BILL ANALYSIS
SB 103
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Date of Hearing: April 15, 2009
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Anna Marie Caballero, Chair
SB 103 (Local Government Committee) - As Introduced: January
27, 2009
SENATE VOTE : 33-0
SUBJECT : Third Validating Act of 2009.
SUMMARY : Enacts the Third Validating Act of 2009, which
validates the organization, boundaries, acts, proceedings, and
bonds of the state, counties, cities, special districts, school
districts, redevelopment agencies, and other public agencies.
EXISTING LAW allows local agencies to make changes to the
organization, boundaries, acts, proceedings, and bonds of the
state, cities, counties, special districts, school districts,
redevelopment agencies, and other local agencies.
FISCAL EFFECT : None
COMMENTS :
1)According to the Senate Local Government Committee, for nearly
70 years, the Legislature has adopted annual Validating Acts
that retroactively fix public officials' inadvertent
procedural errors or omissions. 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 had been streamlined into annual, comprehensive
validating acts. The Acts protect investors from the chance
that a minor error might undermine the legal integrity of a
public agency's bond. The annual bills affect the state
government, as well as counties, cities, special districts,
school districts, and redevelopment agencies.
2)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. This bill gives legislative
SB 103
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protection to public lenders 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.
3)Following its customary practice, the Senate Local Government
Committee, is authoring three Validating Acts this year, the
first two being urgency measures. SB 101, the First
Validating Act, will take effect sometime this spring. The
Second Validating Act, SB 102, will take effect late summer,
validating mistakes that occur after the chaptering of the
First Validating Act. SB 103, the Third Validating Act, will
take effect on January 1, 2010, covering the period between
the chaptering of SB 102 and the end of 2009.
REGISTERED SUPPORT / OPPOSITION :
Support
State Controller John Chiang
State Treasurer Bill Lockyer
American Federation of State, County and Municipal Employees,
AFL-CIO
Association of CA Water Agencies
CA Association of County Treasurers and Tax Collectors
CA Association of Local Agency Formation Commissions
CA Association of Recreation and Park Districts
CA Fire Chiefs Association
CA Public Securities Association
CA Redevelopment Association
CA Special Districts Association
CA State Association of Counties
County of Sacramento
East Bay Municipal Utilities District
Fire Districts Association of CA
League of CA Cities
Midpeninsula Regional Open Space District
Mosquito and Vector Control Association of CA
Regional Council of Rural Counties
State Association of County Auditors
Urban Counties Caucus
SB 103
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Opposition
None on file
Analysis Prepared by : Dixie Petty / L. GOV. / (916) 319-3958