BILL ANALYSIS
SENATE TRANSPORTATION & HOUSING COMMITTEE BILL NO: SB 501
SENATOR ALAN LOWENTHAL, CHAIRMAN AUTHOR: correa
VERSION: 4/20/09
Analysis by: Carrie Cornwell FISCAL: yes
Hearing date: April 28, 2009
SUBJECT:
The California Debt Limit Allocation Committee
DESCRIPTION:
This bill clarifies that the California Debt Limit Allocation
Committee may allow a local agency to apply for an allocation of
the state's private activity bond authority whether or not the
county in which that local agency is located has applied.
ANALYSIS:
Federal law caps, through a population-based formula, the amount
of tax-exempt "private activity" bonds that a state can issue
each calendar year to facilitate private development, including
affordable housing. The cap for California for 2009 is $3.3
billion.
The California Debt Limit Allocation Committee (CDLAC) allocates
this private activity bond authority, which it distributes among
six programs that include various affordable housing, solid
waste and recycling, student loan, and industrial development
programs. Tax-exempt bonds typically lower the interest rates
that developers and homebuyers pay on their mortgages or that
other beneficiaries pay on their debt instruments.
CDLAC consists of three voting members: the State Treasurer, who
serves as chair, the State Controller, and the Director of
Finance. State law allows a local agency to apply to CDLAC for
an allocation of the state bond cap for a specific project or
program.
CDLAC's procedures for affordable single family housing programs
provide for a "fair share allocation" under which each county
SB 501 (CORREA) Page 2
receives a proportion of the allocation based on the county's
proportion of the state population. Cities within each county in
turn receive a proportionate share of the county's bond cap
based on the city's proportion of the county population, unless
the cities and county agree to another arrangement.
This bill :
1.Authorizes CDLAC to allow a local agency, which is located
within in a county that has not in any calendar year applied
for all of its bond cap, to apply on or after October 1 for a
portion of that bond cap.
2.Provides that if more than one local agency applies for an
allocation under its provisions, then CDLAC shall award the
allocation on a per capita proportionate basis among the
applicants.
3.Requires that CDLAC consider and act upon such an application
at its next scheduled meeting before the end of the year.
4.Specifies that a local agency is not required to obtain
consent from the county in which it is located or to obtain a
transfer of the county's allocation as a condition of applying
to CDLAC.
COMMENTS:
1.Purpose . Under its current practice, CDLAC allocates private
activity bond cap for single family programs first to the
California Housing Finance Authority (CalHFA) and then the
remainder on a per capita basis to the 58 counties in
California. If a county does not apply for some, or all, of
its share early in the year, its portion of bond cap for
single family programs is returned to CDLAC. CDLAC then
allocates it elsewhere, and cities within that county may not
apply for bond cap on their own. This practice does not appear
to follow CDLAC's written procedures.
Existing state statute allows any city to apply to CDLAC for
bond cap. CDLAC's procedures reserve to each city within a
county an amount of single family bond cap that is
proportional to the city's share of the county's population.
Despite this, some cities report being turned away by CDLAC if
their county chooses not to apply for bond cap under the
single family program.
SB 501 (CORREA) Page 3
This bill clarifies that CDLAC has the authority to provide an
application opportunity for cities within a county to apply
for all unused bond cap. Given that CDLAC has broad powers to
allocate bond cap, the bill changes neither CDLAC's authority
nor its current practice or procedures. The sponsor and the
author believe, however, that this bill expresses the
Legislature's desire to allow all local governments the
opportunity to access California's private activity bond
authority.
2.Necessary ? Existing state law gives CDLAC broad powers to
allocate private activity bond authority to various programs
and to create procedures to award that authority to local
agencies for specific projects. As noted above, this bill
changes neither CDLAC's statutory authority nor its current
practice or procedures. Rather it specifies a process that
CDLAC could follow now without changes to its statute or to
its procedures. It may, therefore, be more appropriate for the
proponents of this bill simply to ask CDLAC to change its
existing practice.
POSITIONS: (Communicated to the Committee before noon on
Wednesday,
April 22, 2009)
SUPPORT: Independent Cities Lease Finance Authority
(sponsor)
OPPOSED: None received.