Amended in Assembly March 25, 2015

California Legislature—2015–16 Regular Session

Assembly Bill No. 581

Introduced by Assembly Member Gomez

February 24, 2015

An act to add Chapter 11.2 (commencing with Section 8852) to Division 1 of Title 2 of the Government Code, relating to financing deferred maintenance on state facilities, by providing the funds necessary therefor through an election for the issuance and sale of bonds of the State of California and for the handling and disposition of those funds.

LEGISLATIVE COUNSEL’S DIGEST

AB 581, as amended, Gomez. State Facilities Renewal Bond Act of 2016.

The annual Budget Act appropriates funds to state agencies for operations as part of their respective agency budgets. Existing law requires the Department of General Services to report to the Legislature, as specified, on expenditures for seismic hazard abatement for state buildings and facilities, in connection with the Earthquake Safety and Public Buildings Rehabilitation Bond Act of 1990.

This bill would enact the State Facilities Renewal Bond Act of 2016, which, if adopted by the voters at the June 7, 2016, statewide primary election, would authorize the issuance of bonds in the amount of $2,000,000,000, pursuant to the State General Obligation Bond Law, to finance deferred maintenance on state-owned property, subject to appropriation by the Legislature in the annual Budget Act.

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.  

Chapter 11.2 (commencing with Section 8852)
is added to Division 1 of Title 2 of the Government Code, to read:

 

Chapter  11.2. State Facilities Renewal Bond Act of 2016

 

Article 1.  General Provisions

 

8852.  

begin delete (a) end delete begin delete   end delete This chapter shall be known as the State Facilities
Renewal Bond Act of 2016.

8852.1.  

As used in this chapter, the following terms have the
following meanings:

(a) “Committee” means the State Facilities Renewal Bond
Finance Committee created pursuant to Section 8852.31.

(b) “Fund” means the State Facilities Renewal Bond Fund
created pursuant to Section 8852.2.

(c) “State agency” means any state agency, department, office,
division, bureau, board, commission, the California State
University, the University of California, and the Judicial Council.

begin insert

(d) “Deferred maintenance projects” means delayed projects
to replace infrastructure and building components in order to
preserve or maintain these assets in an acceptable condition.

end insert

 

Article 2.  State Facilities Renewal Bond Fund and Program

 

8852.2.  

(a) The proceeds of bonds issued and sold pursuant
to this chapter shall be deposited in the State Facilities Renewal
Bond Fund, which is hereby created. Fund moneys shall only be
used to address deferred maintenance begin insert projects end insert on state-owned
property and shall be made available for expenditure only upon
appropriation by the Legislature in the annual Budget Act. Funds
shall be appropriated to state agencies as part of their respective
agency budgets for state operations. begin insert Fund moneys appropriated
to a state agency shall supplement, not supplant, an agency’s
existing deferred maintenance expenditures. end insert It is the intent of the
Legislature that the projects funded by these bonds shall have a
useful life of at least 20 years.

begin insert

(b) The Governor shall propose appropriations from the State
Facilities Renewal Bond Fund as part of his or her January 10
budget proposal.

end insert begin insert

(1) Within 10 days following release of the budget proposal,
the Department of Finance shall report all of the following to the
respective budget committees of the Legislature:

end insert begin insert

(A) The administration’s methodology for allocating the bond
funds among the various state agencies.

end insert begin insert

(B) The criteria used for establishing deferred maintenance
project funding priorities.

end insert begin delete

(b)

end delete

begin insert (2) end insert  A state agency for which the Governor proposes an
appropriation from the State Facilities Renewal Bond Fund begin delete as part
of his or her January 10 budget proposal end delete shall report, within begin delete 60 end delete begin insert 30 end insert
days following the release of the budget proposal, the following
to the respective budget committees of the Legislature:

begin delete

(1)

end delete

begin insert (A) end insert  The agency’s total deferred maintenance backlog.

begin insert

(B) The agency’s deferred maintenance expenditures in the
prior fiscal year.

end insert begin delete

(2)

end delete

begin insert (C) end insert  A list of deferred maintenance projects proposed to be
undertaken by the agency with moneys from the fund proposed
for appropriation.

begin insert

(D) The agency’s expenditures in the prior fiscal year for
maintenance other than deferred maintenance.

end insert begin delete

(3)

end delete

begin insert (E) end insert  The extent to which the agency’s current budget for
maintenance is insufficient to prevent an increase in the agency’s
deferred maintenance backlog.

 

Article 3.  Fiscal

 

8852.3.  

Bonds in the total amount of two billion dollars
($2,000,000,000), or so much thereof as is necessary, not including
the amount of any refunding bonds, or so much thereof as is
necessary, may be issued and sold to provide a fund to be used for
carrying out the purposes expressed in this chapter and to reimburse
the General Obligation Bond Expense Revolving Fund pursuant
to Section 16724.5. The bonds, when sold, shall be and constitute
a valid and binding obligation of the State of California, and the
full faith and credit of the State of California is hereby pledged
for the punctual payment of both principal of, and interest on, the
bonds as the principal and interest become due and payable. The
bonds issued pursuant to this chapter shall be repaid within 20
years from the date they are issued.

8852.31.  

The bonds authorized by this chapter shall be
prepared, executed, issued, sold, paid, and redeemed as provided
in the State General Obligation Bond Law (Chapter 4 (commencing
with Section 16720) of Part 3 of Division 4 of Title 2), and all of
the provisions of that law apply to the bonds and to this chapter
and are hereby incorporated in this chapter as though set forth in
full in this chapter, except subdivisions (a) and (b) of Section
16727.

8852.32.  

(a) Solely for the purpose of authorizing the issuance
and sale pursuant to the State General Obligation Bond Law of
the bonds authorized by this chapter, the State Facilities Renewal
Bond Finance Committee is hereby created. For purposes of this
chapter, the State Facilities Renewal Bond Finance Committee is
“the committee” as that term is used in the State General Obligation
Bond Law. The committee consists of the Controller, Director of
Finance, and begin delete treasurer, end delete begin insert Treasurer, end insert or their designated
representatives.

(b) The begin delete treasurer end delete begin insert Treasurer end insert shall serve as chairperson of the
committee.

(c) A majority of the committee may act for the committee.

8852.33.  

The committee shall determine whether or not it is
necessary or desirable to issue bonds authorized pursuant to this
chapter in order to carry out the actions specified in Section 8852.2
and, if so, the amount of bonds to be issued and sold. Successive
issues of bonds may be authorized and sold to carry out those
actions progressively, and it is not necessary that all of the bonds
authorized to be issued be sold at any one time.

8852.34.  

There shall be collected each year and in the same
manner and at the same time as other state revenue is collected,
in addition to the ordinary revenues of the state, a sum in an amount
required to pay the principal of, and interest on, the bonds each
year. It is the duty of all officers charged by law with any duty in
regard to the collection of the revenue to do and perform each and
every act that is necessary to collect that additional sum.

8852.35.  

Notwithstanding Section 13340, there is hereby
appropriated from the General Fund in the State Treasury, for the
purposes of this chapter, an amount that will equal the total of the
following:

(a) The sum annually necessary to pay the principal of, and
interest on, bonds issued and sold pursuant to this chapter, as the
principal and interest become due and payable.

(b) The sum necessary to carry out Section 8852.36,
appropriated without regard to fiscal years.

8852.36.  

For the purposes of carrying out this chapter, the
Director of Finance may authorize the withdrawal from the General
Fund of an amount not to exceed the amount of the unsold bonds
that have been authorized by the committee to be sold for the
purpose of carrying out this chapter. Any amounts withdrawn shall
be deposited in the fund. Any begin delete money end delete begin insert moneys end insert made available under
this section shall be returned to the General Fund, with interest at
the rate earned by the begin delete money end delete begin insert moneys end insert in the Pooled Money
Investment Account, from proceeds received from the sale of bonds
for the purpose of carrying out this chapter.

8852.37.  

All begin delete money end delete begin insert moneys end insert deposited in the fund that is
derived from premium and accrued interest on bonds sold shall be
reserved in the fund and shall be available for transfer to the
General Fund as a credit to expenditures for bond interest.

8852.38.  

Pursuant to Chapter 4 (commencing with Section
16720) of Part 3 of Division 4 of Title 2, the cost of bond issuance
shall be paid out of the bond proceeds. These costs shall be shared
proportionally by each program funded through this bond act.

8852.39.  

The committee may request the Pooled Money
Investment Board to make a loan from the Pooled Money
Investment Account, including other authorized forms of interim
financing that include, but are not limited to, commercial paper,
in accordance with Section 16312, for purposes of carrying out
this chapter. The amount of the request shall not exceed the amount
of the unsold bonds that the committee, by resolution, has
authorized to be sold for the purpose of carrying out this chapter.
The committee shall execute any documents required by the Pooled
Money Investment Board to obtain and repay the loan. Any
amounts loaned shall be deposited in the fund to be allocated by
the board in accordance with this chapter.

8852.40.  

The bonds may be refunded in accordance with Article
6 (commencing with Section 16780) of Chapter 4 of Part 3 of
Division 4 of Title 2, which is a part of the State General Obligation
Bond Law. Approval by the voters of the state for the issuance of
the bonds described in this chapter includes the approval of the
issuance of any bonds issued to refund any bonds originally issued
under this chapter or any previously issued refunding bonds.

8852.41.  

Notwithstanding any other provision of this chapter,
or of the State General Obligation Bond Law, if the begin delete treasurer end delete
begin insert Treasurer end insert sells bonds pursuant to this chapter that include a bond
counsel opinion to the effect that the interest on the bonds is
excluded from gross income for federal tax purposes, subject to
designated conditions, the begin delete treasurer end delete begin insert Treasurer end insert may maintain
separate accounts for the investment of bond proceeds and for the
investment of earnings on those proceeds. The begin delete treasurer end delete begin insert Treasurer end insert
may use or direct the use of those proceeds or earnings to pay any
rebate, penalty, or other payment required under federal law or
take any other action with respect to the investment and use of
those bond proceeds required or desirable under federal law to
maintain the tax exempt status of those bonds and to obtain any
other advantage under federal law on behalf of the funds of this
state.

8852.42.  

The Legislature hereby finds and declares that,
inasmuch as the proceeds from the sale of bonds authorized by
this chapter are not “proceeds of taxes” as that term is used in
Article XIII B of the California Constitution, the disbursement of
these proceeds is not subject to the limitations imposed by that
article.

SEC. 2.  

Section 1 of this act shall take effect upon the approval
by the voters of the State Facilities Renewal Bond Act of 2016, as
set forth in Section 1 of this act.

SEC. 3.  

Section 1 of this act shall be submitted to the voters
at the June 7, 2016, statewide primary election in accordance with
provisions of the Government Code and the Elections Code
governing the submission of a statewide measure to the voters.