Policy & Legislation
PMIB Update: Bond Sale Anticipated in Late March
March 11, 2009
According to legislative staff, State Treasurer Bill Lockyer is preparing to sell approximately $3 billion in general obligation bonds in late March. Investors' reception of the offering -- the first since July 2008 -- will determine how much the state must pay in interest. The treasurer's office estimates that a second bond sale of roughly $2 billion could occur in April if borrowing costs are not too high.
Proceeds from the bond sales can be used to fund loans made under propositions 46 and 1C. The Department of Finance (DOF) most likely will make the final decisions on how to allocate the money.
DOF will rely on information from the Department of Housing and Community Development (HCD) to establish its priorities. HCD staff are refining the data they received from developers about which developments need funds and when. They hope to finish the lists today.
The Pooled Money Investment Board (PMIB) is scheduled to meet on March 18, 2009. According to the treasurer's staff, the board will discuss the state's cash flow and the treasurer's plan to sell bonds. In a "best case scenario," they also will adopt a process for releasing money in stages when the state's cash flow improves.
Temporary Help from Feds?
At the urging of many nonprofit developers, Tax Credit Allocation Committee (TCAC) staff continues to explore whether any of the federal Tax Credit Assistance Program (TCAP) funds can be used as bridge loans for stalled developments that have tax credit financing. The initial response from the U.S. Housing and Urban Development Department (HUD) was not encouraging; they want to focus on creating new jobs through new construction.
The Southern California Association of Nonprofit Housing (SCANPH) and other organizations point out that the president specifically names retaining jobs as one of his top economic stimulus goals, and jobs will be lost if nonprofits go under as a result of the PMIB freeze.
TCAC expects to release draft regulations for the TCAP funds and the new federal exchange program later this week.
Fixing the Construction Loan Mess
HCD Director Lynn Jacobs met with representatives from banks on March 2, 2009, to urge them to make construction loans. Jacobs offered to modify HCD's estoppel letter to remove the new "paragraph 11" upon request. However, it's not clear whether this will fully alleviate bankers' concerns.
The treasurer's office is also urging banks with whom the state has significant deposits to continue making construction loans.
Keeping up the Pressure
The informal PMIB Coalition meets this afternoon to discuss strategies for maintaining pressure on DOF, Lockyer and State Controller John Chiang. Coalition members have written letters to all three and lobbied legislators in whose district these developments are under construction. We will be meeting with DOF and the governor's staff within a few weeks.
- TAKE ACTION! Send letters to the PMIB and legislators who have affected developments in their districts.
- Use our KEY MESSAGES.
- DEADLINE: Please send your letters by Tuesday, March 31, 2009.
Contact Julie Snyder, (916) 447-0503 x 102 or .
