BILL NUMBER: SB 497 CHAPTERED 09/07/99 CHAPTER 362 FILED WITH SECRETARY OF STATE SEPTEMBER 7, 1999 APPROVED BY GOVERNOR SEPTEMBER 7, 1999 PASSED THE SENATE AUGUST 24, 1999 PASSED THE ASSEMBLY JULY 15, 1999 AMENDED IN ASSEMBLY JUNE 29, 1999 AMENDED IN ASSEMBLY JUNE 17, 1999 AMENDED IN SENATE MAY 28, 1999 AMENDED IN SENATE MARCH 23, 1999 INTRODUCED BY Senator Rainey (Coauthor: Assembly Members House and Lowenthal) FEBRUARY 18, 1999 An act to amend Section 33080.2 of, and to add Section 33080.8 to, the Health and Safety Code, relating to redevelopment. LEGISLATIVE COUNSEL'S DIGEST SB 497, Rainey. Redevelopment law: major violations: actions. The Community Redevelopment Law requires a redevelopment agency to file with the Controller and present to its legislative body an annual report within 6 months of the end of the agency's fiscal year containing an independent financial audit that includes an opinion of the agency's compliance with laws, regulations, and administrative requirements governing the activities of the agency, and subjects officers of the agency to specified monetary forfeitures for failure to comply. The Controller is required to compile and annually publish reports of the financial transactions of each community redevelopment agency. Existing law provides for the filing of a writ of mandate to compel the performance of a duty by a public entity. This bill would require the agency to inform the legislative body of any major violations, as defined, of the Community Redevelopment Law based on the independent financial audit, and would require the Controller to compile, on or before April 1 of each year, a list of the agencies that appear to have major violations. The bill would also require the Controller to determine, on or before June 1 of each year, whether the agency has corrected the major violation. If the Controller determines that agencies have not corrected major violations, the bill would require the Controller to send a list of those agencies and their major violations to the Attorney General for action pursuant to the bill. The bill would require the Attorney General to determine whether to file an action to compel compliance with these provisions. The bill would require the court to conduct specified hearings and if it finds good cause to believe there is any uncorrected major violation, to order the agency to comply within a specified period and to prohibit, by order, specified actions by the agency until the court determines that the violation is corrected, at which time the court may dissolve the order. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 33080.2 of the Health and Safety Code is amended to read: 33080.2. (a) When the agency presents the annual report to the legislative body pursuant to Section 33080.1, the agency shall inform the legislative body of any major violations of this part based on the independent financial audit report. The agency shall inform the legislative body that the failure to correct a major violation of this part may result in the filing of an action by the Attorney General pursuant to Section 33080.8. (b) The legislative body shall review the report and take any action which it deems appropriate on the report submitted pursuant to Section 33080.1 no later than the first meeting of the legislative body occurring more than 21 days from the receipt of the report. SEC. 2. Section 33080.8 is added to the Health and Safety Code, to read: 33080.8. (a) On or before April 1 of each year, the Controller shall compile a list of agencies that appear to have major violations of this part, based on the independent financial audit reports filed with the Controller pursuant to Section 33080. (b) On or before June 1 of each year, for each major violation of each agency identified pursuant to subdivision (a), the Controller shall determine if the agency has corrected the major violation. Before making this determination, the Controller shall consult with each affected agency. In making this determination, the Controller may request and shall receive the prompt assistance of public officials and public agencies, including, but not limited to, the affected agencies, counties, and cities. If the Controller determines that an agency has not corrected the major violation, the Controller shall send a list of those agencies and their major violations to the Attorney General for action pursuant to this section. (c) For each agency that the Controller refers to the Attorney General pursuant to subdivision (b), the Controller shall notify the agency and the legislative body that the agency was on the list sent to the Attorney General. The Controller's notice shall inform the agency and the legislative body of the duties imposed by Section 33080.2. (d) Within 45 days of receiving the list of agencies and major violations pursuant to subdivision (c), the Attorney General shall determine whether to file an action to compel the agency's compliance with this part. The time limit for the Attorney General to make this determination is directory and not mandatory. Any action shall be accompanied by an affidavit or affidavits setting forth facts that demonstrate a likelihood of success on the merits of the claim that the agency has a major violation of this part. The affidavit shall also certify that the agency and the legislative body were informed not less than 10 days prior to the date on which the action was filed. (e) (1) On the earliest day that the business of the court will permit, but not later than 15 days after the filing of an action pursuant to this section, the court shall conduct a hearing to determine if good cause exists for believing that the agency has a major violation of this part and has not corrected that violation. (2) If the court determines that no major violation exists or that the agency had a major violation but corrected the major violation, the court shall dismiss the action. (3) If the court determines that there is good cause for believing that the agency has a major violation of this part and has not corrected that major violation, the court shall immediately issue an order that prohibits the agency from doing any of the following: (A) Encumbering any funds or expending any money derived from any source except to pay the obligations designated in subparagraphs (A) to (G), inclusive, of paragraph (1) of subdivision (e) of Section 33334.12. (B) Adopting a redevelopment plan. (C) Amending a redevelopment plan except to correct the major violation that is the subject of the action. (D) Issuing, selling, offering for sale, or delivering any bonds or any other evidence of indebtedness. (E) Incurring any indebtedness. (f) In a case that is subject to paragraph (3) of subdivision (e), the court shall also set a hearing on the matter within 30 days. (g) If, on the basis of that subsequent hearing, the court determines that the agency has a major violation and has not corrected that violation, the court shall order the agency to comply with this part within 30 days. The order issued by the court pursuant to paragraph (3) of subdivision (e) shall continue in effect until the court determines that the agency has corrected the major violation. If the court determines that the agency has corrected the major violation, the court may dissolve its order issued pursuant to paragraph (3) of subdivision (e) at any time. (h) An action filed pursuant to this section to compel an agency to comply with this part is in addition to any other remedy, and is not an exclusive means to compel compliance. (i) As used in this section, "major violation" means that, for the fiscal year in question, an agency did not: (1) File an independent financial audit report that substantially conforms with the requirements of subdivision (a) of Section 33080.1. (2) File a fiscal statement that includes substantially all of the information required by Section 33080.5. (3) Establish time limits, as required by Section 33333.6. (4) Establish a Low and Moderate Income Housing Fund, as required by subdivision (a) of Section 33334.3. (5) Accrue interest earned by the Low and Moderate Income Housing Fund to that fund, as required by subdivision (b) of Section 33334.3. (6) Initiate development of housing on real property acquired using moneys from the Low and Moderate Income Housing Fund or sell the property, as required by Section 33334.16. (7) Adopt an implementation plan, as required by Section 33490.