BILL ANALYSIS �
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|SENATE RULES COMMITTEE | AB 612|
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THIRD READING
Bill No: AB 612
Author: Gordon (D)
Amended: 6/23/11 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 : 78-0, 5/19/11 - See last page for vote
SUBJECT : Parks and recreation: districts: repayment of
indebtedness
SOURCE : Midpeninsula Regional Open Space District
DIGEST : This bill extends the period of time for the
Midpeninsula Regional Open Space Districts promissory
borrowing without voter approval from 20 years to 30 years.
ANALYSIS : State laws limit most promissory notes to $5
million to $10 million, repaid over two to 10 years.
Regional parks and open space districts can use two types
of promissory notes:
1. For revenue-producing purposes, a district can issue
promissory notes with the unanimous vote of its board of
directors. A district can borrow up to $200,000 or five
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percent of its general fund, to be repaid over five
years.
2. For acquiring land and facilities, a district can issue
promissory notes with a 4/5-vote of its board of
directors. A district can borrow up to five years of
anticipated property tax revenues or 20 years of
anticipated special tax revenues, or both. A district
must repay these promissory notes within 20 years (AB
800 �Klehs], Chapter 24, Statutes of 1987).
In addition, The East Bay Regional Park District can issue
30-year promissory notes, but only to acquire the land and
facilities designated in its master plan (AB 2425 �Sher],
Chapter 140, Statutes of 1987).
Special districts can issue securitized limited obligation
notes (SLONs) which must be secured by pledging dedicated
revenues. While SLONs don't need voter approval, they
require a 4/5-vote of a district's governing board.
Special districts can use SLONs to borrow up to $2 million
for 10 years, to be paid back from pledged revenues. The
authority to issue SLONs sunsets on December 31, 2014 (SB
1770 �Senate Local Government Committee], Chapter 610,
Statutes of 2004).
This bill extends the period of time for the Midpeninsula
Regional Open Space District's promissory borrowing from 20
years to 30 years. This bill requires the District to
formally pledge the revenue that will repay the
indebtedness. This bill contains legislative findings
justifying this special provision.
This bill specifies that the interest rate on indebtedness
not exceed the rate allowable under provisions governing
issuance of local general obligation bonds for all regional
park districts, regional park and open-space districts, and
regional open-space districts.
Comments
By amortizing their borrowing costs over 30 years instead
of 20 years, the Midpeninsula Regional Open Space District
can leverage more capital to buy and preserve open space.
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By lowering annual interest costs and expanding debt
capacity, the West Bay's premier open space agency can
acquire more property in one of the nation's most expensive
real estate markets. Making taxpayers' dollars work harder
allows the District to achieve what its constituents want:
greenbelts, open space, and wilderness.
Cities and counties can't issue promissory notes because of
the constitutional ban. State law limits most special
districts' promissory notes to short terms of two years,
five years, and sometimes 10 years. Only regional park and
open space districts have access to 20-year promissory
notes and only the East Bay Regional Park District can
issue 30-year notes. Traditionally, short-term promissory
notes are for smaller projects that don't have a dedicated
revenue stream. For long-term debts, local officials
usually use 30-year bonds that are backed by new revenues.
Long-term bonds require voter approval; short-term
promissory notes don't.
Related Legislation
AB 697 (Ruskin), 2007, which would have allowed the
Midpeninsula Regional Open Space District and the East Bay
Regional Park District to borrow money for 30 years without
voter approval and without identifying the revenues to
repay those debts. That version of AB 697 was never acted
upon by the former Senate Local Government Committee, but
was amended for another purpose by Assembly Member Hancock.
AB 561 (Corell) 2011-12 Session, which raises the Ventura
County Watershed Protection District's SLON Cap to $20
million, allowing the District to borrow money for 10 years
without voter-approval, provided that it pledges existing
revenues.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 6/23/11)
Midpeninsula Regional Open Space District (source)
Acterra
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Bay Area Open Space Council
Bay Area Ridge Trail
Committee for Green Foothills
East Bay Regional Park District
Greenbelt Alliance
Hidden Villa
Land Trust of Santa Cruz County
Natural Resources Defense Council
Peninsula Open Space Trust
Planning and Conservation League
San Mateo County
Santa Clara County Open Space Authority
Santa Clara County Parks and Recreation Department
Santa Clara Valley Audubon Society
Save Mount Diablo
Save the Redwoods League
Sempervirens Fund
Sierra Club, Loma Prieta Chapter
Silicon Valley Leadership Group
Sonoma Land Trust
The Nature Conservancy
Trust for Public Land
ASSEMBLY FLOOR :
AYES: Achadjian, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hern�ndez, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, 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: Alejo, Gorell
AGB:do 6/23/11 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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