BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 185|
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THIRD READING
Bill No: AB 185
Author: Assembly Budget Committee
Amended: 9/4/09 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SUBJECT : Budget Act of 2009: Proposition 1A borrowing
and
securitization clean-up
SOURCE : Author
DIGEST : Senate Floor Amendments of 9/4/09 delete the
prior version of the bill making statutory changes
necessary to implement the Hunan Services portions of the
2009-10 Budget. This bill now provides the necessary
statutory changes in the area of Proposition 1A of 2004
borrowing and securitization in order to amend the 2009
Budget Act.
ANALYSIS : This bill makes cleanup revisions to the
Proposition 1A of 2004 suspension and securitization
provisions of the July Budget Agreement. Specifically, it:
1. Increases the minimum size of the Joint Powers Authority
(JPA) from 100 local agencies to 250 local agencies.
This amendment will ensure the bonds are sold by a
single JPA instead of multiple JPAs. Limiting the
securitization to a single JPA will minimize costs to
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the State.
2. Clarifies and revises various dates and timelines to
streamline the process and eliminate any ambiguity for
bond investors.
3. Allows bond proceeds to be used to reimburse the State
Treasurer for his work in reviewing the bonds. Provides
a streamlined contracting process so the Treasurer can
quickly procure fiscal advisory services. Under the
existing language, the Treasurer and the Director of the
Department of Finance have certain oversight
responsibilities to protect the interests of the state.
4. Removes the requirement for at least two early call
dates. Removing this requirement will provide more
flexibility to negotiate terms that minimize interest
and other costs.
5. Revises the extreme hardship exemption process, such
that the determination is made after the anticipated
sales of bonds, but no later than December 1, 2009. If
bonds are successfully sold and allocated, locals will
see no revenue loss or delay associated with the
Proposition 1A suspension, and no hardship exemptions
will be granted.
6. Adds "city" and "a city and county" to the existing
authority for a county to borrow funds from a
Redevelopment Agency (RDA). An RDA would have the
option, but not be required, to loan funds to a city,
county, or city and county to fully or partially replace
their Proposition 1A reduction. No such loan could be
made if the Redevelopment Agency has itself borrowed
from its Low and Moderate Income Housing Fund.
7. Specifies that bonds may bear interest payable on a
periodic interest payment dates or may accrue interest
to their maturity date or any combination thereof,
subject to the approval of the Department of Finance and
the State Treasurer.
8. Makes other technical and clarifying changes requested
by local governments, bond counsel, and the State
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Treasurer's Office to facilitate the securitization of
Proposition 1A receivables.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
DLW:mw 9/8/09 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
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