BILL ANALYSIS �
AB 2395
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Date of Hearing: April 23, 2014
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
K.H. "Katcho" Achadjian, Chair
AB 2395 (Lowenthal) - As Amended: April 10, 2014
SUBJECT : Oxnard Harbor District: infrastructure projects:
funding.
SUMMARY : Raises, for the Oxnard Harbor District (District), the
amount it can borrow and incur indebtedness from $1 million to
15% of the District's total assets. Specifically, this bill :
1)Prohibits the District from borrowing an amount over 15% of
its total assets, as determined based on the estimated values
of the assets included in the Port of Hueneme Comprehensive
Annual Financial Report (CAFR).
2)Requires the District, prior to commencing any action to
borrow funds, to conduct a public hearing to consider the
proposed borrowing.
3)Prohibits the District from borrowing any funds unless the
proposed borrowing is approved by a two-thirds vote of the
board.
4)Authorizes the District to expend any funds made available by
borrowing pursuant to 1), above, for the acquisition of any
interest in lands pursuant to current law, for the
acquisition, construction, development, ownership, and leasing
of port facilities, infrastructure and, other projects,
including, but not limited to, harbor deepening, and for any
other buildings, plants, equipment, aids, facilities, and
improvements necessary for, or incident to, the accommodation
and promotion of commerce and fisheries in the District.
5)Authorizes the District to borrow money and incur indebtedness
and to accept financial or other assistance from the state or
federal government.
6)Finds and declares that the District owns and operates the
Port of Hueneme (Port), and that the District needs to finance
several significant infrastructure projects over the next
several decades to expand the limited capacity of the port.
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7)Finds and declares that the existing one million dollar limit
on the borrowing of money impedes the District's ability to
develop the infrastructure and systems necessary to continue
the development of the Port to expand the Port's limited
capacity and meet anticipated demands.
8)Finds and declares that the District does not levy, or expend
funds generated by local taxes as most of its operations are
funded directly through fees and other revenue that the port
generates from its users or tenants, and from occasional state
and federal grants.
9)Makes other findings and declarations regarding the District's
activities.
10)Finds and declares that a special statute is necessary
because of the unique circumstances applicable only to the
District.
EXISTING LAW :
1)Authorizes the board of a harbor district to borrow money, up
to one million dollars, by issuance of promissory notes, or
execute a conditional sales contract to purchase personal
property for the purpose of acquiring land for and
constructing or operating any work project, or facility, as
specified or for making improvement or the purchase of
equipment or for the maintenance.
2)Requires the indebtedness to be authorized by a resolution
adopted by a two-thirds vote of the board of a harbor
district. Prohibits any moneys borrowed from being borrowed
for a term exceeding five years and from incurring a rate of
interest exceeding 12%.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill . This bill changes the borrowing cap for
the District from a hard cap
of one million dollars to 15% of the District's total assets as
determined based on the estimated value included in the
District's CAFR (Port of Hueneme Comprehensive Annual
Financial Report). For example, in the most recent financial
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report the District's total assets are listed at $95,306,826.
Under this bill, the District's borrowing cap would then be
$14,296,023. Current law allows the District to incur
indebtedness with a two-thirds vote
of the board. This bill will not change that requirement. This
bill is sponsored by the District.
2)Oxnard Harbor District : The District was created in 1937 and
is a political subdivision of the state operating as an
independent special district. The District owns and manages
the commercial Port and is governed by a five-member Board of
Harbor Commissioners elected at large to four-year terms from
the District's service area. The District's boundaries are
comprised of the City of Oxnard, the City of Port Hueneme, and
some unincorporated areas within Ventura County.
The Port is empowered to acquire, construct, own, operate,
control or develop any and all harbor works or facilities
necessary to the efficient undertaking of its mission. The
Port prepares and controls its own budget, administers and
controls its fiscal activities, and is responsible for all
Port construction and operations. The Port does not assess
taxes for operations or capital expansion. Its operating
expenses are funded by the revenues generated by tariff
charges, leases and other contract revenues assessed upon Port
users. The Port's commercial facilities are primarily located
within the City of Port Hueneme, with one facility located in
the City of Oxnard.
Pursuant to current law the District publishes an annual CAFR,
including audited financial statements within a six-month
period of the close of each fiscal year. According to the
District's most recent Comprehensive Annual Financial Report
for the Fiscal Years Ended June 30, 2013 and 2012, "The Port
has a $12.9 million operating budget and $6 million in
available unrestricted reserves to support critical capital
repairs for the Port's $70 million in net capital assets.
Major capital investments of the Port have been historically
financed throughout the use of revenue bonds issued by the
Port pursuant to the California Harbors and Navigation Code.
At the close of the fiscal year 2013, the Port holds $21.2
million in outstanding revenue bond debt.
The fiscal years 2013 and 2014 Capital Outlay Program calls
for $12.2 million to support various infrastructure projects.
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The sources of funds for this year's capital program include:
(1) General Fund 55% (2) Revenue Bonds 8% and (3)
State/Federal Grants 37%."
3)Author's statement . According to the author, "This bill
authorizes the District to incur indebtedness beyond a $1
million cap set in statute 30 years ago. This limitation does
not accurately or adequately account for the needs and
escalated project costs of a modern port competing in a global
market.
"The Port of Hueneme is the only deep water port on the
Pacific between the major ports of southern and northern
California. Although a deep water port, at a depth of only 35
feet MLLW (mean lower low water), the Port is limited in its
activities and applications. At least 40 feet MLLW is
necessary to accommodate the Port's anticipated needs into the
next several decades.
"The Port has identified the following growth goals, all of
which are attainable and will result in the noted job growth
if the Port could undertake several significant infrastructure
projects, including harbor deepening.
Containers (50,000 Units) 836 jobs, $6.5m in taxes,
$69.4m in local revenue
Break-bulk (350,000 tons) 114 direct jobs, $15.6m in
local revenue
Auto/Roll-on Roll-off (120,000 autos) 724 jobs,
$6.0m in taxes, $36.5m in local revenue
Liquid Bulk (50,000 tons) 80 jobs, $600,000 in
taxes, $3.2m in local revenue
Aggregate (200,000 tons) 56 jobs, $464,000 in taxes,
$72m in local revenue
Fish (Existing Operation) 1,375 jobs, $10.8m in
taxes, $55.5m in local revenue
"Meeting these goals will require that the Oxnard Harbor
District execute several critical infrastructure projects, all
of which will require debt financing well beyond the
limitation set forth in existing law."
According to the District, estimates for the following
infrastructure projects, exemplifies the need to raise the
borrowing cap. Deepening dredge and associated wharf
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improvements at
$8 to $12 million, shore power phase 2 at $2 million,
dockside/ tank farm rail at $1 to $3 million, life cycle
repairs costs to restore capability to wharfs, parking areas
and structures at $10 million, and high mast lighting upgrades
at $500,000.
1)Policy considerations .
a) The Committee may wish to consider if it is appropriate
to base the amount that the District can borrow on a
percentage of total assets that are estimated in a CAFR.
This amount of total assets does not reflect the capacity
for the District to repay debt or loans because the assets
may not be liquid or disposable and the amount of total
assets does not include any outstanding debt or liabilities
of the District. Additionally, the Committee may wish to
consider if it is appropriate to base the amount the
District can borrow on an estimate that changes from year
to year.
b) The author may wish to clarify that the most recent
annual financial report should be used to determine 15% of
total assets for the borrowing cap.
2)Arguments in support . Supporters argue that this bill will
adjust the 30-year-old debt limitation set forth in existing
law and will allow the District to undertake vital and
necessary projects, including an anticipated harbor deepening
project.
3)Arguments in opposition . None on file.
REGISTERED SUPPORT / OPPOSITION :
Support
Oxnard Harbor District [SPONSOR]
Opposition
None on file
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
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