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8A <br /> Page 4 <br /> Leader's Comment: I wanted to make sure you had informa#ion on the loanlrepayment <br /> provisions. This was an impottant par#of the final agreement since we wanted to make <br /> sure local agencies would not be adversely impacted by the 1 a provision. This <br /> repayment mechanisrn will be i�a budget trailer bill. <br /> Proposition 1 a—Repayment Guarantee <br /> 1) Repayment Guarantee: <br /> a. Gontingent Appropriation. We will pass a bil!a#the same#ime which appropriates <br /> the repayment within 3 years. (required by the Constitution)This bill could not be altered <br /> because it wi11 be part of the JPA bond covenants. <br /> Response:a contingent appropriation is meaningless if all other expenses ha�e beert paid first. <br /> Wha#we need assurance of is that there wiN be cash available#o make the full repaymen#, and, <br /> at this point,that is in great doubt. <br /> Leader's Comment: <br /> b. Repayment priority. 6ill will place 1a repayment above aIl other payments except <br /> education {gets first call under the constitution}and bond debt. Payroll and revenue <br /> lease bonds are paid after 9a. <br /> Response: if the repayment date is June 3Q,2013,as we unders#and,this is meaningiess <br /> because the state will face serious cash shor#ages at this time in 20'I3, based on its own <br /> projections.The repayment date has to be moved up to May 1,2013. <br /> L.eader's Comment: <br /> c. Repayment terms. The state pays local agencies back 900°10 pfus interes#. <br /> Response:conflicts with 2)b belvw. <br /> Leader's Comment: <br /> 2} �.oan Mechanism. Provide legislati�e authority far a loan mechanism similar to the <br /> VLF Gap loan authorized through CSCDA. <br /> a. CSCDA would have borrowing authority for a single issuance upon application for <br /> al(locafs who wanted it. The Department of Finance has already worked with CSCDA to <br /> set up the loan mechanism. <br /> Response: Incarrect.The Department of Finance has shared its bi1l dr.aft,but it is seriously <br /> flawed in a number of respects mentioned herein that p�,�t the entire financing at risfc.We have <br /> shared our concerns, but any subsequent conversations have n�t assured city,county and <br /> special district representatives that the concems will be addressed adequately. <br /> Leader's Commer�t: <br /> b. Local agencies should receive 95%of their anticipa#ed funds through this Iaan <br /> mechanism. <br /> � Response:this is totally inconsistent wi#h 'f.c)above. Locai agencies can't get both 10fl%and <br /> 95%of the funds. Plus,our view is that a 1A borrowing requires#he state to pay locals back fN <br /> FULL. <br /> Leader's Commenf: <br /> 3) lmpact:The 1a represents 8%of local property tax. There are no exemptions from <br /> the 1a�rigger. All agencies will be eligible to borrow us�ng the JPA mechanism. <br /> Resaonse: Incorrect.We have been advised there is a provisfon to aflaw local agencies facing <br /> financiaE hardships to be exempted and for their�nancial burden to be spread among other lacal� <br /> agencies in the county. <br /> 4 <br />