BILL ANALYSIS
SB 501
Page 1
Date of Hearing: July 1, 2009
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Kevin De Leon, Chair
SB 501 (Correa) - As Amended: April 20, 2009
Policy Committee: Local
GovernmentVote:7-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill clarifies that the California Debt Limit Allocation
Committee may permit 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.
Specifically, the 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.
FISCAL EFFECT
No direct state fiscal impact. Potential reallocation of local
bond-supported activity.
COMMENTS
SB 501
Page 2
1)Background . 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 private activity bond authority within California,
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.
Under its current practice, CDLAC allocates private activity
bond authority for single family programs first to the
California Housing Finance Authority and then the remainder on
a per capita basis to the 58 counties in California. If a
county does not apply for all of its share early in the year,
its remaining 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 authority on
their own.
2)Purpose . This bill, which is sponsored by the Independent
Cities Lease Financing Authority, clarifies that CDLAC has the
authority to allow cities within a county to apply for unused
bond authority. Given that CDLAC has broad powers to allocate
bond authority, 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.
Analysis Prepared by : Brad Williams / APPR. / (916) 319-2081