BILL ANALYSIS
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|SENATE RULES COMMITTEE | AB 1364|
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THIRD READING
Bill No: AB 1364
Author: Evans (D), et al
Amended: 8/17/09 in Senate
Vote: 27 - Urgency
SENATE GOVERNMENTAL ORG. COMMITTEE : 11-0, 7/8/09
AYES: Wright, Harman, Benoit, Calderon, Denham, Florez,
Negrete McLeod, Padilla, Price, Wyland, Yee
NO VOTE RECORDED: Oropeza, Wiggins
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
ASSEMBLY FLOOR : 76-0, 5/28/09 (Consent) - See last page
for vote
SUBJECT : Public contracts: state bonds: grant
agreements
SOURCE : California Council of Land Trusts
California State Parks Foundation
Planning and Conservation League
DIGEST : This bill provides that, notwithstanding any
other provision of law, any state agency that has entered
into a grant agreement for the expenditure of state bond
funds where the state agency or grant recipient is, or may
be, unable to comply with the terms of that agreement
because of the suspension of interim funding for projects
and contracts by the Pooled Money Investment Board on or
after December 18, 2008, shall, with the consent of the
CONTINUED
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grant recipient, have the authority to either renegotiate,
modify, or eliminate the deadlines and timetables for and
deliverables within the grant agreement in order to address
the suspension or to terminate the grant agreement if no
grant funds have yet been delivered thereunder. The bill
specifies that it does not modify any act under which bonds
are authorized to be issued or the State General Obligation
Bond Law.
ANALYSIS : Existing law permits the modification of
contracts by state agencies in specified instances.
Comments
According to the Senate Governmental Organization analysis,
on December 17, 2008, the PMIB froze all disbursements from
the Pooled Money Investment Account (PMIA) because of the
state's poor cash position. The PMIA has historically been
used to provide interim funding for all bond funded
projects until the State Treasurer's Office (STO) is able
to issue commerical paper and subsequently sell bonds. The
PMIB "freeze" affected approximately 5,700 projects across
the state. In the weeks that followed this action, the
Department of Finance authorized 276 projects to continue,
but the remaining 5,400 projects were directed to be
shut-down unless other non-state funding sources were
available to enable them to continue.
Enactment of the 2009-10 Budget Act in February allowed the
STO to re-enter the bond market and resume issuing bonds.
Prior to the March 2009 bond sale, the state was unable to
sell bonds since June of 2008. A mismatch remains,
however, between the amount of bond resources committed
through state contracts and the amount of bond funds
available. Moreover, the Legislative Analyst's Office, in
its recent report, "California's Cash Flow Crisis: May 2009
Update," states that California's cash flow pressures are
likely to reemerge this summer and fall, and the short-term
borrowing requirement could reach $20 billion.
Purpose of AB 1364: According to the author's office, "On
April 3, the Department of Finance issued Budget Letter
09-09 which says, 'If projects continue with non-state
funding sources, the state intends to eventually pay the
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costs to which it has committed through a valid agreement.'
While this passage brings important clarity regarding the
state's intentions relating to fiscal assurances,
uncertainty now shifts to the validity of contracts where
datelines for deliverables are passing. For these reasons,
as the state moves ahead with its contract partners, the
grey area centers on what constitutes a valid contract.
This raises the inevitable question: Since the timetables
for deliverables are passing and not being met, are such
contracts valid? This bill proposes an affirmative
solution to validate these state contracts. The approach
proposed in AB 1364 is for state agencies to amend
timetables for these contracts."
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 8/18/09)
California Council of Land Trusts (co-source)
California State Parks Foundation (co-source)
Planning and Conservation League (co-source)
A Living Library
American Land Conservancy
Anza Borrego Foundation
Arroyo Seco Foundation
Association of California Construction Managers
Bay Area Open Space Council
Big Sur Land Trust
California Association of Nonprofits
California ReLeaf
California Urban Forest Council
Canopy
Central Valley Land Trust Council
Community Alliance for Family Farmers
East Bay Regional Park District
Elkhorn Slough Foundation
Friends of the Urban Forest
Goleta Valley Beautiful
Housing California
Lake County Land Trust
Land Conservancy of San Luis Obispo County
Land Trust Council
Land Trust of Napa County
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Land Trust for Santa Barbara County
Land Trust of Santa Cruz County
Lassen Land & Trails Trust
Marin Agricultural Land Trust
Mattole Restoration Council
Mattole Salmon Group
Mountain Meadows Conservancy
Muir Heritage Land Trust
Napa, City of
Outdoor Heritage Alliance
Palos Verdes Peninsula Land Conservancy
Peninsula Open Space Trust
Placer Land Trust
Redwood Coast Land Conservancy
Sacramento Tree Foundation
Sacramento Valley Conservancy
San Joaquin River Parkway & Conservation Trust
San Diego River Park Foundation
San Francisco Bay Joint Venture
Save Mount Diablo
Sequoia Riverlands Trust
Sierra-Cascade Land Trust Council
Solano Land Trust
Sonoma Land Trust
Tree Davis
Tri-Valley Conservancy
ARGUMENTS IN SUPPORT : Proponents state that this bill
takes a straightforward approach to eliminating ambiguity
on the status of grant agreements affected by the bond
freeze implemented under Finance Budget Letter 08-33 on
December 17, 2008.
Proponents contend that the ongoing freeze continues to
adversely impact hundreds of nonprofits, contractors, small
businesses, local governments and other public and private
agencies struggling to survive through this unprecedented
cash flow crisis which has impacted those who can afford it
the least. Proponents believe that this measure is an
important step in providing some peace of mind to those
whose critical transportation, education, affordable
housing, flood control and resource conservation projects
hang in the balance.
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ASSEMBLY FLOOR :
AYES: Adams, Ammiano, Anderson, Arambula, Beall, Bill
Berryhill, Tom Berryhill, Blakeslee, Block, Blumenfield,
Brownley, Buchanan, Caballero, Charles Calderon, Carter,
Chesbro, Conway, Cook, Coto, Davis, De La Torre, De Leon,
DeVore, Emmerson, Eng, Feuer, Fletcher, Fong, Fuentes,
Fuller, Furutani, Gaines, Galgiani, Garrick, Gilmore,
Hagman, Hall, Harkey, Hayashi, Hernandez, Hill, Huber,
Huffman, Jeffries, Jones, Knight, Krekorian, Lieu, Logue,
Bonnie Lowenthal, Ma, Miller, Monning, Nava, Niello,
Nielsen, John A. Perez, V. Manuel Perez, Portantino,
Price, Ruskin, Salas, Saldana, Silva, Skinner, Smyth,
Solorio, Audra Strickland, Swanson, Torlakson, Torres,
Torrico, Tran, Villines, Yamada, Bass
NO VOTE RECORDED: Duvall, Evans, Mendoza, Nestande
TSM:do 8/19/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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