Gov. Arnold Schwarzenegger signed SB 67 on Monday, Oct. 19, clearing the final hurdle for cities to be able to securitize their Proposition 1A property tax loan through California Communities. This bill is now Chapter 634. California Communities' Prop. 1A Securitization Program allows participating local governments to avoid any loss of local property tax dollars caused by the state's borrowing. The state is paying all costs associated with the securitization of the loan.

Enroll Now: Nov. 6 Deadline Looms for Prop. 1A Securitization Program

California Communities announced that as of Tuesday, Oct. 20, approximately 1,325 agencies - 57 counties, 395 cities and 873 special districts - had enrolled in the program. This totals approximately $1.5 billion for cities and counties.

The California Department of Finance set the interest rate for the Prop. 1A loan at 2 percent. The state will repay local agencies that do not securitize by June 30, 2013.

It is extremely important that cities interested in securitizing the lost amount of property tax complete the required documents immediately.

Bond counsel to California Communities must receive local agency approved and signed documents by Friday, Nov. 6.

Transaction Schedule

• Nov. 6: Local agency approved and signed documents must be received by Orrick, Herrington & Sutcliffe
• Nov. 10: Bond pricing estimated
• Nov. 19: Bond closing estimated
• Jan. 15 and May 3: Distribution of bond proceeds to local agencies

Information for Hardship Cases

Hardship applicants must first participate in the Prop. 1A Securitization Program. The Director of Finance may permit a reallocation of the property tax reduction amount only to the extent that the agency did not receive bond proceedings.

Local agencies can enroll in the securitization program online at the California Communities Web site.

For questions about the Prop. 1A Program email or call (800) 635-3993, ext. 260.