BILL NUMBER: AB 581INTRODUCED BILL TEXT 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 introduced, 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. (a) 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. 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 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. It is the intent of the Legislature that the projects funded by these bonds shall have a useful life of at least 20 years. (b) A state agency for which the Governor proposes an appropriation from the State Facilities Renewal Bond Fund as part of his or her January 10 budget proposal shall report, within 60 days following the release of the budget proposal, the following to the respective budget committees of the Legislature: (1) The agency's total deferred maintenance backlog. (2) A list of deferred maintenance projects proposed to be undertaken by the agency with moneys from the fund proposed for appropriation. (3) 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 treasurer, or their designated representatives. (b) The treasurer 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 money made available under this section shall be returned to the General Fund, with interest at the rate earned by the money 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 money 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 treasurer 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 treasurer may maintain separate accounts for the investment of bond proceeds and for the investment of earnings on those proceeds. The treasurer 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.