BILL ANALYSIS
AB 711
Page 1
CONCURRENCE IN SENATE AMENDMENTS
AB 711 (Charles Calderon)
As Amended April 22, 2010
Majority vote
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|ASSEMBLY: | |(June 3, 2009) |SENATE: |27-9 |(April 26, |
| | | | | |2010) |
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(vote not relevant)
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|COMMITTEE VOTE: |6-3 |(April 29, 2010) |RECOMMENDATION: |concur |
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Original Committee Reference: REV. & TAX.
SUMMARY : Loans $45,000 from the Environmental Enhancement and
Mitigation Program (EEMP) Fund to the Los Angeles County Local
Agency Formation Commission (LA LAFCO) to cover costs related to
incorporation proceedings by the East Los Angeles Residents
Association (ELARA), and provides for other specified conditions.
Specifically, this bill :
1)Transfers $45,000 from the EEMP Fund to the state's General Fund
(GF).
2)Appropriates $45,000 from the GF to the State Controller for
allocation to LA LAFCO for a loan to ELARA.
3)Provides that the loan shall be made pursuant to existing law
which allows incorporation proponents to request a loan from the
state's GF.
4)Finds and declares that this is a special law because of the
unique circumstances of LA LAFCO and ELARA.
5)Provides that this act is an urgency statute and shall go into
effect immediately, in order for LA LAFCO to grant a loan to
ELARA to complete incorporation proceedings and to meet a
contractual deadline to pay for and start an economic impact
study.
AB 711
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The Senate amendments delete the Assembly version of this bill, and
instead, provide for a loan to ELARA for incorporation proceedings
related to the East Los Angeles incorporation.
EXISTING LAW :
1)Establishes procedures for local government changes of
organization, including city incorporations, annexations, and
city and special district consolidations.
2)Authorizes a LAFCO to establish a schedule of fees and costs for
proceedings taken pursuant to that act, including incorporation
proceedings.
3)Authorizes a LAFCO to request a loan from the GF to cover the
expenses of incorporation proceedings under specified
circumstances.
4)Provides that repayment of the loan shall be made as a condition
of approval of the incorporations, if successful, and shall
become an obligation of the newly formed city.
5)Provides that repayment shall be made within two years of the
effective date of the incorporation.
6)Provides that if the proposal is denied by the commission or
defeated at an election, the loan shall be forgiven.
AS PASSED BY THE ASSEMBLY , this bill required a qualified
purchaser, as defined, to register with the Board of Equalization
and report and pay, by April 15, the use tax owed for the previous
calendar year.
FISCAL EFFECT : According to the Senate Appropriations Committee,
the fiscal impact is $45,000 in fiscal year 2009-10. If the
incorporation efforts are successful, the loan would be repaid
within two years of the incorporation date. However, if the
incorporation effort fails, the loan would be forgiven.
COMMENTS : This bill provides a loan of $45,000 to fund the
comprehensive fiscal analysis that is required to be completed in
the East Los Angeles incorporation efforts. ELARA, the
incorporation proponents, have raised $90,000 toward the study, but
need help to meet the total cost of approximately $135,000 for the
cost of the consultant who will complete the fiscal analysis.
AB 711
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Existing law allows a LAFCO, for incorporation proceedings that
have been initiated by the filing of sufficient voter signatures,
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 the LAFCO for the
proceedings. Existing law states that the Legislature may
appropriate funds for this purpose, and provides that repayment of
the loan is a condition of approval of a successful incorporation,
to be paid back within two years of the incorporation date. If the
incorporation proposal is denied by LAFCO or defeated by voters at
an election, existing law provides that the loan be forgiven.
ELARA has submitted an application with sufficient local voter
signatures to LA LAFCO to incorporate an area of 7.4 square miles
which contains 140,000 residents. LA LAFCO has established an
April 29, 2010, deadline for ELARA to provide the full amount to
fund the study. This bill contains an urgency clause and would
take effect immediately.
EEMP [AB 471 (Katz and Willie Brown), Chapter 106, Statutes of
1989] was created as a depository for annual allocations made by
the Legislature for the purpose of providing grants to undertake
environmental enhancement and mitigation projects. Grants are
provided to local, state, and federal agencies and non-profit
entities to undertake environmental enhancement and mitigation
projects which are directly or indirectly related to the
environmental impact of modifying existing transportation
facilities or for the design, construction, or expansion of new
transportation facilities.
The Legislature has only provided financial assistance related to
incorporations in one other instance - the incorporation
application for the community of San Fernando Valley. That loan
was forgiven when the incorporation proposal failed in the 2002
election. The Legislature may wish to consider whether it is
appropriate to continue the precedent of giving loans for
incorporation efforts, especially given the inability of ELARA to
raise the necessary funds to pay for the comprehensive fiscal
analysis. The Legislature may wish to also consider whether ELARA
will be able to provide the additional funding necessary to carry
the proposal to an election, which will ultimately determine
whether the loan is paid back or forgiven.
Support arguments. Existing law allows a LAFCO to request a loan
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from the GF to cover the expenses of incorporation proceedings
under specified conditions. AB 711 uses provisions that are in
existing law to help a community undertake the necessary fiscal
analysis to determine whether cityhood is financially viable.
Supporters argue that incorporation of East Las Angeles will not
only help this thriving community secure and manage their local
resources, but also achieve greater social and economic
empowerment.
Opposition arguments. The Legislature has only provided financial
assistance related to incorporations in one other instance - the
incorporation application for the community of San Fernando Valley.
That loan was forgiven when the incorporation proposal failed in
the 2002 election. The Legislature may wish to consider whether it
is appropriate to continue the precedent of giving loans for
incorporation efforts, especially given the inability of ELARA to
raise the necessary funds to pay for the comprehensive fiscal
analysis. The Legislature may wish to also consider whether ELARA
will be able to provide the additional funding necessary to carry
the proposal to an election, which will ultimately determine
whether the loan is paid back or forgiven.
Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958
FN: 0004086