Amended in Assembly January 4, 2016

Amended in Assembly April 21, 2015

Amended in Assembly March 25, 2015

California Legislature—2015–16 Regular Session

Assembly BillNo. 581


Introduced by Assembly Member Gomez

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(Principal coauthor: Assembly Member Bigelow)

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February 24, 2015


An act tobegin delete add Chapter 11.2 (commencing with Section 8852) to Division 1 of Title 2 of the Governmentend deletebegin insert add Section 79707.5 to the Waterend insert Code, relating tobegin delete 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.end deletebegin insert water.end insert

LEGISLATIVE COUNSEL’S DIGEST

AB 581, as amended, Gomez. begin deleteState Facilities Renewal Bond Act of 2016. end deletebegin insertWater Quality, Supply, and Infrastructure Improvement Act of 2014.end insert

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Existing law, the Water Quality, Supply, and Infrastructure Improvement Act of 2014, approved by the voters as Proposition 1 at the November 4, 2014, statewide general election, authorizes the issuance of general obligation bonds in the amount of $7,545,000,000 to finance a water quality, supply, and infrastructure improvement program. The act provides that it is the intent of the people that, to the extent practicable, a project supported by the funds made available by the act will include signage informing the public that the project received funds from the act.

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This bill would require certain recipients of funding pursuant to the act to post signs acknowledging the source of funds in accordance with guidelines that the Secretary of the Natural Resources Agency would be required to develop.

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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.

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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.

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Vote: begin delete23 end deletebegin insertmajorityend insert. Appropriation: no. Fiscal committee: yes. State-mandated local program: no.

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

P2    1begin insert

begin insertSECTION 1.end insert  

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begin insertSection 79707.5 is added to the end insertbegin insertWater Codeend insertbegin insert, to
2read:end insert

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3

begin insert79707.5.end insert  

In furtherance of subdivision (g) of Section 79707,
4all recipients of funding pursuant to Chapter 6 (commencing with
5Section 79730) shall post signs acknowledging the source of funds
6in accordance with guidelines that the secretary shall develop.
7For the purposes of this section, state funding shall be listed first
8on the sign if the state is the source of 50 percent or more of the
9total project costs.

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10

SECTION 1.  

Chapter 11.2 (commencing with Section 8852)
11is added to Division 1 of Title 2 of the Government Code, to read:

12 

13Chapter  11.2. State Facilities Renewal Bond Act of 2016
14

14 

15Article 1.  General Provisions
16

 

17

8852.  

This chapter shall be known as the State Facilities
18Renewal Bond Act of 2016.

P3    1

8852.1.  

As used in this chapter, the following terms have the
2following meanings:

3(a) “Committee” means the State Facilities Renewal Bond
4Finance Committee created pursuant to Section 8852.31.

5(b) “Fund” means the State Facilities Renewal Bond Fund
6created pursuant to Section 8852.2.

7(c) “State agency” means any state agency, department, office,
8division, bureau, board, commission, district agricultural
9association, the California State University, the University of
10California, and the Judicial Council.

11(d) “Deferred maintenance projects” means delayed projects to
12replace infrastructure and building components in order to preserve
13or maintain these assets in an acceptable condition.

14 

15Article 2.  State Facilities Renewal Bond Fund and Program
16

 

17

8852.2.  

(a) The proceeds of bonds issued and sold pursuant
18to this chapter shall be deposited in the State Facilities Renewal
19Bond Fund, which is hereby created. Fund moneys shall only be
20used to address deferred maintenance projects on state-owned
21property and shall be made available for expenditure only upon
22appropriation by the Legislature in the annual Budget Act. Funds
23shall be appropriated to state agencies as part of their respective
24agency budgets for state operations. Fund moneys appropriated to
25a state agency shall supplement, not supplant, an agency’s existing
26deferred maintenance expenditures. It is the intent of the
27Legislature that the projects funded by these bonds shall have a
28useful life of at least 20 years.

29(b) The Governor shall propose appropriations from the State
30Facilities Renewal Bond Fund as part of his or her January 10
31budget proposal.

32(1) Within 10 days following release of the budget proposal,
33the Department of Finance shall report all of the following to the
34respective budget committees of the Legislature:

35(A) The administration’s methodology for allocating the bond
36funds among the various state agencies.

37(B) The criteria used for establishing deferred maintenance
38project funding priorities.

39(2) A state agency for which the Governor proposes an
40appropriation from the State Facilities Renewal Bond Fund shall
P4    1report, within 30 days following the release of the budget proposal,
2the following to the respective budget committees of the
3Legislature:

4(A) The agency’s total deferred maintenance backlog.

5(B) The agency’s deferred maintenance expenditures in the prior
6fiscal year.

7(C) A list of deferred maintenance projects proposed to be
8undertaken by the agency with moneys from the fund proposed
9for appropriation.

10(D) The agency’s expenditures in the prior fiscal year for
11maintenance other than deferred maintenance.

12(E) The extent to which the agency’s current budget for
13maintenance is insufficient to prevent an increase in the agency’s
14deferred maintenance backlog.

15 

16Article 3.  Fiscal
17

 

18

8852.3.  

Bonds in the total amount of two billion dollars
19($2,000,000,000), or so much thereof as is necessary, not including
20the amount of any refunding bonds, or so much thereof as is
21necessary, may be issued and sold to provide a fund to be used for
22carrying out the purposes expressed in this chapter and to reimburse
23the General Obligation Bond Expense Revolving Fund pursuant
24to Section 16724.5. The bonds, when sold, shall be and constitute
25a valid and binding obligation of the State of California, and the
26full faith and credit of the State of California is hereby pledged
27for the punctual payment of both principal of, and interest on, the
28bonds as the principal and interest become due and payable. The
29bonds issued pursuant to this chapter shall be repaid within 20
30years from the date they are issued.

31

8852.31.  

The bonds authorized by this chapter shall be
32prepared, executed, issued, sold, paid, and redeemed as provided
33in the State General Obligation Bond Law (Chapter 4 (commencing
34with Section 16720) of Part 3 of Division 4 of Title 2), and all of
35the provisions of that law apply to the bonds and to this chapter
36and are hereby incorporated in this chapter as though set forth in
37full in this chapter, except subdivisions (a) and (b) of Section
3816727.

39

8852.32.  

(a) Solely for the purpose of authorizing the issuance
40and sale pursuant to the State General Obligation Bond Law of
P5    1the bonds authorized by this chapter, the State Facilities Renewal
2Bond Finance Committee is hereby created. For purposes of this
3chapter, the State Facilities Renewal Bond Finance Committee is
4“the committee” as that term is used in the State General Obligation
5Bond Law. The committee consists of the Controller, Director of
6Finance, and Treasurer, or their designated representatives.

7(b) The Treasurer shall serve as chairperson of the committee.

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

9

8852.33.  

The committee shall determine whether or not it is
10necessary or desirable to issue bonds authorized pursuant to this
11chapter in order to carry out the actions specified in Section 8852.2
12and, if so, the amount of bonds to be issued and sold. Successive
13issues of bonds may be authorized and sold to carry out those
14actions progressively, and it is not necessary that all of the bonds
15authorized to be issued be sold at any one time.

16

8852.34.  

There shall be collected each year and in the same
17manner and at the same time as other state revenue is collected,
18in addition to the ordinary revenues of the state, a sum in an amount
19required to pay the principal of, and interest on, the bonds each
20year. It is the duty of all officers charged by law with any duty in
21regard to the collection of the revenue to do and perform each and
22every act that is necessary to collect that additional sum.

23

8852.35.  

Notwithstanding Section 13340, there is hereby
24appropriated from the General Fund in the State Treasury, for the
25purposes of this chapter, an amount that will equal the total of the
26following:

27(a) The sum annually necessary to pay the principal of, and
28interest on, bonds issued and sold pursuant to this chapter, as the
29principal and interest become due and payable.

30(b) The sum necessary to carry out Section 8852.36,
31appropriated without regard to fiscal years.

32

8852.36.  

For the purposes of carrying out this chapter, the
33Director of Finance may authorize the withdrawal from the General
34Fund of an amount not to exceed the amount of the unsold bonds
35that have been authorized by the committee to be sold for the
36purpose of carrying out this chapter. Any amounts withdrawn shall
37be deposited in the fund. Any moneys made available under this
38section shall be returned to the General Fund, with interest at the
39rate earned by the moneys in the Pooled Money Investment
P6    1Account, from proceeds received from the sale of bonds for the
2purpose of carrying out this chapter.

3

8852.37.  

All moneys deposited in the fund that is derived from
4premium and accrued interest on bonds sold shall be reserved in
5the fund and shall be available for transfer to the General Fund as
6a credit to expenditures for bond interest.

7

8852.38.  

Pursuant to Chapter 4 (commencing with Section
816720) of Part 3 of Division 4 of Title 2, the cost of bond issuance
9shall be paid out of the bond proceeds. These costs shall be shared
10proportionally by each program funded through this bond act.

11

8852.39.  

The committee may request the Pooled Money
12Investment Board to make a loan from the Pooled Money
13Investment Account, including other authorized forms of interim
14financing that include, but are not limited to, commercial paper,
15in accordance with Section 16312, for purposes of carrying out
16this chapter. The amount of the request shall not exceed the amount
17of the unsold bonds that the committee, by resolution, has
18authorized to be sold for the purpose of carrying out this chapter.
19The committee shall execute any documents required by the Pooled
20Money Investment Board to obtain and repay the loan. Any
21amounts loaned shall be deposited in the fund to be allocated by
22the board in accordance with this chapter.

23

8852.40.  

The bonds may be refunded in accordance with Article
246 (commencing with Section 16780) of Chapter 4 of Part 3 of
25Division 4 of Title 2, which is a part of the State General Obligation
26Bond Law. Approval by the voters of the state for the issuance of
27the bonds described in this chapter includes the approval of the
28issuance of any bonds issued to refund any bonds originally issued
29under this chapter or any previously issued refunding bonds.

30

8852.41.  

Notwithstanding any other provision of this chapter,
31or of the State General Obligation Bond Law, if the Treasurer sells
32bonds pursuant to this chapter that include a bond counsel opinion
33to the effect that the interest on the bonds is excluded from gross
34income for federal tax purposes, subject to designated conditions,
35the Treasurer may maintain separate accounts for the investment
36of bond proceeds and for the investment of earnings on those
37proceeds. The Treasurer may use or direct the use of those proceeds
38or earnings to pay any rebate, penalty, or other payment required
39under federal law or take any other action with respect to the
40investment and use of those bond proceeds required or desirable
P7    1under federal law to maintain the tax exempt status of those bonds
2and to obtain any other advantage under federal law on behalf of
3the funds of this state.

4

8852.42.  

The Legislature hereby finds and declares that,
5inasmuch as the proceeds from the sale of bonds authorized by
6this chapter are not “proceeds of taxes” as that term is used in
7Article XIII B of the California Constitution, the disbursement of
8these proceeds is not subject to the limitations imposed by that
9article.

10

SEC. 2.  

Section 1 of this act shall take effect upon the approval
11by the voters of the State Facilities Renewal Bond Act of 2016, as
12set forth in Section 1 of this act.

13

SEC. 3.  

Section 1 of this act shall be submitted to the voters
14at the June 7, 2016, statewide primary election in accordance with
15provisions of the Government Code and the Elections Code
16governing the submission of a statewide measure to the voters.

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