BILL ANALYSIS Ó
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UNFINISHED BUSINESS
Bill No: SB 193
Author: Senate Governance and Finance Committee
Amended: 5/16/11
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 8-0, 3/16/11
AYES: Wolk, Huff, DeSaulnier, Fuller, Hancock, Hernandez,
La Malfa, Liu
NO VOTE RECORDED: Kehoe
SENATE FLOOR : 36-0, 3/24/11 (Consent)
AYES: Alquist, Anderson, Berryhill, Blakeslee, Cannella,
De León, DeSaulnier, Dutton, Emmerson, Evans, Fuller,
Gaines, Hancock, Harman, Hernandez, Huff, Kehoe, La
Malfa, Leno, Lieu, Liu, Lowenthal, Negrete McLeod,
Padilla, Pavley, Price, Rubio, Runner, Simitian,
Steinberg, Vargas, Walters, Wolk, Wright, Wyland, Yee
NO VOTE RECORDED: Calderon, Corbett, Correa, Strickland
ASSEMBLY FLOOR : 77-0, 8/25/11 - See last page for vote
SUBJECT : Third Validating Act of 2011
SOURCE : Author
DIGEST : This bill enacts the Third Validating Act which
validates the organization, boundaries, acts, proceedings,
and bonds of the state government, counties, cities,
special districts, school districts, and redevelopment
agencies, among other public bodies.
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Assembly Amendments (1) exclude redevelopment agencies,
Community Development Commissions, and Joint Powers
Authorities acting as redevelopment agencies, from the
provisions of the bill, and (2) make clarifying changes,
and (3) remove three coauthors.
ANALYSIS : For over 70 years, the Legislature's annual
Validating Acts have boosted the stability and credit
ratings of state and local bonds. The Validating Acts cure
public officials' mistakes that might otherwise invalidate
boundary changes or bond issues. They also correct errors
or omissions by local agencies and state departments. The
Acts do not protect against fraud, corruption, or
unconstitutional actions.
This bill enacts the Third Validating Act which validates
the organization, boundaries, acts, proceedings, and bonds
of the state government, counties, cities, special
districts, school districts, and redevelopment agencies,
among other public bodies.
Comments
1. The annual Validating Acts protect investors from the
chance that a minor error might undermine the legal
integrity of a public agency's bond. Banks, pension
funds, and other investors will not buy public agencies'
securities unless they are sound investments. Investors
rely on legal opinions from bond counsels to assure the
bonds' credit worthiness. Without legislative action to
cure technical errors, bond counsels are reluctant to
certify bonds as good credit risks. This bill gives
legislative protection to public agencies and private
investors.
2. The three Validating Acts cure typographical,
grammatical, and procedural errors. They do not forgive
fraud, corruption, or unconstitutional acts. A local
official who makes a technical error will find
reassurance in the Validating Acts, while a corrupt
official faces prosecution regardless of the Acts.
3. By insulating state and local bonds against harmless
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errors, the Validating Acts save taxpayers' money.
Strong legal opinions from bond counsels result in higher
credit ratings for state and local bonds. Higher credit
ratings allow state and local officials to pay lower
interest rates to private investors. Lower borrowing
costs save money for taxpayers.
4. Starting 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 validating acts (AB 2842, Bennett, 1939).
The current custom and practice is to pass three
Validating Acts that retroactively cure public officials'
mistakes. The first two measures are urgency bills that
go into effect when they are chaptered. SB 191 (First
Validating Act) will probably reach Governor Brown's desk
this spring, validating errors made before the date on
which the bill is chaptered. SB 192 (Second Validating
Act) will reach Governor Brown in August, validating
mistakes made after SB 191. The Third Validating Act (SB
193) will take effect on January 1, 2012, covering the
period between the chaptering of SB 192 and the end of
2011.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/25/11)
State Controller John Chiang
State Treasurer Bill Lockyer
American Federation of State, County and Municipal
Employees
Association of California Water Agencies
California Association of Local Agency Formation
Commissions
California Association of Recreation and Park Districts
California Association of Sanitation Agencies
California Municipal Utilities Association
California Redevelopment Association
California Special Districts Association
California State Association of Counties
County of Sacramento
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East Bay Municipal Utility District
Fire Districts Association of California
Midpeninsula Regional Open Space District
Mosquito and Vector Control Association of California
Regional Council of Rural Counties
State Association of County Auditors
Urban Counties Caucus
OPPOSITION : (Verified 8/25/11)
California Redevelopment Association
Cities of Hesperia, Highland, and San Jose
League of California Cities
San Jose Redevelopment Agency
Town of Apple Valley
ASSEMBLY FLOOR : 77-0, 8/25/11
AYES: Achadjian, Alejo, Allen, Ammiano, Atkins, Beall,
Bill Berryhill, Block, Blumenfield, Bradford, Brownley,
Buchanan, Butler, Charles Calderon, Campos, Carter,
Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Lara, Logue, Bonnie Lowenthal, Ma, Mansoor, Mendoza,
Miller, Mitchell, Monning, Morrell, Nestande, Nielsen,
Norby, Olsen, Pan, Perea, V. Manuel Pérez, Portantino,
Silva, Skinner, Smyth, Solorio, Swanson, Torres, Valadao,
Wagner, Wieckowski, Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Bonilla, Gorell, Knight
AGB:mw 8/26/11 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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