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SB-450 Public bodies: bonds: public notice.(2017-2018)

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Date Published: 10/09/2017 09:00 PM
SB450:v94#DOCUMENT

Senate Bill No. 450
CHAPTER 625

An act to add Section 5852.1 to the Government Code, relating to bonds.

[ Approved by Governor  October 09, 2017. Filed with Secretary of State  October 09, 2017. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 450, Hertzberg. Public bodies: bonds: public notice.
Existing law authorizes the governing body of a public body to authorize the issuance of bonds pursuant to a resolution, indenture, agreement, or other instrument providing for the issuance of bonds. Existing law defines a “public body” to mean, among other entities, a county, city, or city and county.
This bill, prior to authorization of the issuance of certain bonds, would require the governing body of a public body to obtain and disclose specified information regarding the bonds in a meeting open to the public. The bill would require the information to be obtained as a good faith estimate from an underwriter, financial advisor, or private lender or from a third party borrower, as specified, if the public body issuing bonds is a conduit financing provided, as defined.
By imposing new duties upon local county officials with respect to the public notice requirement described above, this bill would impose a state-mandated local program.
The California Constitution requires local agencies, for the purpose of ensuring public access to the meetings of public bodies and the writings of public officials and agencies, to comply with a statutory enactment that amends or enacts laws relating to public records or open meetings and contains findings demonstrating that the enactment furthers the constitutional requirements relating to this purpose.
This bill would make legislative findings to that effect.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: YES  

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


SECTION 1.

 Section 5852.1 is added to the Government Code, to read:

5852.1.
 (a) (1) Prior to authorization of the issuance of bonds with a term greater than 13 months pursuant to this chapter, the governing body of a public body shall obtain and disclose all of the following information in a meeting open to the public:
(A) The true interest cost of the bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of bonds.
(B) The finance charge of the bonds, which means the sum of all fees and charges paid to third parties.
(C) The amount of proceeds received by the public body for sale of the bonds less the finance charge of the bonds described in subparagraph (B) and any reserves or capitalized interest paid or funded with proceeds of the bonds.
(D) The total payment amount, which means the sum total of all payments the borrower will make to pay debt service on the bonds plus the finance charge of the bonds described in subparagraph (B) not paid with the proceeds of the bonds. The total payment amount shall be calculated to the final maturity of the bonds.
(2) The information in paragraph (1) shall be obtained as follows:
(A) As a good faith estimate from an underwriter, financial adviser, or private lender.
(B) From a third-party borrower pursuant to subdivision (b).
(b) (1) If the public body issuing bonds is a conduit financing provider, as defined in subdivision (b) of Section 5870, issuing bonds on behalf of a third-party borrower, the information in paragraph (1) of subdivision (a) shall be presented to the third-party borrower as a good faith estimate by an underwriter, financial adviser, or private lender engaged by the third-party borrower.
(2) If the third-party borrower has a governing board, the information shall be presented to the governing board or the official or officials or committee designated by the governing board to obligate the third-party borrower in connection with the financing. If the third-party borrower does not have a governing board, the information shall be presented to the official or officials of the third-party borrower who has the authority to obligate the third-party borrower in connection with the financing.
(3) The third-party borrower shall provide the information received pursuant to this subdivision to the public body prior to the disclosure of the information as required pursuant to subdivision (a).
(c) The requirements of this section shall not apply to any public body that is a state entity. For purposes of this subdivision, “state entity” means any agency, department, bureau, board, or commission of any kind.
(d) This section, including the failure to comply with the requirements of this section, shall not affect the validity of the bonds or the authorization of the bonds by the public body.

SEC. 2.

 The Legislature finds and declares that Section 1 of this act, which adds Section 5852.1 to the Government Code, furthers, within the meaning of paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the purposes of that constitutional section as it relates to the right of public access to the meetings of local public bodies or the writings of local public officials and local agencies. Pursuant to paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution, the Legislature makes the following findings:
This act ensures the public’s right of access to information about the conduct of their government agencies relating to the issuance of bonds.

SEC. 3.

 No reimbursement is required by this act pursuant to Section 6 of Article XIII B of the California Constitution because the only costs that may be incurred by a local agency or school district under this act would result from a legislative mandate that is within the scope of paragraph (7) of subdivision (b) of Section 3 of Article I of the California Constitution.