BILL ANALYSIS
SB 501
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Date of Hearing: June 17, 2009
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Anna Marie Caballero, Chair
SB 501 (Correa) - As Amended: April 20, 2009
SENATE VOTE : 36-0
SUBJECT : California Debt Limit Allocation Committee.
SUMMARY : Clarifies that the California Debt Limit Allocation
Committee (CDLAC) may allow a local agency to apply for an
allocation of the state's private activity bond authority even
if the county in which that local agency is located has not
applied. Specifically, this bill :
1)Authorizes CDLAC to allow a local agency, which is located
within 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 the bill's 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 calendar
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.
EXISTING LAW :
1)Specifies that the membership of CDLAC consists of six members
including the Treasurer or his or her designee, the Controller
or his or her designee, the Governor or his or her designee,
the Director of Housing and Community Development as a
nonvoting member, the Executive Director of the California
Housing Finance Agency (CalHFA) as a nonvoting member, and a
non-voting representative from local government selected by
two voting members of CDLAC.
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2)Provides that CDLAC may adopt, amend, or repeal rules and
regulations or emergency regulations in accordance with the
rulemaking provisions of the Administrative Procedure Act.
3)Requires CDLAC to allocate to authorized state and local
agency applicants the volume ceiling for private activity
bonds that can be issued in California in accordance with
federal law.
4)Provides for an application process through which a local or
state agency can apply for an allocation of a portion of the
state ceiling.
FISCAL EFFECT : None
COMMENTS :
1)According to the State Treasurer's office, the purpose of
CDLAC is to implement Section 1301 of the Federal Tax Reform
Act of 1986 and Section 146 of the Internal Revenue Code which
impose a limit on the amount of tax-exempt private activity
bonds that a state may issue in a calendar year (the annual
state ceiling), as determined by a population-based formula.
The current 2009 California debt ceiling is just over $3.3
billion, of which the allocation is distributed among six
program areas including 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.
2)In accordance with CDLAC's procedures, at the beginning of
each calendar year CDLAC must establish and announce the
amounts they expect to be apportioned to each of the state
ceiling pools and the amounts that are expected to be
available in each of the allocation rounds for the program
year.
3)CDLAC allocates private activity bond cap for single family
programs first to CalHFA and then the remainder on a per
capita basis to the 58 counties in California. 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
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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.
4)SB 501 clarifies that CDLAC has the authority to provide a
second application opportunity for cities within a county to
apply for all unused bond cap, in the instance that the county
has not applied. According to the sponsor, the Independent
Cities Financing Authority, while this is not expressly
prohibited under current law, it is also not specifically
allowed either, which illustrates the need to clarify the
ambiguity in state statute. Given that CDLAC has broad powers
to allocate bond cap, SB 501 changes neither CDLAC's authority
nor its current practice of procedures. The author notes that
SB 501 expresses the Legislature's desire to allow all local
governments the opportunity to access California's private
activity bond authority.
REGISTERED SUPPORT / OPPOSITION :
Support
Independent Cities Lease Financing Authority [SPONSOR]
League of California Cities
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958