The California Statewide Communities Development Authority and the California Municipal Finance Authority are joint powers authorities that serve as "conduit financiers" between hundreds of local public agencies and investors. The JPAs make project decisions based on recommendations from private companies that serve as their staff.
The problem, Lockyer has asserted, is that because the companies are paid based on the tax-exempt bonds they issue, they have an inherent conflict of interest.
A state audit last year, which Lockyer requested, said the practice "raises concerns."
Lockyer had sponsored Assembly Bill 1059 to tighten conflict of interest rules, but agreed to drop it Monday in exchange for concessions from the two JPAs. The JPAs will have to hire executive directors - paid a fixed amount - to make recommendations. And the groups will have to competitively bid and contracts for outside project advisers.
In a statement, Lockyer said the deal components represent "major steps forward."
PHOTO CREDIT: Bill Lockyer in 2012. The Sacramento Bee/Randy Pench