BILL ANALYSIS �
AB 2395
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CONCURRENCE IN SENATE AMENDMENTS
AB 2395 (Lowenthal)
As Amended July 2, 2014
Majority vote
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|ASSEMBLY: |76-0 |(May 23, 2014) |SENATE: |36-0 |(August 7, |
| | | | | |2014) |
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Original Committee Reference: L. GOV.
SUMMARY : Raises, for the Oxnard Harbor District (District), the
amount it can borrow and incur indebtedness from $1 million to
$10 million.
The Senate amendments :
1)Raise, for the District, the amount it can borrow from $1
million to $10 million.
2)Specify that the District may borrow money by issuance of
promissory notes or execute conditional sales contracts to
purchase personal property for the purposes of acquiring land
for and constructing or operating any work, project, or
facility for the making of improvements or the purchase or
maintenance of equipment.
3)Prohibit any moneys borrowed from being borrowed for a term
exceeding five years and from incurring a rate of interest
exceeding 12%.
4)Require the District's board to adopt a resolution by a
two-thirds vote to authorize indebtedness.
5)Require, as a condition precedent to borrowing money or the
execution of any conditional sales contract over $100,000, the
District's board to approve a resolution and have on file a
report on engineering and economic feasibility, as specified.
EXISTING LAW :
1)Authorizes the board of a harbor district to borrow money, up
to $1 million, by issuance of promissory notes, or execute a
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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%.
AS PASSED BY THE ASSEMBLY , this bill:
1)Prohibited 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)Required the District, prior to commencing any action to
borrow funds, to conduct a public hearing to consider the
proposed borrowing.
3)Prohibited the District from borrowing any funds unless the
proposed borrowing is approved by a two-thirds vote of the
board.
4)Authorized 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)Authorized the District to borrow money and incur indebtedness
and to accept financial or other assistance from the state or
federal government.
6)Made findings and declarations regarding the District and the
Port of Hueneme (Port), and the District's needs to finance
several significant infrastructure projects the constraints
that the current cap places on the District, and the
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District's accomplishments.
7)Found and declared that a special statute is necessary because
of the unique circumstances applicable only to the District.
FISCAL EFFECT : None
COMMENTS :
1)Purpose of this bill. This bill raises the borrowing cap for
the District from $1 million to $10 million. Current law
allows the District to incur indebtedness with a two-thirds
vote of the board, and limits the term and interest rate for
any money borrowed. This bill will not change those
requirements. 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.
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
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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."
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."
According to the District, estimates for the following
infrastructure projects, exemplifies the need to raise the
borrowing cap. Deepening dredge and associated wharf
improvements at $8 to $12 million, shore power phase two at $2
million, dockside/tank farm rail at $1 to $3 million, life
cycle repair costs to restore capability to wharfs, parking
areas and structures at $10 million, and high mast lighting
upgrades at $500,000.
4)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.
5)Arguments in opposition. None on file.
Analysis Prepared by : Misa Yokoi-Shelton / L. GOV. / (916)
319-3958
FN: 0004285
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