In the days leading up to the September 30 Constitutional deadline for dispensing with legislation passed by the State Legislature, Governor Gavin Newsom signed into law CSDA-sponsored Assembly Bill 2107 related to small, medium-term loans.
This measure stems from a law first passed in 2004, when the Legislature authorized special districts to utilize Securitized Limited Obligations Notes or "SLONs," with a five-year sunset (the date the statute becomes inactive). Since then, the Legislature has twice approved extensions to the sunset via committee omnibus bills.
On December 31, 2019, the authorization for special districts to use “SLONs” expired. This unique financing tool offered a pragmatic, cost-effective, medium-term financing method for a variety of projects without requiring voter approval. Since no committee bill in 2019 included an extension of SLONs for the next five years, a standalone bill was needed for special districts to continue using this important financial tool.
In response, CSDA sponsored AB 2107, carried by Assemblymember Freddie Rodriguez (D-Pomona) and joint authored by Assemblymember Adam Gray (D-Merced), to renew this authorization. It was passed by both houses of the State Legislature with no opposition.
Features of a SLON include:
- Approval by four-fifths of a district board;
- Stated purpose for the debt which could be for either the acquisition/improvement of land, facilities, or equipment;
- Revenue source(s) identified as dedicated to paying off the loan,
- Maturation date of 10 years, and
- Borrowing limit of $2 million.
AB 2107 takes effect on January 1, 2021 and will sunset in five years unless reauthorized.
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