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Committee recommends participation in state Prop 1A securitization to avoid an $89 million revenue shortfall
Summary
The Budget & Finance Committee heard Comptroller Office staff explain a statewide securitization (CSCDA) under Proposition 1A and forwarded an emergency ordinance and purchase/sale agreement that would allow San Francisco to receive its receivable up front, preserving $89 million in expected receipts and avoiding a budget shortfall.
The Comptroller's Office presented a proposal to participate in a state securitization program created under Proposition 1A and implementing AB 67. "This would allow municipalities to receive 100% of their receivable within fiscal year 2009/2010," the Comptroller’s Office representative said, explaining the California Statewide Communities Development Authority (CSCDA) would issue bonds backed by the state's pledge to repay in 2013.
Staff said the City and County of San Francisco's share of affected receivables is approximately $89 million; absent participation the local receivable would be paid on a schedule (by June 30, 2013) with 2% interest. To participate by the CSCDA timetable the city must adopt an emergency ordinance (one-reading special process) and a purchase-and-sale agreement by the early-November deadline. Staff and the budget analyst said the waiver of certain city contracting provisions is narrowly tailored to this single transaction, and recommended approval to avoid a budget shortfall.
Supervisors asked about repayment mechanics and risk. Staff said the repayment is expected as a balloon payment in 2013 and that the credit was based on the state's pledge; local jurisdictions would receive full principal proceeds in November with expected escrow installments in January and May. After brief public comment the committee moved items 5 and 6 forward to the full Board with recommendation.
