Debt Line, Vol. 38, No. 9.1, 9/2019
DEBT LINE
Vol. 38, No.9, SEPTEMBER 2019
California Public Debt Issuance Monthly Data
CUMULATIVE CALIFORNIA PUBLIC DEBT ISSUANCE (IN BILLIONS)1
TOTAL DEBT ISSUED
$90
$80
$70
$60
$63
$50 $40
$35 $39 $44 $48 $54 $58
$30
$25
$39
$21
$34
$20
$16 $9
$25
$10 $4
$18
$12
$0 $2 $6
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019
2018
MORE
CALIFORNIA PUBLIC DEBT ISSUANCE, JULY (IN MILLIONS)1
$6,000 $5,000 $4,000 $3,000 $2,000 $1,000
$0
$5,369
$3,327 $2,921
$4,110
$637 $713
$1,405 $477
Short-Term
Long-Term Refundings
2019
Long-Term New Money
2018
Total
MORE
STATE* VERSUS LOCAL DEBT ISSUANCE, JULY (IN MILLIONS)1
$6,000 $5,000 $4,000
$4,281 $2,994
$5,369 $4,110
$3,000
$2,000 $1,000
$1,088 $1,116
$0 State
Local 2019 2018
Total
MORE
* State issuers include the State of California, its agencies, commissions, authorities, departments and The Student Loan Corporation.
1 Data may not include issuances reported after the 22nd day of the following month.
REPORTS OF PROPOSED DEBT ISSUANCE RECEIVED 7-16-2019 THROUGH 8-15-2019, BY PURPOSE (IN MILLIONS)
$1,600 $1,400 $1,200 $1,000
$800
$1,448 $1,367 $1,284 $774
Total Proposed
Debt Issuance:
$958
$7,533,731,091
$600 $400 $200
$500
$434
$313
$248
$207
$0
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Other
MORE
TOTAL REPORTS OF FINAL SALE RECEIVED 7-16-2019 THROUGH 8-15-2019, BY PURPOSE (IN MILLIONS)
$2,500 $2,000 $1,500 $1,000
$500
$2,111
Total Debt Issued: $7,915,971,389
$1,025 $898
$826
$722
$595
$351
$255
$239
$895
$0
Water SuIpnCtpealyrsi,mhMSFFtuolloitnriwapag,lneec,CinDagipsittraibl IumtipornovPemuKbe-l1inc2tsW,SCocorhklloesogPleoF,waUcenirliitvGyeersnietyraFtaiocnil/itTyranHsmeaisltsChiooCnllaergeeF,aUcniliivtieerssity
HMouulstiifnagmily Housing
Other
MORE
More detailed debt issuance information is available in the monthly
Debt Line Calendar.
DL
INSIDE THIS ISSUE
Data Corner
2
Filing Tips: The Annual Debt Transparency Report
5
Campbell Leaves CDIAC
9
Legislation Affecting State and Local Governments
9
Mello-Roos and Marks-Roos Reporting Requirements 19
Save the Date
20
Regulatory Activity Calendar
21
CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION FIONA MA, CPA, CHAIR
915 CAPITOL MALL, ROOM 400 SACRAMENTO, CA 95814 (916) 653-3269 WWW.TREASURER.CDIAC
Chair:
FIONA MA, CPA California State Treasurer
Members:
GAVIN NEWSOM Governor
BETTY T. YEE State Controller
SABRINA CERVANTES Assemblymember
ASH KALRA Assemblymember
STEVEN BRADFORD Senator
JOHN M.W. MOORLACH Senator
SANDIE ARNOTT Treasurer-Tax Collector County of San Mateo
NADIA SESAY Executive Director San Francisco Office of Community Investment and Infrastructure
Executive Director:
MARK B. CAMPBELL
Debt Line is published monthly by the California Debt and Investment Advisory Commission (CDIAC).
915 Capitol Mall, Room 400 Sacramento, CA 95814 P (916) 653-3269 F (916) 654-7440 cdiac@treasurer. treasurer.cdiac
Debt Line publishes articles on debt financing and public fund investment that may be of interest to our readers; however, these articles do not necessarily reflect the views of the Commission.
Business correspondence and editorial comments are welcome.
All rights reserved. No part of this document may be reproduced without written credit given to CDIAC. Permission to reprint with written credit given to CDIAC is hereby granted.
2
DEBT LINE
DATA?CORNER
TIMELINESS OF SUBMITTAL OF REPORTS
REPORTS OF PROPOSED DEBT ISSUANCE (RPDI)1 RECEIVED JULY 2019
100
90
89
80
70 60
59
50
40
30
29
20
11
10
4
6
0
On-time 29-15 Days 14-0 Days 1-15 Days 16-29 Days 30+ Days Pre-issue Pre-issue Post-issue Post-issue Post-issue
REPORTS OF FINAL SALE (RFS)2 RECEIVED JULY 2019
120
113
100
80
60
49
40
33
20
11
17
0
On-time
1-15
16-30
31-45 46 or More
Days Late Days Late Days Late Days Late
DATA UNIT ACTIVIT Y JULY 2019
RECEIVED AND PROCESSED
198 RPDI
RECEIVED AND PROCESSED
223 RFS
RECEIVED 10 MARKS-ROOS
YEARLY FISCAL STATUS
REPORTS FOR FY 2018-19
RECEIVED 0 MELLO-ROOS
YEARLY FISCAL STATUS
REPORTS FOR FY 2018-19
RECEIVED 22 ANNUAL
DEBT TRANSPARENCY
REPORTS FOR FY 2018-19
1 California Government Code Section 8855(i) states that the issuer of any proposed debt issue of state and local government shall, no later than 30 days prior to the sale of any debt issue, submit a report of proposed issuance to the commission by any method approved by the commission.
2 California Government Code Section 8855(j) states that the issuer of any debt issue of state or local government, not later than 21 days after the sale of the debt, shall submit a report of final sale to the commission by any method approved by the commission.
Comparison of Six Months of Public Agency Debt Issuance Activity 2018 vs. 2019
Diana Yang, Policy Research Unit
Over the first two quarters of calendar year 2019, debt reported by state and local agencies to the California Debt and Investment Advisory Commission (CDIAC) totaled $31.9 billion. As reflected in Figure 1, issuance for 2019 thus far is down approximately 4.4 percent from the $33.4 billion issued in 2018. Municipal issuance nationwide stands at $168.3 billion of as June 30, 2019. This report compares issuance activity for the first six months of 2019 to the same period in 2018 (Review Period).
NEW MONEY V. REFUNDING
ALL ISSUERS. Figure 2 compares new money to refunding issuance activity for all issuers statewide for the Review Period. For 2019, new money issuance decreased approximately 15 percent while refunding activity increased 20 percent over the prior year.
STATE VERSUS LOCAL COMPARISON. Figure 3 breaks down longterm debt issuance activity by issuer type (state, local) and by issuance activity (new money, refunding) for the Review Period. Local issuance activity (refunding and new money) increased 3.3 percent in 2019, while issuance activity by the state is down approximately 22.8 percent from 2018. The decrease in total state issuance activity is attributable to the decrease in new money issuance by state issuers in 2019. Local agency
FIGURE 1
TOTAL ISSUANCE FOR STATE VS. LOCAL 1/1/18 - 6/30/18 VERSUS 1/1/19 - 6/30/19 (IN THOUSANDS)*
2018
STATE
LOCAL
Long-Term
$9,571,125 $18,856,929
Short-Term
752,493 4,206,332
TOTALS
$10,323,618 $23,063,261
TOTAL DEBT ISSUED
$33,386,879
*Totals may not add due to rounding.
2019
STATE
LOCAL
$7,393,604 $19,476,842
873,658 4,244,593
$8,267,262 $23,721,435
$31,988,697
FIGURE 2
STATEWIDE TOTAL LONG-TERM ISSUANCE NEW MONEY AND REFUNDING 1/1/18 - 6/30/18 VERSUS 1/1/2019 - 6/30/19 (IN THOUSANDS)
24,000,000 20,000,000 16,000,000 12,000,000
8,000,000 4,000,000
-
NEW MONEY REFUNDING
2018 20,557,295 7,870,760
2019 17,424,336 9,446,109
% CHANGE -15.2% 20.0%
new money issuance also registered a slight decrease of 0.2 percent from 2018. Refunding activity by state and local issuers rebounded with double-digit increases from 2018.
DEBT ISSUANCE BY PURPOSE
Figure 4 groups debt issuance activity for state and local issuers for the Review Period by purpose. Of the purpose categories reported, Capital Improvements and Public Works continues to remain the top purpose category by volume in the first half of 2019 with $13.3 billion, followed by Education at $10.1 billion and Interim financing at $4.6 billion.
The purpose category Commercial and Industrial Development had the largest increase, 1,127 % from 2018. The increase is attributed to the California Pollution Control Finance Authority (CPCFA), which has issued $171,275,000 thus far in 2019 - a significant increase over their 2018 issuance activity. Redevelopment experienced the largest decrease in the first half of 2019, down 90% from 2018 - redevelopment is down both by volume as well as number of deals as redevelopment related activities and issuance continue to wind down in the state.
SEPTEMBER 2019
3
FIGURE 3
STATE VERSUS LOCAL, LONG-TERM ISSUANCE: NEW MONEY AND REFUNDING 1/1/18 - 6/30/18 VERSUS 1/1/19 - 6/30/19 (IN THOUSANDS)*
2018
New Money
$5,562,610
Refunding
4,008,516
TOTAL DEBT ISSUED $9,571,126
*Totals may not add due to rounding.
STATE 2019 $2,461,395 4,932,209 $7,393,604
% CHANGE -55.8% 23.0% -22.8%
2018 $14,994,685
3,862,244 $18,856,929
LOCAL 2019 $14,962,941 4,513,900 $19,476,841
% CHANGE -0.2% 16.9% 3.3%
FIGURE 4 DEBT ISSUANCE BY PURPOSE, 1/1/18-6/30/18 VERSUS 1/1/19-6/30/19 (IN THOUSANDS)
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
-
2018 2019 % CHANGE
Capital Improvements
and Public Works
12,856,168
13,388,467
4.1%
Education
8,651,543 10,148,351
17.3%
Interim Financing
4,431,395 4,629,149
4.5%
Housing
2,515,762 1,862,676
-26.0%
Hospital and
Commercial and
Health Care Redevelopment Industrial
Facilities
Development
Other
1,588,641 1,035,223
-34.8%
463,824 46,335 -90.0%
18,700 229,445 1127.0%
2,860,846 649,051 -77.3%
FIGURE 5 DEBT ISSUANCE BY DEBT TYPE, 1/1/2018 - 6/30/2018 VERSUS 1/12019 - 6/30/2019 (IN THOUSANDS)
12,000,000 10,000,000
8,000,000 6,000,000 4,000,000 2,000,000
-
2018 2019 % CHANGE
GOB
10,391,079 11,540,721
Public Enterprise Revenue
Bond
8,249,612
5,965,482
TRAN
2,723,270 3,075,140
Conduit Revenue
Bond
1,807,566 2,755,008
Commercial Paper
Cop/leases PuRbeBlivcoenLndeuaeseRevCeonnudeuNitote
Sales Tax Revenue
Bond
1,759,125 1,565,902 929,687 851,151 719,283 1,500,969 1,804,681 895,420 930,630 1,229,141
10.38% -27.69% 12.92% 52.42% -14.68% 15.25% -3.69%
9.34%
70.88%
Tax Allocation
Bonds
463,824 41,715
-91.01%
Limited Tax Obligation
Bond
Other
563,455 605,238
7.36%
3,362,926 1,644,552
-51.10%
4
DEBT LINE
DEBT TYPE ISSUANCE ACTIVITY
Figure 5 categorizes issuance activity for the Review Period by debt type. Of the twenty-one debt type categories reported to CDIAC, general obligation bonds had the highest volume issued at $11.5 billion, a 10 percent increase over the prior year. Based on percentage change over the prior year, the top three categories with the
largest increases are bond anticipation notes (listed in the "Other" category) with a 217 percent increase, percent gain, sales tax revenue bonds with almost a 71 percent gain and conduit revenue bonds with a 52.4 increase over the prior year. Categories that experienced the sharpest percentage decline from 2018 are tax allocation bonds with a loss of 91 percent, special assessment bonds (listed in the "Other" category) down 48 percent, and
public enterprises revenue bonds down 27.7 percent.
CDIAC debt issuance data is accessible online from the California State Treasurer's open data portal, Debtwatch
.
If you have any questions concerning
this data, please contact the Data Unit
by phone at (916) 653-3269 or by
e-mail at CDIAC_Issuance@treasurer.
.
DL
Filing Tips: The Annual Debt Transparency Report (ADTR)
With the recent close of the 2018-19 fiscal year, many local agency and finance personnel are preparing for the next round of filings of the CDIAC Annual Debt Transparency Report pursuant to California SB 1029 (Chapter 307, Statutes of 2016).
While the next deadline for filing isn't until January 31st, 2020, insights gained from the first two years of ADTR filings can prove helpful for both first-year and returning filers:
1. DON'T OVERLOOK LINE G IN SECTION I
The field marked "Proceeds Used to Acquire Local Obligations" is designed to streamline ADTR filings for debt issued pursuant to the Marks-Roos Local Bond Pooling Act. Entering the appropriate value here will reduce or "zero out" reportable proceeds on report of JPA-issued bond or other debt to preclude the "doubling" of expenditure reporting on associated reports for local obligations, leases, or purchase agreements.
SEPTEMBER 2019
5
2. THE "BEGINNING OF THE REPORTING PERIOD" IS JULY 1ST OF THE PRIOR FISCAL YEAR
For first-year filings ? meaning those ADTRs on issues for which no report has been filed previously ? the filer must enter a value in Section II, Line D. This line calls for "Debt Authorized" as of July 1st of the fiscal year (defined as 7/1/YYYY through 6/30/YYYY) indicated in the upper left of the form. For example, if in the upper left of the online form it says "Information as of Reporting Year End: June 30, 2019" then the Beginning of the Reporting Period is 7/1/2018 through 6/30/2019. Often, the amount entered in Line D will be the same as the prepopulated amount in Section II Line A (Original Authorized Amount), but it shall not be greater.
3. SECTION III, LINE B ? "ACCRETED" VS. "ACCRUED" INTEREST
Generally, the ADTR is designed to track only the outstanding principal balance of debt issued, not interest or other adjustments which may be included in a financing. However, capital appreciation bonds (CABs) present a case in which the principal amount changes over the life of the bond by the accretion of interest which is then added to the initial principal. Line B in Section III allows filers to update the principal amount of a CAB from year to year by entering the accreted interest. Interest accrued, i.e. calculated separately from principal,
should not be entered in this field. If the debt issue being reported is NOT a capital appreciation bond, leave Line B in Section III blank.
6
DEBT LINE
4. CLICK THE "ADD FUND" BUTTON IN SECTION V.B. (PROCEEDS SPENT/ UNSPENT)
After selecting a Fund Category and entering the associated dollar value in the "Total Reportable Proceeds Available" field, it can be easy to assume the section is complete, especially with issues for which all proceeds have one application (e.g. refunding bonds). However, attempting to submit a report with only a category selected and a dollar amount entered will generate an error message. After entering the dollar amount under "Total Reportable Proceeds" be sure to click the Add Fund button (figure 1) located on the left side of the screen, to the left of the Fund Category and Total Proceeds fields. The fund category and amount will then be indicated in the itemized list as shown in (figure 2).
FIGURE 1 FIGURE 2
5. CLICK THE "ADD DETAILS" BUTTON IN SECTION V.C. (EXPENDITURE OF PROCEEDS)
After selecting a Fund Category and entering the associated Purpose and dollar value in the "Expenditure In Current Period" field, it can be easy to assume the section is complete, especially with issues for which all proceeds have one application (e.g. refunding bonds). However, attempting to submit a report with only a category, purpose, and dollar amount entered will generate an error message. After entering the dollar
FIGURE 3
SEPTEMBER 2019
7
amount under "Expenditure" be sure to click the Add Details button (figure 3) located on the left side of the screen, to the left of the Fund Category, Purpose, and amount fields. The expenditure detail and amount will then be indicated in the itemized list as shown in (figure 4).
FIGURE 4
6. BEWARE OF "NEGATIVITY"
Many ADTRs have been submitted with an item or items in Sections V.B. ("Fund") or V.C. ("Expenditure") with a negative dollar amount. Usually these were entered by the filer to indicate a "credit" ? to increase fund balances shown or increase the amount of reportable proceeds. For example, a negative dollar amount is entered and indicated as "transfer from prior reserve fund" with the intent of showing a particular (i.e. sufficient) amount applied to the refunding of prior debt. In other cases, a negative "interest dividend" is entered to adjust an amount of proceeds shown as remaining or "unspent", presumably to match a standing balance reported elsewhere.
The idea behind the ADTR is to track the proceeds of issued debt (i.e. borrowed money) on a per issue basis only ? with the understanding that even though
the report itself might refer to, say, an "escrow account", it is not meant to mirror other financial disclosure documents which may be produced by an issuer, such as a Comprehensive Annual Financial Report
(CAFR). The year-to-year subtotaling functionality of the form is designed to track only those proceeds received at time of issue, such that deductions ? and not balance adjustments ? are reported yearly until the to-
tals are reduced to zero. CDIAC understands the concerns of filers and the reasons certain items are included or reported a particular way, however our aim is to maintain a dataset free of "negative expenditures".
If you have any questions or need assistance in completing the report, please contact the CDIAC Data Unit by email at CDIAC_Issuance@
treasurer. or by phone at (916) 653-3269.
DL
8
DEBT LINE
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