BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                   AB 711|
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                                 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  
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          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  







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          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








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          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

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