Amended in Assembly March 24, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2046

Introduced by Assembly Member Gomez

February 20, 2014

An act to amend Section 6588 of the Government Code, relating to joint exercise of powers, and declaring the urgency thereof, to take effect immediately.

LEGISLATIVE COUNSEL’S DIGEST

AB 2046, as amended, Gomez. Joint exercise of powers: financing.

The Joint Exercise of Powers Act authorizes the legislative or other governing bodies of 2 or more public agencies to jointly exercise by agreement any power common to the contracting parties, as specified, and authorizes a joint powers authority to exercise various powers, including, among others, the power to issue bonds, including bonds bearing interest, to pay the cost of any public capital improvement, working capital, or liability or other insurance program, as specified.

This bill would authorize a joint powers authority to begin delete execute and deliver, end delete begin insert issue end insert or cause to be begin delete executed and delivered, certificates of participation in a lease or installment sale end delete begin insert issued bonds and enter into a loan end insert agreement for the financing or refinancing of a project that is situated in another state, including working capital related to that project, if the project and its financing meets certain conditions.

This bill would declare that it is to take effect immediately as an urgency statute.

Vote: ²⁄₃. Appropriation: no. Fiscal committee: no. State-mandated local program: no.

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

SECTION 1.  

Section 6588 of the Government Code is amended
to read:

6588.  

In addition to other powers specified in an agreement
pursuant to Article 1 (commencing with Section 6500) and Article
2 (commencing with Section 6540), the authority may do any or
all of the following:

(a) Adopt bylaws for the regulation of its affairs and the conduct
of its business.

(b) Sue and be sued in its own name.

(c) (1) Issue bonds, including, at the option of the authority,
bonds bearing interest, to pay the cost of any public capital
improvement, working capital, or liability or other insurance
program.

(2) (A) In addition to paragraph (1), for any purpose for which
an authority may execute and deliver or cause to be executed and
delivered certificates of participation in a lease or installment sale
agreement with any public or private entity, the authority, at its
option, may issue or cause to be issued bonds, rather than
certificates of participation, and enter into a loan agreement with
the public or private entity.

(B) Notwithstanding Sections 6586 and 6586.5 or any other
law, begin delete and in addition to any other purpose for which the end delete begin insert an end insert authority
may begin delete issue bonds, an authority may execute and deliver, or cause
to be executed and delivered, certificates of participation in a lease
or installment sale agreement pursuant to this paragraph end delete begin insert issue or
cause to be issued bonds and enter into a loan agreement, pursuant
to subparagraph (A), end insert for the financing or refinancing of a project
that is situated in another state, including working capital related
to that project, if all of the following apply:

(i) The project is owned, developed, or operated by a private
entity.

(ii) The begin delete execution and delivery of the certificates of participation end delete
begin insert issuance of bonds end insert by the authority and the financing of the project
is approved by resolution, order, or other official action of the city,
county, or other public body with land use planning authority over
the project, or of the state in which the project is situated. This
begin delete subparagraph end delete begin insert clause end insert does not apply to the issuance of refunding
bonds if a prior financing or refinancing of the project was
approved by the city, county, public body, or state.

(iii) The authority finds, based on the facts and circumstances
attendant to the project or the financing or refinancing of the
project, that the begin delete execution and delivery of the certificates of
participation end delete begin insert issuance of the bonds end insert or the financing or refinancing
of the project will result in a substantial public benefit to, and are
for a public purpose of, the citizens of this state.

(d) Engage the services of private consultants to render
professional and technical assistance and advice in carrying out
the purposes of this article.

(e) As provided by applicable law, employ and compensate
bond counsel, financial consultants, and other advisers determined
necessary by the authority in connection with the issuance and sale
of any bonds.

(f) Contract for engineering, architectural, accounting, or other
services determined necessary by the authority for the successful
development of a public capital improvement.

(g) Pay the reasonable costs of consulting engineers, architects,
accountants, and construction, land-use, recreation, and
environmental experts employed by any sponsor or participant if
the authority determines those services are necessary for the
successful development of public capital improvements.

(h) Take title to, sell by installment sale or otherwise, or lease
lands, structures, real or personal property, rights, rights-of-way,
franchises, easements, and other interests in lands that are located
within the state that the authority determines are necessary or
convenient for the financing of public capital improvements, or
any portion thereof.

(i) Receive and accept from any source, loans, contributions,
or grants, in either money, property, labor, or other things of value,
for, or in aid of, the construction financing, or refinancing of public
capital improvement, or any portion thereof or for the financing
of working capital or insurance programs, or for the payment of
the principal of and interest on bonds if the proceeds of those bonds
are used for one or more of the purposes specified in this section.

(j) Make secured or unsecured loans to any local agency in
connection with the financing of capital improvement projects,
working capital or insurance programs in accordance with an
agreement between the authority and the local agency. However,
no loan shall exceed the total cost of the public capital
improvements, working capital or insurance needs of the local
agency as determined by the local agency and by the authority.

(k) Make secured or unsecured loans to any local agency in
accordance with an agreement between the authority and the local
agency to refinance indebtedness incurred by the local agency in
connection with public capital improvements undertaken and
completed.

(l) Mortgage all or any portion of its interest in public capital
improvements and the property on which any project is located,
whether owned or thereafter acquired, including the granting of a
security interest in any property, tangible or intangible.

(m) Assign or pledge all or any portion of its interests in
mortgages, deeds of trust, indentures of mortgage or trust, or
similar instruments, notes, and security interests in property,
tangible or intangible, of a local agency to which the authority has
made loans, and the revenues therefrom, including payment or
income from any interest owned or held by the authority, for the
benefit of the holders of bonds issued to finance public capital
improvements. The pledge of moneys, revenues, accounts, contract
rights, or rights to payment of any kind made by or to the authority
pursuant to the authority granted in this part shall be valid and
binding from the time the pledge is made for the benefit of the
pledgees and successors thereto, against all parties irrespective of
whether the parties have notice of the claim.

(n) Lease the public capital improvements being financed to a
local agency, upon terms and conditions that the authority deems
proper; charge and collect rents therefor; terminate any lease upon
the failure of the lessee to comply with any of the obligations of
the lease; include in any lease provisions that the lessee shall have
options to renew the lease for a period or periods, and at rents as
determined by the authority; purchase or sell by an installment
agreement or otherwise any or all of the public capital
improvements; or, upon payment of all the indebtedness incurred
by the authority for the financing or refinancing of the public
capital improvements, the authority may convey any or all of the
project to the lessee or lessees.

(o) Charge and apportion to local agencies that benefit from its
services the administrative costs and expenses incurred in the
exercise of the powers authorized by this article. These fees shall
be set at a rate sufficient to recover, but not exceed, the authority’s
costs of issuance and administration. The fee charged to each local
obligation acquired by the pool shall not exceed that obligation’s
proportionate share of those costs. The level of these fees shall be
disclosed to the California Debt and Investment Advisory
Commission pursuant to Section 6599.1.

(p) Issue, obtain, or aid in obtaining, from any department or
agency of the United States or of the state, or any private company,
any insurance or guarantee to, or for, the payment or repayment
of interest or principal, or both, or any part thereof, on any loan,
lease, or obligation or any instrument evidencing or securing the
same, made or entered into pursuant to this article.

(q) Notwithstanding any other provision of this article, enter
into any agreement, contract, or any other instrument with respect
to any insurance or guarantee; accept payment in the manner and
form as provided therein in the event of default by a local agency;
and assign any insurance or guarantee that acts as security for the
authority’s bonds.

(r) Enter into any agreement or contract, execute any instrument,
and perform any act or thing necessary, convenient, or desirable
to carry out any power authorized by this article.

(s) Invest any moneys held in reserve or sinking funds, or any
moneys not required for immediate use or disbursement, in
obligations that are authorized by law for the investment of trust
funds.

(t) At the request of affected local agencies, combine and pledge
revenues to public capital improvements for repayment of one or
more series of bonds issued pursuant to this article.

(u) Delegate to any of its individual parties or other responsible
individuals the power to act on its behalf subject to its general
direction, guidelines, and oversight.

(v) Purchase, with the proceeds of its bonds or its revenue, bonds
issued by any local agency at public or negotiated sale. Bonds
purchased pursuant to this subdivision may be held by the authority
or sold to public or private purchasers at public or negotiated sale,
in whole or in part, separately or together with other bonds issued
by the authority.

(w) Purchase, with the proceeds of its bonds or its revenue, VLF
receivables sold to the authority pursuant to Section 6588.5. VLF
receivables so purchased may be pledged to the payment of bonds
issued by the authority or may be resold to public or private
purchasers at public or negotiated sale, in whole or in part,
separately or together with other VLF receivables purchased by
the authority.

(x) (1) Purchase, with the proceeds of its bonds or its revenue,
Proposition 1A receivables pursuant to Section 6588.6. Proposition
1A receivables so purchased may be pledged to the payment of
bonds issued by the authority or may be resold to public or private
purchasers at public or negotiated sales, in whole or in part,
separately or together with other Proposition 1A receivables
purchased by the authority.

(2) (A) All entities subject to a reduction of ad valorem property
tax revenues required under Section 100.06 of the Revenue and
Taxation Code pursuant to the suspension set forth in Section
100.05 of the Revenue and Taxation Code shall be afforded the
opportunity to sell their Proposition 1A receivables to the authority.

(B) If these entities offer Proposition 1A receivables to the
authority for purchase and duly authorize the sale of the Proposition
1A receivable pursuant to documentation approved by the
authority, the authority shall purchase all Proposition 1A
receivables so offered to the extent it can sell bonds therefor. If
the authority does not purchase all Proposition 1A receivables
offered, it shall purchase a pro rata share of each entity’s offered
Proposition 1A receivables.

(C) The authority may establish a deadline, no earlier than
November 3, 2009, by which these entities shall offer their
Proposition 1A receivables for sale to the authority and complete
the application required by the authority.

(3) For purposes of meeting costs incurred in performing its
duties relative to the purchase and sale of Proposition 1A
receivables, the authority shall be authorized to charge a fee to
each entity from which it purchases a Proposition 1A receivable.
The fee shall be computed based on the percentage value of the
Proposition 1A receivable purchased from each entity, in relation
to the value of all Proposition 1A receivables purchased by the
authority. The amount of the fee shall be paid from the proceeds
of the bonds and shall be included in the principal amount of the
bonds.

(4) Terms and conditions of any and all fees and expenses
charged by the authority, or those it contracts with, and the terms
and conditions of sales of Proposition 1A receivables and bonds
issued pursuant to this subdivision, including the terms of optional
early redemption provisions, if any, shall be approved by the
Treasurer and the Director of Finance, who shall not unreasonably
withhold their approval. The aggregate principal amount of all
bonds issued pursuant to this subdivision shall not exceed two
billion two hundred fifty million dollars ($2,250,000,000), and the
rate of interest paid on those bonds shall not exceed 8 percent per
annum. The authority shall exercise its best efforts to obtain the
lowest cost financing possible. Any and all premium obtained shall
be used for either of the following:

(A) Applied to pay the costs of issuance of the bonds.

(B) Deposited in a trust account that is pledged to bondholders
and used solely for the payment of interest on, or for repayment
of, the bonds.

(5) (A) In connection with any financing backed by Proposition
1A receivables, the Treasurer may retain financial advisors, legal
counsel, and other consultants to assist in performing the duties
required by this chapter and related to that financing.

(B) Notwithstanding any other law, none of the following shall
apply to any agreements entered into by the Treasurer pursuant to
subparagraph (A) in connection with any Proposition 1A financing:

(i) Section 11040 of the Government Code.

(ii) Section 10295 of the Public Contract Code.

(iii) Article 3 (commencing with Section 10300) and Article 4
(commencing with Section 10335) of, Chapter 2 of Part 2 of
Division 2 of the Public Contract Code, except for the authority
of the Department of Finance under Section 10336 of the Public
Contract Code to direct a state agency to transmit to it a contract
for review, and except for Section 10348.5 of the Public Contract
Code.

(C) Any costs incurred by the Treasurer in connection with any
Proposition 1A financing shall be reimbursed out of the proceeds
of the financing.

(y) Set any other terms and conditions on any purchase or sale
pursuant to this section as it deems by resolution to be necessary,
appropriate, and in the public interest, in furtherance of the
purposes of this article.

SEC. 2.  

This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:

In order to timely provide essential bonding authority for the
funding of multi-state, public-private projects that are necessary
to ensure California’s national and international competitiveness
and public benefits in this state, it is necessary that this act take
effect immediately.