Amended in Senate July 1, 2014

Amended in Senate June 19, 2014

Amended in Assembly May 15, 2014

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 begin insert , repeal, and add end insert 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 begin insert , until January 1, 2021, end insert authorize a joint powers authority to issue or cause to be issued bonds and enter into a loan 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. begin insert This bill would require the Legislative Analyst, on or before January 1, 2020, to prepare and submit to the Legislature a report on the issuance of those bonds and the financing of those projects. This bill would require, no later than July 1, 2019, authorities that issue those bonds to provide information concerning the bonds, the projects financed, the public benefits accruing to this state and such other information requested by the Legislative Analyst’s Office for the purpose of preparing the report. end insert

begin delete

The Personal Income Tax Law imposes a tax on an individual taxpayer’s taxable income for the taxable year, but excludes certain items of income from the computation of tax. That law, in conformity with federal income tax laws, exempts from tax interest on bonds issued by this state or a local government in this state. The Joint Exercise of Powers Act also provides that all bonds issued by a joint powers authority and the interest thereon or income therefrom are exempt from all taxation in this state, except as otherwise provided.

end delete begin delete

This bill would provide that the interest on an issue of bonds as described above would not be exempt from tax and would be included in gross income under the Personal Income Tax Law, unless specified conditions are met.

end delete

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

Vote: ²⁄₃. Appropriation: no. Fiscal committee: yes. 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) (i) Notwithstanding Sections 6586 and 6586.5 or any other
law, an authority may issue or cause to be issued bonds and enter
into a loan agreement, pursuant to subparagraph (A), 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 issuance of bonds 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 clause 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.

begin delete

(III) The authority finds, based on the facts and circumstances
attendant to the project or the financing or refinancing of the
project, that the issuance of the bonds 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.

(IV) As of July 1, 2014, the authority had at

end delete

begin insert (III) end insert begin insert   end insert begin insert The authority has at end insert least begin delete 70 end delete begin insert 25 end insert local agency members and
the authority begin delete had end delete begin insert has end insert issued bonds and entered into loan agreements
to finance at least 25 separate projects.

begin delete

(ii) Notwithstanding Section 6575 of the Government Code and
Section 17133 of the Revenue and Taxation Code or any other
law, the interest on an issue of bonds pursuant to this subparagraph
shall not be exempt from tax, and shall be included in gross income
under Part 10 (commencing with Section 17001) of Division 2 of
the Revenue and Taxation Code, unless one or more of the
following is satisfied:

end delete begin insert

(IV) The authority finds, based on the facts and circumstances
attendant to the project or the financing or refinancing of the
project, that the issuance of the bonds or the financing or
refinancing of the project will result in a substantial public benefit
to this state because one or more of the following is satisfied:

end insert begin delete

(I)

end delete

begin insert (ia) end insert  At least 20 percent of the net proceeds of the issue are
allocated to the financing of one or more projects, including
working capital related thereto, located in this state.

begin delete

(II)

end delete

begin insert (ib) end insert  The borrower of the bond proceeds has its principal place
of business in this state and, if that borrower is subject to income
or franchise tax in this state or any other state, that borrower has
paid to this state for the most recent tax year income or franchise
tax of at least fifty thousand dollars ($50,000) or one-half of its
total income or franchise tax liability to all states, whichever is
less. If the borrower has little or no assets other than the project
to be financed and is owned by another company or companies,
then the company or companies that own a majority of interest in
the borrower shall have its or their principal place of business in
this state.

begin insert

(ic) The borrower of the bond proceeds or a controlled group
of which it is a member has at least 50 full-time equivalent
employees in this state.

end insert begin insert

(id) The borrower of the bond proceeds or a controlled group
of which it is a member has paid to this state for the most recent
tax year income or franchise tax of at least one hundred thousand
dollars ($100,000).

end insert begin delete

(III)

end delete

begin insert (ie) end insert  In the case of the financing of one or more multifamily
rental housing projects, the developer of that project or projects
has its principal place of business in this state, and any such
developer subject to personal or corporate income tax in California
or other states has paid to this state for the most recent tax year
income or franchise tax of at least fifty thousand dollars ($50,000)
or one-half of its total income or franchise tax liability to all states,
whichever is less.

begin delete

(iii)

end delete

begin insert (ii) end insert  For purposes of this subparagraph, the following definitions
apply:

begin insert

(I) “Controlled group” means a group of corporations,
partnerships, limited liability companies or other persons that are
wholly owned or controlled by a single corporation, partnership,
limited liability company, or other person.

end insert begin delete

(I)

end delete

begin insert (II) end insert  “Developer” means a corporation, partnership, limited
liability company, or other person that is the initial controlling
party within the legal entity that owns the multifamily rental
housing project to be financed with proceeds of the bonds and that
is expected to be the primary economic beneficiary of, and to take
the primary economic risks related to, development and
performance of the project.

begin delete

(II)

end delete

begin insert (III) end insert  “Financing” shall include refinancing of bonds of the
authority or of bonds issued by any other state or local entity
located within this state.

begin delete

(III)

end delete

begin insert (IV) end insert  “Issue” shall have the same meaning as in U.S. Treasury
Regulations Section 1.150-1(c), as in effect on July 1, 2014.

begin delete

(IV)

end delete

begin insert (V) end insert  “Net proceeds of an issue” means the aggregate principal
amount of that issue, less the amount of that issue allocated to
original issue discount, issuance costs, reserve funds, and credit
enhancement costs.

begin insert

(VI) “Principal place of business” of an entity means the
principal place from which the trade or business of the entity is
directed or managed.

end insert begin insert

(iii) The Legislative Analyst shall, on or before January 1, 2020,
prepare and submit to the Legislature a report on the issuance of
bonds and the financing of projects pursuant to this subparagraph.
No later than July 1, 2019, authorities that issue bonds pursuant
to this subparagraph shall provide information concerning those
bonds, the projects financed, the public benefits accruing to this
state, and such other information requested by the Legislative
Analyst’s Office for the purpose of preparing the report. The report
may include recommendations for modifying or extending the
application of this subparagraph.

end insert

(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 receivables 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.

begin insert

(z) This section shall remain in effect only until January 1, 2021,
and as of that date is repealed.

end insert

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 6588 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 6588. end insert   

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) 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. In
addition, 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.

(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 receivables 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.

(z) This section shall become operative on January 1, 2021.

end insert

begin delete SEC. 2. end delete
begin insert SEC. 3. end insert   

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 multistate, 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.