BILL ANALYSIS
SB 103
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SENATE THIRD READING
SB 103 (Local Government Committee)
As Introduced January 27, 2009
Majority vote
SENATE VOTE :33-0
LOCAL GOVERNMENT 7-0
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|Ayes:|Caballero, Knight, | | |
| |Arambula, Davis, Duvall, | | |
| |Krekorian, Skinner | | |
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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 : For nearly 70 years, the Legislature has adopted
annual Validating Acts (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.
Following its customary practice, the Senate Local Government
Committee has authored these Acts again this year, the first two
being urgency measures: Senate Bills 101, 102, and 103.
SB 101 was chaptered late spring [SB 101 (Local Government
Committee), Chapter 2, Statutes of 2009]. SB 102 will take
effect late this summer, validating mistakes that occurred after
the chaptering of SB 101. SB 103 will take effect on January 1,
2010, covering the period between the chaptering of SB 102 and
SB 103
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the end of 2009.
The 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. This bill gives legislative
protection to public lenders and private investors.
By insulating state and local bonds against harmless errors, the
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.
Analysis Prepared by : Dixie Petty / L. GOV. / (916)
319-3958FN: 0002230