Bill Text: CA SB99 | 2009-2010 | Regular Session | Chaptered
Bill Title: Joint exercise of powers: reporting and disclosures.
Spectrum: Bipartisan Bill
Status: (Passed) 2009-10-11 - Chaptered by Secretary of State. Chapter 557, Statutes of 2009. [SB99 Detail]
Download: California-2009-SB99-Chaptered.html
BILL NUMBER: SB 99 CHAPTERED
BILL TEXT
CHAPTER 557
FILED WITH SECRETARY OF STATE OCTOBER 11, 2009
APPROVED BY GOVERNOR OCTOBER 11, 2009
PASSED THE SENATE SEPTEMBER 10, 2009
PASSED THE ASSEMBLY SEPTEMBER 8, 2009
AMENDED IN ASSEMBLY AUGUST 31, 2009
AMENDED IN SENATE MAY 12, 2009
INTRODUCED BY Committee on Local Government (Senators Wiggins
(Chair), Aanestad, Cox, Kehoe, and Wolk)
JANUARY 27, 2009
An act to amend Section 6547 of, to add Sections 6503.6, 6548.5,
6592.1, and 53895.7 to, and to add Chapter 10.7 (commencing with
Section 5870) to Division 6 of Title 1 of, the Government Code,
relating to joint exercise of powers.
LEGISLATIVE COUNSEL'S DIGEST
SB 99, Committee on Local Government. Joint exercise of powers:
reporting and disclosures.
Under the Marks-Roos Local Bond Pooling Act of 1985, a joint
exercise of powers authority may issue or purchase bonds to assist
local agencies in financing public capital improvements, working
capital, liability, or other insurance needs, or projects whenever
there are significant public benefits for taking that action. Under
the Ralph M. Brown Act, all meetings of the legislative body of a
local agency must, subject to designated exceptions, be open and
public. That act requires the legislative body to hold regular
meetings, and permits the legislative body to hold special and
emergency meetings, requiring certain notices and agendas.
This bill would require additional reporting and public
disclosures by specified public entities that issue certain revenue
bonds, including conduit revenue bonds, as defined. This bill would
require entities formed under the Joint Exercise of Powers Act, and
related officers, that fail or refuse to make required reports to
forfeit specified amounts to the state, and would authorize, under
certain conditions, the Attorney General to prosecute an action for
these forfeitures. This bill would require that a resolution issued
pursuant to the Marks-Roos Local Bond Pooling Act of 1985 relating to
bonds, as specified, be adopted by the local agency during a regular
meeting.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 10.7 (commencing with Section 5870) is added to
Division 6 of Title 1 of the Government Code, to read:
CHAPTER 10.7. CONDUIT FINANCING TRANSPARENCY AND
ACCOUNTABILITY
5870. As used in this chapter, the following definitions apply:
(a) "Conduit financing" means the issuance of conduit revenue
bonds.
(b) "Conduit financing provider" means any county, city, city and
county, public district, public authority, public corporation,
nonprofit corporation, joint powers authority, or other statutorily
constituted public entity that issues one or more conduit revenue
bonds.
(c) "Conduit revenue bond" means any municipal security the
proceeds of which are loaned to any nongovernmental borrower,
including, but not limited to, persons, for-profit corporations,
nonprofit corporations pursuant to Section 501(c)(3) of the Internal
Revenue Code, partnerships, and other legal entities for purposes
that are permitted for qualified private activity bonds under
applicable federal law.
5871. A conduit financing provider shall make the following
information available on its Internet Web site, to the extent that it
maintains an Internet Web site:
(a) Agendas for regular meetings posted by a conduit financing
provider pursuant to Section 54954.2.
(b) Notices of special meetings posted by a conduit financing
provider pursuant to Section 54956.
(c) Notices of meetings of a conduit financing provider provided
pursuant to Section 11125.
(d) Staff reports on the items included on the agendas listed in
subdivisions (a), (b), and (c).
(e) Minutes of the meetings for which the agendas listed in
subdivisions (a), (b), and (c) were produced.
(f) Audits of the conduit financing provider's accounts and
records.
(g) Copies of reports of the conduit financing provider's annual
financial transactions required pursuant to Section 12460 or 12463.
(h) Annual lists of applications approved for financing by the
governing body of the conduit financing provider for any fiscal year
in which at least one application is approved.
5872. (a) When an audit of a conduit financing provider's
accounts and records is required by law, in addition to any other
requirements, the audit shall include all of the following:
(1) A disclosure of fees imposed on borrowers by, or on behalf of,
the conduit financing provider.
(2) A disclosure of expenditures related to those fees made by or
on behalf of the conduit financing provider.
(3) The dollar amount and nature of these fees and expenses.
(4) A disclosure of the amount of bonds authorized but unsold at
the end of the time period covered by the audit.
(5) A disclosure of the amount of debt the conduit financing
provider has issued during the period covered by the audit and the
amount of debt still outstanding at the end of the time period
covered by the audit.
(b) An audit of a conduit financing provider's accounts and
records shall be made publicly available pursuant to the California
Public Records Act (Article 1 (commencing with Section 6250) of
Chapter 3.5 of Division 7).
(c) Notwithstanding any other reporting periods permitted pursuant
to subdivision (f) of Section 6505, Section 26909, or any other
provision of law, a conduit financing provider shall annually conduct
an audit of its accounts and records and report the results of that
audit to the Controller. The minimum requirements of the annual audit
and report shall be prescribed by the Controller and conform to
generally accepted auditing standards.
SEC. 2. Section 6503.6 is added to the Government Code, to read:
6503.6. Whenever an agency or entity files a notice of agreement
or amendment with the office of the Secretary of State pursuant to
Section 6503.5, the agency or entity shall file a copy of the full
text of the original joint powers agreement, and any amendments to
the agreement, with the Controller.
SEC. 3. Section 6547 of the Government Code is amended to read:
6547. The power of the entity to issue revenue bonds is
additional to the powers common to the parties to the joint powers
agreement, but shall not be exercised until authorized by the parties
to that agreement. However, in the case of the issuance of revenue
bonds by a fair and exhibition authority this authorization shall not
be required. In the case of the issuance of revenue bonds by an
entity created pursuant to this chapter to construct bridges and
major thoroughfares, as referred to in Section 66484.3, the power of
the entity to issue revenue bonds shall be exercised by a resolution
adopted by a majority vote of the governing body of the entity during
a regular meeting held pursuant to Section 54954. However, no member
of the entity may vote on the question of bond issuance unless the
member has been authorized to vote on that particular question by
previous resolution of the public agency the member represents. In
the case of the issuance of revenue bonds by an entity created
pursuant to this chapter to carry out a consolidated transportation
corridor project, as referred to in Section 6546.13, the power of the
entity to issue revenue bonds shall be exercised by a resolution
adopted by a majority vote of the governing body of the entity. In
the case of a project for the generation or transmission of electric
energy or a project for the disposal, treatment, or conversion to
energy and reusable materials of solid waste, or a project for an
intermodal container transfer facility, or a project for the
construction of bridges and major thoroughfares pursuant to Section
66484.3, this power shall include the power to issue notes for the
purpose of financing studies, the acquisition of options, permits,
and other preliminary costs to be incurred prior to the undertaking
of the construction or acquisition of a project, and for the purpose
of providing temporary financing of costs of construction or
acquisition of a project. These notes may be issued at public or
private sale, and may be renewed from time to time, and the principal
and interest with respect thereto may be made payable from the
revenues of the entity unless paid from the proceeds of revenue
bonds.
Every local agency shall make any authorization, as permitted
under the first sentence of this section, by ordinance, unless
otherwise prescribed in this section. Except as provided in this
section, the ordinance shall describe in general terms the project,
or projects, to be funded by the revenue bonds, the maximum amount of
the bonds proposed to be issued, and the anticipated sources of
revenue to redeem the bonds. In the case of a project for the
generation or transmission of electric energy or a project for the
disposal, treatment, or conversion to energy and reusable materials
of solid waste, or a project for an intermodal container transfer
facility, or a project for the construction of bridges and major
thoroughfares pursuant to Section 66484.3, the ordinance shall
describe in general terms the project or the studies or other
preliminary costs therefor to be funded by the revenue bonds or
notes, the estimate of the maximum amount of bonds to be issued for
the project or the studies or other preliminary costs, and the
anticipated sources of revenue or other funds to pay the principal of
and interest on the bonds or notes. In the case of a project for a
consolidated transportation corridor pursuant to Section 6546.13, the
authorizing resolution shall describe in general terms, the project
or projects to be funded by the revenue bonds, the maximum amount of
bonds proposed to be issued for the project or projects, and the
anticipated sources of revenue or other funds to pay the principal of
and interest on the bonds. However, the statement of the estimated
maximum amount of the bonds or notes shall not be deemed to prevent
the authorization by the ordinance of the issuance of bonds or notes
by the entity in amounts that may exceed the estimate without further
authorization under the ordinance if and to the extent the
additional bonds or notes shall be required to complete the financing
of the project or the studies or other preliminary costs. Each
ordinance shall state that it is subject to the provisions for
referendum prescribed by Section 9142 of the Elections Code.
A separate authorization shall be required for each separate bond
issue proposed by the entity, except that, in the case of a project
for the generation or transmission of electric energy or a project
for the disposal, treatment, or conversion to energy and reusable
materials of solid waste, or a project for an intermodal container
transfer facility, or a project for the construction of bridges and
major thoroughfares pursuant to Section 66484.3, a single
authorization shall be sufficient for bonds that may be issued in
installments from time to time for a project or the costs of studies
or other preliminary costs therefor that shall be identified in the
authorization.
The requirement of an ordinance and the right to referendum
thereon shall not apply to the issuance of revenue bonds if, prior to
March 4, 1971, one or more local or public agencies shall have taken
formal action to implement any one or more projects to be acquired
or constructed pursuant to a joint powers agreement. Formal action to
implement any one or more projects shall include, but not be limited
to, any of the following:
(a) The incurring of liability for a substantial portion of an
architectural or engineering contract or other contract relating to a
project.
(b) The acquisition of land or improvements for the project.
(c) The making of a substantial contribution toward the project.
Notwithstanding the requirement that parties to a joint powers
agreement authorize the issuance of revenue bonds, in the case of a
project that consists of the generation or transmission of electric
energy financed in whole or in part by the issuance of revenue bonds,
only those local agencies that contract to make payments to be
applied to the payment of the revenue bonds shall be required to
authorize the issuance of the revenue bonds.
Any authorizations required by this section for the issuance of
revenue bonds to construct bridges and major thoroughfares projects
pursuant to Section 50029 or 66484.3 may be by ordinance or
resolution.
SEC. 4. Section 6548.5 is added to the Government Code, to read:
6548.5. The level of fees or charges imposed by, or on behalf of,
an agency or entity for the issuance of bonds pursuant to this
article shall be disclosed in a report of final sale submitted to the
California Debt and Investment Advisory Commission pursuant to
Chapter 11.5 (commencing with Section 8855) of Division 1 of Title 2.
SEC. 5. Section 6592.1 is added to the Government Code, to read:
6592.1. A resolution authorizing bonds or any issuance of bonds
or accepting the benefit of any bonds or the proceeds of bonds shall
be adopted by an authority only during a regular meeting held
pursuant to Section 54954.
SEC. 6. Section 53895.7 is added to the Government Code, to read:
53895.7. (a) For the purpose of this section, "agency" means any
agency or entity formed pursuant to the Joint Exercise of Powers Act
(Article 1 (commencing with Section 6500) of Chapter 5 of Division 7
of Title 1) that issues conduit revenue bonds.
(b) An officer of an agency who fails or refuses to make and file
his or her report pursuant to this article within 20 days after
receipt of a written notice of the failure from the Controller shall
forfeit to the state:
(1) One thousand dollars ($1,000) in the case of an agency with
total revenue, in the prior year, of less than one hundred thousand
dollars ($100,000), as reported in the Controller's annual financial
reports.
(2) Two thousand five hundred dollars ($2,500) in the case of an
agency with total revenue, in the prior year, of at least one hundred
thousand dollars ($100,000), but less than two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
(3) Five thousand dollars ($5,000) in the case of an agency with
total revenue, in the prior year, of at least two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
(c) An officer of an agency who fails or refuses to make and file
his or her report within 20 days after receipt of a written notice of
the failure from the Controller in the second or more consecutive
year shall forfeit to the state:
(1) Two thousand dollars ($2,000) in the case of an agency with
total revenue, in the prior year, of less than one hundred thousand
dollars ($100,000), as reported in the Controller's annual financial
reports.
(2) Five thousand dollars ($5,000) in the case of an agency with
total revenue, in the prior year, of at least one hundred thousand
dollars ($100,000), but less than two hundred fifty thousand dollars
($250,000), as reported in the Controller's annual financial reports.
(3) Ten thousand dollars ($10,000) in the case of an agency with
total revenue, in the prior year, of at least two hundred fifty
thousand dollars ($250,000), as reported in the Controller's annual
financial reports.
(d) In the case of an agency that fails or refuses to make and
file its report within 20 days after receipt of a written notice of
the failure from the Controller in the third or more consecutive
year, the Controller shall conduct, or cause to be conducted, an
independent financial audit report consistent with the requirements
of Section 6505. The agency shall reimburse the Controller for the
cost of complying with this subdivision.
(e) (1) Upon the request of the Controller, the Attorney General
shall prosecute an action for the forfeiture in the name of the
people of the State of California.
(2) Upon a satisfactory showing of good cause, the Controller may
waive the penalties for late filing provided in this section.
(f) An agency that makes a forfeiture or payment pursuant to this
section shall still file the report required pursuant to Section
53891.
SEC. 7. The Legislature finds and declares all of the following:
(a) Conduit financing providers annually provide billions of
dollars of tax-exempt financing to the private sector, at a cost to
the state caused by a lack of tax revenues on the interest earned on
these investments, for projects that are intended to fulfill a public
benefit purpose, including, but not limited to, educational
facilities, pollution control facilities, health care facilities,
industrial development, and affordable housing.
(b) Testimony and information provided to the Senate Committee on
Local Government at its February 6, 2008, informational hearing on
"Conduit Financing: Transparency and Accountability" demonstrated the
need to provide for greater public awareness of, and participation
in, the activities of conduit financing providers.
(c) Statutory ambiguities and discrepancies make it difficult to
determine whether all conduit financing providers are complying with
audit, annual financial reporting, and other public accountability
requirements.
(d) It is the intent of the Legislature in enacting this act to
ensure that all conduit financing providers make their activities
sufficiently transparent and accountable to the public by extending
sufficient opportunities for participation in public meetings and
providing useful information about their financial activities.
