BILL ANALYSIS AB 1232 Page 1 CONCURRENCE IN SENATE AMENDMENTS AB 1232 (Huffman) As Amended June 24, 2009 Majority vote ----------------------------------------------------------------- |ASSEMBLY: |48-27|(May 21, 2009) |SENATE: |22-16|(August 27, | | | | | | |2009) | ----------------------------------------------------------------- Original Committee Reference: L. GOV. SUMMARY : Allows the Marin County Local Agency Formation Commission (Commission) to initiate and approve, after notice and hearing, a reorganization or consolidation of the Sewerage Agency of Southern Marin (SASM) and its member districts, without protest hearings. The Senate amendments : 1)Narrow the scope of the bill to focus specifically on the reorganization or consolidation of SASM and its member districts. 2)Allow the Commission, if it initiates and approves the reorganization or consolidation, to impose terms and conditions on the reorganization or consolidation that would require SASM and its member agencies to be responsible for payment of the Commission's costs incurred in association with the reorganization or consolidation. EXISTING LAW : 1)Establishes the procedures for the organization and reorganization of cities, counties, and special districts under the Cortese-Knox-Hertzberg Local Reorganization Act of 2000 (Act). 2)Allows a local area formation commission (LAFCO) to initiate proposals for changes or organization, including consolidation. 3)Defines "change of organization" in the Act to include consolidation of cities or special districts. AB 1232 Page 2 4)Defines "proceedings" to mean proceedings taken by the LAFCO for a proposed change of organization or reorganization. 5)Provides for noticing requirements for a protest hearing, and specifies that during the hearing the LAFCO shall hear and receive any oral or written protests, objections, or evidence that is made, presented or filed. 6)Provides that a proposal for change of organization must be abandoned if a majority protest is deemed to exist. 7)Requires a LAFCO to revisit its municipal service reviews and adopted spheres of influence every five years. AS PASSED BY THE ASSEMBLY , this bill: 1)Provided the Commission, after notice and hearing, with the power to initiate and approve a reorganization or consolidation of small wastewater agencies, without protest hearings, if all of the following conditions exist: a) The Commission, in its municipal services review (MSR) of the wastewater agencies, completed within the last 10 years, makes findings or determinations related to reorganization or consolidation, that if implemented, would improve the financial and service level benefits, improve government accountability, improve operational efficiencies, and provide cost savings for the ratepayers; b) The wastewater agencies have not implemented the Commission's findings or determinations as provided in the MSR; and, c) The wastewater agencies affected have had three or more illegal discharges in the last five years, based on violations identified by the San Francisco Bay Regional Water Quality Control Board (SFBRWQCB) that exceed 5,000 gallons of untreated or partially treated wastewater to waters of the state. 2)Defined "small wastewater agencies" to mean sanitation districts and local governments that provide sewer and wastewater collection or treatment services to 10,000 service AB 1232 Page 3 connections or less. 3)Stated that the provisions of this measure will become effective on January 1, 2011. 4)Made findings and declarations about the impact of illegal sewage spills. 5)Declared that this bill is a special statute because of the unique circumstances applicable to the County of Marin. FISCAL EFFECT : None COMMENTS : Current law specifies various ways that special districts and other agencies can be reorganized and modified, including consolidation, dissolution, including dissolution with annexation, a merger, or establishment of a subsidiary district. This bill focuses on consolidation - the formal restructuring transactions that would combine two or more agencies into a single organization and would require a formal LAFCO review and approval process - as the means to modify special districts. A consolidation can be initiated by a petition of registered voters or landowners, by a resolution of the governing body of an affected local agency, or by LAFCO itself. This bill originates from problems in eleven sewer services agencies located in southern Marin County, including six sanitary districts, three cities, one community services district and one joint powers agency. Three of the agencies operate wastewater treatment plants - Sanitary District No. 5 (Tiburon), SASM, and the Sausalito-Marin City Sanitary District. Ten of the eleven agencies operate sewerage collection systems and pumping stations. All of the special districts providing sanitary sewer services are governed by independent boards, except for SASM, whose members are appointed by each of its six member agencies. The author notes that "the frequency and size of illegal sewage spills of raw or partially treated sewage are increasing often because of the improper sewer system maintenance. By providing limited new authority to a LAFCO, this bill would increase the cost effectiveness and efficiency of small wastewater agencies and reduce the impacts on water quality due to illegal sewage spills. The San Francisco Bay Regional Water Quality Control Board reports that over 2,000 separate illegal sewage spills occurred in the bay and coastline between 2004 and 2007. Over AB 1232 Page 4 500 of the spills exceeded 1,000 gallons. One of the largest spills was 2.5 million gallons in Marin County which illegally discharged both untreated and partially treated sewage into the San Francisco Bay." To reduce water quality problems and to increase system efficiencies, in 2005 the Marin County LAFCO conducted an MSR and recommended a consolidation plan for the eleven small wastewater agencies in southern Marin County. The report concluded that the operation of numerous separate agencies with duplicated staff, and over 40 elected officials, is not a cost effective way to manage the single purpose service of wastewater collection and treatment. The MSR identified significant cost savings for the ratepayers that would occur if agency functions were consolidated. This bill would allow the Marin County LAFCO to force the consolidation or reorganization of SASM and its member districts, without protest hearings. Protest proceedings are established in existing law to allow registered voters and landowners to give oral or written protests against a change of organization. This bill removes the ability of the Marin LAFCO to hold protest hearings for public input and for an affected district to speak and deliberate in a public forum on the issue of forced consolidation and whether it is the best option for the community. Protest proceedings are removed from the bill because, according to the author, "there has been strong local agency resistance to consolidation. That resistance has made it impossible under existing laws to implement the LAFCO consolidation recommendation because existing law requires a majority of voters in the affected districts to approve the consolidation." While consolidation of SASM and its member districts may increase administrative effectiveness and provide for better management of those agencies, there are no guarantees that consolidation is the answer to the question of how to prevent illegal sewage discharges. There may be other avenues to pursue that would help sanitary districts update their aging infrastructure including federal and state grants or funding, or heavier enforcement if negligence is found on the part of the sanitary districts. The Legislature may wish to consider whether the approach in the bill is the correct approach to address illegal sewage discharges. AB 1232 Page 5 This bill, if signed into law, will take effect on January 1, 2011. The assumption for SASM and its member districts is that they have a few years before the bill's effective date to figure out a plan to consolidate on their own terms, and then can initiate consolidation before the bill takes effect. Analysis Prepared by : Debbie Michel / L. GOV. / (916) 319-3958 FN: 0001845