BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 711| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 711 Author: Charles Calderon (D), et al Amended: 4/22/10 in Senate Vote: 27 - Urgency PRIOR VOTES NOT RELEVANT SENATE APPROPRIATIONS COMMITTEE : 7-2, 4/19/10 AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee NOES: Cox, Wyland NO VOTE RECORDED: Denham, Walters SUBJECT : Local agency formation commissions: cost of incorporation proceedings SOURCE : Author DIGEST : This bill transfers $45,000 to the General Fund from the Environmental Enhancement and Mitigation Program Fund, and appropriates $45,000 from the General Fund to the Los Angeles County Local Agency Formation Commission for a loan to the East Los Angles Residents Association, as specified. ANALYSIS : Existing law, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Act), establishes procedures for local government changes of organization, including city incorporations, annexations, and city and special district consolidations. The local agency CONTINUED AB 711 Page 2 formation commission (LAFCO) in each county is responsible for implementation of the Act and administers proceedings related to incorporation applications. LAFCOs can require an applicant to deposit any necessary fees or charges associated with the costs of processing the application and undertaking any LAFCO proceedings before any action is taken and within the time period designated by LAFCO. For incorporation proceedings that have been initiated by the filing of sufficient voter signatures, LAFCO is authorized to request a General Fund loan to cover the costs of necessary proceedings when incorporation proponents certify that they are unable to raise sufficient funds to reimburse LAFCO for the proceedings, and the Legislature appropriates funds for this purpose. Repayment of the loan is a condition of approval of a successful incorporation, and the city must repay the loan within two years of the incorporation date. If the incorporation proposal is denied by LAFCO or defeated at an election, the loan is forgiven. This bill transfers $45,000 to the General Fund from the Environmental Enhancement and Mitigation Program Fund, and appropriates $45,000 from the General Fund to the Los Angeles County LAFCO (LA LAFCO) for a loan to the East Los Angles Residents Association (ELARA) to pay for the comprehensive fiscal analysis required as part of incorporation proceedings. Existing law specifies that this loan would be repaid by the City of East Los Angeles within two years of the date of a successful incorporation. If the incorporation proposal is denied by LAFCO or defeated at an election, however, the loan would be forgiven. Comments According to the Senate Appropriations Committee staff analysis, the community of East Los Angeles is a part of the unincorporated area in Los Angeles County. The ELARA has submitted an application with sufficient local voter signatures to the LA LAFCO to incorporate an area of 7.4 square miles and containing 140,000 residents. This bill is intended to provide ELARA with some of the funding necessary to pay for a comprehensive fiscal analysis that is required to demonstrate the city would receive AB 711 Page 3 sufficient revenues to provide public services and facilities during the three years following incorporation. LA LAFCO has identified a consultant to perform the study at a cost of $134,700, and ELARA indicates that it has raised approximately $90,000 for purposes of the study. LA LAFCO has established a deadline of April 29, 2010 for ELARA to provide the full amount to fund the study. The Senate Appropriations Committee analysis also notes that apart from costs associated with the comprehensive fiscal analysis, ELARA will be responsible for any additional costs associated with the incorporation proceedings. These could include any potential litigation costs if any element of the proposal is challenged in court, any costs associated with environmental documentation associated with the proposal, any costs associated with validating voter signatures on the application, as well as any costs associated with bringing the proposal to the voters in an election. Given the inability of ELARA to raise the funds necessary to pay for the comprehensive fiscal analysis over the past 16 months, it is unclear whether the group will be able to provide additional funding necessary to carry the proposal to an election. This may jeopardize the ultimate success of the incorporation and the repayment of the loan provided in this bill. The Legislature has only appropriated funds related to an incorporation application one other time; a Budget Act appropriation provided a loan for incorporation proceedings for the community of San Fernando Valley. That loan was ultimately forgiven when the incorporation proposal failed in a 2002 election. Related Legislation SB 1232 (Romero) extends the April 29 deadline by six months for ELARA to provide necessary funds to LA LAFCO for costs associated with the comprehensive fiscal analysis. SB 1232 would also deem the signatures submitted with the incorporation application to be valid through October 29, 2010, or longer if the petition continues. FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes Local: No AB 711 Page 4 According to the Senate Appropriations Committee: Fiscal Impact (in thousands) Major Provisions 2009-10 2010-11 2011-12 Fund Appropriation $45 Special* * Environmental Enhancement and Mitigation Program Fund AGB:mw 4/26/10 Senate Floor Analyses SUPPORT/OPPOSITION: NONE RECEIVED **** END ****