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AB-330 Local agencies: redevelopment.(2011-2012)

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AB330:v99#DOCUMENT


CALIFORNIA LEGISLATURE— 2011–2012 REGULAR SESSION

Assembly Bill
No. 330


Introduced  by  Assembly Member Norby

February 10, 2011


An act to amend Section 33080.2 of, and to add Sections 33080.9, 33080.10, 33080.11, and 33080.12 to, the Health and Safety Code, relating to redevelopment.


LEGISLATIVE COUNSEL'S DIGEST


AB 330, as introduced, Norby. Local agencies: redevelopment.
The Community Redevelopment Law requires every redevelopment agency to present an annual report to its legislative body that includes an independent financial audit report for the previous fiscal year and to inform the legislative body of major audit violations. The failure to correct the major violations may result in the filing of an action by the Attorney General. The Department of Housing and Community Development may examine the records of redevelopment agencies.
This bill would establish a specified procedure by which the department, the Attorney General, and the courts would handle major audit violations. The bill also would authorize the Controller to conduct quality control reviews of independent financial audit reports to the extent it is feasible to do so within existing budgetary resources, and refer suspected violations to the California Board of Accountancy, as provided.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 33080.2 of the Health and Safety Code is amended to read:

33080.2.
 (a) When the agency presents the annual report to the legislative body pursuant to Section 33080.1, the agency shall inform the legislative body of any major audit violations of this part based on the independent financial audit report or an audit or investigation conducted by the department. The agency shall inform the legislative body that the failure to correct a major audit violation of this part may result in the filing of an action by the Attorney General pursuant to Section 33080.8.
(b) The legislative body shall review any report submitted pursuant to Section 33080.1 and take any action it deems appropriate on that report no later than the first meeting of the legislative body occurring more than 21 days from the receipt of the report.

SEC. 2.

 Section 33080.9 is added to the Health and Safety Code, to read:

33080.9.
 (a) (1) The department shall forward to the Attorney General and the Controller a copy of any audit or investigation of a redevelopment agency conducted pursuant to Section 50464.
(2) On or before April 1 of each year, the department shall determine for all audits and investigations conducted the previous year, including those audits and investigations conducted pursuant to Section 50464, whether an audit or investigation contains major audit violations, as defined in subdivision (j) of Section 33080.8.
(b) On or before June 1 of each year, the department shall determine for each major audit violation identified pursuant to subdivision (a) if the agency has corrected the major audit violation. Before making this determination, the department shall consult with each affected agency. In making this determination, the department may request and shall receive the prompt assistance of public officials and public agencies, including, but not limited to, the affected agencies, counties, and cities. If the department determines an agency has not corrected the major audit violation, the department shall send a list of those agencies, their major audit violations, all relevant documentation, and the affidavits required pursuant to subdivision (e) to the Attorney General for any action pursuant to this section.
(c) For each agency the department refers to the Attorney General pursuant to subdivision (b), the department shall notify the agency and its legislative body that the agency was on the list sent to the Attorney General. The notice shall inform the agency and its legislative body of the duties imposed pursuant to Section 33080.2.
(d) The Attorney General shall determine whether to file an action to compel the agency’s compliance with this article within 45 days of receiving notice from the department regarding major audit violations. Any action filed pursuant to this section shall be commenced in the County of Sacramento. The time limit for the Attorney General to make this determination is directory and not mandatory.
(e) Any action shall be accompanied by the affidavit or affidavits setting forth the facts that demonstrate a likelihood of success on the merits of the claim that the agency has a major audit violation. The affidavit also shall certify that the agency and its legislative body were notified of the action no less than 10 days prior to the date on which the action was filed. The agency shall file a response to any action filed by the Attorney General pursuant to this section within 15 days of service.
(f) Nothing in this section shall be construed to permit the department to initiate or settle litigation, or to resolve any departmental audit or investigation in a manner contrary to law.

SEC. 3.

 Section 33080.10 is added to the Health and Safety Code, to read:

33080.10.
 In an action to compel an agency’s compliance with this article pursuant to Section 33080.9, all of the following apply:
(a) (1) On the earliest day that the business of the court will permit, but no later than 45 days after the filing of an action, the court shall conduct a hearing to determine if good cause exists for believing the agency has a major audit violation, as defined in subdivision (j) of Section 33080.8, and has not corrected the major audit violation.
(2) If the court determines that no major audit violation exists or that the agency had a major audit violation and has corrected the major audit violation, the court shall dismiss the action.
(3) If the court determines there is good cause to believe the agency had a major audit violation and has not corrected that major audit violation, the court shall set a hearing on the matter within 60 days. The court also shall issue immediately an order that prohibits the agency doing any of the following:
(A) Encumbering any funds or expending any money derived from any source, other than a Low and Moderate Income Housing Fund, except to pay the obligations designated in subparagraphs (A) to (G), inclusive, of paragraph (1) of subdivision (e) of Section 33334.12.
(B) Adopting a redevelopment plan.
(C) Amending a redevelopment plan, except to correct the major audit violation that is the subject of the action.
(D) Issuing, selling, offering for sale, or delivering any bonds or any other evidence of indebtedness, except to increase, improve, or preserve, or assist in the construction or rehabilitation of, housing units that will be occupied by and affordable to persons or families of extremely low, very low, low, or moderate income, in accordance with this part.
(E) Incurring any indebtedness, except to increase, improve, or preserve, or assist in the construction or rehabilitation of, housing units that will be occupied by and affordable to persons or families of extremely low, very low, low, or moderate income, in accordance with this part.
(b) If a court finds, on the basis of the subsequent hearing set pursuant to paragraph (3) of subdivision (a), that the agency has a major audit violation and has not corrected the major audit violation, the court shall order the agency to comply with this article within 30 days and order the agency to forfeit to the state no more than any of the following, as applicable:
(1) Two thousand dollars ($2,000) in the case of an agency with total revenue in the prior year of at least one hundred thousand dollars ($100,000) as reported in the Controller’s annual financial reports.
(2) Five thousand dollars ($5,000) in the case of an agency with total revenue in the prior year of at least one hundred thousand dollars ($100,000) but less than two hundred fifty thousand dollars ($250,000) as reported in the Controller’s annual financial reports.
(3) Ten thousand dollars ($10,000) in the case of an agency with total revenue in the prior year of at least two hundred fifty thousand dollars ($250,000) as reported in the Controller’s annual financial reports.
(c) The order issued by the court pursuant to paragraph (3) of subdivision (a) shall continue in effect until the court determines the agency has corrected the major audit violation. If the court determines that the agency has corrected the major audit violation, the court may dissolve its order at any time.
(d) An action filed pursuant to this section is in addition to any other remedy and is not an exclusive means to compel compliance. This section is not intended to preclude an action to compel compliance with this article by any other interested party or resident of the jurisdiction.

SEC. 4.

 Section 33080.11 is added to the Health and Safety Code, to read:

33080.11.
 (a) The Controller may conduct quality control reviews of independent financial audit reports required by Section 33080.1 to the extent it is feasible to do so within existing budgetary resources. The Controller shall communicate the results of his or her reviews to the independent auditor and the agency for which the audit was conducted, and shall review his or her er the Controller determines through two consecutive quality control reviews, pursuant to Section 33080.11, that audits performed by an independent auditor pursuant to Section 33080.1 were not performed in substantial conformity with provisions of the audit and report guidelines adopted pursuant to Section 33080.3, the Controller shall notify in writing the independent auditor and the California Board of Accountancy. If the independent auditor does not file an appeal in writing to the California Board of Accountancy within 30 calendar days after receipt of the Controller’s notification, the Controller’s determination under this section shall be final.
(b) If an appeal is filed with the California Board of Accountancy, the board shall complete an investigation of the appeal. On the basis of the investigation, the board may do any of the following:
(1) Find the Controller’s determination should not be upheld and has no effect.
(2) Schedule the appeal for a hearing.
(c) If the Controller’s determination pursuant to subdivision (a) becomes final, the independent auditor shall be ineligible to conduct audits pursuant to Section 33080.1 for a period of three years, or, in the event of an appeal, for any period and subject to conditions that may be ordered by the California Board of Accountancy. No later than March 1 following the date on which the Controller’s determination becomes final, the Controller shall notify each agency of those independent auditors determined to be ineligible under this section or Section 33080.11. Agencies shall not use the audit services of an independent auditor ineligible under this section.
(d) For the purposes of this section, “independent auditor” shall mean any person or firm entering into a contract to conduct an audit under Section 33080.1.
(e) This section shall not preclude the California Board of Accountancy from taking any disciplinary action it deems appropriate under other provisions of law.