Amended in Senate April 15, 2015

Senate Bill No. 797

Introduced by Committee on Governmental Organization (Senators Hall (Chair), Berryhill, Block, Gaines, Galgiani, Hernandez, Hill, Hueso, Lara, McGuire, and Vidak)

March 12, 2015

An act to begin insert amend Section 16430 of the Government Code, to end insert repeal Title 4.5 (commencing with Section begin delete 4400) of Part 3, end delete begin insert 4400), and end insert Title 4.6 (commencing with Section 4450) of Part 3 of, to repeal Chapter 12 (commencing with Section 7100) and Chapter 13 (commencing with Section 7200) of Title 7 of Part 3 of, the Penal Code, to repeal Chapter 1.6 (commencing with Section 5096.1) and Chapter 1.67 (commencing with Section 5096.71) of Division 5 of the Public Resources Code, and to repeal Article 5.5 (commencing with Section 11922) of Chapter 10 of Part 3 of Division 6 of, and to repeal Chapter 13 (commencing with Section 13970) and Chapter 14 (commencing with Section 13985) of Division 7 of, the Water Code, relating to government finance.

LEGISLATIVE COUNSEL’S DIGEST

SB 797, as amended, Committee on Governmental Organization. begin delete General obligation bonds. end delete begin insert Government finance. end insert

begin insert

Existing law specifies the types of securities that are eligible for the investment of surplus state funds, including commercial paper of “prime” quality as defined by a nationally recognized organization that rates these securities, if the commercial paper is issued by a corporation, trust, or limited liability company that is approved by the Pooled Money Investment Board as meeting specified conditions. Existing law prohibits a purchase of commercial paper from exceeding 180 days maturity.

end insert begin insert

This bill would additionally include commercial paper issued by a federally or state-chartered bank or a state-licensed branch of a foreign bank that is approved by the Pooled Money Investment Board as meeting the specified conditions. This bill would prohibit a purchase of commercial paper from exceeding 270 days maturity.

end insert

The County Jail Capital Expenditure Bond Act of 1981 authorized the issuance and sale of $280 million in state general obligation bonds to finance the construction, reconstruction, remodeling, and replacement of county jails and for deferred maintenance. The act establishes the County Jail Capital Expenditure Finance Committee for the purpose of authorizing the issuance and sale of the bonds authorized by the act.

The County Jail Capital Expenditure Bond Act of 1984 authorized the issuance and sale of $250 million in state general obligation bonds to finance the construction, reconstruction, remodeling, and replacement of county jails and for deferred maintenance. The act establishes the County Jail Capital Expenditure Finance Committee for the purpose of authorizing the issuance and sale of the bonds authorized by the act.

The New Prison Construction Bond Act of 1981 authorized the issuance and sale of $495 million in state general obligation bonds to finance the construction, renovation, and remodeling of state correctional facilities and for deferred maintenance. The act establishes the New Prison Construction Committee for the purpose of authorizing the issuance and sale of the bonds authorized by the act.

The New Prison Construction Bond Act of 1984 authorized the issuance and sale of $300 million in state general obligation bonds to finance the construction, renovation, and remodeling of state correctional facilities and for deferred maintenance. The act establishes the 1984 Prison Construction Committee for the purpose of authorizing the issuance and sale of the bonds authorized by the act.

The Cameron-Unruh Beach, Park, Recreational, and Historical Facilities Bond Act of 1964 authorized the issuance and sale of $150 million in state general obligation bonds to finance the acquisition and development of lands for recreational purposes. The act establishes the State Park and Recreation Finance Committee or the purpose of authorizing the issuance and sale of the bonds authorized by the act.

The State Beach, Park, Recreational, and Historical Facilities Bond Act of 1974, also known as the Z’berg-Collier Park Bond Act, authorized the issuance and sale of $250 million in state general obligation bonds to finance the acquisition and development of lands for recreational purposes. The act establishes the State Park and Recreation Finance Committee for the purpose of authorizing the issuance and sale of the bonds authorized by the act.

Existing law, known as the Recreation and Fish and Wildlife Enhancement Bond Act of 1970, authorized the issuance and sale of $60 million in state general obligation bonds to finance the design and construction of recreation facilities, fish and wildlife enhancement features, and fishing access sites. Existing law establishes the Recreation and Fish and Wildlife Enhancement Finance Committee for the purpose of authorizing the issuance and sale of the bonds authorized by these provisions.

The Clean Water Bond Law of 1970 authorized the issuance and sale of $250 million in state general obligation bonds to finance grants to municipalities for water reclamation projects. The Clean Water Bond Law of 1970 establishes the Clean Water Finance Committee for the purpose of authorizing the issuance and sale of the bonds authorized by these provisions.

The Clean Water Bond Law of 1974 authorized the issuance and sale of $250 million in state general obligation bonds to finance grants to municipalities for water reclamation projects. The Clean Water Bond Law of 1974 establishes the Clean Water Finance Committee for the purpose of authorizing the issuance and sale of the bonds authorized by these provisions.

This bill would repeal all of the above-described laws.

Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program: no.

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

begin insert

begin insert SECTION 1. end insert   

end insert

begin insert Section 16430 of the end insert begin insert Government Code end insert begin insert is
amended to read: end insert

16430.  

Eligible securities for the investment of surplus moneys
shall be any of the following:

(a) Bonds or interest-bearing notes or obligations of the United
States, or those for which the faith and credit of the United States
are pledged for the payment of principal and interest.

(b) Bonds or interest-bearing notes on obligations that are
guaranteed as to principal and interest by a federal agency of the
United States.

(c) Bonds, notes, and warrants of this state, or those for which
the faith and credit of this state are pledged for the payment of
principal and interest.

(d) Bonds or warrants, including, but not limited to, revenue
warrants, of any county, city, metropolitan water district, California
water district, California water storage district, irrigation district
in the state, municipal utility district, or school district of this state.

(e) Any of the following:

(1) Bonds, consolidated bonds, collateral trust debentures,
consolidated debentures, or other obligations issued by federal
land banks or federal intermediate credit banks established under
the Federal Farm Loan Act, as amended (12 U.S.C. Sec. 2001 et
seq.).

(2) Debentures and consolidated debentures issued by the
Central Bank for Cooperatives and banks for cooperatives
established under the Farm Credit Act of 1933, as amended (12
U.S.C. Sec. 2001 et seq.).

(3) Bonds or debentures of the Federal Home Loan Bank Board
established under the Federal Home Loan Bank Act (12 U.S.C.
Sec. 1421 et seq.).

(4) Stocks, bonds, debentures, and other obligations of the
Federal National Mortgage Association established under the
National Housing Act, as amended (12 U.S.C. Sec. 1701 et seq.).

(5) Bonds of any federal home loan bank established under that
act.

(6) Obligations of the Federal Home Loan Mortgage
Corporation.

(7) Bonds, notes, and other obligations issued by the Tennessee
Valley Authority under the Tennessee Valley Authority Act, as
amended (16 U.S.C. Sec. 831 et seq.).

(8) Other obligations guaranteed by the Commodity Credit
Corporation for the export of California agricultural products under
the Commodity Credit Corporation Charter Act, as amended (15
U.S.C. Sec. 714 et seq.).

(f) (1) Commercial paper of “prime” quality as defined by a
nationally recognized organization that rates these securities, if
the commercial paper is issued by a begin insert federally or state-chartered
bank or a state-licensed branch of a foreign bank, end insert corporation,
trust, or limited liability company that is approved by the Pooled
Money Investment Board as meeting the conditions specified in
either subparagraph (A) or subparagraph (B):

(A) Both of the following conditions:

(i) Organized and operating within the United States.

(ii) Having total assets in excess of five hundred million dollars
($500,000,000).

(B) Both of the following conditions:

(i) Organized within the United States as a begin insert federally or
state-chartered bank or a state-licensed branch of a foreign bank, end insert
special purpose corporation, trust, or limited liability company.

(ii) Having programwide credit enhancements including, but
not limited to, overcollateralization, letters of credit, or surety
bond.

(2) A purchase of eligible commercial paper may not do any of
the following:

(A) Exceed begin delete 180 days’ end delete begin insert 270 days end insert maturity.

(B) Represent more than 10 percent of the outstanding paper of
an issuing begin insert federally or state-chartered bank or a state-licensed
branch of a foreign bank, end insert corporation, trust, or limited liability
company.

(C) Exceed 30 percent of the resources of an investment
program.

(3) At the request of the Pooled Money Investment Board, an
investment made pursuant to this subdivision shall be secured by
the issuer by depositing with the Treasurer securities authorized
by Section 53651 of a market value at least 10 percent in excess
of the amount of the state’s investment.

(g) Bills of exchange or time drafts drawn on and accepted by
a commercial bank, otherwise known as bankers acceptances, that
are eligible for purchase by the Federal Reserve System.

(h) Negotiable certificates of deposits issued by a federally or
state-chartered bank or savings and loan association, a
state-licensed branch of a foreign bank, or a federally or
state-chartered credit union. For the purposes of this section,
negotiable certificates of deposits are not subject to Chapter 4
(commencing with Section 16500) and Chapter 4.5 (commencing
with Section 16600).

(i) The portion of bank loans and obligations guaranteed by the
United States Small Business Administration or the United States
Farmers Home Administration.

(j) Bank loans and obligations guaranteed by the Export-Import
Bank of the United States.

(k) Student loan notes insured under the Guaranteed Student
Loan Program established pursuant to the Higher Education Act
of 1965, as amended (20 U.S.C. Sec. 1001 and following) and
eligible for resale to the Student Loan Marketing Association
established pursuant to Section 133 of the Education Amendments
of 1972, as amended (20 U.S.C. Sec. 1087-2).

(l) Obligations issued, assumed, or guaranteed by the
International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank,
the African Development Bank, the International Finance
Corporation, or the Government Development Bank of Puerto
Rico.

(m) Bonds, debentures, and notes issued by corporations
organized and operating within the United States. Securities eligible
for investment under this subdivision shall be within the top three
ratings of a nationally recognized rating service.

(n) Negotiable Order of Withdrawal Accounts (NOW Accounts),
invested in accordance with Chapter 4 (commencing with Section
16500).

begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Title 4.5 (commencing with Section 4400) of Part 3
of the Penal Code is repealed.

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

Title 4.6 (commencing with Section 4450) of Part 3
of the Penal Code is repealed.

begin delete SEC. 3. end delete
begin insert SEC. 4. end insert   

Chapter 12 (commencing with Section 7100) of Title
7 of Part 3 of the Penal Code is repealed.

begin delete SEC. 4. end delete
begin insert SEC. 5. end insert   

Chapter 13 (commencing with Section 7200) of Title
7 of Part 3 of the Penal Code is repealed.

begin delete SEC. 5. end delete
begin insert SEC. 6. end insert   

Chapter 1.6 (commencing with Section 5096.1) of
Division 5 of the Public Resources Code is repealed.

begin delete SEC. 6. end delete
begin insert SEC. 7. end insert   

Chapter 1.67 (commencing with Section 5096.71) of
Division 5 of the Public Resources Code is repealed.

begin delete SEC. 7. end delete
begin insert SEC. 8. end insert   

Article 5.5 (commencing with Section 11922) of
Chapter 10 of Part 3 of Division 6 of the Water Code is repealed.

begin delete SEC. 8. end delete
begin insert SEC. 9. end insert   

Chapter 13 (commencing with Section 13970) of
Division 7 of the Water Code is repealed.

begin delete SEC. 9. end delete
begin insert SEC. 10. end insert   

Chapter 14 (commencing with Section 13985) of
Division 7 of the Water Code is repealed.