capital
28improvements. The pledge of moneys, revenues, accounts, contract
29rights, or rights to payment of any kind made by or to the authority
30pursuant to the authority granted in this part shall be valid and
31binding from the time the pledge is made for the benefit of the
32pledgees and successors thereto, against all parties irrespective of
33whether the parties have notice of the claim.

34(n) Lease the public capital improvements being financed to a
35local agency, upon terms and conditions that the authority deems
36proper; charge and collect rents therefor; terminate any lease upon
37the failure of the lessee to comply with any of the obligations of
38the lease; include in any lease provisions that the lessee shall have
39options to renew the lease for a period or periods, and at rents as
40determined by the authority; purchase or sell by an installment
P7    1agreement or otherwise any or all of the public capital
2improvements; or, upon payment of all the indebtedness incurred
3by the authority for the financing or refinancing of the public
4capital improvements, the authority may convey any or all of the
5project to the lessee or lessees.

6(o) Charge and apportion to local agencies that benefit from its
7services the administrative costs and expenses incurred in the
8exercise of the powers authorized by this article. These fees shall
9be set at a rate sufficient to recover, but not exceed, the authority’s
10costs of issuance and administration. The fee charged to each local
11obligation acquired by the pool shall not exceed that obligation’s
12proportionate share of those costs. The level of these fees shall be
13disclosed to the California Debt and Investment Advisory
14Commission pursuant to Section 6599.1.

15(p) Issue, obtain, or aid in obtaining, from any department or
16agency of the United States or of the state, or any private company,
17any insurance or guarantee to, or for, the payment or repayment
18of interest or principal, or both, or any part thereof, on any loan,
19lease, or obligation or any instrument evidencing or securing the
20same, made or entered into pursuant to this article.

21(q) Notwithstanding any other provision of this article, enter
22into any agreement, contract, or any other instrument with respect
23to any insurance or guarantee; accept payment in the manner and
24form as provided therein in the event of default by a local agency;
25and assign any insurance or guarantee that acts as security for the
26authority’s bonds.

27(r) Enter into any agreement or contract, execute any instrument,
28and perform any act or thing necessary, convenient, or desirable
29to carry out any power authorized by this article.

30(s) Invest any moneys held in reserve or sinking funds, or any
31moneys not required for immediate use or disbursement, in
32obligations that are authorized by law for the investment of trust
33funds.

34(t) At the request of affected local agencies, combine and pledge
35revenues to public capital improvements for repayment of one or
36more series of bonds issued pursuant to this article.

37(u) Delegate to any of its individual parties or other responsible
38 individuals the power to act on its behalf subject to its general
39direction, guidelines, and oversight.

P8    1(v) Purchase, with the proceeds of its bonds or its revenue, bonds
2issued by any local agency at public or negotiated sale. Bonds
3purchased pursuant to this subdivision may be held by the authority
4or sold to public or private purchasers at public or negotiated sale,
5in whole or in part, separately or together with other bonds issued
6by the authority.

7(w) Purchase, with the proceeds of its bonds or its revenue, VLF
8receivables sold to the authority pursuant to Section 6588.5. VLF
9receivables so purchased may be pledged to the payment of bonds
10issued by the authority or may be resold to public or private
11purchasers at public or negotiated sale, in whole or in part,
12separately or together with other VLF receivables purchased by
13the authority.

14(x) (1) Purchase, with the proceeds of its bonds or its revenue,
15Proposition 1A receivables pursuant to Section 6588.6. Proposition
161A receivables so purchased may be pledged to the payment of
17bonds issued by the authority or may be resold to public or private
18purchasers at public or negotiated sales, in whole or in part,
19separately or together with other Proposition 1A receivables
20purchased by the authority.

21(2) (A) All entities subject to a reduction of ad valorem property
22tax revenues required under Section 100.06 of the Revenue and
23Taxation Code pursuant to the suspension set forth in Section
24100.05 of the Revenue and Taxation Code shall be afforded the
25opportunity to sell their Proposition 1A receivables to the authority.

26(B) If these entities offer Proposition 1A receivables to the
27authority for purchase and duly authorize the sale of the Proposition
281A receivables pursuant to documentation approved by the
29authority, the authority shall purchase all Proposition 1A
30receivables so offered to the extent it can sell bonds therefor. If
31the authority does not purchase all Proposition 1A receivables
32offered, it shall purchase a pro rata share of each entity’s offered
33Proposition 1A receivables.

34(C) The authority may establish a deadline, no earlier than
35November 3, 2009, by which these entities shall offer their
36Proposition 1A receivables for sale to the authority and complete
37the application required by the authority.

38(3) For purposes of meeting costs incurred in performing its
39duties relative to the purchase and sale of Proposition 1A
40receivables, the authority shall be authorized to charge a fee to
P9    1each entity from which it purchases a Proposition 1A receivable.
2The fee shall be computed based on the percentage value of the
3Proposition 1A receivable purchased from each entity, in relation
4to the value of all Proposition 1A receivables purchased by the
5authority. The amount of the fee shall be paid from the proceeds
6of the bonds and shall be included in the principal amount of the
7bonds.

8(4) Terms and conditions of any and all fees and expenses
9charged by the authority, or those it contracts with, and the terms
10and conditions of sales of Proposition 1A receivables and bonds
11issued pursuant to this subdivision, including the terms of optional
12early redemption provisions, if any, shall be approved by the
13Treasurer and the Director of Finance, who shall not unreasonably
14withhold their approval. The aggregate principal amount of all
15bonds issued pursuant to this subdivision shall not exceed two
16billion two hundred fifty million dollars ($2,250,000,000), and the
17rate of interest paid on those bonds shall not exceed 8 percent per
18annum. The authority shall exercise its best efforts to obtain the
19lowest cost financing possible. Any and all premium obtained shall
20be used for either of the following:

21(A) Applied to pay the costs of issuance of the bonds.

22(B) Deposited in a trust account that is pledged to bondholders
23and used solely for the payment of interest on, or for repayment
24of, the bonds.

25(5) (A) In connection with any financing backed by Proposition
261A receivables, the Treasurer may retain financial advisors, legal
27counsel, and other consultants to assist in performing the duties
28required by this chapter and related to that financing.

29(B) Notwithstanding any other law, none of the following shall
30apply to any agreements entered into by the Treasurer pursuant to
31subparagraph (A) in connection with any Proposition 1A financing:

32(i) Section 11040 of the Government Code.

33(ii) Section 10295 of the Public Contract Code.

34(iii) Article 3 (commencing with Section 10300) and Article 4
35(commencing with Section 10335) of, Chapter 2 of Part 2 of
36Division 2 of the Public Contract Code, except for the authority
37of the Department of Finance under Section 10336 of the Public
38Contract Code to direct a state agency to transmit to it a contract
39for review, and except for Section 10348.5 of the Public Contract
40Code.

P10   1(C) Any costs incurred by the Treasurer in connection with any
2Proposition 1A financing shall be reimbursed out of the proceeds
3of the financing.

4(y) Set any other terms and conditions on any purchase or sale
5pursuant to this section as it deems by resolution to be necessary,
6appropriate, and in the public interest, in furtherance of the
7purposes of this article.

8(z) This section shall remain in effect only until January 1, 2022,
9and as of that date, is repealed.

10

SEC. 2.  

Section 6588 is added to the Government Code, to
11read:

12

6588.  

In addition to other powers specified in an agreement
13pursuant to Article 1 (commencing with Section 6500) and Article
142 (commencing with Section 6540), the authority may do any or
15all of the following:

16(a) Adopt bylaws for the regulation of its affairs and the conduct
17of its business.

18(b) Sue and be sued in its own name.

19(c) Issue bonds, including, at the option of the authority, bonds
20bearing interest, to pay the cost of any public capital improvement,
21working capital, or liability or other insurance program. In addition,
22for any purpose for which an authority may execute and deliver
23or cause to be executed and delivered certificates of participation
24in a lease or installment sale agreement with any public or private
25entity, the authority, at its option, may issue or cause to be issued
26bonds, rather than certificates of participation, and enter into a
27loan agreement with the public or private entity.

28(d) Engage the services of private consultants to render
29professional and technical assistance and advice in carrying out
30the purposes of this article.

31(e) As provided by applicable law, employ and compensate
32bond counsel, financial consultants, and other advisers determined
33necessary by the authority in connection with the issuance and sale
34of any bonds.

35(f) Contract for engineering, architectural, accounting, or other
36services determined necessary by the authority for the successful
37development of a public capital improvement.

38(g) Pay the reasonable costs of consulting engineers, architects,
39accountants, and construction, land-use, recreation, and
40environmental experts employed by any sponsor or participant if
P11   1the authority determines those services are necessary for the
2successful development of public capital improvements.

3(h) Take title to, sell by installment sale or otherwise, or lease
4lands, structures, real or personal property, rights, rights-of-way,
5franchises, easements, and other interests in lands that are located
6within the state that the authority determines are necessary or
7convenient for the financing of public capital improvements, or
8any portion thereof.

9(i) Receive and accept from any source, loans, contributions,
10or grants, in either money, property, labor, or other things of value,
11for, or in aid of, the construction financing, or refinancing of public
12capital improvement, or any portionbegin delete thereofend deletebegin insert thereof,end insert or for the
13financing of working capital or insurance programs, or for the
14payment of the principal of and interest on bonds if the proceeds
15of those bonds are used for one or more of the purposes specified
16in this section.

17(j) Make secured or unsecured loans to any local agency in
18connection with the financing of capital improvement projects,
19working capital or insurance programs in accordance with an
20agreement between the authority and the local agency. However,
21no loan shall exceed the total cost of the public capital
22improvements, working capital or insurance needs of the local
23agency as determined by the local agency and by the authority.

24(k) Make secured or unsecured loans to any local agency in
25accordance with an agreement between the authority and the local
26agency to refinance indebtedness incurred by the local agency in
27connection with public capital improvements undertaken and
28completed.

29(l) Mortgage all or any portion of its interest in public capital
30improvements and the property on which any project is located,
31whether owned or thereafter acquired, including the granting of a
32security interest in any property, tangible or intangible.

33(m) Assign or pledge all or any portion of its interests in
34mortgages, deeds of trust, indentures of mortgage or trust, or
35similar instruments, notes, and security interests in property,
36tangible or intangible, of a local agency to which the authority has
37made loans, and the revenues therefrom, including payment or
38income from any interest owned or held by the authority, for the
39benefit of the holders of bonds issued to finance public capital
40improvements. The pledge of moneys, revenues, accounts, contract
P12   1rights, or rights to payment of any kind made by or to the authority
2pursuant to the authority granted in this part shall be valid and
3binding from the time the pledge is made for the benefit of the
4pledgees and successors thereto, against all parties irrespective of
5whether the parties have notice of the claim.

6(n) Lease the public capital improvements being financed to a
7local agency, upon terms and conditions that the authority deems
8proper; charge and collect rents therefor; terminate any lease upon
9the failure of the lessee to comply with any of the obligations of
10the lease; include in any lease provisions that the lessee shall have
11options to renew the lease for a period or periods, and at rents as
12determined by the authority; purchase or sell by an installment
13agreement or otherwise any or all of the public capital
14improvements; or, upon payment of all the indebtedness incurred
15by the authority for the financing or refinancing of the public
16capital improvements, the authority may convey any or all of the
17project to the lessee or lessees.

18(o) Charge and apportion to local agencies that benefit from its
19services the administrative costs and expenses incurred in the
20exercise of the powers authorized by this article. These fees shall
21be set at a rate sufficient to recover, but not exceed, the authority’s
22costs of issuance and administration. The fee charged to each local
23obligation acquired by the pool shall not exceed that obligation’s
24proportionate share of those costs. The level of these fees shall be
25disclosed to the California Debt and Investment Advisory
26Commission pursuant to Section 6599.1.

27(p) Issue, obtain, or aid in obtaining, from any department or
28agency of the United States or of the state, or any private company,
29any insurance or guarantee to, or for, the payment or repayment
30of interest or principal, or both, or any part thereof, on any loan,
31lease, or obligation or any instrument evidencing or securing the
32 same, made or entered into pursuant to this article.

33(q) Notwithstanding any other provision of this article, enter
34into any agreement, contract, or any other instrument with respect
35to any insurance or guarantee; accept payment in the manner and
36form as provided therein in the event of default by a local agency;
37and assign any insurance or guarantee that acts as security for the
38authority’s bonds.

P13   1(r) Enter into any agreement or contract, execute any instrument,
2and perform any act or thing necessary, convenient, or desirable
3to carry out any power authorized by this article.

4(s) Invest any moneys held in reserve or sinking funds, or any
5moneys not required for immediate use or disbursement, in
6obligations that are authorized by law for the investment of trust
7funds.

8(t) At the request of affected local agencies, combine and pledge
9revenues to public capital improvements for repayment of one or
10more series of bonds issued pursuant to this article.

11(u) Delegate to any of its individual parties or other responsible
12individuals the power to act on its behalf subject to its general
13direction, guidelines, and oversight.

14(v) Purchase, with the proceeds of its bonds or its revenue, bonds
15issued by any local agency at public or negotiated sale. Bonds
16purchased pursuant to this subdivision may be held by the authority
17or sold to public or private purchasers at public or negotiated sale,
18in whole or in part, separately or together with other bonds issued
19by the authority.

20(w) Purchase, with the proceeds of its bonds or its revenue, VLF
21receivables sold to the authority pursuant to Section 6588.5. VLF
22receivables so purchased may be pledged to the payment of bonds
23issued by the authority or may be resold to public or private
24purchasers at public or negotiated sale, in whole or in part,
25separately or together with other VLF receivables purchased by
26the authority.

27(x) (1) Purchase, with the proceeds of its bonds or its revenue,
28Proposition 1A receivables pursuant to Section 6588.6. Proposition
291A receivables so purchased may be pledged to the payment of
30bonds issued by the authority or may be resold to public or private
31purchasers at public or negotiated sales, in whole or in part,
32separately or together with other Proposition 1A receivables
33purchased by the authority.

34(2) (A) All entities subject to a reduction of ad valorem property
35tax revenues required under Section 100.06 of the Revenue and
36Taxation Code pursuant to the suspension set forth in Section
37100.05 of the Revenue and Taxation Code shall be afforded the
38opportunity to sell their Proposition 1A receivables to the authority.

39(B) If these entities offer Proposition 1A receivables to the
40authority for purchase and duly authorize the sale of the Proposition
P14   11A receivables pursuant to documentation approved by the
2authority, the authority shall purchase all Proposition 1A
3receivables so offered to the extent it can sell bonds therefor. If
4the authority does not purchase all Proposition 1A receivables
5offered, it shall purchase a pro rata share of each entity’s offered
6Proposition 1A receivables.

7(C) The authority may establish a deadline, no earlier than
8November 3, 2009, by which these entities shall offer their
9Proposition 1A receivables for sale to the authority and complete
10the application required by the authority.

11(3) For purposes of meeting costs incurred in performing its
12duties relative to the purchase and sale of Proposition 1A
13receivables, the authority shall be authorized to charge a fee to
14each entity from which it purchases a Proposition 1A receivable.
15The fee shall be computed based on the percentage value of the
16Proposition 1A receivable purchased from each entity, in relation
17to the value of all Proposition 1A receivables purchased by the
18authority. The amount of the fee shall be paid from the proceeds
19of the bonds and shall be included in the principal amount of the
20bonds.

21(4) Terms and conditions of any and all fees and expenses
22charged by the authority, or those it contracts with, and the terms
23and conditions of sales of Proposition 1A receivables and bonds
24issued pursuant to this subdivision, including the terms of optional
25early redemption provisions, if any, shall be approved by the
26Treasurer and the Director of Finance, who shall not unreasonably
27withhold their approval. The aggregate principal amount of all
28bonds issued pursuant to this subdivision shall not exceed two
29billion two hundred fifty million dollars ($2,250,000,000), and the
30rate of interest paid on those bonds shall not exceed 8 percent per
31annum. The authority shall exercise its best efforts to obtain the
32lowest cost financing possible. Any and all premium obtained shall
33be used for either of the following:

34(A) Applied to pay the costs of issuance of the bonds.

35(B) Deposited in a trust account that is pledged to bondholders
36and used solely for the payment of interest on, or for repayment
37of, the bonds.

38(5) (A) In connection with any financing backed by Proposition
391A receivables, the Treasurer may retain financial advisors, legal
P15   1counsel, and other consultants to assist in performing the duties
2required by this chapter and related to that financing.

3(B) Notwithstanding any other law, none of the following shall
4apply to any agreements entered into by the Treasurer pursuant to
5subparagraph (A) in connection with any Proposition 1A financing:

6(i) Section 11040 of the Government Code.

7(ii) Section 10295 of the Public Contract Code.

8(iii) Article 3 (commencing with Section 10300) and Article 4
9(commencing with Section 10335) of, Chapter 2 of Part 2 of
10Division 2 of the Public Contract Code, except for the authority
11of the Department of Finance under Section 10336 of the Public
12Contract Code to direct a state agency to transmit to it a contract
13for review, and except for Section 10348.5 of the Public Contract
14Code.

15(C) Any costs incurred by the Treasurer in connection with any
16Proposition 1A financing shall be reimbursed out of the proceeds
17of the financing.

18(y) Set any other terms and conditions on any purchase or sale
19pursuant to this section as it deems by resolution to be necessary,
20appropriate, and in the public interest, in furtherance of the
21purposes of this article.

22(z) This section shall become operative on January 1, 2022.



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