BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 561|
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THIRD READING
Bill No: AB 561
Author: Gorell (R) and Smyth (R)
Amended: 6/28/11 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 9-0, 6/22/11
AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez,
Kehoe,
La Malfa, Liu
ASSEMBLY FLOOR : 73-0, 05/02/11 - See last page for vote
SUBJECT : Ventura County Watershed Protection District:
indebtedness
SOURCE : Author
DIGEST : This bill increases Ventura County Watershed
Protection Districts (District) securitized limited
obligation note limit and allows the District to
participate in state and federal loan programs.
ANALYSIS : Before counties, cities, or school districts
can create multi-year general obligation debt, the
California Constitution requires that counties and cities
receive two-thirds-voter approval and 55 percent
voter-approval for school district bonds. Because the
Constitution does not mention special districts, the
Legislature has allowed some districts to borrow money
without voter approval by issuing "promissory notes," loans
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that are backed only by the promise to repay.
Local officials have several fiscal tools to create public
capital needed to pay for public works projects:
1. General obligation bonds are funded through ad valorem
tax revenues, outside of Proposition 13's (1978) one
percent tax rate.
2. Limited obligation bonds are securitized by a local
government's existing revenues. Limited obligation
bonds require two-thirds-voter approval.
3. Revenue bonds, which are funded by rates and user
charges, need majority-voter approval.
4. Mello-Roos Act bonds allow counties, cities, special
districts, and school districts to levy special taxes
(parcel taxes) to finance a wide variety of public works
with two-third-voter approval.
5. Benefit assessment bonds allow property owners to pay
for public improvements. The amount of the assessment
is directly related to the amount of the benefit that
the property receives. Benefit assessments require
property owners' approval in weighted ballot elections.
6. Special districts may issue securitized limited
obligation notes (SLONs), which must be secured by
pledging a dedicated revenue stream. Though SLONs don't
require voter approval, they need a four-fifths-vote of
a district's governing board. Special districts can
borrow up to $2 million to be paid back from designated
revenues, over 10 years. The authority for special
districts to issue SLONs sunsets on December 31, 2014
(SB 1770 �Senate Local Government Committee], Chapter
114, Statutes of 2004).
In 1944, the Legislature created the Ventura County Flood
Control District, now called the Ventura County Watershed
Protection District (AB 2320 �Strickland], Chapter 564,
Statutes of 2002). The District controls and conserves
flood, storm waters, and watersheds to protect life,
property, and public infrastructure. The Ventura County
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Board of Supervisors governs the District.
This bill authorizes the District to participate in state
and federal revolving loan funds for the purposes of flood
and storm water control, water conservation, erosion
protection, beach and shoreline restoration, water
reclamation, water storage, technical investigations, and
capital works projects.
This bill increases the District's promissory note
borrowing capacity from $2 million to $13 million.
Comments
During stressed fiscal times, local governments have fewer
resources to allocate to critical infrastructure
improvements. In 2009, 11 District levees failed to meet
Federal Levee Certification requirements and must be
retrofitted or enhanced. The District's levees protect
more than $8 billion of property and improvements of
parcels, and the estimated costs of prevented flood damages
are roughly $526 million. Despite possible fiscal and
safety incentives to improve levee systems, the District's
steady revenue streams of assessments, property taxes, and
land development fees aren't enough. This bill lets the
District participate in state and federal revolving loans,
rather than wait for lengthy borrowing procedures.
Moreover, this bill raises the cap on the District's SLONs.
By giving the District more access to additional
borrowing, the bill helps the District prevent damage and
stabilize flood insurance rates, rather than wait until a
disaster wreaks costlier havoc.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/28/11)
Association of California Water Agencies
Calleguas Municipal Water District
Ventura County Board of Supervisors
ASSEMBLY FLOOR : 73-0, 5/2/11
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AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Campos, Carter, Chesbro,
Conway, Cook, Davis, Dickinson, Donnelly, Feuer,
Fletcher, Fong, Fuentes, Furutani, Galgiani, Garrick,
Gatto, Gordon, Grove, Hagman, Halderman, Hall, Harkey,
Hayashi, Roger Hern�ndez, Hill, Huber, Hueso, Huffman,
Jeffries, Jones, Knight, Logue, Bonnie Lowenthal, Ma,
Mansoor, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel P�rez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. P�rez
NO VOTE RECORDED: Charles Calderon, Cedillo, Eng, Gorell,
Lara, Mendoza, Vacancy
AGB:kc 6/28/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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