Assembly Bill 2107 re-establishes Securitized
Limited Obligation Notes, or SLONs, as financing tools for
California's special districts. Prior to AB 2107's passage,
Government Code section 53839 authorized special districts to issue
SLONs for the acquisition or improvement of land, facilities or
equipment until Dec. 31, 2019. Signed by Gov. Gavin Newsom on Sept.
28, AB 2107 extends that authorization to Dec. 31, 2024.
SLONs are one of several financing options that special districts
may utilize to acquire or improve real property, facilities or
equipment. SLONs permit a public agency to issue a note to finance
lower-cost acquisitions or improvements of land, facilities or
equipment. SLONs are viewed as practical and cost-effective and do
not require voter approval.
When issuing a SLON, special districts must adopt a resolution
containing specified information. A four-fifths vote of the
governing body is required as well. SLONs may not exceed a 10-year
term and may not exceed $2 million outstanding. The California
Special Districts Association states that, "[f]or many special
districts, especially for smaller districts with limited resources,
SLONs may be the only pragmatic and cost-effective medium-term
financing method available to fund a variety of modest
projects."
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