text:
Eligible securities are any of the following:

(a) United States Treasury notes, bonds, bills or certificates of indebtedness, or obligations for which the faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of small business administration loans, so long as the loans are obligations for which the faith and credit of the United States are pledged for the payment of principal and interest.

(b) Notes or bonds or any obligations of a local public agency (as defined in the United States Housing Act of 1949) or any obligations of a public housing agency (as defined in the United States Housing Act of 1937) for which the faith and credit of the United States are pledged for the payment of principal and interest.

(c) Bonds of this state or of any local agency or district of the State of California having the power, without limit as to rate or amount, to levy taxes or assessments to pay the principal and interest of the bonds upon all property within its boundaries subject to taxation or assessment by the local agency or district, and in addition, limited obligation bonds pursuant to Article 4 (commencing with Section 50665) of Chapter 3 of Division 1, senior obligation bonds pursuant to Article 5 (commencing with Section 53387) of Chapter 2.7, and revenue bonds and other obligations payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the state, local agency or district or by a department, board, agency or authority thereof.

(d) Bonds of any public housing agency (as defined in the United States Housing Act of 1937, as amended) as are secured by a pledge of annual contributions under an annual contribution contract between the public housing agency and the Public Housing Administration if such contract shall contain the covenant by the Public Housing Administration which is authorized by subsection (b) of Section 22 of the United States Housing Act of 1937, as amended, and if the maximum sum and the maximum period specified in the contract pursuant to that subsection 22(b) shall not be less than the annual amount and the period for payment which are requisite to provide for the payment when due of all installments of principal and interest on the obligations.

(e) Registered warrants of this state.

(f) Bonds, consolidated bonds, collateral trust debentures, consolidated debentures, or other obligations issued by the United States Postal Service, federal land banks or federal intermediate credit banks established under the Federal Farm Loan Act, as amended, debentures and consolidated debentures issued by the Central Bank for Cooperatives and banks for cooperatives established under the Farm Credit Act of 1933, as amended, consolidated obligations of the federal home loan banks established under the Federal Home Loan Bank Act, bonds, debentures and other obligations of the Federal National Mortgage Association or of the Government National Mortgage Association established under the National Housing Act, as amended, bonds of any federal home loan bank established under that act, bonds, debentures and other obligations of the Federal Home Loan Mortgage Corporation established under the Emergency Home Finance Act of 1970, and obligations of the Tennessee Valley Authority.

(g) Notes, tax anticipation warrants or other evidence of indebtedness issued pursuant to Article 7 (commencing with Section 53820), Article 7.5 (commencing with Section 53840) or Article 7.6 (commencing with Section 53850) of this Chapter 4.

(h) State of California notes.

(i) Bonds, notes, certificates of indebtedness, warrants or other obligations issued by: (1) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or any local agency thereof having the power to levy taxes, without limit as to rate or amount, to pay the principal and interest of such obligations, or (2) any state of the United States (except this state), or the Commonwealth of Puerto Rico, or a department, board, agency or authority thereof except bonds which provide for or are issued pursuant to a law which may contemplate a subsequent legislative appropriation as an assurance of the continued operation and solvency of the department, board, agency or authority but which does not constitute a valid and binding obligation for which the full faith and credit of such state or the Commonwealth of Puerto Rico are pledged, which are payable solely out of the revenues from a revenue-producing source owned, controlled or operated thereby; provided the obligations issued by an entity described in (1), above, are rated in one of the three highest grades, and such obligations issued by an entity described in (2), above, are rated in one of the two highest grades by a nationally recognized investment service organization that has been engaged regularly in rating state and municipal issues for a period of not less than five years.

(j) Obligations issued, assumed or guaranteed by the International Bank for Reconstruction and Development, Inter-American Development Bank, the Government Development Bank of Puerto Rico, the Asian Development Bank, the International Finance Corporation, or the African Development Bank.

(k) Participation certificates of the Export-Import Bank of the United States.

(l) Bonds and notes of the California Housing Finance Agency issued pursuant to Chapter 7 (commencing with Section 51350) of Part 3 of Division 31 of the Health and Safety Code.

(m) Promissory notes secured by first mortgages and first trust deeds which comply with Section 53651.2.

(n) Any bonds, notes, warrants, or other evidences of indebtedness of a nonprofit corporation issued to finance the construction of a school building or school buildings pursuant to a lease or agreement with a school district entered into in compliance with the provisions of Section 39315 or 81345 of the Education Code, and also any bonds, notes, warrants or other evidences of indebtedness issued to refinance those bonds, notes, warrants, or other evidences of indebtedness as specified in Section 39317 of the Education Code.

(o) Any municipal securities, as defined by Section 3(a)(29) of the Securities Exchange Act of June 6, 1934, (15 U.S.C. Sec. 78, as amended), which are issued by this state or any local agency thereof.

(p) With the consent of the treasurer, letters of credit issued by the Federal Home Loan Bank of San Francisco which comply with Section 53651.6.

history: (History: Amended by Stats. 1991, Ch. 1206, Sec. 7.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


kind: section

code: GOV

text:
(a) To be an eligible security under subdivision (m) of Section 53651, a promissory note placed in a securities pool on or after January 1, 1987, shall comply with all of the following provisions:

(1) Each promissory note shall be secured by a first mortgage or first trust deed on improved 1 to 4 unit residential real property located in California, shall be fully amortized over the term of the note, and shall have a term of no more than 30 years. Any first mortgage or first trust deed which secures a promissory note providing for negative amortization shall be removed from the securities pool and replaced with an eligible security under subdivision (m) of Section 53651 if the loan to value ratio exceeds 85 percent of the original appraised value of the security property as a consequence of negative amortization.

(2) Each promissory note shall be eligible for sale to the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation; provided, however, that up to 25 percent of the total dollar amount of any promissory note securities pool established pursuant to Section 53658 may consist of promissory notes with loan amounts which exceed the maximum amounts eligible for purchase by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation, but which do not exceed: (i) five hundred thousand dollars ($500,000) in the case of a single family dwelling; (ii) one million dollars ($1,000,000) in the case of a 2, 3, or 4 unit dwelling.

(b) The following shall not constitute eligible securities under subdivision (m) of Section 53651:

(1) Any promissory note on which any payment is more than 60 days past due.

(2) Any promissory note secured by a mortgage or deed of trust as to which there is a lien prior to the mortgage or deed of trust. For the purposes of this paragraph, no lien specified in Section 766 of the Financial Code shall be considered a prior encumbrance unless any installment or payment thereunder (other than a rental or royalty under a lease) is due and delinquent.

(3) Any promissory note secured by a mortgage or deed of trust as to which a notice of default has been recorded pursuant to Section 2924 of the Civil Code or an action has been commenced pursuant to Section 725a of the Code of Civil Procedure.

(c) The depository may exercise, enforce, or waive any right granted to it by the promissory note, mortgage, or deed of trust.

(d) For purposes of this article, the market value of a promissory note which is an eligible security under subdivision (m) of Section 53651, shall be determined in accordance with the regulations adopted by the Treasurer under paragraph (2) of subdivision (m) of Section 53651, as the regulations and statute were in effect on December 31, 1986. However, if and when regulations on the subject are adopted by the administrator, the market value shall be determined in accordance with those regulations of the administrator.

history: (History: Amended by Stats. 1996, Ch. 1063, Sec. 81. Effective January 1, 1997.)

division: 2. CITIES, COUNTIES, AND OTHER AGENCIES

title: 5. LOCAL AGENCIES

chapter: 4. Financial Affairs

article: 2. Deposit of Funds

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 2. Deposit of Funds


text:
(a) A depository that uses eligible securities of the class described in subdivision (m) of Section 53651 shall, within 90 days after the close of each calendar year or within a longer period as the administrator may specify, file with the administrator a report of an independent certified public accountant regarding compliance with this article and with regulations and orders issued by the administrator under this article with respect to eligible securities of that class. The report shall be based upon the audit, shall contain the information, and shall be in the form the administrator may prescribe. The depository shall provide a copy of the report to the treasurer on request.

(b) If a depository that is a state bank files with the administrator, not less than 90 days before the beginning of the calendar year, a notice that it elects to be examined by the administrator instead of filing a report of an independent certified public accountant under subdivision (a) for that calendar year, the depository shall be exempt from subdivision (a) for that calendar year and shall for that calendar year be subject to examination by the administrator regarding compliance with this article and with regulations and orders under this article with respect to eligible securities of the class described in subdivision (m) of Section 53651. The administrator shall provide a report to a treasurer with deposits in the examined state bank upon request of the treasurer.

(c) A national bank may apply to the administrator to be examined, and the administrator, in his or her discretion, may examine a national bank for the purposes of satisfying the requirements of subdivision (a). The administrator shall provide a report to a treasurer with deposits in the examined national bank upon request of the treasurer.

(d) Whenever the administrator examines a depository pursuant to subdivision (b) or (c), the depository shall pay, within 30 days after receipt of a statement from the administrator, a fee of seventy-five dollars ($75) per hour for each examiner engaged in the examination.

history: (History: Amended by Stats. 1997, Ch. 375, Sec. 18. Effective January 1, 1998.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) To be an eligible security under subdivision (p) of Section 53651, a letter of credit shall be in such form and shall contain such provisions as the administrator may prescribe, and shall include all of the following terms:

(1) The administrator shall be the beneficiary of the letter of credit.

(2) The letter of credit shall be clean and irrevocable and shall provide that the administrator may draw upon it up to the total amount in the event of the failure of the depository savings association or federal association or if the depository savings association or federal association refuses to permit the withdrawal of funds by a treasurer.

history: (History: Added by Stats. 1986, Ch. 1132, Sec. 17.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
To secure active or inactive deposits a depository shall at all times maintain with the agent of depository eligible securities in securities pools, pursuant to Sections 53656 and 53658, in the amounts specified in this section. Uncollected funds shall be excluded from the amount deposited in the depository when determining the security requirements for the deposits.

(a) Eligible securities, except eligible securities of the classes described in subdivisions (m) and (p) of Section 53651, shall have a market value of at least 10 percent in excess of the total amount of all deposits of a depository secured by the eligible securities.

(b) Eligible securities of the class described in subdivision (m) of Section 53651 shall have a market value at least 50 percent in excess of the total amount of all deposits of a depository secured by those eligible securities.

(c) Eligible securities of the class described in subdivision (p) of Section 53651 shall have a market value of at least 5 percent in excess of the total amount of all deposits of a depository secured by those eligible securities. For purposes of this article, the market value of a letter of credit which is an eligible security under subdivision (p) of Section 53651 shall be the amount of credit stated in the letter of credit.

history: (History: Repealed and added by Stats. 1986, Ch. 1132, Sec. 19.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: When in his or her discretion local conditions so warrant, the treasurer may waive security for the portion of any deposits as is insured pursuant to federal law, notwithstanding this article. For deposits equivalent to and not less than the maximum amount insured pursuant to federal law for which a treasurer has waived security under this section, a treasurer at his or her discretion may also waive security for the interest accrued on the deposits which, when added to the deposits, would cause the sum of the interest and deposits to exceed the maximum amount insured pursuant to federal law, provided that the interest is computed by the depository on the average daily balance of the deposits, paid monthly and computed on a 360-day basis.

history: (History: Amended by Stats. 1988, Ch. 156, Sec. 1.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) The depository may add securities to the pool or substitute securities of equal value for those in the pool at any time, but shall not interchange classes of security, as defined in Section 53632.5, without prior approval of the treasurer.

(b) Withdrawal of securities from the pool without replacement at equal value may be ordered only by two duly authorized officers or employees of the depository who satisfy the requirements as may be set by the administrator.

(c) The agent of depository is responsible for the safekeeping and disbursement of securities placed in its custody by a depository. It shall release securities only upon presentation by the depository of the most reasonably current statement of the total deposits subject to this article held by the depository, such statement to be verified and countersigned by two duly authorized officers, other than those who ordered the withdrawal of securities. A copy of this statement shall be forwarded to the administrator concurrently by the agent of depository.

history: (History: Amended by Stats. 1986, Ch. 1132, Sec. 22.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: A placement of securities by a depository with an agent of depository pursuant to this article shall have the effect of perfecting a security interest in those securities in the local agencies having deposits in that depository notwithstanding provisions of the Uniform Commercial Code to the contrary and notwithstanding that the agent of depository may be the trust department of the depository.

history: (History: Repealed and added by Stats. 1969, Ch. 1483.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) At the time the treasurer enters into a contract with the depository pursuant to Section 53649, he or she shall authorize the agent of depository designated by the depository, but including the trust department of the depository only when acceptable to both the treasurer and the depository, to hold securities of the depository in accordance with this article to secure the deposit of the local agency.

(b) Only those trust companies and trust departments, or the Federal Home Loan Bank of San Francisco, which have been authorized by the administrator pursuant to Section 53657 shall be authorized by treasurers to act as agents of depository.

(c) The securities are subject to order of the depository in accordance with Section 53654 except when the provisions of subdivision (i) of Section 53661 and Section 53665 are in effect.

(d) An agent of depository shall not release any security held to secure a local agency deposit in a depository unless the administrator issues an order authorizing the release where either of the following occurs:

(1) A state or federal regulatory agency has taken possession of the depository.

(2) A conservator, receiver, or other legal custodian has been appointed for the depository.

history: (History: Amended by Stats. 1998, Ch. 1035, Sec. 10. Effective September 30, 1998.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) No person shall act as an agent of depository unless that person is a trust company located in this state, the trust department of a bank located in this state, or the Federal Home Loan Bank of San Francisco, and is authorized by the administrator to act as an agent of depository.

(b) (1) An application for authorization shall be in such form, shall contain such information, shall be signed in such manner, and shall (if the administrator so requires) be verified in such manner, as the administrator may prescribe.

(2) The fee for filing an application for authorization with the administrator shall be five hundred dollars ($500).

(3) If the administrator finds, with respect to an application for authorization, that the applicant is competent to act as an agent of depository and that it is reasonable to believe the applicant will comply with all applicable provisions of this article and of any regulation or order issued under this article, the administrator shall approve the application. If the administrator finds otherwise, the administrator shall deny the application.

(4) When an application for authorization has been approved, the applicant shall file with the administrator an agreement to comply with all applicable provisions of this article and of any regulation or order issued under this article. The agreement shall be in such form, shall contain such provisions, and shall be signed in such manner as the administrator may prescribe.

(5) When an application for authorization has been approved, the applicant has complied with paragraph (4), and all conditions precedent to authorizing the applicant to act as agent of depository have been fulfilled, the administrator shall authorize the applicant to act as agent of depository.

history: (History: Amended by Stats. 1996, Ch. 1063, Sec. 82. Effective January 1, 1997.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: An agent of a depository may hold and pool securities to secure deposits for one or more depositories pursuant to Section 53656, but shall maintain a separate pool for each said depository. Each local agency shall have an undivided security interest in the pooled securities in the proportion that the amount of its deposits bears to the total amount of deposits secured by the pooled securities.

history: (History: Amended by Stats. 1970, Ch. 84.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: Whenever an agent of depository accepts securities pursuant to Section 53656 it may, with the authorization of the depository, place such securities for safekeeping with a Federal Reserve Bank or branch thereof or with any bank located in a city designated as a reserve city by the Board of Governors of the Federal Reserve System or with the Federal Home Loan Bank of San Francisco or with a trust company located in this state. Authority for such placement together with the names of the banks or, including the Federal Home Loan Bank of San Francisco, trust companies to be so used, shall be contained in the contract between the treasurer and the depository required in Section 53649.

history: (History: Amended by Stats. 1976, Ch. 349.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
When deposits of a local agency are secured by pooled securities pursuant to Section 53656, the agent of depository shall make available to the treasurer for review at a mutually agreed upon time and location all of the following information which may be in the form of a copy of the report required in subdivision (e) of Section 53661:

(a) A certification that there are securities in the pool in the amounts required by Section 53652 to secure deposits.

(b) A certified report of the individual securities then on deposit in the pool with the location and total market value thereof.

(c) The total amount of deposits then reported by the depository to be secured by the pool.

history: (History: Amended by Stats. 1986, Ch. 1132, Sec. 26.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) The Commissioner of Financial Protection and Innovation shall act as Administrator of Local Agency Security and shall be responsible for the administration of Sections 53638, 53651, 53651.2, 53651.4, 53651.6, 53652, 53654, 53655, 53656, 53657, 53658, 53659, 53660, 53661, 53663, 53664, 53665, 53666, and 53667.

(b) The administrator shall have the powers necessary or convenient to administer and enforce the sections specified in subdivision (a).

(c) (1) The administrator shall issue regulations consistent with law as the administrator may deem necessary or advisable in executing the powers, duties, and responsibilities assigned by this article. The regulations may include regulations prescribing standards for the valuation, marketability, and liquidity of the eligible securities of the class described in subdivision (m) of Section 53651, regulations prescribing procedures and documentation for adding, withdrawing, substituting, and holding pooled securities, and regulations prescribing the form, content, and execution of any application, report, or other document called for in any of the sections specified in subdivision (a) or in any regulation or order issued under any of those sections.

(2) The administrator, for good cause, may waive any provision of any regulation adopted pursuant to paragraph (1) or any order issued under this article, where the provision is not necessary in the public interest.

(d) The administrator may enter into any contracts or agreements as may be necessary, including joint underwriting agreements, to sell or liquidate eligible securities securing local agency deposits in the event of the failure of the depository or if the depository fails to pay all or part of the deposits of a local agency.

(e) The administrator shall require from every depository a report certified by the agent of depository listing all securities, and the market value thereof, which are securing local agency deposits together with the total deposits then secured by the pool, to determine whether there is compliance with Section 53652. These reports may be required whenever deemed necessary by the administrator, but shall be required at least four times each year at the times designated by the Comptroller of the Currency for reports from national banking associations. These reports shall be filed in the office of the administrator by the depository within 20 business days of the date the administrator calls for the report.

(f) The administrator may have access to reports of examination made by the Comptroller of the Currency insofar as the reports relate to national banking association trust department activities which are subject to this article.

(g) (1) The administrator shall require the immediate substitution of an eligible security, where the substitution is necessary for compliance with Section 53652, if (i) the administrator determines that a security listed in Section 53651 is not qualified to secure public deposits, or (ii) a treasurer, who has deposits secured by the securities pool, provides written notice to the administrator and the administrator confirms that a security in the pool is not qualified to secure public deposits.

(2) The failure of a depository to substitute securities, where the administrator has required the substitution, shall be reported by the administrator promptly to those treasurers having money on deposit in that depository and, in addition, shall be reported as follows:

(A) When that depository is a national bank, to the Comptroller of the Currency of the United States.

(B) When that depository is a state bank, to the Commissioner of Financial Protection and Innovation.

(C) When that depository is a federal association, to the Office of the Comptroller of the Currency.

(D) When that depository is a savings association, to the Commissioner of Financial Protection and Innovation.

(E) When that depository is a federal credit union, to the National Credit Union Administration.

(F) When that depository is a state credit union or a federally insured industrial loan company, to the Commissioner of Financial Protection and Innovation.

(h) The administrator may require from each treasurer a registration report and at appropriate times a report stating the amount and location of each deposit together with other information deemed necessary by the administrator for effective operation of this article. The facts recited in any report from a treasurer to the administrator are conclusively presumed to be true for the single purpose of the administrator fulfilling responsibilities assigned to them by this article and for no other purpose.

(i) (1) If, after notice and opportunity for hearing, the administrator finds that any depository or agent of depository has violated or is violating, or that there is reasonable cause to believe that any depository or agent of depository is about to violate, any of the sections specified in subdivision (a) or any regulation or order issued under any of those sections, the administrator may order the depository or agent of depository to cease and desist from the violation or may by order suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation.

(2) (A) If the administrator makes any of the findings set forth in paragraph (1) with respect to any depository or agent of depository and, in addition, finds that the violation or the continuation of the violation is likely to seriously prejudice the interests of treasurers, the administrator may order the depository or agent of depository to cease and desist from the violation or may suspend or revoke the authorization of the agent of depository. The order may require the depository or agent of depository to take affirmative action to correct any condition resulting from the violation.

(B) Within five business days after an order is issued under subparagraph (A), the depository or agent of depository may file with the administrator an application for a hearing on the order. The administrator shall schedule a hearing at least 30 days, but not more than 40 days, after receipt of an application for a hearing or within a shorter or longer period of time agreed to by a depository or an agent of depository. If the administrator fails to schedule the hearing within the specified or agreed to time period, the order shall be deemed rescinded. Within 30 days after the hearing, the administrator shall affirm, modify, or rescind the order; otherwise, the order shall be deemed rescinded. The right of a depository or agent of depository to which an order is issued under subparagraph (A) to petition for judicial review of the order shall not be affected by the failure of the depository or agent of depository to apply to the administrator for a hearing on the order pursuant to this subparagraph.

(3) Whenever the administrator issues a cease and desist order under paragraph (1) or (2), the administrator may in the order restrict the right of the depository to withdraw securities from a security pool; and, in that event, both the depository to which the order is directed and the agent of depository which holds the security pool shall comply with the restriction.

(4) In case the administrator issues an order under paragraph (1) or (2) suspending or revoking the authorization of an agent of depository, the administrator may order the agent of depository at its own expense to transfer all pooled securities held by it to such agent of depository as the administrator may designate in the order. The agent of depository designated in the order shall accept and hold the pooled securities in accordance with this article and regulations and orders issued under this article.

(j) In the discretion of the administrator, whenever it appears to the administrator that any person has violated or is violating, or that there is reasonable cause to believe that any person is about to violate, any of the sections specified in subdivision (a) or any regulation or order issued thereunder, the administrator may bring an action in the name of the people of the State of California in the superior court to enjoin the violation or to enforce compliance with those sections or any regulation or order issued thereunder. Upon a proper showing a permanent or preliminary injunction, restraining order, or writ of mandate shall be granted, and the court may not require the administrator to post a bond.

(k) In addition to other remedies, the administrator shall have the power and authority to impose the following sanctions for noncompliance with the sections specified in subdivision (a) after a hearing if requested by the party deemed in noncompliance. Any fine assessed pursuant to this subdivision shall be paid within 30 days after receipt of the assessment.

(1) Assess against and collect from a depository a fine not to exceed two hundred fifty dollars ($250) for each day the depository fails to maintain with the agent of depository securities as required by Section 53652.

(2) Assess against and collect from a depository a fine not to exceed one hundred dollars ($100) for each day beyond the time period specified in subdivision (b) of Section 53663 the depository negligently or willfully fails to file in the office of the administrator a written report required by that section.

(3) Assess against and collect from a depository a fine not to exceed one hundred dollars ($100) for each day beyond the time period specified in subdivision (e) that a depository negligently or willfully fails to file in the office of the administrator a written report required by that subdivision.

(4) Assess and collect from an agent of depository a fine not to exceed one hundred dollars ($100) for each day the agent of depository fails to comply with any of the applicable sections specified in subdivision (a) or any applicable regulation or order issued thereunder.

(l) (1) In the event that a depository or agent of depository fails to pay a fine assessed by the administrator pursuant to subdivision (k) within 30 days of receipt of the assessment, the administrator may assess and collect an additional penalty of 5 percent of the fine for each month or part thereof that the payment is delinquent.

(2) If a depository fails to pay the fines or penalties assessed by the administrator, the administrator may notify local agency treasurers with deposits in the depository.

(3) If an agent of depository fails to pay the fines or penalties assessed by the administrator, the administrator may notify local agency treasurers who have authorized the agent of depository as provided in Sections 53649 and 53656, and may by order revoke the authorization of the agent of depository as provided in subdivision (i).

(m) The amendments to this section enacted by the Legislature during the 1999–2000 Regular Session shall become operative on January 1, 2001.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 188. (SB 1498) Effective January 1, 2023.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) Each agent of depository shall report in writing to the administrator within two business days after any withdrawal, substitution, or addition of pooled securities and shall state the name and market value of the securities withdrawn, substituted, or added together with the total deposits then secured by the pool. This information shall be available from the administrator to the treasurer upon request.

(b) Each depository shall report in writing to the administrator weekly, giving the total amount of all deposits held by the depository pursuant to this article. The report shall be as of close of business on Wednesday of each week and shall be delivered to the office of the administrator, deposited in the United States mail, postage prepaid, or delivered electronically via email, or other electronic means approved by the administrator, addressed to the office of the administrator, within five business days. Where there has occurred no change in the deposits required to be held by the depository pursuant to this article, the report required by this subdivision need only state that fact.

history: (History: Amended by Stats. 2014, Ch. 214, Sec. 1. (AB 2298) Effective January 1, 2015.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: The individual reports specified in Sections 53654, 53660, 53661, and 53663 are not public documents and are not open to inspection by the public.

history: (History: Amended by Stats. 1987, Ch. 841, Sec. 5.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
If a depository fails to pay all or part of the deposits of a local agency secured by pooled securities in accordance with the contract provided for in Section 53649, and on demand of its treasurer or other authorized official and the treasurer files a report with the administrator, or if the depository fails:

(a) In case the pooled securities consist of securities other than securities of the class described in subdivision (p) of Section 53651, the administrator shall order the agent of depository holding the pooled securities to convert into money that portion of the pooled securities necessary to produce an amount equal to the sum of (i) the deposits of the local agency, (ii) any accrued interest due on the deposits, and (iii) the reasonable expenses of the agent of depository in complying with the order of the administrator and to pay the sum of items (i) and (ii) to the treasurer in satisfaction of the deposits. The agent of depository shall be reimbursed out of the proceeds of the conversion for its reasonable expenses in complying with the order of the administrator, as approved by the administrator. Any excess moneys resulting from the conversion shall be retained by the agent of depository as part of the securities pool until the depository substitutes for the excess moneys securities having a market value sufficient to bring the total of pooled securities up to the amount required by Section 53652.

(b) In case the pooled securities consist of a security of the class described in subdivision (p) of Section 53651, the administrator shall draw on the letter of credit an amount equal to the sum of (i) the deposits of the local agency, (ii) any accrued interest on the deposits, and (iii) the reasonable expenses of the administrator in paying the deposits and pay the sum of items (i) and (ii) to the treasurer in satisfaction of the deposits.

history: (History: Amended by Stats. 1986, Ch. 1132, Sec. 30.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: The only liability that shall attach to the administrator as the result of the operation of this article is that which would attach as a result of other laws of this state.

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) Expenses incurred by the administrator in carrying out the duties and responsibilities assigned to the administrator by the sections specified in subdivision (a) of Section 53661, shall be borne by the Local Agency Deposit Security Fund, which is hereby created and continuously appropriated to the administrator for the administration of the sections specified in subdivision (a) of Section 53661. This fund shall consist of fines levied pursuant to Section 53661, fees collected pursuant to the sections specified in subdivision (a) of Section 53661, and assessments levied pursuant to this section.

(b) Each fiscal year the administrator shall levy an assessment on a pro rata basis on those depositories which at any time during the preceding fiscal year held local agency deposits. The total assessment levied on all of those depositories shall be in an amount which, when added to the amount of fines and fees that the administrator estimates will be collected during the fiscal year when the assessment is levied, is sufficient in the judgment of the administrator to meet the expenses of the administrator in administering the sections specified in subdivision (a) of Section 53661 and to provide a reasonable reserve for contingencies. The basis of the apportionment of the assessment among the depositories assessed shall be the proportion that the average amount of local agency deposits held by each of those depositories bears to the average total amount of local agency deposits held by all of those depositories as shown by the reports of depositories to the administrator for the preceding fiscal year, as required in subdivision (e) of Section 53661; provided, however, that the amount of the assessment levied on each of those depositories shall be not less than twenty-five dollars ($25).

(c) The administrator shall notify each depository by mail of the amount levied against it. The depository shall pay the amount levied within 20 days after such notice into the Local Agency Deposit Security Fund for the administration of the sections specified in subdivision (a) of Section 53661. If payment is not made to the administrator within such time, the administrator shall assess and collect, in addition to the annual assessment, a penalty of 5 percent of the assessment for each month or part thereof that the payment is delinquent. If a depository fails to pay the assessment or penalties assessed by the administrator, the administrator may notify local agency treasurers with deposits in the depository.

history: (History: Amended by Stats. 1987, Ch. 841, Sec. 6.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: The treasurer or other authorized official is not responsible for money while it is deposited pursuant to this article.

history: (History: Amended by Stats. 1953, Ch. 670.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: The treasurer is not responsible for securities delivered to and receipted for by any bank, savings and loan association, credit union, federally insured industrial loan company, or trust company.

history: (History: Amended by Stats. 1988, Ch. 1004, Sec. 6. Operative January 1, 1989, by Sec. 8 of Ch. 1004.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: The charges for the handling and safekeeping of any such securities are not a charge against the treasurer but shall be paid by the depository owning the securities.

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
So far as possible, all money belonging to a local agency under the control of any of its officers or employees other than the treasurer shall, and money deposited as bail coming into the possession of a judge or officer of a superior court may, be deposited as active deposits in the state or national bank, inactive deposits in the state or national bank or state or federal association, federal or state credit union, or federally insured industrial loan company in this state selected by the officer, employee, or judge of the court. For purposes of this section, an officer or employee of a local agency and a judge or officer of a superior court are prohibited from depositing local agency funds or money coming into their possession into a state or federal credit union if an officer or employee of the local agency, or a judge or officer of a superior court, also serves on the board of directors, or any committee appointed by the board of directors, or the credit committee or supervisory committee, of the particular state or federal credit union. That money is subject to this article except:

(a) Deposits in an amount less than that insured pursuant to federal law are not subject to this article.

For deposits in excess of the amount insured under any federal law a contract in accordance with Section 53649 is required and the provisions of this article shall apply.

(b) Interest is not required on money deposited in an active deposit by a judge or officer of a superior court.

(c) Interest is not required on money deposited in an active deposit by an officer having control of a revolving fund created pursuant to Chapter 2 (commencing with Section 29300) of Division 3 of Title 3.

(d) Interest is not required on money deposited in an active deposit by an officer having control of a special fund established pursuant to Article 5 (commencing with Section 29400) or Article 6 (commencing with Section 29430) of Chapter 2 of Division 3 of Title 3.

history: (History: Amended by Stats. 2010, Ch. 212, Sec. 8. (AB 2767) Effective January 1, 2011.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: Notwithstanding any other provision of law, the accounting practices of each county utilized prior to the effective date of this section relating to interest on trust funds shall be deemed appropriate and to have been made under the direction of the board of supervisors of that county. This section is declaratory of the law in existence prior to the enactment of this section.

history: (History: Added by Stats. 1992, Ch. 1032, Sec. 1. Effective January 1, 1993.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: A tax collector of a local agency shall immediately deposit with the treasurer all money under his control, unless he deposits the money in a depositary pursuant to this article under permission and instructions of the treasurer having authority to make such deposit.

history: (History: Added by Stats. 1949, Ch. 81.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: An officer or employee of a local agency who deposits money belonging to, or in the custody of, the local agency in any other manner than that prescribed in this article is subject to forfeiture of his office or employment.

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
Notwithstanding any other provision in this article except Section 53652, the treasurer may deposit moneys in and enter into contracts with any depository, as defined in subdivision (c) of Section 53630, for services to be rendered by that depository that in the treasurer’s judgment are to the public advantage. One copy of each contract entered into under this section shall be filed with the auditor or corresponding officer of the local agency. The contract shall:

(a) Fix the duration of compensating deposits, if any.

(b) Fix the interest rate of that compensating deposit, if any.

(c) Specify the services to be rendered by the depository.

(d) Indicate whether the depository shall bear the expenses of transportation of the money to and from the depository.

(e) Fix the consideration payable by the agency for such services.

(f) Specify who may deposit moneys into the treasurer’s active account and how those persons are to make those deposits.

history: (History: Amended by Stats. 1994, Ch. 705, Sec. 11. Effective January 1, 1995.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text: Notwithstanding any other provision in this article, the consideration payable by the agency as specified in subdivision (e) of Section 53682 shall be paid by the treasurer by applying such consideration as costs applied on a pro rata basis against the interest earned by all the agencies for which the treasurer invests.

history: (History: Amended by Stats. 1976, Ch. 723.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) Unless otherwise provided by law, if the treasurer of any local agency, or other official responsible for the funds of the local agency, determines that the local agency has excess funds which are not required for immediate use, the treasurer or other official may, upon the adoption of a resolution by the legislative or governing body of the local agency authorizing the investment of funds pursuant to this section and with the consent of the county treasurer, deposit the excess funds in the county treasury for the purpose of investment by the county treasurer pursuant to Section 53601 or 53635, or Section 20822 of the Revenue and Taxation Code.

(b) The county treasurer shall, at least quarterly, apportion any interest or other increment derived from the investment of funds pursuant to this section in an amount proportionate to the average daily balance of the amounts deposited by the local agency and to the total average daily balance of deposits in the investment pool. In apportioning and distributing that interest or increment, the county treasurer may use the cash method, the accrual method, or any other method in accordance with generally accepted accounting principles.

Prior to distributing that interest or increment, the county treasurer may deduct the actual costs incurred by the county in administering this section in proportion to the average daily balance of the amounts deposited by the local agency and to the total average daily balance of deposits in the investment pool.

(c) The county treasurer shall disclose to each local agency that invests funds pursuant to this section the method of accounting used, whether cash, accrual, or other, and shall notify each local agency of any proposed changes in the accounting method at least 30 days prior to the date on which the proposed changes take effect.

(d) The treasurer or other official responsible for the funds of the local agency may withdraw the funds of the local agency pursuant to the procedure specified in Section 27136.

(e) Any moneys deposited in the county treasury for investment pursuant to this section are not subject to impoundment or seizure by any county official or agency while the funds are so deposited.

(f) This section is not operative in any county until the board of supervisors of the county, by majority vote, adopts a resolution making this section operative in the county.

(g) It is the intent of the Legislature in enacting this section to provide an alternative procedure to Section 51301 for local agencies to deposit money in the county treasury for investment purposes. Nothing in this section shall, therefore, be construed as a limitation on the authority of a county and a city to contract for the county treasurer to perform treasury functions for a city pursuant to Section 51301.

history: (History: Amended by Stats. 2011, Ch. 369, Sec. 2. (AB 1090) Effective January 1, 2012.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
(a) Any audit conducted relating to the investment of local agency funds and other funds by the county treasurer in the county fund maintained pursuant to Section 53684 shall be rendered to the depositary, the auditor, the controller, the secretary, or the corresponding officer of the local agency, the treasurer or other official responsible for the funds of any local agency that has funds on deposit in the county treasury, and the presiding judge of any superior court that has ordered, pursuant to Section 3412, Section 3413, or Section 3611 of the Probate Code, that assets of an estate be deposited with the county treasurer for deposit or investment.

(b) Any report rendered pursuant to Section 53646 shall be provided to the treasurer or other official responsible for the funds of any local agency that has funds on deposit in the county treasury.

history: (History: Added by Stats. 1996, Ch. 81, Sec. 2. Effective July 1, 1996.)

title: 5. LOCAL AGENCIES

article: 2. Deposit of Funds


text:
For the purposes of this article:

(a) “Local agency” means a county, city, city and county, redevelopment agency, public district, joint powers authority, or public nonprofit corporation.

(b) “Securities” means any bonds, notes, warrants, or other evidences of indebtedness and the interest coupons, if any, attached thereto, issued or proposed to be issued to finance or refinance a public project.

(c) “Issuer” means a local agency which issues securities.

(d) “Broker” has the same meaning as “broker-dealer” as defined in Section 25004 of the Corporations Code.

(e) “Dealer” has the same meaning as “broker-dealer” as defined in Section 25004 of the Corporations Code.

(f) “Municipal securities dealer” means any person, including a separately identifiable department or division of a bank, trust company, or savings and loan association engaged in the business of buying and selling municipal securities for his or her own account, through a broker or otherwise, but does not include any of the following:

(1) Any person insofar as he or she buys or sells those securities for his or her own account, either individually or in some fiduciary capacity, but not as a part of a regular business.

(2) A bank, trust company, or savings and loan association, unless the bank, trust company, or savings and loan association is engaged in the business of buying and selling municipal securities for its own account other than in a fiduciary capacity, through a broker or otherwise, unless the bank, trust company or savings and loan association is engaged in that business through a separately identifiable department or division, in which case the department or division, and not the bank, trust company, or savings and loan association, is the municipal securities dealer.

history: (History: Amended by Stats. 1981, Ch. 496, Sec. 1.)

title: 5. LOCAL AGENCIES

article: 2.5. Sale of Securities

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 2.5. Sale of Securities


text:
(a) A financial advisory relationship shall be deemed to exist when a broker, dealer, or municipal securities dealer renders, or enters into an agreement to render, financial advisory or consultant services to, or on behalf of, an issuer, with respect to a new issue or issues of municipal securities, including advice with respect to the structure, timing, and terms of an issue or issues, for a fee or other compensation, or in expectation of compensation for the rendering of the services. Notwithstanding the foregoing, a financial advisory relationship shall not be deemed to exist when, in the course of acting as an underwriter, a municipal securities dealer renders advice to an issuer, including advice with respect to the structure, timing, and terms of a new issue of municipal securities.

(b) Each financial advisory relationship shall be evidenced by a writing executed prior to, upon, or promptly after, the inception of the financial advisory relationship (or promptly after the creation or selection of the issuer if the issuer does not exist or has not been determined at the time the relationship commences). The writing shall set forth the basis of compensation for the financial advisory services to be rendered, including provisions relating to the deposit of funds or the utilization of fiduciary or agency services offered by the broker, dealer, or municipal securities dealer, or by a person controlling, controlled by, or under common control with the broker, dealer, or municipal securities dealer in connection with the rendering of the financial advisory services.

(c) No broker, dealer, or municipal securities dealer that has a financial advisory relationship with respect to a new issue of municipal securities shall acquire, as principal, either alone or as a participant in a syndicate or other similar account formed for the purpose of purchasing, directly or indirectly, from the issuer all or any portion of the issue, nor arrange for the acquisition or participation by a person controlling, controlled by, or under common control with the broker, dealer, or municipal securities dealer, unless one of the following applies:

(1) If the issue is to be sold by the issuer on a negotiated basis, all of the following conditions have occurred:

(A) The financial advisory relationship with respect to the issue has been terminated in writing and, at or after the termination, the issuer has expressly consented in writing to the acquisition or participation in the purchase of the securities on a negotiated basis.

(B) The broker, dealer, or municipal securities dealer has expressly disclosed in writing to the issuer, at or before the termination, that there may be a conflict of interest in changing from the capacity of financial adviser to purchaser of the securities with respect to which the financial advisory relationship exists, and the issuer has expressly acknowledged in writing to the broker, dealer, or municipal securities dealer receipt of that disclosure.

(C) The broker, dealer, or municipal securities dealer has expressly disclosed in writing to the issuer, at or before the termination, the source and anticipated amount of all remuneration to the broker, dealer, or municipal securities dealer with respect to the issue in addition to the compensation referred to in subdivision (b), and the issuer has expressly acknowledged in writing to the broker, dealer, or municipal securities dealer receipt of that disclosure.

(2) If the issue is to be sold by the issuer at competitive bid, the issuer has expressly consented in writing prior to the bid to that acquisition or participation.

The limitations and requirements set forth in this subdivision shall also apply to any broker, dealer, or municipal securities dealer controlling, controlled by, or under common control with the broker, dealer, or municipal securities dealer having a financial advisory relationship. The use of the term “indirectly” in this subdivision shall not preclude a broker, dealer, or municipal securities dealer who has a financial advisory relationship with respect to a new issue of municipal securities from purchasing those securities from an underwriter, either for its own trading account or for the account of customers, except to the extent that the purchase is made to contravene the purpose and intent of this section. Each broker, dealer, and municipal securities dealer subject to the provisions of this subdivision shall maintain a copy of the written disclosures, acknowledgments, and consents required by this section in a separate file.

(d) If a broker, dealer, or municipal securities dealer acquires all or a portion of a new issue of municipal securities or participates in a syndicate or other account that acquires those securities in accordance with subdivision (c), the broker, dealer, or municipal securities dealer shall disclose the existence of the financial advisory relationship in writing to each customer who purchases those securities from that broker, dealer, or municipal securities dealer, at or before the completion of the transaction with the customer.

history: (History: Repealed and added by Stats. 1981, Ch. 496, Sec. 3.)

title: 5. LOCAL AGENCIES

article: 2.5. Sale of Securities


text: In addition to any other requirement imposed by law, at least 15 days prior to the sale of any public securities that exceed one million dollars ($1,000,000) but do not exceed ten million dollars ($10,000,000) at a public sale and at least five days prior to the sale of any public securities that exceed ten million dollars ($10,000,000) at a public sale, an issuer shall publish notice of the intention to sell the securities in a financial publication generally circulated throughout the state or reasonably expected to be disseminated among prospective bidders for the securities. The notice shall include the date, time, and place of the intended sale and the amount of the securities to be sold.

history: (History: Amended by Stats. 2004, Ch. 7, Sec. 5. Effective January 22, 2004.)

title: 5. LOCAL AGENCIES

article: 2.5. Sale of Securities


text:
A county, city, municipal corporation, or district may do any and all things necessary under federal law or rule of a federal department, agency, mandatory, or authority, to secure monetary aid either as a loan or as an outright appropriation:

(a) To reduce any of its indebtedness.

(b) To fund or refund any such indebtedness, whether relating to general obligation bonds or to the obligations represented by special assessment bonds for the unpaid principal upon any assessment levied prior to September 15, 1935 pursuant to state law in which the lien is special as to a particular property described in the assessment or bond, or whether the bonds are to be paid and discharged from an annual levy in accordance with the assessed value of all of the lands in a district.

title: 5. LOCAL AGENCIES

article: 3. Federal Aid

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 3. Federal Aid


text: Notwithstanding any other law, except limitations imposed by the Constitution, the legislative body of a county, city, district, political subdivision, or a public or municipal corporation, may accept grants or loans of funds made available by the Federal Government or a federal department or agency to aid in financing plans for, or construction of, public works.

title: 5. LOCAL AGENCIES

article: 3. Federal Aid


text: A county, city, district, political subdivision, or a public or municipal corporation, may comply with all applicable requirements of federal laws and regulations and orders issued pursuant to the law relating to the awarding of contracts for public work, the hours of labor, employment preferences, and other matters covered by the law, regulation, or order, if such compliance is a prerequisite to the loan or grant of federal funds.

title: 5. LOCAL AGENCIES

article: 3. Federal Aid


text:
A county or city may do all acts necessary to participate in all programs authorized by a federal housing act, including the Demonstration Cities and Metropolitan Development Act of 1966 or any other federal program whereby federal funds are granted to the county or city or any of its residents for purposes of health, education, welfare, public safety, law enforcement activities which have not been preempted by state law, prevention or reduction of crime, rehabilitation of persons convicted of crime or juvenile offenders, public works or community improvement, including, without limitation thereto, contracting and cooperating with the federal government, the state and its agencies, other local public agencies and private persons and corporations, and may make any expenditure of county or city funds required for such participation.

A county or city may, through its officers and employees, also provide any or all necessary services to any housing authority with regard to which the governing body of the county or city has made a declaration of necessity pursuant to Article 2, Chapter 1, Part 2, Division 24 of the Health and Safety Code.

Where the authority to perform any act or service is delegated to a city or county by this section, the city or county may perform such act or service by means of a contract with an independent contractor, which independent contractor may be a public or private agency or private person.

This section shall not be construed to operate as a grant of authority in compliance with any federal act or program requiring the adoption of specific enabling legislation nor shall it be construed to supersede any such legislation.

history: (History: Amended by Stats. 1972, Ch. 1246.)

title: 5. LOCAL AGENCIES

article: 3. Federal Aid


text: A city, county or city and county which has entered into and operated a federal grant program pursuant to the authority contained within Section 53703 may continue the operation of such program for a period not exceeding two years from the termination of any federal grant or authority for such program. The board of supervisors or city council may appropriate funds for such programs and may do all acts necessary to continue the program in operation.

history: (History: Added by Stats. 1973, Ch. 160.)

title: 5. LOCAL AGENCIES

article: 3. Federal Aid


text:
A city, county or city and county may appropriate funds and may do all acts necessary to assume and carry out or continue any program, or part thereof, which is operated by any other public agency, private person or corporation and whereby federal funds have been granted to such public agency, private person or corporation for purposes of health, education, welfare, public safety, law enforcement activities which have not been preempted by state law, prevention or reduction of crime, rehabilitation of persons convicted of crime or juvenile offenders, or public works or community improvements, where the federal funds for such programs are to be terminated or substantially reduced by the federal government; provided however, that no such program shall be operated pursuant to this section for a period exceeding two years. A city, county or city and county may perform any act or service authorized by this section by means of a contract with an independent contractor. The independent contractor may be a public agency, private person or corporation.

The board of supervisors or city council may appropriate funds for such programs and may do all acts necessary to continue the program in action.

title: 5. LOCAL AGENCIES

article: 3. Federal Aid


text: “Priority expenditures” for which the State and Local Fiscal Assistance Act of 1972 (Public Law 92-512) funds may be spent for the purposes authorized by the act by a local agency are priority expenditures serving the general interest of the citizens of the city or the county in which they are spent whether the expenditure is made by the city, the county, or by any other local governmental agency authorized to perform those purposes within the city or the county receiving the funds. The funds for the construction, removal, relocation or replacement of any facility designed to provide water, water treatment or sewer services may be allocated and appropriated for such priority expenditures by the city or county receiving them for expenditure by the agency itself or by the local governmental agency which performs the service wholly or partially within the boundaries of the city or the county making the allocation for such purposes.

history: (History: Added by Stats. 1974, Ch. 539.)

title: 5. LOCAL AGENCIES

article: 3. Federal Aid


text: As used in Article XIIIB of the California Constitution, the term “proceeds of taxes” does not include the proceeds from the sale of bonds, notes, warrants or other obligations required for the purpose of financing or refinancing the acquisition, construction, or completion of public improvements or projects or any rents, charges, assessments, or levies, other than tax levies, made pursuant to law, the proceeds of which are required for the payment of principal and interest, or to otherwise secure such obligations, and to pay the costs and expenses associated therewith.

history: (History: Added by Stats. 1980, Ch. 516.)

title: 5. LOCAL AGENCIES

article: 3.5. Proceeds of Taxes

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 3.5. Proceeds of Taxes


text:
(a) Pursuant to Section 4 of Article XIII A of the California Constitution and Article 3.5 (commencing with Section 50075) of Chapter 1 of Part 1 of Division 1, and consistent with Article 3.7 (commencing with Section 53720), any city, county, city or county, or library district may impose special taxes for the purpose of providing public library facilities and services as described in Chapter 1.5 (commencing with Section 18010) of Part 11 of the Education Code.

(b) As used in this section, “special taxes” means special taxes that apply uniformly to all taxpayers or all real property within the city, county, city and county, or library district.

history: (History: Added by Stats. 1988, Ch. 1344, Sec. 1. Effective September 26, 1988.)

title: 5. LOCAL AGENCIES

article: 3.6. Public Library Special Taxes

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 3.6. Public Library Special Taxes


text: A tax imposed pursuant to this article is a special tax and not a special assessment, and there is no requirement that the tax be apportioned on the basis of benefit to any property. However, a special tax levied pursuant to this article may be on or based on benefit received by parcels of real property, the cost of making facilities or authorized services available to each parcel, or other reasonable basis as determined by the city, county, city or county, or library district. A special tax apportioned on any of these bases shall not be construed to be on or based upon the ownership of real property.

title: 5. LOCAL AGENCIES

article: 3.6. Public Library Special Taxes


text: This article does not apply to any special tax or other charge imposed under Chapter 2.5 (commencing with Section 53311).

title: 5. LOCAL AGENCIES

article: 3.6. Public Library Special Taxes


text: This article does not apply to any special tax imposed prior to the effective date of this article.

title: 5. LOCAL AGENCIES

article: 3.6. Public Library Special Taxes


text:
DEFINITIONS.

As used in this Article:

(a) “local government” means any county, city, city and county, including a chartered city or county, or any public or municipal corporation; and,

(b) “district” means an agency of the state, formed pursuant to general law or special act, for the local performance of governmental or proprietary functions within limited boundaries.

history: (History: Added November 4, 1986, by initiative Proposition 62.)

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 3.7. Voter Approval of Taxes


text: All taxes are either special taxes or general taxes. General taxes are taxes imposed for general governmental purposes. Special taxes are taxes imposed for specific purposes.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text: No local government or district may impose any special tax unless and until such special tax is submitted to the electorate of the local government, or district and approved by a two-thirds vote of the voters voting in an election on the issue.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text: No local government, or district, whether or not authorized to levy a property tax, may impose any general tax unless and until such general tax is submitted to the electorate of the local government, or district and approved by a majority vote of the voters voting in an election on the issue.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text:
(a) A tax subject to the vote requirements prescribed by Section 53722 or Section 53723 shall be proposed by an ordinance or resolution of the legislative body of the local government or district. The ordinance or resolution proposing such tax shall include the type of tax and rate of tax to be levied, the method of collection, the date upon which an election shall be held on the issue, and, if a special tax, the purpose or service for which its imposition is sought.

(b) No tax subject to the vote requirement prescribed by Section 53723 shall be presented at an election unless the ordinance or resolution proposing such tax is approved by a two-thirds vote of all members of the legislative body of the local government or district.

(c) Except as provided in subdivision (d), the election on any tax proposed pursuant to this Article shall be consolidated with a statewide primary election, a statewide general election, or a regularly scheduled local election at which all of the electors of the local government or district are entitled to vote.

(d) Notwithstanding subdivision (c), the legislative body of the local government or district may provide that the election on any tax proposed pursuant to this Article shall be held at any date otherwise permitted by law. The local government or district shall bear the cost of any election held pursuant to this subdivision. An election held pursuant to this subdivision shall be deemed at the request of the local government or district calling such election, and shall not be deemed a state mandate.

(e) The revenues from any special tax shall be used only for the purpose or service for which it was imposed, and for no other purpose whatsoever.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text:
(a) Except as permitted in Section 1 of Article XIIIA of the California Constitution, no local government or district may impose any ad valorem taxes on real property. No local government or district may impose any transaction tax or sales tax on the sale of real property within the city, county or district.

(b) Taxes permitted by Subdivision (b) of Section 1 of Article XIIIA of the California Constitution shall not be subject to the vote requirements prescribed by this Article.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text: Except as set forth in Section 53727, this Article shall not be construed to repeal or affect any statute enacted prior to August 1, 1985 which authorizes the imposition of a special tax.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text:
(a) Neither this Article, nor Article XIIIA of the California Constitution, nor Article 3.5 of Division 1 of Title 5 of the Government Code (commencing with Section 50075) shall be construed to authorize any local government or district to impose any general or special tax which it is not otherwise authorized to impose; provided, however, that any special tax imposed pursuant to Article 3.5 of Division 1 of Title 5 of the Government Code prior to August 1, 1985 shall not be affected by this section.

(b) Any tax imposed by any local government or district on or after August 1, 1985, and prior to the effective date of this Article, shall continue to be imposed only if approved by a majority vote of the voters voting in an election on the issue of imposition, which election shall be held within two years of the effective date of this Article. Any local government or district which fails to seek or obtain such majority approval shall cease to impose such tax on and after November 15, 1988.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text: If any local government or district imposes any tax without complying with the requirements of this Article, or in excess of its authority as clarified by Section 53727, whether or not any provision of Section 53727 is held not applicable to such jurisdiction, the amount of property tax revenue allocated to the jurisdiction pursuant to Chapter 6 of part 0.5 of Division 1 of the Revenue and Taxation Code (commencing with Section 95) shall be reduced by one dollar ($1. 00) for each one dollar ($1.00) of revenue attributable to such tax for each year that the tax is collected. Nothing in this section shall impair the right of any citizen or taxpayer to maintain any action to invalidate any tax imposed in violation of this Article.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text: This Article may only be amended by vote of the electorate of the State of California.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text: If any provision of this Article, or the application thereof to any person, organization, local government, district, or circumstance is held invalid or unconstitutional, the provision to other persons, organizations, local governments, districts, or circumstances shall not be affected thereby but shall remain in full force and effect.

title: 5. LOCAL AGENCIES

article: 3.7. Voter Approval of Taxes


text:
A hospital district established pursuant to Division 23 (commencing with Section 32000) of the Health and Safety Code whose hospitals are wholly owned and are operated by the district shall have the authority to impose special taxes pursuant to Article XIIIA of the California Constitution and Article 3.5 (commencing with Section 50075) of Chapter 1 of Part 1 of Division 1 and consistent with Article 3.7 (commencing with Section 53720). The board of directors shall determine the basis and nature of any special tax and its manner of collection.

“Special taxes” as used in this section, means special taxes which apply uniformly to all taxpayers or all real property within the hospital district.

history: (History: Added by Stats. 1988, Ch. 1345, Sec. 1.)

title: 5. LOCAL AGENCIES

article: 3.8. Hospital Districts: Special Taxes

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 3.8. Hospital Districts: Special Taxes


text: This article does not apply to any special tax imposed prior to January 1, 1989, nor does this article affect the validity of any special tax imposed by a hospital district prior to January 1, 1989.

title: 5. LOCAL AGENCIES

article: 3.8. Hospital Districts: Special Taxes


text: As used in this article, “local agency” means a city, county, or district empowered to levy and collect assessments or taxes.

history: (History: Added by renumbering Section 53730 (as added by Stats. 1949, Ch. 81) by Stats. 1987, Ch. 56, Sec. 87.)

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 4. Capital Outlay Fund


text: By ordinance, the legislative body of a local agency may provide for the levy and collection of assessments or taxes for the creation and accumulation of a fund for capital outlays.

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund


text: In making a levy, the legislative body shall not exceed any limitation upon its right to impose taxes prescribed by law except as authorized by law.

history: (History: Amended by Stats. 1951, Ch. 808.)

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund


text: If the local agency is a city or county operating under a charter, the limitations upon the levying of taxes imposed by the charter apply.

history: (History: Added by Stats. 1949, Ch. 81.)

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund


text: In a local agency required to adopt a budget, all or part of the fund may be shown in the budget as reserves for future expenditures in subsequent years and when so shown shall be identified as to purpose, but need not be itemized.

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund


text: At any time after the creation of the fund the legislative body may transfer to the fund any unencumbered surplus funds remaining on hand at the end of a fiscal year.

history: (History: Amended by Stats. 1979, Ch. 373.)

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund


text: The term “capital outlays” does not include the construction, acquisition, extensions of, or additions to utilities other than utilities for the furnishing of water supply. The term “utilities” shall not include sewage or sanitation facilities or airports.

history: (History: Amended by Stats. 1949, Ch. 14.)

title: 5. LOCAL AGENCIES

article: 4. Capital Outlay Fund


text:
(a) An ordinance or resolution presented for voter approval pursuant to this article or to Article XIIIC or XIIID of the California Constitution may state a range of rates or amounts. If the ordinance or resolution is approved by the requisite number of votes at an election held for that purpose, the governing board of the adopting local government may thereafter impose the tax, assessment, or property-related fee or charge at any rate or amount that is less than or equal to the maximum amount authorized by the voter-approved ordinance or resolution.

(b) (1) Except as provided in paragraph (2), an ordinance or resolution presented for voter approval pursuant to Article XIIIC or XIIID of the California Constitution may provide that the tax, assessment, or property-related fee or charge rates or amounts stated in that ordinance or resolution may be adjusted for inflation pursuant to a clearly identified formula stated in that ordinance or resolution. If an ordinance or resolution described in the preceding sentence is approved by the requisite number of votes at an election held for that purpose, the governing board of the adopting local government may thereafter impose the tax, assessment, or property-related fee or charge at any rate or amount that is less than or equal to the inflation-adjusted maximum amount authorized by the voter-approved ordinance or resolution.

(2) Notwithstanding the authority established in paragraph (1), if the amount or rate of a tax, assessment, or property-related fee or charge is determined by using a percentage calculation, the ordinance imposing the tax, assessment, or property-related fee or charge may not provide that the percentage will be adjusted for inflation.

history: (History: Added by Stats. 1997, Ch. 38, Sec. 4. Effective July 1, 1997.)

title: 5. LOCAL AGENCIES

article: 4.3. Local Levies

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 4.3. Local Levies


text: As used in this article, “local agency” means city, county, or district empowered to levy or assess taxes.

history: (History: Added by Stats. 1967, Ch. 1059.)

title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 4.5. Tort Liability Fund


text: By ordinance, the legislative body of a local agency may provide for the levy and collection of assessments or taxes for the creation and accumulation of a fund to provide for payments of claims arising under Division 3.6 (commencing with Section 810) of Title 1 of the Government Code, and all legal and investigative costs arising from said claims.

title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


text: If the local agency is a city or county operating under a charter, any limitations upon the levying of taxes imposed by the charter apply.

title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


text: At any time after the creation of the fund the legislative body may transfer to the fund any unencumbered surplus funds remaining on hand at the end of the fiscal year.

title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


text: The fund shall be used exclusively for the payments of claims, judgments, and legal and investigative costs that may arise under Division 3.6 (commencing with Section 810) of Title 1 of the Government Code.

title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


text: This article is applicable only in counties with a population of 4,000,000 or more, as determined by the 1960 federal census.

title: 5. LOCAL AGENCIES

article: 4.5. Tort Liability Fund


text:
For purposes of Article XIIIC and Article XIIID of the California Constitution and this article, the following words have the following meanings, and shall be read and interpreted in light of the findings and declarations contained in Section 53751:

(a) “Agency” means any local government as defined in subdivision (b) of Section 1 of Article XIIIC of the California Constitution.

(b) “Assessment” means any levy or charge by an agency upon real property that is based upon the special benefit conferred upon the real property by a public improvement or service, that is imposed to pay the capital cost of the public improvement, the maintenance and operation expenses of the public improvement, or the cost of the service being provided. “Assessment” includes, but is not limited to, “special assessment,” “benefit assessment,” “maintenance assessment,” and “special assessment tax.”

(c) “District” means an area that is determined by an agency to contain all of the parcels that will receive a special benefit from a proposed public improvement or service.

(d) “Drainage system” means any system of public improvements that is intended to provide for erosion control, for landslide abatement, or for other types of water drainage.

(e) “Extended,” when applied to an existing tax or fee or charge, means a decision by an agency to extend the stated effective period for the tax or fee or charge, including, but not limited to, amendment or removal of a sunset provision or expiration date.

(f) “Flood control” means any system of public improvements that is intended to protect property from overflow by water.

(g) “Identified parcel” means a parcel of real property that an agency has identified as having a special benefit conferred upon it and upon which a proposed assessment is to be imposed, or a parcel of real property upon which a proposed property-related fee or charge is proposed to be imposed.

(h) (1) “Increased,” when applied to a tax, assessment, or property-related fee or charge, means a decision by an agency that does either of the following:

(A) Increases any applicable rate used to calculate the tax, assessment, fee, or charge.

(B) Revises the methodology by which the tax, assessment, fee, or charge is calculated, if that revision results in an increased amount being levied on any person or parcel.

(2) A tax, fee, or charge is not deemed to be “increased” by an agency action that does either or both of the following:

(A) Adjusts the amount of a tax, fee, or charge in accordance with a schedule of adjustments, including a clearly defined formula for inflation adjustment that was adopted by the agency prior to November 6, 1996.

(B) Implements or collects a previously approved tax, fee, or charge, so long as the rate is not increased beyond the level previously approved by the agency, and the methodology previously approved by the agency is not revised so as to result in an increase in the amount being levied on any person or parcel.

(3) A tax, assessment, fee, or charge is not deemed to be “increased” in the case in which the actual payments from a person or property are higher than would have resulted when the agency approved the tax, assessment, fee, or charge, if those higher payments are attributable to events other than an increased rate or revised methodology, such as a change in the density, intensity, or nature of the use of land.

(i) “Notice by mail” means any notice required by Article XIIIC or XIIID of the California Constitution that is accomplished through a mailing, postage prepaid, deposited in the United States Postal Service and is deemed given when so deposited. Notice by mail may be included in any other mailing to the record owner that otherwise complies with Article XIIIC or XIIID of the California Constitution and this article, including, but not limited to, the mailing of a bill for the collection of an assessment or a property-related fee or charge.

(j) “Record owner” means the owner of a parcel whose name and address appears on the last equalized secured property tax assessment roll, or in the case of any public entity, the State of California, or the United States, means the representative of that public entity at the address of that entity known to the agency.

(k) “Sewer” includes systems, all real estate, fixtures, and personal property owned, controlled, operated, or managed in connection with or to facilitate sewage collection, treatment, or disposition for sanitary or drainage purposes, including lateral and connecting sewers, interceptors, trunk and outfall lines, sanitary sewage treatment or disposal plants or works, drains, conduits, outlets for surface or storm waters, and any and all other works, property, or structures necessary or convenient for the collection or disposal of sewage, industrial waste, or surface or storm waters. “Sewer system” shall not include a sewer system that merely collects sewage on the property of a single owner.

(l) “Registered professional engineer” means an engineer registered pursuant to the Professional Engineers Act (Chapter 7 (commencing with Section 6700) of Division 3 of the Business and Professions Code).

(m) “Vector control” means any system of public improvements or services that is intended to provide for the surveillance, prevention, abatement, and control of vectors as defined in subdivision (k) of Section 2002 of the Health and Safety Code and a pest as defined in Section 5006 of the Food and Agricultural Code.

(n) “Water” means any system of public improvements intended to provide for the production, storage, supply, treatment, or distribution of water from any source.

history: (History: Amended by Stats. 2017, Ch. 536, Sec. 1. (SB 231) Effective January 1, 2018.)

title: 5. LOCAL AGENCIES

path: 5. LOCAL AGENCIES > 2. CITIES, COUNTIES, AND OTHER AGENCIES > 4. Financial Affairs > 4.6. Proposition 218 Omnibus Implementation Act


text:
(a) The Legislature finds and declares all of the following:

(1) Fire service is a different and distinct service from water service, which is one of several other property-related services that aids in the provision of fire service provided to properties.

(2) Hydrants are part of the system of public improvements described in subdivision (n) of Section 53750.

(3) Hydrants are generally designed, installed, and used to provide an immediately available water service to aid in extinguishing fires that threaten property served by a water service provider, and are generally not designed or installed to provide water service to aid in extinguishing fires that threaten property not served by a water service provider or wildfires. Hydrants are also used by a water service provider for water system operations and maintenance.

(4) Hydrants are generally located in proximity to properties served by a water service provider to facilitate water service to those properties. Hydrants and the water distributed through them have a direct relationship to property ownership because hydrants are generally sized based upon property use and then are installed when parcels are developed or connected to a water system.

(5) Hydrants and the water distributed through them are not available to the public at large in substantially the same manner as they are to property owners served by a water service provider because hydrants are designed, installed, and used to serve properties receiving water service, and the public at large does not generally have access to water through those hydrants. Incidental or other de minimis use of hydrants and the water distributed through them for other purposes does not change their essential character as a property-related service.

(6) Hydrants and the water distributed through them are part of the property-related water service provided to all property owners served by a water service provider. Through hydrants, water is immediately available to those properties to aid in extinguishing a fire that directly threatens them. The cost associated with this aspect of water service is proportionately allocable among properties that may receive a reasonably similar level of service from the immediate availability of water to aid in extinguishing fires that directly or indirectly threaten those properties.

(7) Property-related water service costs may include, but are not limited to, any costs associated with constructing, maintaining, repairing, upgrading, and replacing hydrants, and costs associated with obtaining, treating, and distributing adequate volumes of water to meet the water demands of properties served by the water service provider, including water supplied for firefighting purposes. The fees or charges related to those costs are imposed upon a parcel or person as an incident of property ownership.

(b) The fees or charges for property-related water service imposed or increased pursuant to Section 6 of Article XIII D of the California Constitution may include the costs to construct, maintain, repair, or replace hydrants as needed or consistent with applicable fire codes and industry standards, and may include the cost of water distributed through hydrants. In addition to any other method consistent with Section 6 of Article XIII D of the California Constitution, fees or charges for the aspects of water service related to hydrants and the water distributed through them may be fixed and collected as a separate fee or charge, or included in the other water rates and charges fixed and collected by a public agency, as provided for in Section 53069.9 of the Government Code.

(c) For the purpose of this section, “hydrants” means all hydrants and other infrastructure used to distribute water that aids in the protection of property from fire, and all related or appurtenant infrastructure and facilities owned by a water service provider necessary or convenient for distributing water that aids in the protection of property from fire, including adequately sized and pressurized lines, pumps, and all appurtenances, but does not include privately owned hydrants or other private fire response related infrastructure.

(d) This section is declaratory of existing law.

history: (History: Added by Stats. 2020, Ch. 240, Sec. 1. (SB 1386) Effective January 1, 2021.)

title: 5. LOCAL AGENCIES

article: 4.6. Proposition 218 Omnibus Implementation Act


text:
(a) The fees or charges for property-related water service imposed or increased pursuant to Section 6 of Article XIII D of the California Constitution may include the incrementally higher costs of water service due to any of the following:

(1) The higher water usage demand of parcels.

(2) The maximum potential water use.

(3) Projected peak water usage.

(4) Any combination of paragraphs (1) to (3), inclusive.

(b) (1) The incrementally higher costs of water service associated with higher water usage demands, the maximum potential water use, or projected peak water usage may be allocated using any method that reasonably assesses the water service provider’s cost of serving those parcels that are increasing potential water usage demand, maximum potential water use, or projected peak water usage.

(2) In addition to any other method consistent with Section 6 of Article XIII D of the California Constitution, the incrementally higher costs of water service associated with higher water usage demand, maximum potential water use, or projected peak water usage may be allocated among customer classes, within customer classes, or both, based on meter size or peaking factors, as those methods reasonably assess the water service provider’s cost of serving parcels that increase water usage demand, maximum potential water use, or projected peak water usage.

(c) This section is declaratory of existing law.

history: (History: Added by Stats. 2024, Ch. 359, Sec. 1. (AB 1827) Effective January 1, 2025.)

title: 5. LOCAL AGENCIES


text:
The Legislature finds and declares all of the following:

(a) The ongoing, historic drought has made clear that California must invest in a 21st century water management system capable of effectively meeting the economic, social, and environmental needs of the state.

(b) Sufficient and reliable funding to pay for local water projects is necessary to improve the state’s water infrastructure.

(c) Proposition 218 was approved by the voters at the November 5, 1996, statewide general election. Some court interpretations of the law have constrained important tools that local governments need to manage storm water and drainage runoff.

(d) Storm waters are carried off in storm sewers, and careful management is necessary to ensure adequate state water supplies, especially during drought, and to reduce pollution. But a court decision has found storm water subject to the voter-approval provisions of Proposition 218 that apply to property-related fees, preventing many important projects from being built.

(e) The court of appeal in Howard Jarvis Taxpayers Ass’n v. City of Salinas (2002) 98 Cal.App.4th 1351 concluded that the term “sewer,” as used in Proposition 218, is “ambiguous” and declined to use the statutory definition of the term “sewer system,” which was part of the then-existing law as Section 230.5 of the Public Utilities Code.

(f) The court in Howard Jarvis Taxpayers Ass’n v. City of Salinas (2002) 98 Cal.App.4th 1351 failed to follow long-standing principles of statutory construction by disregarding the plain meaning of the term “sewer.” Courts have long held that statutory construction rules apply to initiative measures, including in cases that apply specifically to Proposition 218 (see People v. Bustamante (1997) 57 Cal.App.4th 693; Keller v. Chowchilla Water Dist. (2000) 80 Cal.App.4th 1006). When construing statutes, courts look first to the words of the statute, which should be given their usual, ordinary, and commonsense meaning (People v. Mejia (2012) 211 Cal.App.4th 586, 611). The purpose of utilizing the plain meaning of statutory language is to spare the courts the necessity of trying to divine the voters’ intent by resorting to secondary or subjective indicators. The court in Howard Jarvis Taxpayers Ass’n v. City of Salinas (2002) 98 Cal.App.4th 1351 asserted its belief as to what most voters thought when voting for Proposition 218, but did not cite the voter pamphlet or other accepted sources for determining legislative intent. Instead, the court substituted its own judgment for the judgment of voters.

(g) Neither the words “sanitary” nor “sewerage” are used in Proposition 218, and the common meaning of the term “sewer services” is not “sanitary sewerage.” In fact, the phrase “sanitary sewerage” is uncommon.

(h) Proposition 218 exempts sewer and water services from the voter-approval requirement. Sewer and water services are commonly considered to have a broad reach, encompassing the provision of clean water and then addressing the conveyance and treatment of dirty water, whether that water is rendered unclean by coming into contact with sewage or by flowing over the built-out human environment and becoming urban runoff.

(i) Numerous sources predating Proposition 218 reject the notion that the term “sewer” applies only to sanitary sewers and sanitary sewerage, including, but not limited to:

(1) Section 230.5 of the Public Utilities Code, added by Chapter 1109 of the Statutes of 1970.

(2) Section 23010.3, added by Chapter 1193 of the Statutes of 1963.

(3) The Street Improvement Act of 1913.

(4) L.A. County Flood Control Dist. v. Southern Cal. Edison Co. (1958) 51 Cal.2d 331, where the California Supreme Court stated that “no distinction has been made between sanitary sewers and storm drains or sewers.”

(5) Many other cases where the term “sewer” has been used interchangeably to refer to both sanitary and storm sewers include, but are not limited to, County of Riverside v. Whitlock (1972) 22 Cal.App.3d 863, Ramseier v. Oakley Sanitary Dist. (1961) 197 Cal.App.2d 722, and Torson v. Fleming (1928) 91 Cal.App. 168.

(6) Dictionary definitions of sewer, which courts have found to be an objective source for determining common or ordinary meaning, including Webster’s (1976), American Heritage (1969), and Oxford English Dictionary (1971).

(j) Prior legislation has affirmed particular interpretations of words in Proposition 218, specifically Assembly Bill 2403 of the 2013–14 Regular Session (Chapter 78 of the Statutes of 2014).

(k) In Crawley v. Alameda Waste Management Authority (2015) 243 Cal.App.4th 396, the Court of Appeal relied on the statutory definition of “refuse collection services” to interpret the meaning of that phrase in Proposition 218, and found that this interpretation was further supported by the plain meaning of refuse. Consistent with this decision, in determining the definition of “sewer,” the plain meaning rule shall apply in conjunction with the definitions of terms as provided in Section 53750.

(l) The Legislature reaffirms and reiterates that the definition found in Section 230.5 of the Public Utilities Code is the definition of “sewer” or “sewer service” that should be used in the Proposition 218 Omnibus Implementation Act.

(m) Courts have read the Legislature’s definition of “water” in the Proposition 218 Omnibus Implementation Act to include related services. In Griffith v. Pajaro Valley Water Management Agency (2013) 220 Cal.App.4th 586, the Court of Appeal concurred with the Legislature’s view that “water service means more than just supplying water,” based upon the definition of water provided by the Proposition 218 Omnibus Implementation Act, and found that actions necessary to provide water can be funded through fees for water service. Consistent with this decision, “sewer” should be interpreted to include services necessary to collect, treat, or dispose of sewage, industrial waste, or surface or storm waters, and any entity that collects, treats, or disposes of any of these necessarily provides sewer service.

history: (History: Added by Stats. 2017, Ch. 536, Sec. 2. (SB 231) Effective January 1, 2018.)

title: 5. LOCAL AGENCIES


text: The Department of General Services shall develop compliance standards in the State Administrative Manual (SAM) to inform owners of state property of their duties and responsibilities pursuant to this article and Articles XIIIC and XIIID of the California Constitution.

history: (History: Added by Stats. 2002, Ch. 981, Sec. 2. Effective January 1, 2003.)

title: 5. LOCAL AGENCIES