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
SB 183
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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
SB 183
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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