CRA Urges Members to Ask Legislators to Support SB 659 Extending the Dissolution Deadline; Lengthy List of Issues Emerging As Feb 1 Deadline Approaches
CRA and League of California Cities officials, our respective legal counsel, our lobbying team, and public finance experts have been engaged in multiple meetings with the Department of Finance Director and her staff, and representatives from the Treasurer’s Office, and the State Controller. The purpose of these meetings are to detail the numerous problems associated with implementing AB 1X 26 in its present form. Reflecting the position of the Governor, Department of Finance has stated they do not see the need to delay the dissolution date as proposed by SB 659 (Padilla). We believe this to be very short sighted on the State’s part, but they are unmoved. We encourage members to share with their legislators the need to approve SB 659 now and extend the dissolution deadline to April 15. The lengthy list of issues we have discussed (which are likely not the complete universe of problems that exist) are attached. Your local legislator will benefit from having explicit local examples of the negative effect of dissolution on your agency.
Members may be aware that the Department of Finance (DOF) established a website that is intended to address questions that have been asked, and to provide clarification. It is important that CRA members understand that the DOF website does not represent legal advice that can be relied on. It is possible that agencies could take steps that would later be determined to be invalid. While the intentions of DOF are to be helpful, CRA and our lawyers have significant differences of opinion on a wide variety of issues. We urge members to rely on their own legal counsel for guidance.
State Treasurer Issues Advisory Regarding Local Agency Investment FundMany agencies may also invest some of their funds in the Local Agency Investment Fund (LAIF) managed by the State Treasurer. The State Treasurer issued an advisory to LAIF participants today in which they indicate that individuals requesting a transaction involving LAIF be authorized by resolution. Some believe that the Treasurer intends to freeze assets in LAIF. We are aware of agencies who are proactively moving funds from LAIF.
S&P Reports Express Concern about AB 1X 26 Lack of Clarity and ImpactsWe have also been advised that Standard & Poor’s has issued two reports regarding tax allocation bonds. The first report expresses concerns about the impacts and lack of clarity in AB X1 26; the second report places five RDA tax allocation bonds on negative credit watch. S&P appears to be particularly focused on variable rate debt at this time.