BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                  SB 192
                                                                  Page  1


          SENATE THIRD READING
          SB 192 (Governance and Finance Committee)
          As Amended  May 16, 2011
          2/3 vote.  Urgency 

           SENATE VOTE  :36-0  
           
           LOCAL GOVERNMENT    8-1                                         
           
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          |Ayes:|Smyth, Alejo, Bradford,   |     |                          |
          |     |Campos, Davis, Gordon,    |     |                          |
          |     |Hueso, Norby              |     |                          |
          |     |                          |     |                          |
          |-----+--------------------------+-----+--------------------------|
          |Nays:|Knight                    |     |                          |
          |     |                          |     |                          |
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           SUMMARY  :  Enacts the Second Validating Act of 2011, which would 
          validate the organization, boundaries, acts, proceedings, and 
          bonds of the state government, counties, cities, special 
          districts, school districts, and other public bodies, excluding 
          redevelopment agencies.

           EXISTING LAW  allows local agencies to make changes to the 
          organization, boundaries, acts, proceedings, and bonds of the 
          state, cities, counties, special districts, school districts, 
          redevelopment agencies, and other local agencies.

           FISCAL EFFECT  :  None

           COMMENTS  :  According to the Senate Governance and Finance 
          Committee, the Legislature has adopted annual Validating Acts 
          for over 70 years that retroactively fix public officials' 
          inadvertent procedural errors or omissions.  The annual bills 
          affect the state government, as well as counties, cities, 
          special districts, school districts, and redevelopment agencies.

          Beginning in the mid-1920s, the Legislature passed separate 
          validating acts for different types of bonds, several classes of 
          special districts, and various local boundary changes.  By the 
          late 1930s, the practice was to pass annual comprehensive 
          validating acts.








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          In Miller v. McKenna (1944), 23 Cal.2d 774, the California 
          Supreme Court explained that the "Legislature may cure 
          irregularities or omissions to comply with provisions of a 
          statute which could have been omitted in the first instance."

          The Validating Acts save taxpayers money.  The bills allow bond 
          counsels to issue strong legal opinions.  Strong legal opinions 
          result in higher credit ratings.  Higher credit ratings result 
          in lower interest rates.  Lower interest rates mean lower 
          borrowing costs.  Lower borrowing costs save money for state and 
          local taxpayers.  The Validating Acts cannot forgive fraud, 
          corruption, or unconstitutional actions.

          It was customary practice for members of the former Senate Local 
          Government Committee to jointly author these annual Validating 
          Acts.  Following this established tradition, the Senate 
          Governance and Finance Committee is authoring this year's 
          Validating Acts.  As an urgency measure, SB 191, the First 
          Validating Act, will take effect this spring, when the Governor 
          signs the bill into law.  SB 192, the Second Validating Act, 
          also an urgency bill, will take effect late summer, validating 
          mistakes that occur after the chaptering of the First Validating 
          Act.  SB 193, the Third Validating Act, will take effect on 
          January 1, 2012, covering the period between the chaptering of 
          SB 192 and the end of 2011.
           
           The May 2 amendments exclude redevelopment agencies (RDAs), 
          Community Development Commissions, and Joint Powers Authorities 
          acting as redevelopment agencies, from the provisions of the 
          bill.  These amendments were requested by the Department of 
          Finance in order to avoid conflict at this time with the 
          Governor's Budget and budget legislation ÝSB 77 (Budget and 
          Fiscal Review Committee)] that remains pending on the Assembly 
          Floor.  The amendments do not invalidate any actions of RDAs.  
          They avoid putting the Legislature in the position of appearing 
          to validate the numerous actions that RDAs have taken purporting 
          to commit current and future funds in agreement with their host 
          communities and others.  Pre-January 2011 actions already have 
          been validated by legislation last session.  Depending on the 
          final budget action on redevelopment, these measures can be 
          revised as appropriate in the second and third validating acts, 
          and these validations would reach back to January 1, 2011.  The 
          amendments are intended to allow these bills to move forward now 








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          and provide the extra security of validation to local government 
          entities and the state while the redevelopment budget action 
          remains pending.  Nothing in the provisions of this measure 
          prohibit an RDA from individually requesting a superior court to 
          determine validity of a matter pursuant to the Code of Civil 
          Procedure Section 860. 

          Support arguments:  Supporters argue that the annual Validating 
          Acts are a cost effective way of correcting inadvertent 
          procedural errors or omissions of the state and local 
          governments without having to have thousands of entities go to 
          the superior court to get their actions validated. 

          Opposition arguments:  Opposition argues that singling out one 
          type of local government entity for exclusion from the 
          Validating Acts is unprecedented.  It will cast an unwarranted 
          shadow of uncertainty over redevelopment transactions to the 
          detriment of both agencies and the private investors in those 
          transactions. 


           Analysis Prepared by  :    Katie Kolitsos / L. GOV. / (916) 319-3


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