SECTIONS 16492-16495.5

16492.  The Legislature finds and declares that local agencies maybe unable to sell short-term notes to financial institutions at theend of the 1977-78 fiscal year and the beginning of the 1978-79fiscal year due to the lack of certainty in their ability to raiserevenue to repay such short-term notes. Therefore, another source ofshort-term financing is necessary to ensure the orderly delivery ofbasic programs and services during the beginning of the fiscal year.In order to meet this need, the state, in this article, herebyestablishes a Local Agency Emergency Loan Fund to serve as the lenderof last resort.16492.5.  It is the purpose of the Local Agency Emergency Loan Fundto provide short-term loans to local agencies for operationalpurposes so that vital services are not interrupted.16493.  As used in this article: (a) "Board" means the Pooled Money Investment Board. (b) "Local agency" means a city, county, city and county, specialdistrict, school district, county board of education, or communitycollege district which levied a property tax during the 1977-78fiscal year or for which a property tax was levied. "Local agency"also means any city, special district, or school district formedduring the 1977-78 fiscal year which was authorized to levy aproperty tax but did not actually levy such a tax for that year.16493.5.  There is hereby created in the State Treasury a LocalAgency Emergency Loan Fund. Short-term loans shall be available tolocal agencies for the purpose of meeting operating costs at the endof the 1977-78 fiscal year and during the 1978-79 fiscal year. Suchfunds shall not be used for capital outlay projects.16494.  The amount of any loan shall not exceed 50 percent of thelocal agency's property tax revenues for the 1977-78 fiscal year,including state property tax relief subventions. The maximum amountof a loan to a local agency which was formed during the 1977-78fiscal year and authorized to levy a property tax, but did not do so,shall be no more than 50 percent of the amount such agency couldhave levied if it had levied such a tax.16494.7.  Notwithstanding any other provision of law, any localagency may apply to the board, by no later than August 21, 1978, fora loan pursuant to this article after the adoption by the localagency's governing body of a resolution containing all of thefollowing: (a) A statement that the local agency is authorized to issuerevenue or tax anticipation notes; (b) A statement indicating the local agency's property taxrevenues for the 1977-78 fiscal year, including state property taxsubvention. With respect to a local agency formed during the 1977-78fiscal year and authorized to levy a property tax, but did not do so,a statement estimating the amount such agency could have levied ifit had levied such a tax; (c) A finding based on substantial evidence that the agency's cashflow is not sufficient to meet current obligations for the operationof vital services and that all unrestricted reserves except for aprudent surplus have been exhausted or will be exhausted at the timethe loan is made; (d) A statement that taxes, revenues, and other income notobligated by law for a specific purpose and anticipated to bereceived during the 1978-79 fiscal year, will be available to repaythe principal and interest on such loan before May 31, 1979; (e) A statement that revenue and tax anticipation notes are notcurrently being purchased from the local agency by private lenders;and (f) Evidence that the local agency is unable to use interfundtransfers to meet its short-term cash obligations.16495.  (a) The board may approve, reduce, or deny any loanapplication. Such action shall be taken within 10 days of the receiptof an application. No loan shall be made by the board after August31, 1978. The board shall establish the form and content of loanapplications, and procedures for periodic disbursements of approvedloans to local agencies. (b) For the purposes of this article, each member of the board mayappoint a representative to act on his behalf. The board shall havethe authority to appoint sufficient staff to process loanapplications received by the board.16495.5.  (a) All loans shall bear an interest rate comparable tothe prevailing market interest rate statewide for tax anticipationnotes purchased by major California banks, as determined by theboard. The interest on such loans shall accrue until final payment. (b) Any such loan constitutes a lien and charge against the taxes,revenues, and other income not obligated by law collected during thefiscal year in which it was borrowed. The loan shall be repaid intothe General Fund from the money received by the local agency from thetaxes, revenues, and income as it becomes available. At a minimum,50 percent of the principal and interest shall be repaid by December31, 1978, and the remaining principal and interest shall be repaid byMay 31, 1979. If such loan is not repaid, the board shall requestthe State Controller to offset the amount not repaid against anypayments required by law to be made by the state to the defaultinglocal agency. If the total of such payments is less than the amountowed to the state, the state may exercise its lien rights pursuant tothis section. (c) The State Controller may audit all loan recipients.