BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                     SB 183


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          Date of Hearing:  June 17, 2015


                       ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT


                              Brian Maienschein, Chair


          SB  
          183 (Committee on Governance and Finance) - As Introduced  
          February 9, 2015


          SENATE VOTE:   37-0


          SUBJECT:  Validations.


          SUMMARY: Validates the organization, boundaries, acts,  
          proceedings, and bonds of the state government, counties,  
          cities, special districts, and school districts, among other  
          public bodies.  


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


          FISCAL EFFECT:  None


          COMMENTS:  


          1)Bill Summary and Background on Validating Acts.  The annual  








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            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.  SB 183 gives legislative  
            protection to public agencies and private investors.

            By insulating state and local bonds against harmless 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.

            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.   
            The First Validating Act, SB 181 (Committee on Governance and  
            Finance), Chapter 4, Statutes of 2015, validates errors made  
            before the date on which the bill was chaptered.  The Second  
            Validating Act (SB 182) will reach Governor Brown in August,  
            validating mistakes made after SB 181.  The Third Validating  
            Act (SB 183) will take effect on January 1, 2016, covering the  
            period between the chaptering of SB 182 and the end of 2015.

          













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          REGISTERED SUPPORT / OPPOSITION:




          Support


          Association of California Water Agencies


          California Association of Local Agency Formation Commissions


          California State Association of Counties


          California Special Districts Association


          California State Controller Betty Yee


          California State Treasurer John Chiang


          California State Association of Counties


          East Bay Municipal Utility District








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          Imperial Local Agency Formation Commission


          Rural County Representatives of California


          Santa Clara Valley Water District




          Opposition


          None on file   




          


          Analysis Prepared by:Debbie Michel / L. GOV. / (916)  
          319-3958