CSDA sponsored legislation to reinstate a short-term loan tool for special districts has passed the State Legislature and awaits action by Governor Gavin Newsom. AB 2107, authored by Assembly member Freddie Rodriguez (D-Pomona) and joint authored by Assembly member Adam Gray (D-Merced) would re-establish Securitized Limited Obligation Notes or “SLONs” as a financing tool for special districts.
In 2004, the Legislature authorized special districts to utilize SLONs, with a 5-year sunset. Since then, the Legislature has twice approved to extend the sunset via committee omnibus bills, with the last sunset expiring on December 2019. Since no committee bill in 2019 included an extension of SLONs for the next 5 years, a standalone bill was needed for special districts to continue using this tool.
SLONs are a unique financing tool that offer a pragmatic, cost-effective, medium-term financing method for a variety of projects without requiring voter approval.
Features of a SLON include:
- Approval by four-fifths of a district board
- A stated purpose for the debt which could be for either the acquisition/improvement of land, facilities, or equipment
- A revenue source(s) identified as dedicated to paying off the loan
- A maturation date of 10 years
- A borrowing limit of $2 million
Special districts can support this legislation by asking Governor Newsom to sign AB 2107 by visiting CSDA’s take action page and downloading a sample letter.
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