Amended in Assembly April 10, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 1883

Introduced by Assembly Member Skinner

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(Coauthors: Assembly Members Ammiano, Buchanan, Chesbro, Gordon, and Ting)

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February 19, 2014

An act to amend Section 5898.28 of the Streets and Highways Code, relating to public improvements.

LEGISLATIVE COUNSEL’S DIGEST

AB 1883, as amended, Skinner. Public improvements: contractual begin delete assessments: delinquency. end delete begin insert assessments. end insert

Existing law, under the Improvement Act of 1911, authorizes the legislative body of a public agency to designate an area within which the public agency and property owners may enter into voluntary contractual assessments to finance certain public improvements. Existing law authorizes the public agency to advance its own funds to finance work to be repaid through the voluntary assessments, and to issue bonds in that regard. Existing law provides that assessments levied in this manner constitute a lien against the property on which the assessments are made, and, in the case of delinquency, provides for collection of assessments and associated interest and penalties, as specified.

This bill would authorize a public agency to transfer, as defined, its right, title, and interest in any voluntary contractual assessments begin delete and in all rights to initiate and prosecute a foreclosure action resulting from a delinquency in those assessments, as specified, end delete if bonds have not been issued in that regard begin insert , subject to an agreement identifying the specific period of time during which the transfer will be operative, not to exceed 3 years end insert . begin insert The bill would not authorize the transferee to initiate and prosecute a foreclosure action resulting from a delinquency in the payment of the voluntary contractual assessment, which action would remain the responsibility of the public agency. The bill would also not affect the senior lien status of a lien resulting from that delinquency. end insert

Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

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begin insert The Legislature finds and declares all of the
following: end insert

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(a) Energy efficiency, renewable energy, and water efficiency
upgrades to residential, commercial, industrial, and other
properties are integral to furthering the state’s goals of reducing
greenhouse gas emissions, insulating the state from the impacts
of dwindling water resources, and helping Californians save
money.

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(b) Not-for-profit entities and other third parties are increasingly
important partners with local governments in funding Property
Assessed Clean Energy (PACE) upgrades.

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(c) The closing costs associated with bond issuance can make
PACE financing for small projects cost-prohibitive.

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(d) By pooling small to medium size PACE projects into one
bond, the closing costs for each project can be drastically reduced.

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(e) In order for a third party to pool projects, it is necessary to
enable local governments to assign the revenue from a PACE
assessment to an investor prior to the issuance of a bond.

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(f) The right to foreclose on delinquent voluntary assessments,
and the senior lien status of those assessments, should remain with
the local government.

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begin delete SECTION 1. end delete
begin insert SEC. 2. end insert   

Section 5898.28 of the Streets and Highways Code is
amended to read:

5898.28.  

(a) A public agency may issue bonds pursuant to this
chapter, the principal and interest for which would be repaid by
voluntary contractual assessments. A public agency may advance
its own funds to finance work to be repaid through voluntary
contractual assessments, and may from time to time sell bonds to
reimburse itself for those advances. A public agency may enter
into a relationship with an underwriter or financial institution that
would allow the sequential issuance of a series of bonds, each bond
being issued as the need arose to finance work to be repaid through
voluntary contractual assessments. The interest rate of each bond
may be determined by an appropriate index, but shall be fixed at
the time each bond is issued. Bond proceeds may be used to
establish a reserve fund, and to pay for expenses incidental to the
issuance and sale of the bonds. Division 10 (commencing with
Section 8500) shall apply to any bonds issued pursuant to this
section, insofar as that division is not in conflict with this chapter.

(b)  begin insert (1) end insert begin insert   end insert Notwithstanding any provision of this division or the
Improvement Act of 1915 (Division 10 (commencing with Section
8500)), a public agency may transfer its right, title, and interest in
and to begin delete (1) end delete any voluntary contractual begin delete assessments and (2) all rights
to initiate and prosecute a foreclosure action resulting from a
delinquency in the payment of the voluntary contractual end delete
assessments, if bonds have not been issued pursuant to subdivision
(a). begin delete A end delete begin insert The public agency and the transferee shall enter into an
agreement that, among other things, identifies the specific period
of time during which the transfer of voluntary contractual
assessments will be operative, not to exceed three years. Except
as provided in paragraph (2), a end insert transfer of any voluntary
contractual assessments under this subdivision shall be treated as
a true and absolute transfer of the asset so transferred begin insert for the period
of the transfer end insert and not as a pledge or grant of a security interest
by the public agency for any borrowing. The characterization of
the transfer of any of those assets as an absolute transfer by the
public agency shall not be negated or adversely affected by the
fact that only a portion of any voluntary contractual assessment is
transferred, nor by any characterization of the transferee for
purposes of accounting, taxation, or securities regulation, nor by
any other factor whatsoever. As used in this section, “transfer”
means sale, assignment, or other transfer.

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(2) Nothing in this subdivision shall be construed to authorize
the transferee to initiate and prosecute a foreclosure action
resulting from a delinquency in the payment of the voluntary
contractual assessment, and nothing in this subdivision shall affect
the senior lien status of a lien resulting from that delinquency.
Initiation and prosecution of a foreclosure action shall remain the
responsibility of the public agency.

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