Amended in Senate March 28, 2016

Senate Bill No. 1236

Introduced by Senator Hernandez

February 18, 2016

An act to begin delete amend Section 34450 of end delete begin insert add and repeal Sections 34096 and 36516.7 of end insert the Government Code, begin insert and to add and repeal Section 1100.8 of the Public Contract Code, end insert relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

SB 1236, as amended, Hernandez. Local government.

begin delete Existing law end delete begin insert The California Constitution end insert authorizes any city or city and county to enact, amend, or repeal a charter for its own government, as specified. begin insert A charter adopted pursuant to these provisions supersedes general laws of the state in regard to a municipal affair, and a city charter may specify various matters including, but not limited to, compensation of city end insert begin insert employees. end insert

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This bill would, until January 1, 2028, require a city that is incorporated to promote commerce and industry, is located wholly within the County of Los Angeles, and had no residentially zoned land within its boundaries as of January 1, 1992, to conduct audits pursuant to a specified procedure and provide annual disclosures of property owned by the city, as specified. By increasing the duties of local officials, this bill would impose a state-mandated local program. The bill would, until January 1, 2028, additionally prohibit a city meeting this description from permitting more than 5% of any cityowned housing to be occupied by a city employee or officer, or person who contracts with the city, or their family. The bill would provide that until January 1, 2028, the compensation for service on the city council of a city meeting this description may not exceed $1,000 per month.

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Existing law states that the Public Contract Code is the basis of all contracts between most public entities and their contractors and subcontractors. Existing law further states that, with regard to charter cities, the code applies unless there is an express exemption or a charter city ordinance or regulation that is in direct conflict with the code.

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This bill would provide that until January 1, 2028, the Public Contract Code applies to a city that is incorporated to promote commerce and industry, is located wholly within the County of Los Angeles, and had no residentially zoned land within its boundaries as of January 1, 1992, as specified.

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This bill would declare that its provisions are a matter of statewide concern, and not a municipal affair.

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This bill would make legislative findings and declarations as to the necessity of a special statute for a city that is incorporated to promote commerce and industry, is located wholly within the County of Los Angeles, and had no residentially zoned land within its boundaries as of January 1, 1992.

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The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

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This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

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This bill would make a nonsubstantive change to this provision.

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Vote: majority. Appropriation: no. Fiscal committee:  begin delete no end delete begin insert yes end insert . State-mandated local program:  begin delete no end delete begin insert yes end insert .

The people of the State of California do enact as follows:

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begin insert SECTION 1. end insert   

end insert

begin insert The Legislature finds and declares all of the
following: end insert

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(a) The issue of corruption in small charter cities across the
state is an increasing and alarming trend, with no signs of slowing
or stopping.

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(b) Small charter cities such as the City of Vernon, the City of
Bell, and the City of Industry have long histories of abuses of
power within city limits, going back decades. Those abuses include
inflated salaries for city officials, failing to establish minimum
qualifications for key positions, fiscally risky bond issuances,
misappropriation of public funds, city officials issuing loans to
themselves, failure to plan basic municipal responsibilities such
as energy purchases according to best practices, incorrectly
classifying employees to obtain higher, unearned retirement
benefits, forcing employees to work at will for the city council,
buying residential properties and renting them at below-market
rents to city workers, inadequate and self-serving contracting
policies, routine violations of conflict-of-interest policies, and little
or no restrictions on city-issued credit cards.

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(c) The voter base in small charter cities is tightly managed by
city officials. The housing units within these cities are controlled
by city leaders and rented out to handpicked tenants at
below-market cost, thus keeping the voter base indebted to those
in power. Efforts to broaden the homeowning population have met
with resistance from city leaders, with officials in one city cutting
power to new residents in an effort to force them from their homes.

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(d) Criminal charges have also been filed in some instances,
furthering the notion that these cities should not govern themselves.
Voter fraud, conspiracy, and misappropriation of public funds are
some of the charges that have been investigated, and are still being
investigated, in some cases.

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(e) This corruption has taken a toll on voter trust, citizen
confidence, and taxpayer funds.

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(f) In January 2016, an audit was released by the Controller
highlighting the lack of administrative and internal accounting
controls. Out of the 79 control elements evaluated by the
Controller, 85 percent was found to be inadequate. Of the ethical
components evaluated, none were found to be adequate.

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(g) Historically, cities with small population size were not
authorized to adopt a charter for local governance. However, in
1970, the Constitution was amended to authorize any city to adopt
a charter. Since then, California’s citizens have seen one after
another small charter city become mired in corruption and the
leaders of these cities enrich themselves at the expense of the
California taxpayer. Ensuring that our citizens, no matter where
they live, have an open, honest, and transparent government is a
matter of statewide concern, and not a municipal affair, and as a
result the Legislature has the authority and the responsibility to
impose heightened governing requirements. Therefore, the
Legislature finds and declares that the provisions of this act are
not a municipal affair, as that term is used in Section 5 of Article
XI of the California Constitution, but are instead a matter of
statewide concern.

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begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 34096 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 34096. end insert   

Notwithstanding any other law, all of the following
shall apply to a city that is incorporated to promote commerce
and industry, is located wholly within the County of Los Angeles,
and had no residentially zoned land within its boundaries as of
January 1, 1992:

(a) No more than 5 percent of the city’s total city-owned housing
may be occupied by any of the following persons:

(1) Employees or officers of the city, including the family of
employees or officers of the city.

(2) Persons that contract with the city, including employees of
persons or companies that contract with the city, and including
the family of persons who contract with the city and the family of
employees of persons or companies that contract with the city.

(b) The city shall make an annual disclosure of all property
owned by the city, wherever that property is situated.

(c) The city shall conduct an annual audit that utilizes internal
control components and elements based on the guidelines
established by the Government Accountability Office’s Internal
Control Management and Evaluation Tool. The city shall
substantially comply with those guidelines.

(d) This section shall remain in effect only until January 1, 2028,
and as of that date is repealed.

end insert

begin insert

begin insert SEC. 3. end insert   

end insert

begin insert Section 36516.7 is added to the end insert begin insert Government Code end insert begin insert , to
read: end insert

begin insert

begin insert 36516.7. end insert   

(a) Notwithstanding any other law, the compensation
for service on the city council of a city that is incorporated to
promote commerce and industry, is located wholly within the
County of Los Angeles, and had no residentially zoned land within
its boundaries as of January 1, 1992, shall not exceed $1,000 per
month.

(b) This section shall remain in effect only until January 1, 2028,
and as of that date is repealed.

end insert

begin insert

begin insert SEC. 4. end insert   

end insert

begin insert Section 1100.8 is added to the end insert begin insert Public Contract Code end insert begin insert ,
to read: end insert

begin insert

begin insert 1100.8. end insert   

(a) Notwithstanding Section 1100.7, this code shall
apply to contracts entered into by a city that is incorporated to
promote commerce and industry, is located wholly within the
County of Los Angeles, and had no residentially zoned land within
its boundaries as of January 1, 1992, including, but not limited
to, contracts for the provision of waste collection and management
services.

(b) This section shall remain in effect only until January 1, 2028,
and as of that date is repealed.

end insert

begin insert

begin insert SEC. end insert begin insert 5. end insert   

end insert begin insert

The Legislature finds and declares that a special law
is necessary and that a general law cannot be made applicable
within the meaning of Section 16 of Article IV of the California
Constitution because of the concerns related to the governance of
a city that is incorporated to promote commerce and industry, is
located wholly within the County of Los Angeles, and had no
residentially zoned land within its boundaries as of January 1,
1992.

end insert

begin insert

begin insert SEC. 6. end insert   

end insert begin insert

If the Commission on State Mandates determines that
this act contains costs mandated by the state, reimbursement to
local agencies and school districts for those costs shall be made
pursuant to Part 7 (commencing with Section 17500) of Division
4 of Title 2 of the Government Code.

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begin delete

SECTION 1.  

Section 34450 of the Government Code is
amended to read:

34450.  

Any city or city and county may enact, amend, or repeal
a charter for its own government pursuant to this article or Article
3 (commencing with Section 9255) of Chapter 3 of Division 9 of
the Elections Code.

end delete