LOS ANGELES — Increasing disclosure requirements for bond issuers is high on California Treasurer John Chiang’s list of priorities for the state legislature.
The seven bills in the
“These bills are on my must-pass list, because they will help the state flourish today and thrive tomorrow,” Chiang said in a statement.
The bill on his slate that is most impactful to the municipal bond market was introduced in mid-February, at Chiang’s behest, by Sen. Bob Hertzberg, D-Los Angeles.
Senate Bill 1029 would require California issuers to provide significantly more information to the California Debt and Investment Advisory Commission.
It would require issuers to submit an annual debt accountability report showing adherence to bond payments and also that the money was spent on what voters intended. Issuers would also be required to certify they have adopted local debt policies and that their debt issuance is consistent with those policies.
“I think it’s something that is needed,” said Larry Kosmont, president of Kosmont Cos., a government consultant. “The continuing disclosure is not up to par. It gets thrown by the wayside, because local government has high turnover.”
The turnover makes it harder to track information for bondholders – particularly after the 2012 dissolution of California’s more than 400 redevelopment agencies, Kosmont said.
“It is essential that we do anything we can to raise the temperature in the room and provide more transparency,” he said.
In an interview in February, Chiang highlighted housing and structural economic challenges as top priorities.
“We have massive wealth inequality, which is very disturbing and potentially harmful to California’s future,” Chiang said. “You can’t have the poverty we have today and not be concerned about the economic consequences in the medium- to long-term future.”
Chiang, who is contemplating a run for governor in 2018, said he considers tackling social issues a central mission for the treasurer’s office.
“We want to make sure senior citizens have the choice to remain in California and that young people, who are the seed corn of economic growth, have the ability to stay here,” Chiang said. “In the treasurer’s office, we fight for the expansion of economic opportunities.”
Standard & Poor’s credit analyst Gabriel Petek highlighted the state’s lack of affordable housing as a ratings concern in a February 2015 report.
Assembly Bill 1920, authored by Assemblyman Ed Chau, D-Arcadia, would allow fines to be levied on apartment housing owners who received tax credits to build low-income housing, but don’t maintain rents at those levels.
Senate Bill 873, authored by Sen. Jim Beall, D-San Jose, would allow developers who have little or no tax liability to sell low-income housing tax credits to an investor without the investor becoming a limited partner in a project. The measure would increase the value of the tax credit allowing the development of more affordable housing, supporters say.
Kosmont said AB 1920 would likely help to retain existing low-income housing, but he said he doesn’t know enough about the issues involved with SB 873 to gauge the impact.
Tax credits already exist as a funding stream for affordable housing, but Kosmont said nothing has been done to replace the affordable housing set-aside that local governments received through their former redevelopment agencies.
“There is no solution that is giving affordable housing reliable income for affordable housing other than tax credits,” Kosmont said. “That is why we are seeing a slowdown in affordable housing production, because there is no replacement for it yet.”
Financing for affordable housing projects involves a complex mix of funding from government at the local, state and federal levels.
Any weak link could stop development, Chiang said, which is why he has been meeting with affordable housing developers to work on solutions.
Chiang also supports Assembly Bill 2276, which creates tax incentives for parents to save for college; and Senate Bill 1234, which would require employers with five or more employees to provide a retirement plan or enroll employees in a state-administered Secure Choice plan.
The treasurer said he supports legislation that helps the state reimagine “how we can help California’s workers, businesses, financial centers and the environment thrive at the forward edge of a fast-changing economy.”
The treasurer also backs Assembly Bill 2833, a measure that would require private equity firms to disclose all fees charged to California public pension funds and their trustees.
“Every dollar paid to Wall Street managers of hedge and equity funds is a dollar that isn’t available to ensure benefits are adequately funded and minimize taxpayer costs,” Chiang said.
