BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | SB 501|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: SB 501
Author: Correa (D)
Amended: 4/20/09
Vote: 21
SENATE TRANS. & HOUSING COMMITTEE : 10-0, 4/28/09
AYES: Lowenthal, Huff, Ashburn, DeSaulnier, Harman,
Hollingsworth, Kehoe, Pavley, Simitian, Wolk
NO VOTE RECORDED: Oropeza
SENATE APPROPRIATIONS COMMITTEE : Senate Rule 28.8
SUBJECT : California Debt Limit Allocation Committee
SOURCE : Independent Cities Lease Finance Authority
DIGEST : This bill clarifies that the California Debt
Limit Allocation Committee may allow a local agency to
apply for an allocation of the states 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
CONTINUED
SB 501
Page
2
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 the Department 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 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
SB 501
Page
3
Purpose of the bill . 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.
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 bill's 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.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: No
SUPPORT : (Verified 4/28/09)
Independent Cities Lease Finance Authority (source)
JJA:mw 5/12/09 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
**** END ****
SB 501
Page
4