BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 240|
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THIRD READING
Bill No: AB 240
Author: Rendon (D)
Amended: 6/18/13 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 4-1, 6/12/13
AYES: Wolk, Beall, DeSaulnier, Liu
NOES: Knight
NO VOTE RECORDED: Emmerson, Hernandez
ASSEMBLY FLOOR : 76-0, 4/29/13 - See last page for vote
SUBJECT : Mutual water companies
SOURCE : Author
DIGEST : This bill requires mutual water companies to comply
with open meeting, public record, audit, and budget requirements
and allows them to impose liens to collect unpaid charges.
ANALYSIS : Existing law exempts a mutual water company from
state regulation if it is organized to deliver water to its
stockholders and members, with specified exceptions.
Governance of a mutual water company is generally limited to
shareholders, or members, of the company. While the details of
any particular company's governing structure are determined by
its articles and bylaws, most mutual water companies allow only
shareholders and members to vote on organizational matters and
serve on the company's governing board.
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The Ralph M. Brown Act (Brown Act), first enacted by the
Legislature in 1953, is the set of existing laws which
guarantees the public's right to attend and participate in local
legislative bodies' meetings. As private corporations, mutual
water companies are not subject to the Brown Act. Instead,
existing law gives mutual water companies broad authority to
specify in their articles and bylaws, how their meetings are
conducted, and who may attend.
In 1968, the Legislature enacted the Public Records Act, which
generally requires that government records must be provided to
the public, upon request, unless there is a specific reason,
specified in state law, to withhold a record. Private
corporations, including mutual water companies, are not subject
to the Public Records Act. Existing law requires that mutual
water companies must allow members to inspect specified records
including accounting books, meeting minutes, articles and
bylaws, and election results. A mutual water company's articles
and bylaws determine whether non-members are permitted access to
the company's records.
Existing law requires most local governments to prepare annual
budgets and requires periodic audits of most local governments'
accounts and records. Existing law requires private
corporations to prepare and distribute annual reports and other
specified financial statements.
This bill:
1. Enacts the Mutual Water Company Opening Meeting Act, which
applies to all mutual water companies, and permits an
eligible person to attend a meeting of a mutual water
company, as those terms are defined, or to speak at a
meeting, except as provided.
2. Requires the board of a mutual water corporation that
operates a public water system to contract with a certified
public accountant or public accountant to make an annual
audit of the accounts and records of the mutual water
company. The audit must conform to generally accepted
auditing standards. A report of the audit must be filed as a
public record with the mutual water company and must be sent
to the State Controller and any person served by the mutual
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water company that submits a written request to the board.
The report must be filed within 12 months of the end of the
mutual water company's fiscal year under examination.
3. Requires the board of a mutual water company that operates a
public water system to adopt in an open meeting, an annual
budget on or before the start of each fiscal year of the
mutual water company.
4. Allows a mutual water company's board of directors, after
providing at least 20 days' written notice and if authorized
by its articles or bylaws, to authorize the recording of a
lien against a shareholder's property to secure the
collection of rates, charges, and assessments owed to the
mutual water company by the shareholder.
5. Requires mutual water company board members to repeat, every
six years, training related to the duties of mutual water
companies' board members.
6. Requires the board of directors of a mutual water company
that operates a public water system to make specified
documents available to an eligible person, as defined, upon
payment of fees covering the direct costs of duplication, a
specified.
7. Expresses the Legislature's intent to encourage collaboration
among mutual water companies that operate public water
systems in the City of Maywood to create a public agency that
can consolidate drinking water services for the people and
businesses of that city.
Comments
In response to concerns that that some mutual water companies
lacked capital to pay for needed water quality improvements and
the managerial capacity to operate successful public water
systems, the Legislature passed AB 54 (Solorio, Chapter 512,
Statutes of 2011). The bill established training requirements
for mutual water districts' board members, made mutual water
companies liable for specified fines and penalties for violating
the California Safe Drinking Water Act, and expanded local
agency formation commissions' authority to review matters
related to mutual water companies.
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Three mutual water companies deliver water to residents of the
City of Maywood in Los Angeles County. Maywood residents have,
for years, expressed concerns about the quality of water they
receive, citing problems with discoloration, odors, and taste.
Deteriorated water supply infrastructure may be a primary cause
of these problems. A substantial portion of Maywood's residents
are renters. Because they don't own real property in Maywood,
they are not stockholders or members of the mutual water
companies that serve Maywood and cannot participate in those
companies' corporate governance. Residents express frustration
that the three mutual water companies are not responsive to the
needs of thousands of residents who use the water that the
companies deliver.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local:
No
SUPPORT : (Verified 6/25/13)
Central Basin Municipal Water District
Sierra Club
Union de Vecinos
ASSEMBLY FLOOR : 76-0, 4/29/13
AYES: Achadjian, Alejo, Allen, Ammiano, Bigelow, Bloom,
Blumenfield, Bocanegra, Bonilla, Bonta, Bradford, Brown,
Buchanan, Ian Calderon, Campos, Chau, Chávez, Chesbro, Conway,
Cooley, Dahle, Daly, Dickinson, Eggman, Fong, Frazier, Beth
Gaines, Garcia, Gatto, Gomez, Gordon, Gorell, Gray, Grove,
Hagman, Hall, Harkey, Roger Hernández, Holden, Jones,
Jones-Sawyer, Levine, Linder, Logue, Lowenthal, Maienschein,
Mansoor, Medina, Melendez, Mitchell, Morrell, Mullin,
Muratsuchi, Nazarian, Nestande, Olsen, Pan, Patterson, Perea,
V. Manuel Pérez, Quirk, Quirk-Silva, Rendon, Salas, Skinner,
Stone, Ting, Torres, Wagner, Waldron, Weber, Wieckowski, Wilk,
Williams, Yamada, John A. Pérez
NO VOTE RECORDED: Atkins, Donnelly, Fox, Vacancy
AB:d 6/26/13 Senate Floor Analyses
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SUPPORT/OPPOSITION: SEE ABOVE
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