AB 1883, as amended, Skinner. Public improvements: contractual assessments.
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 if bonds have not been issued in
that regard, subject to an agreement identifying the specific period of time during which the transfer will be operative, not to exceed 3 years. 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 assessmentbegin delete, whichend deletebegin insert. The foreclosureend insert action would remain the responsibility of the public agencybegin insert, which would retain the sole right to enforce its senior lien statusend insert.begin delete The bill would also not affect the senior lien status of a lien resulting from that delinquency.end delete
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
The Legislature finds and declares all of the
2following:
3(a) Energy efficiency, renewable energy, and water efficiency
4upgrades to residential, commercial, industrial, and other properties
5are integral to furthering the state’s goals of reducing greenhouse
6gas emissions, insulating the state from the impacts of dwindling
7water resources, and helping Californians save money.
8(b) Not-for-profit entities and other third parties are increasingly
9important partners with local governments in funding Property
10Assessed Clean Energy (PACE) upgrades.
11(c) The closing costs associated with bond issuance can make
12PACE
financing for small projects cost-prohibitive.
13(d) By pooling small to medium size PACE projects into one
14bond, the closing costs for each project can be drastically reduced.
15(e) In order for a third party to pool projects, it is necessary to
16enable local governments to assign the revenue from a PACE
17assessment to an investor prior to the issuance of a bond.
18(f) The right to foreclose on delinquent voluntary assessments,
19and the senior lien status of those assessments, should remain with
20the local government.
Section 5898.28 of the Streets and Highways Code is
22amended to read:
(a) A public agency may issue bonds pursuant to this
24chapter, the principal and interest for which would be repaid by
25voluntary contractual assessments. A public agency may advance
26its own funds to finance work to be repaid through voluntary
27contractual assessments, and may from time to time sell bonds to
28reimburse itself for those advances. A public agency may enter
P3 1into a relationship with an underwriter or financial institution that
2would allow the sequential issuance of a series of bonds, each bond
3being issued as the need arose to finance work to be repaid through
4voluntary contractual assessments. The interest rate of each bond
5may be determined by an appropriate index, but shall be fixed at
6the time each bond is issued. Bond proceeds may be used to
7establish a reserve fund, and to pay for expenses incidental to the
8
issuance and sale of the bonds. Division 10 (commencing with
9Section 8500) shall apply to any bonds issued pursuant to this
10section, insofar as that division is not in conflict with this chapter.
11(b) (1) Notwithstanding any provision of this division or the
12Improvement Act of 1915 (Division 10 (commencing with Section
138500)), a public agency may transfer its right, title, and interest in
14and to any voluntary contractual assessments, if bonds have not
15been issued pursuant to subdivision (a). The public agency and
16the transferee shall enter into an agreement that, among other
17things, identifies the specific period of time during which the
18transfer of voluntary contractual assessments will be operative,
19not to exceed three years. Except as provided in paragraph (2), a
20transfer of any voluntary contractual assessments under this
21subdivision shall be treated as a true and absolute transfer of the
22asset so transferred for the
period of the transfer and not as a pledge
23or grant of a security interest by the public agency for any
24borrowing. The characterization of the transfer of any of those
25assets as an absolute transfer by the public agency shall not be
26negated or adversely affected by the fact that only a portion of any
27voluntary contractual assessment is transferred, nor by any
28characterization of the transferee for purposes of accounting,
29taxation, or securities regulation, nor by any other factor
30whatsoever. As used in this section, “transfer” means sale,
31assignment, or other transfer.
32(2) Nothing in this subdivision shall be construed to authorize
33the transferee to initiate and prosecute a foreclosure action resulting
34from a delinquency in the payment of the voluntary contractual
35begin delete assessment, and nothing in this subdivision shall affect the senior begin insert
assessment.end insert
36lien status of a lien resulting from that delinquency.end delete
37 Initiation and prosecution of a foreclosure action shall remain the
P4 1responsibility of the public agencybegin insert, which shall retain the sole
2right to enforce its senior lien statusend insert.
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