BILL ANALYSIS Ó
AB 1292
Page 1
ASSEMBLY THIRD READING
AB 1292 (Roger Hernández)
As Amended May 4, 2011
Majority vote
ENVIRONMENTAL SAFETY 8-0
APPROPRIATIONS 17-0
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|Ayes:|Wieckowski, Miller, |Ayes:|Fuentes, Harkey, |
| |Campos, Davis, Feuer, | |Blumenfield, Bradford, |
| |Bonnie Lowenthal, | |Charles Calderon, Campos, |
| |Morrell, Valadao | |Davis, Donnelly, Gatto, |
| | | |Hall, Hill, Lara, |
| | | |Mitchell, Nielsen, Norby, |
| | | |Solorio, Wagner |
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| | | |
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SUMMARY : Authorizes the California Department of Public Health
(CDPH) to sell revenue bonds to assist drinking water systems in
meeting their federal Safe Drinking Water State Revolving Fund
(SDWSRF) matching fund requirements. Specifically, this bill:
1)Authorizes the California Infrastructure and Economic
Development Bank (I-Bank) to contract with the CDPH to issue
tax exempt revenue bonds with the proceeds to be provided to
the SDWSRF.
2)Authorize the issuance of revenue bonds by the I-Bank to be
used to meet the federal matching requirements of the Safe
Drinking Water Act (SDWA).
3)Provides that tax exempt revenue bonds would be repaid from
the funds in the SDWSRF as security for revenue bonds, and to
use the interest earned from water system loans to pay
principal and interest to bond holders.
EXISTING LAW :
1)Creates the I-Bank within the Business, Transportation and
Housing Agency, to promote economic revitalization, enable
future development, and encourage a health climate for jobs in
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California. Authorize the I-Bank to issue tax-exempt and
taxable revenue bonds to underwrite the costs of
infrastructure development that meets certain public purposes.
2)Establishes the Safe Drinking Water State Revolving Fund and
continuously appropriates the funds to CDPH to provide grants
or revolving fund loans for the design and construction of
projects for the public water systems that will enable
suppliers to meet safe drinking water standards.
FISCAL EFFECT : According to the Assembly Appropriations
Committee, this bill would result in the potential issuance of
revenue bonds, possibly in the millions of dollars, to provide
the state match for Safe Drinking Water Act federal money. The
annual cost to CDPH is estimated to be in the range of $100,000
to $150,000 for contract services to provide financial advice
regarding the implementation of a revenue bond program.
(SDWSRF.)
COMMENTS :
Need for the bill . According the CDPH, the sponsors of this
bill, the legislation is necessary to assure that California is
able to receive the maximum amount of federal funds available in
2011, and in subsequent years, to address drinking water system
infrastructure needs. California receives annual funding from
the U.S. Environmental Protection Agency (US EPA) for the Safe
Drinking Water State Revolving Fund (SDWSRF) program. The
annual funding amount has ranged from $66 million to $126
million, and is expected to continue at approximately $90
million per year for 2011 and the next several years based on
recent federal budget actions. In order for the state to
receive these federal dollars, the state must provide a 20%
match of state funds.
With an allocation of approximately $90 million per year, the
required state match is projected to be $18 million annually;
current state match sources are not enough to provide the full
match for the 2011 federal grant or in subsequent years. This
increased allocation of federal funds requires the state to put
forth a larger match in order to draw down this critical
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funding.
Repayment of bonds from the SDWSRF revenue. The US EPA provides
each state with an annual federal capitalization grant that
"seeds" the State Revolving Fund program. In order to get these
funds, the state has to provide a 20% match of state funds. The
match can come from a variety of sources, but it cannot come
from repayments or interest on loans that are made to water
systems.
The state match can come from General Fund allocations or from
state bond measures (e.g., California has done this with
Proposition 13, Proposition 50, and Proposition 84). As an
alternative to these options, US EPA allows states to sell
revenue bonds to provide the state match. States are allowed to
use the moneys in the SDWSRF as security for revenue bonds, and
to use the interest earned from water system loans to pay
principal and interest to bond holders. CDPH does not currently
have statutory authority to issue or sell revenue bonds; this
bill would provide such authority.
Prior Legislation:
AB 1571 (Costa) Chapter 1078, Statutes of 2000, authorizes the
California Infrastructure and Development Bank to issue bonds
and deposit the proceeds of those bonds into the State Water
Pollution Control Revolving Fund Program for purposes of
implementing Clean Water Act projects undertaken at the local
level.
Analysis Prepared by : Bob Fredenburg / E.S. & T.M. / (916)
319-3965
FN: 0000983