OXNARD : Senate Passes Bill to Aid Port Plan

The California Senate passed a bill Thursday that would allow the Oxnard Harbor District to save millions of dollars by issuing a more flexible kind of bond.

The Senate voted 38 to 0 for Sen. Milton Marks’ (D-San Francisco) bill allowing the district to issue parity revenue bonds to support plans for modernizing the Port of Hueneme, which will cost $10 million to $20 million.

The Oxnard Harbor District already is making payments on a regular revenue bond, paying off a bank loan it obtained for harbor improvements in 1985, said Bill Dryer, district finance director.

But the district is planning to modernize the port so it can comply with a state law requiring that all California ports be able to compete with international shipping ports, Dryer said. Modernization would include installing an automated cargo-handling system, new fenders at the wharves and new loading docks for freight trucks, he said.

A second regular revenue bond would allow the district to pay for the modernization, but it would allow the lending bank to have a weaker claim on its loan in case the district defaulted, Dryer said. The bank would then charge a higher interest rate, he said.

“It’s like the difference between a first mortgage and a second mortgage,” he said. “You’ll pay less interest on the first mortgage because the second mortgage is less secure. The new legislation would effectively allow the district to effectively issue multiple first mortgages.”

Parity bonds would allow the lending bank to have equal claims on the first and second bonds, saving the district about one point on its interest rate, Dryer said.

The bill will be forwarded next to the Assembly Local Government Committee, then to the Assembly floor, said Joy Skalbeck, an aide to Marks. If it passes through the Assembly, it could be in the governor’s office for consideration by July or August, she said.