BILL ANALYSIS Ó
SENATE COMMITTEE ON APPROPRIATIONS
Senator Ricardo Lara, Chair
2015 - 2016 Regular Session
SB 1236 (Hernandez) - Local government
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|Version: March 28, 2016 |Policy Vote: GOV. & F. 5 - 0 |
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|Urgency: No |Mandate: Yes |
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|Hearing Date: May 2, 2016 |Consultant: Mark McKenzie |
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This bill meets the criteria for referral to the Suspense File.
Bill
Summary: SB 1236 would require the City of Industry to do the
following until January 1, 2028: (1) conduct annual audits; (2)
limit compensation to city council members to $1,000 per month;
(3) comply with the Public Contract Code for city contracts; (4)
make an annual disclosure of city-owned property; and (5) cap
occupancy in city-owned housing by city employees and their
families, as well as persons who contract with the city and
their families, at five percent.
Fiscal
Impact:
Unknown mandate costs, potentially in the range of $50,000 to
$150,000 annually until 2028, related to requirements to
conduct annual audits and provide annual disclosures of
city-owned property (General Fund). Actual state-reimbursable
costs would be contingent upon the filing of a successful
mandate claim with the Commission on State Mandates, and a
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determination by the Commission that specific duties
constitute a new program or higher level of service that
warrants state reimbursement.
Background: The California Constitution authorizes cities and counties to
adopt a charter governing its own "municipal affairs," upon
approval by a majority of voters. A charter adopted pursuant to
these provisions supersedes other provisions of state law when
there are inconsistencies, but only with respect to these
municipal affairs that are not of statewide concern.
Encompassing an area of nearly 12 square miles in southeastern
Los Angeles County, the City of Industry is a charter city which
incorporated in 1957 for the purpose of promoting commerce and
industry. The City is governed by a city council comprised of
five members who serve four year terms. Councilmembers are
subject to at-large elections, although the City has rarely had
to hold competitive elections. With approximately 440
residents, the City accommodates very little residential housing
within its boundaries.
For many years, the City of Industry's government has attracted
attention over allegations of corruption, misspending, and
mismanagement. Just last year, an internal city audit
reportedly found that the city had paid more than $300 million
to companies owned by the city's former mayor and his relatives
and that the payments were often not supported by accurate
invoices or other documentation, which resulted in a district
attorney investigation of Industry's former Mayor and City
Council. The State Controller also conducted an audit of the
City of Industry's government transactions and contracts,
reporting widespread deficiencies in the City's internal
controls, questionable expenditures, inadequate oversight of
financial and operational activities, and irregular compensation
and personnel practices.
Proposed Law:
SB 1236 would, until January 1, 2018, place the following
requirements on a city that is incorporated to promote commerce
and industry, is located wholly within Los Angeles County, and
had no residentially zoned land within its boundaries as of
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January 1, 1992:
Specify that no more than five percent of city-owned housing
may be occupied by employees or officers of the city or their
families, or persons that contract with the city, including
employees of that person or families of that person or
employees.
Require the city to make an annual disclosure of all property
owned by the city, regardless of the location of the property.
Require the city to conduct annual audits utilizing internal
control components and elements based on specified audit
guidelines, and require the city to substantially comply with
those guidelines.
Limit compensation for service on the city council to $1,000
per month.
Require the Public Contract Code to apply to contracts entered
into by the city, including those providing for waste
collection and management services.
Staff
Comments: SB 1236 would impose a state-mandated local program
by requiring the City of Industry to annually conduct audits and
make a disclosure of all city-owned property. Costs to compile
information on city-owned property and make an annual disclosure
are likely to be minor. However, costs to conduct annual audits
are more significant. City of Industry audit costs are unknown,
and likely dependent upon a contract with an outside firm to
conduct the audits. State reimbursement of local costs would be
contingent upon a finding by the Commission on State Mandates
that the bill constitutes a new program or higher level of
service, and a finding that specific costs incurred by the City
are reimbursable.
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