BILL ANALYSIS �
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|SENATE RULES COMMITTEE | SB 1383|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
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THIRD READING
Bill No: SB 1383
Author: Hernandez (D)
Amended: 8/6/12
Vote: 27 - Urgency
SENATE GOVERNANCE & FINANCE COMMITTEE : 7-1, 7/3/12
AYES: Wolk, Dutton, DeSaulnier, Hernandez, Kehoe, La
Malfa, Liu
NOES: Fuller
NO VOTE RECORDED: Yee
SUBJECT : Local government: sales of specific water
utility property
SOURCE : City of El Monte
DIGEST : This bill allows the City of El Monte (City) to
sell or transfer its public utility water system, without
voter approval, subject to specified requirements.
ANALYSIS : State law does not provide a standard
procedure for cities to follow when they sell municipal
property, but for more than 80 years cities have had to
follow special procedures when they want to sell public
utilities that supply water, power, sewer, transportation,
or communication services.
By a 2/3-vote, the city council must determine that the
public interest and necessity demand that the public
utility should be sold. By a 2/3-vote, the city council
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must explain how the city will spend the proceeds of the
sale and then call an election on selling the public
utility. A successful election requires 2/3-voter
approval. If the proposition passes, city officials must
sell the public utility to the highest and best bidder.
In 1996, the Legislature allowed cities to sell their water
utilities with majority-voter approval instead of 2/3-voter
approval. Further, the Legislature allowed the Cities of
Montebello, Fontana, and West Covina to sell their water
utilities without any voter approval.
This bill allows the City of El Monte to sell or transfer,
pursuant to specified statutes, all or any part of the
public utility for furnishing water service that it owns
and operates. The sale or transfer is subject to the
following requirements:
1. The El Monte City Council cannot sell the water utility
property for less than its fair market value, determined
in accordance with the Public Water System Investment
and Consolidation Act of 1997, which defines fair market
value as:
A. The highest price that would be agreed to by a
willing seller and willing buyer, acting under no
particular or urgent necessity to buy or sell, and
each with full knowledge of all the uses and purposes
for which the property is reasonably adaptable and
available.
2. Upon acquiring the City's water system, the acquiring
water corporation assumes the obligation to provide
water service to all persons in the area formerly served
through the water system being sold by the city on the
same terms and conditions that the Public Utilities
Commission has found to be just and reasonable for the
acquiring water corporation's other customers in the
city and that do not unlawfully discriminate against the
previous customers of the city's water system.
This bill sunsets on January 1, 2014.
Comments
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According to the Senate Governance and Finance Committee
analysis, the City's water utility is an aging system that
needs substantial investments in maintenance and
improvements. In light of fiscal challenges confronting
the City, El Monte city council members are considering
selling the City's water system to another utility
provider. The council has been negotiating the terms of a
sale with representatives of the San Gabriel Valley Water
Company, a private utility company that already provides
retail water service to many El Monte residents. Because
the terms of a potential sales agreement have not yet been
finalized, the City may not have enough time left this year
to seek voter approval of a sale under the majority-vote
process enacted by the 1996 Beverly bill. To allow city
officials to take advantage of favorable financial
conditions by completing the sales process soon, this bill
grants the City an exemption from the voter-approval
requirements that apply to the sale of a municipal utility.
FISCAL EFFECT : Appropriation: No Fiscal Com.: No
Local: No
SUPPORT : (Verified 8/8/12)
City of El Monte (source)
AGB:k 8/8/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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