BILL NUMBER: AB 2795	AMENDED
	BILL TEXT

	AMENDED IN SENATE  MAY 27, 2010

INTRODUCED BY   Committee on Local Government (Smyth (Chair),
Caballero (Vice Chair), Arambula, Bradford, Davis, Logue, and
Solorio)

                        MARCH 24, 2010

   An act to amend Sections 56100, 56332, 56375, 56381, 57075.5,
57127, 57129, 57377, and 57379 of, and to add Section 56037.2 to, the
Government Code, and to amend Section 99 of the Revenue and Taxation
Code, relating to local government.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 2795, as amended, Committee on Local Government. Local
government: organization.
   (1) Existing law, the Cortese-Knox-Hertzberg Local Government
Reorganization Act, provides the authority and procedure for the
organization and reorganization of cities and districts.
   This bill would define "divestiture of power"  and
"executive officer"  as used in the act  . This bill
  and  would  also  make
additional changes to clarify and maintain the consistency of the
act. 
   (2) Existing law defines the composition and selection of members
of an independent special district selection committee, and requires
the executive officer of that committee to call meetings whenever a
vacancy exists among the members or alternate member representing
independent special districts on the committee or upon receipt of a
written request by one or more members of the selection committee
representing districts having 10% or more of the assessed value of
taxable property within the county, as shown on the last equalized
county assessment roll.  
   This bill would define "executive officer" for purposes of these
provisions, and would require the executive officer to call a meeting
whenever the executive officer anticipates that a vacancy among the
members or alternate member on the committee will occur within the
next 90 days.  
   (2) 
    (3)  Existing law authorizes a local agency formation
commission to initiate proposals for the consolidation or dissolution
or formation of a district, a merger, the establishment of a
subsidiary district, or a reorganization, as specified.
   This bill would specify that the commission may initiate these
proceedings by resolution of application. 
   (3) 
    (4)  Existing law requires the commission to adopt an
annual budget that apportions the net operative expenses of the
commission as specified including the share for independent special
districts.
   This bill would make a technical, nonsubstantive change to this
provision. 
   (4) 
    (5)  Existing law requires the commission, for a
proposed annexation of land to a city with more than 100,000
residents in a county with a population of more than 400,000, to make
a finding regarding written protest filed and not withdrawn, and
order one of 3 options, including an order requiring the territory be
annexed subject to confirmation by the voters, and calling a special
election.
   This bill would instead require the commission, upon making that
order, to request the  local legislative body  
city council  to call the special election, and would make
conforming changes. 
   (5) 
    (6)  Existing law, for newly established cities,
specifies that of the 5 newly elected city council members, the 3
receiving the lowest number of votes hold office until the first
succeeding general municipal election and the 2 receiving the highest
number of votes hold office until the 2nd municipal election, as
specified.
   This bill would instead provide that the 2 city council members
receiving the lowest number of votes hold office until the first
succeeding municipal election, and the 3 receiving the highest number
of votes hold office until the 2nd municipal election, as specified.

   (6) 
    (7)  Existing law provides local agencies 60 days to
negotiate the allocation of property taxes when jurisdictional
changes are made pursuant to the act.
   This bill would authorize a local agency involved in a negotiation
to extend the 60-day negotiation period to 90 days, upon notice to
the local agencies involved, the county auditor, and the local agency
formation commission, by the local agency that desires the
extension.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 56037.2 is added to the Government Code, to
read:
   56037.2.  "Divestiture of power" means the termination of the
power and authority to provide particular functions or classes of
services within all or part of the jurisdictional boundaries of a
special district.
  SEC. 2.  Section 56100 of the Government Code is amended to read:
   56100.  (a) Except as otherwise provided in paragraph (2) of
subdivision (b) of Section 56036, paragraph (2) of subdivision (c) of
Section 56036, and Section 56101, this division provides the sole
and exclusive authority and procedure for the initiation, conduct,
and completion of changes of organization and reorganization for
cities and districts. All changes of organization and reorganizations
shall be initiated, conducted, and completed in accordance with, and
as provided in, this division.
   (b) Notwithstanding any other provision of law, proceedings for
the formation of a district shall be conducted as authorized by the
principal act of the district proposed to be formed, except that the
commission shall serve as the conducting authority and the procedural
requirements of this division shall apply and shall prevail in the
event of conflict with the procedural requirements of the principal
act of the district. In the event of such a conflict, the commission
shall specify the procedural requirements that apply, consistent with
the requirements of this section.
  SEC. 3.  Section 56332 of the Government Code is amended to read:
   56332.  (a) The independent special district selection committee
shall consist of the presiding officer of the legislative body of
each independent special district. However, if the presiding officer
of an independent special district is unable to attend a meeting of
the independent special district selection committee, the legislative
body of the district may appoint one of its members to attend the
meeting of the selection committee in the presiding officer's place.
Those districts shall include districts located wholly within the
county and those containing territory within the county representing
50 percent or more of the assessed value of taxable property of the
district, as shown on the last equalized county assessment roll. Each
member of the committee shall be entitled to one vote for each
independent special district of which he or she is the presiding
officer. Members representing a majority of the eligible districts
shall constitute a quorum.
   (b) The executive officer shall call and give written notice of
all meetings of the members of the selection committee. A meeting
shall be called and held under  either   one
 of the following circumstances: 
   (1) Whenever the executive officer anticipates that a vacancy will
occur within the next 90 days among the members or alternate member
representing independent special districts on the committee. 

   (1) 
    (2)  Whenever a vacancy exists among the members or
alternate  members   member  representing
independent special districts upon the commission. 
   (2) 
    (3)  Upon receipt of a written request by one or more
members of the selection committee representing districts having 10
percent or more of the assessed value of taxable property within the
county, as shown on the last equalized county assessment roll.
   (c) (1) If the executive officer determines that a meeting of the
special district selection committee, for the purpose of selecting
the special district representatives or for filling a vacancy, is not
feasible, the executive officer may conduct the business of the
committee in writing, as provided in this subdivision. The executive
officer may call for nominations to be submitted in writing within 30
days. At the end of the nominating period, the executive officer
shall prepare and deliver, or send by certified mail, to each
independent special district one ballot and voting instructions. If
only one candidate is nominated for a vacant seat, that candidate
shall be deemed selected, with no further proceedings.
   (2) As an alternative to the delivery by certified mail, the
executive officer, with the prior concurrence of the district, may
transmit the ballot and voting instructions by electronic mail,
provided that the executive officer shall retain written evidence of
the receipt of that material.
   (3) The ballot shall include the names of all nominees and the
office for which each was nominated. The districts shall return the
ballots to the executive officer by the date specified in the voting
instructions, which date shall be at least 30 days from the date on
which the executive officer mailed the ballots to the districts.
   (4) If the executive officer has transmitted the ballot and voting
instructions by electronic mail, the districts may return the
ballots to the executive officer by electronic mail, provided that
the executive officer retains written evidence of the receipt of the
ballot.
   (5) Any ballot received by the executive officer after the
specified date is invalid. The executive officer shall announce the
results of the election within seven days of the specified date.
   (d) The selection committee shall appoint two regular members and
one alternate member to the commission. The members so appointed
shall be elected or appointed special district officers residing
within the county but shall not be members of the legislative body of
a city or county. If one of the regular district members is absent
from a commission meeting or disqualifies himself or herself from
participating in a meeting, the alternate district member may serve
and vote in place of the regular district member for that meeting.
The representation by a regular district member who is a special
district officer shall not disqualify, or be cause for
disqualification of, the member from acting on a proposal affecting
the special district. The special district selection committee may,
at the time it appoints a member or alternate, provide that the
member or alternate is disqualified from voting on proposals
affecting the district of which the member is a representative.
   (e) If the office of a regular district member becomes vacant, the
alternate member may serve and vote in place of the former regular
district member until the appointment and qualification of a regular
district member to fill the vacancy.
   (f) For purposes of this section, "executive officer" means the
executive officer or designee as authorized by the commission.
  SEC. 4.  Section 56375 of the Government Code is amended to read:
   56375.  The commission shall have all of the following powers and
duties subject to any limitations upon its jurisdiction set forth in
this part:
   (a) (1) To review and approve or disapprove with or without
amendment, wholly, partially, or conditionally, proposals for changes
of organization or reorganization, consistent with written policies,
procedures, and guidelines adopted by the commission.
   (2) The commission may initiate proposals by resolution of
application for any of the following:
   (A) The consolidation of a district, as defined in Section 56036.
   (B) The dissolution of a district.
   (C) A merger.
   (D) The establishment of a subsidiary district.
   (E) The formation of a new district or districts.
   (F) A reorganization that includes any of the changes specified in
subparagraph (A), (B), (C), (D), or (E).
   (3) A commission may initiate a proposal described in paragraph
(2) only if that change of organization or reorganization is
consistent with a recommendation or conclusion of a study prepared
pursuant to Section 56378, 56425, or 56430, and the commission makes
the determinations specified in subdivision (b) of Section 56881.
   (4) A commission shall not disapprove an annexation to a city,
initiated by resolution, of contiguous territory that the commission
finds is any of the following:
   (A) Surrounded or substantially surrounded by the city to which
the annexation is proposed or by that city and a county boundary or
the Pacific Ocean if the territory to be annexed is substantially
developed or developing, is not prime agricultural land as defined in
Section 56064, is designated for urban growth by the general plan of
the annexing city, and is not within the sphere of influence of
another city.
   (B) Located within an urban service area that has been delineated
and adopted by a commission, which is not prime agricultural land, as
defined by Section 56064, and is designated for urban growth by the
general plan of the annexing city.
   (C) An annexation or reorganization of unincorporated islands
meeting the requirements of Section 56375.3.
   (5) As a condition to the annexation of an area that is
surrounded, or substantially surrounded, by the city to which the
annexation is proposed, the commission may require, where consistent
with the purposes of this division, that the annexation include the
entire island of surrounded, or substantially surrounded, territory.
   (6) A commission shall not impose any conditions that would
directly regulate land use density or intensity, property
development, or subdivision requirements.
   (7) The decision of the commission with regard to a proposal to
annex territory to a city shall be based upon the general plan and
prezoning of the city. When the development purposes are not made
known to the annexing city, the annexation shall be reviewed on the
basis of the adopted plans and policies of the annexing city or
county. A commission shall require, as a condition to annexation,
that a city prezone the territory to be annexed or present evidence
satisfactory to the commission that the existing development
entitlements on the territory are vested or are already at build-out,
and are consistent with the city's general plan. However, the
commission shall not specify how, or in what manner, the territory
shall be prezoned.
   (b) With regard to a proposal for annexation or detachment of
territory to, or from, a city or district or with regard to a
proposal for reorganization that includes annexation or detachment,
to determine whether territory proposed for annexation or detachment,
as described in its resolution approving the annexation, detachment,
or reorganization, is inhabited or uninhabited.
   (c) With regard to a proposal for consolidation of two or more
cities or districts, to determine which city or district shall be the
consolidated successor city or district.
   (d) To approve the annexation of unincorporated, noncontiguous
territory, subject to the limitations of Section 56742, located in
the same county as that in which the city is located, and that is
owned by a city and used for municipal purposes and to authorize the
annexation of the territory without notice and hearing.
   (e) To approve the annexation of unincorporated territory
consistent with the planned and probable use of the property based
upon the review of general plan and prezoning designations. No
subsequent change may be made to the general plan for the annexed
territory or zoning that is not in conformance to the prezoning
designations for a period of two years after the completion of the
annexation, unless the legislative body for the city makes a finding
at a public hearing that a substantial change has occurred in
circumstances that necessitate a departure from the prezoning in the
application to the commission.
   (f) With respect to the incorporation of a new city or the
formation of a new special district, to determine the number of
registered voters residing within the proposed city or special
district or, for a landowner-voter special district, the number of
owners of land and the assessed value of their land within the
territory proposed to be included in the new special district. The
number of registered voters shall be calculated as of the time of the
last report of voter registration by the county elections official
to the Secretary of State prior to the date the first signature was
affixed to the petition. The executive officer shall notify the
petitioners of the number of registered voters resulting from this
calculation. The assessed value of the land within the territory
proposed to be included in a new landowner-voter special district
shall be calculated as shown on the last equalized assessment roll.
   (g) To adopt written procedures for the evaluation of proposals,
including written definitions consistent with existing state law. The
commission may adopt standards for any of the factors enumerated in
Section 56668. Any standards adopted by the commission shall be
written.
   (h) To adopt standards and procedures for the evaluation of
service plans submitted pursuant to Section 56653 and the initiation
of a change of organization or reorganization pursuant to subdivision
(a).
   (i) To make and enforce regulations for the orderly and fair
conduct of hearings by the commission.
   (j) To incur usual and necessary expenses for the accomplishment
of its functions.
   (k) To appoint and assign staff personnel and to employ or
contract for professional or consulting services to carry out and
effect the functions of the commission.
   (  l  ) To review the boundaries of the territory
involved in any proposal with respect to the definiteness and
certainty of those boundaries, the nonconformance of proposed
boundaries with lines of assessment or ownership, and other similar
matters affecting the proposed boundaries.
   (m) To waive the restrictions of Section 56744 if it finds that
the application of the restrictions would be detrimental to the
orderly development of the community and that the area that would be
enclosed by the annexation or incorporation is so located that it
cannot reasonably be annexed to another city or incorporated as a new
city.
   (n) To waive the application of Section 22613 of the Streets and
Highways Code if it finds the application would deprive an area of a
service needed to ensure the health, safety, or welfare of the
residents of the area and if it finds that the waiver would not
affect the ability of a city to provide any service. However, within
60 days of the inclusion of the territory within the city, the
legislative body may adopt a resolution nullifying the waiver.
   (o) If the proposal includes the incorporation of a city, as
defined in Section 56043, or the formation of a district, as defined
in Section 2215 of the Revenue and Taxation Code, the commission
shall determine the property tax revenue to be exchanged by the
affected local agencies pursuant to Section 56810.
   (p) To authorize a city or district to provide new or extended
services outside its jurisdictional boundaries pursuant to Section
56133.
   (q) To enter into an agreement with the commission for an
adjoining county for the purpose of determining procedures for the
consideration of proposals that may affect the adjoining county or
where the jurisdiction of an affected agency crosses the boundary of
the adjoining county.
  SEC. 5.  Section 56381 of the Government Code is amended to read:
   56381.  (a) The commission shall adopt annually, following noticed
public hearings, a proposed budget by May 1 and final budget by June
15. At a minimum, the proposed and final budget shall be equal to
the budget adopted for the previous fiscal year unless the commission
finds that reduced staffing or program costs will nevertheless allow
the commission to fulfill the purposes and programs of this chapter.
The commission shall transmit its proposed and final budgets to the
board of supervisors, to each city, and to each independent special
district.
   (b) After public hearings, consideration of comments, and adoption
of a final budget by the commission pursuant to subdivision (a), the
auditor shall apportion the net operating expenses of a commission
in the following manner:
   (1) (A) In counties in which there is city and independent special
district representation on the commission, the county, cities, and
independent special districts shall each provide a one-third share of
the commission's operational costs.
   (B) The cities' share shall be apportioned in proportion to each
city's total revenues, as reported in the most recent edition of the
Cities Annual Report published by the Controller, as a percentage of
the combined city revenues within a county, or by an alternative
method approved by a majority of cities representing the majority of
the combined cities' populations.
   (C) The independent special districts' share shall be apportioned
in proportion to each district's total revenues as a percentage of
the combined total district revenues within a county. Except as
provided in subparagraph (D), an independent special district's total
revenue shall be calculated for nonenterprise activities as total
revenues for general purpose transactions less intergovernmental
revenue and for enterprise activities as total operating and
nonoperating revenues less intergovernmental revenue, as reported in
the most recent edition of the "Special Districts Annual Report"
published by the Controller, or by an alternative method approved by
a majority of the agencies, representing a majority of their combined
populations. For the purposes of fulfilling the requirement of this
section, a multicounty independent special district shall be required
to pay its apportionment in its principal county. It is the intent
of the Legislature that no single district or class or type of
district shall bear a disproportionate amount of the district share
of costs.
   (D) (i) For purposes of apportioning costs to a health care
district formed pursuant to Division 23 (commencing with Section
32000) of the Health and Safety Code that operates a hospital, a
health care district's share, except as provided in clauses (ii) and
(iii), shall be apportioned in proportion to each district's net from
operations as reported in the most recent edition of the hospital
financial disclosure report form published by the Office of Statewide
Health Planning and Development, as a percentage of the combined
independent special districts' net operating revenues within a
county.
   (ii) A health care district for which net from operations is a
negative number may not be apportioned any share of the commission's
operational costs until the fiscal year following positive net from
operations, as reported in the most recent edition of the hospital
financial disclosure report form published by the Office of Statewide
Health Planning and Development.
   (iii) A health care district that has filed and is operating under
public entity bankruptcy pursuant to federal bankruptcy law, shall
not be apportioned any share of the commission's operational costs
until the fiscal year following its discharge from bankruptcy.
   (iv) As used in this subparagraph "net from operations" means
total operating revenue less total operating expenses.
   (E) Notwithstanding the requirements of subparagraph (C), the
independent special districts' share may be apportioned by an
alternative method approved by a majority of the districts,
representing a majority of the combined populations. However, in no
event shall an individual district's apportionment exceed the amount
that would be calculated pursuant to subparagraphs (C) and (D), or in
excess of 50 percent of the total independent special districts'
share, without the consent of that district.
   (F) Notwithstanding the requirements of subparagraph (C), no
independent special district shall be apportioned a share of more
than 50 percent of the total independent special districts' share of
the commission's operational costs, without the consent of the
district as otherwise provided in this section. In those counties in
which a district's share is limited to 50 percent of the total
independent special districts' share of the commission's operational
costs, the share of the remaining districts shall be increased on a
proportional basis so that the total amount for all districts equals
the share apportioned by the auditor to independent special
districts.
   (2) In counties in which there is no independent special district
representation on the commission, the county and its cities shall
each provide a one-half share of the commission's operational costs.
The cities' share shall be apportioned in the manner described in
paragraph (1).
   (3) In counties in which there are no cities, the county and its
special districts shall each provide a one-half share of the
commission's operational costs. The independent special districts'
share shall be apportioned in the manner described for cities'
apportionment in paragraph (1). If there is no independent special
district representation on the commission, the county shall pay all
of the commission's operational costs.
   (4) Instead of determining apportionment pursuant to paragraph
(1), (2), or (3), any alternative method of apportionment of the net
operating expenses of the commission may be used if approved by a
majority vote of each of the following: the board of supervisors; a
majority of the cities representing a majority of the total
population of cities in the county; and the independent special
districts representing a majority of the combined total population of
independent special districts in the county. However, in no event
shall an individual district's apportionment exceed the amount that
would be calculated pursuant to subparagraphs (C) and (D) of
paragraph (1), or in excess of 50 percent of the total independent
special districts' share, without the consent of that district.
   (c) After apportioning the costs as required in subdivision (b),
the auditor shall request payment from the board of supervisors and
from each city and each independent special district no later than
July 1 of each year for the amount that entity owes and the actual
administrative costs incurred by the auditor in apportioning costs
and requesting payment from each entity. If the county, a city, or an
independent special district does not remit its required payment
within 60 days, the commission may determine an appropriate method of
collecting the required payment, including a request to the auditor
to collect an equivalent amount from the property tax, or any fee or
eligible revenue owed to the county, city, or district. The auditor
shall provide written notice to the county, city, or district prior
to appropriating a share of the property tax or other revenue to the
commission for the payment due the commission pursuant to this
section. Any expenses incurred by the commission or the auditor in
collecting late payments or successfully challenging nonpayment shall
be added to the payment owed to the commission. Between the
beginning of the fiscal year and the time the auditor receives
payment from each affected city and district, the board of
supervisors shall transmit funds to the commission sufficient to
cover the first two months of the commission's operating expenses as
specified by the commission. When the city and district payments are
received by the commission, the county's portion of the commission's
annual operating expenses shall be credited with funds already
received from the county. If, at the end of the fiscal year, the
commission has funds in excess of what it needs, the commission may
retain those funds and calculate them into the following fiscal year'
s budget. If, during the fiscal year, the commission is without
adequate funds to operate, the board of supervisors may loan the
commission funds. The commission shall appropriate sufficient funds
in its budget for the subsequent fiscal year to repay the loan.
  SEC. 6.  Section 57075.5 of the Government Code is amended to read:

   57075.5.  Notwithstanding Section 57075, if territory proposed to
be annexed to a city with more than 100,000 residents is inhabited
and is located in a county with a population of over 4,000,000, the
commission, not more than 30 days after conclusion of the hearing,
shall make a finding regarding the value of written protests filed
and not withdrawn and shall take one of the following actions:
   (a) Terminate proceedings if written protests have been filed and
not withdrawn by 50 percent or more of the registered voters within
the affected territory.
   (b) Order the territory annexed subject to the confirmation by the
voters on the question, and request the  local legislative
body   city council  to call a special election and
submit to the voters residing within the affected territory the
question of whether it shall be annexed to the city, if written
protests have been filed and not withdrawn by either 15 percent or
more of the registered voters within the territory, or 15 percent or
more of the number of owners of land who also own not less than 15
percent of the total assessed value of land within the territory.
   (c) Order the territory annexed without an election if written
protests have been filed and not withdrawn by less than 15 percent of
the registered voters within the territory and less than 15 percent
of the owners of land who own less than 15 percent of the total
assessed value of land within the territory.
  SEC. 7.  Section 57127 of the Government Code is amended to read:
   57127.  If the board of supervisors calls any special election
within all or any part of any district, any references in the
principal act to the board of directors of the district and to the
clerk or secretary of the district shall be deemed to mean the board
of supervisors and the elections official, respectively.
  SEC. 8.  Section 57129 of the Government Code is amended to read:
   57129.  Where any records of a city or a district are required for
the purpose of calling, holding, or conducting any special election
called by the board of supervisors or city council pursuant to this
division, those records or certified copies of those records shall be
delivered, upon request, to the elections official by the city or
district officer having custody of the records or copies and shall be
returned to that officer immediately after the canvass of the
election returns. All other election records, documents, instruments,
and election supplies, including, but not limited to, rosters,
ballots, and tally sheets, shall be retained or disposed of by the
elections official in the manner provided by law.
  SEC. 9.  Section 57377 of the Government Code is amended to read:
   57377.  Officers, except members of the city council, shall hold
office until the first succeeding general municipal election held in
the city and until their successors are elected and qualified. Of the
five elected members of the city council, the two receiving the
lowest number of votes shall hold office until the first succeeding
general municipal election held in the city and until their
successors are elected                                           and
qualified, and the three receiving the highest number of votes shall
hold office until the second succeeding general municipal election
held in the city and until their successors are elected and
qualified. If two or more members of the city council are elected by
the same number of votes, the terms of each shall be determined by
lot. The members of the city council elected to succeed the members
elected at the incorporation election shall hold office for four
years from the Tuesday succeeding their election, and until their
successors are elected and qualified.
  SEC. 10.  Section 57379 of the Government Code is amended to read:
   57379.  If the first general municipal election following an
incorporation election will occur less than one year after the
effective date of incorporation, or occurred on or after November 1,
1987, and less than one year after the incorporation election, of the
five elected members of the city council, the two receiving the
lowest number of votes shall hold office until the second general
municipal election following the incorporation election and until
their successors are elected and qualified, and the three receiving
the highest number of votes shall hold office until the third general
municipal election following the incorporation election and until
their successors are elected and qualified.
   The first general municipal election following the incorporation
election shall not be held unless either a proposition is to be voted
upon or offices other than city council member offices are to be
filled.
   In the event that, pursuant to Section 56724, the first election
for city council members was held after the election on the
incorporation proposal, the term "incorporation election" in this
section means the first election for city council members.
  SEC. 11.  Section 99 of the Revenue and Taxation Code is amended to
read:
   99.  (a) For the purposes of the computations required by this
chapter:
   (1) In the case of a jurisdictional change, other than a city
incorporation or a formation of a district as defined in Section
2215, the auditor shall adjust the allocation of property tax revenue
determined pursuant to Section 96 or 96.1, or the annual tax
increment determined pursuant to Section 96.5, for local agencies
whose service area or service responsibility would be altered by the
jurisdictional change, as determined pursuant to subdivision (b) or
(c).
   (2) In the case of a city incorporation, the auditor shall assign
the allocation of property tax revenues determined pursuant to
Section 56810 of the Government Code and the adjustments in tax
revenues that may occur pursuant to Section 56815 of the Government
Code to the newly formed city or district and shall make the
adjustment as determined by Section 56810 in the allocation of
property tax revenue determined pursuant to Section 96 or 96.1 for
each local agency whose service area or service responsibilities
would be altered by the incorporation.
   (3) In the case of a formation of a district as defined in Section
2215, the auditor shall assign the allocation of property tax
revenues determined pursuant to Section 56810 of the Government Code
to the district and shall make the adjustment as determined by
Section 56810 in the allocation of property tax revenue determined
pursuant to Section 96 or 96.1 for each local agency whose service
area or service responsibilities would be altered by the formation.
   (b) Upon the filing of an application or a resolution pursuant to
the Cortese-Knox-Hertzberg Local Government Reorganization Act of
2000 (Division 3 (commencing with Section 56000) of Title 5 of the
Government Code), but prior to the issuance of a certificate of
filing, the executive officer shall give notice of the filing to the
assessor and auditor of each county within which the territory
subject to the jurisdictional change is located. This notice shall
specify each local agency whose service area or responsibility will
be altered by the jurisdictional change.
   (1) (A) The county assessor shall provide to the county auditor,
within 30 days of the notice of filing, a report which identifies the
assessed valuations for the territory subject to the jurisdictional
change and the tax rate area or areas in which the territory exists.
   (B) The auditor shall estimate the amount of property tax revenue
generated within the territory that is the subject of the
jurisdictional change during the current fiscal year.
   (2) The auditor shall estimate what proportion of the property tax
revenue determined pursuant to paragraph (1) is attributable to each
local agency pursuant to  Section   Sections
 96.1 and  Section  96.5.
   (3) Within 45 days of notice of the filing of an application or
resolution, the auditor shall notify the governing body of each local
agency whose service area or service responsibility will be altered
by the amount of, and allocation factors with respect to, property
tax revenue estimated pursuant to paragraph (2) that is subject to a
negotiated exchange.
   (4) Upon receipt of the estimates pursuant to paragraph (3)  ,
 the local agencies shall commence negotiations to determine
the amount of property tax revenues to be exchanged between and among
the local agencies.  This   Except as otherwise
provided, this  negotiation period shall not exceed 60 days. If
a local agency involved in these negotiations notifies the other
local agencies, the county auditor, and the local agency formation
commission in writing of its desire to extend the negotiating period,
the negotiating period shall be 90 days.
   The exchange may be limited to an exchange of property tax
revenues from the annual tax increment generated in the area subject
to the jurisdictional change and attributable to the local agencies
whose service area or service responsibilities will be altered by the
proposed jurisdictional change. The final exchange resolution shall
specify how the annual tax increment shall be allocated in future
years.
   (5) In the event that a jurisdictional change would affect the
service area or service responsibility of one or more special
districts, the board of supervisors of the county or counties in
which the districts are located shall, on behalf of the district or
districts, negotiate any exchange of property tax revenues. Prior to
entering into negotiation on behalf of a district for the exchange of
property tax revenue, the board shall consult with the affected
district. The consultation shall include, at a minimum, notification
to each member and executive officer of the district board of the
pending consultation and provision of adequate opportunity to comment
on the negotiation.
   (6) Notwithstanding any other provision of law, the executive
officer shall not issue a certificate of filing pursuant to Section
56658 of the Government Code until the local agencies included in the
property tax revenue exchange negotiation, within the negotiation
period, present resolutions adopted by each such county and city
whereby each county and city agrees to accept the exchange of
property tax revenues.
   (7) In the event that the commission modifies the proposal or its
resolution of determination, any local agency whose service area or
service responsibility would be altered by the proposed
jurisdictional change may request, and the executive officer shall
grant,  15   30  days for the affected
agencies, pursuant to paragraph (4)  ,  to renegotiate an
exchange of property tax revenues. Notwithstanding the time period
specified in paragraph (4), if the resolutions required pursuant to
paragraph (6) are not presented to the executive officer within the
 15-day   30-day  period, all proceedings
of the jurisdictional change shall automatically be terminated.
   (8) In the case of a jurisdictional change that consists of a city'
s qualified annexation of unincorporated territory, an exchange of
property tax revenues between the city and the county shall be
determined in accordance with subdivision (e) if that exchange of
revenues is not otherwise determined pursuant to either of the
following:
   (A) Negotiations completed within the applicable period or periods
as prescribed by this subdivision.
   (B) A master property tax exchange agreement among those local
agencies, as described in subdivision (d).
   For purposes of this paragraph, a qualified annexation of
unincorporated territory means an annexation, as so described, for
which an application or a resolution was filed on or after January 1,
1998, and on or before January 1, 2015.
   (9) No later than the date on which the certificate of completion
of the jurisdictional change is recorded with the county recorder,
the executive officer shall notify the auditor or auditors of the
exchange of property tax revenues and the auditor or auditors shall
make the appropriate adjustments as provided in subdivision (a).
   (c) Whenever a jurisdictional change is not required to be
reviewed and approved by a local agency formation commission, the
local agencies whose service area or service responsibilities would
be altered by the proposed change, shall give notice to the State
Board of Equalization and the assessor and auditor of each county
within which the territory subject to the jurisdictional change is
located. This notice shall specify each local agency whose service
area or responsibility will be altered by the jurisdictional change
and request the auditor and assessor to make the determinations
required pursuant to paragraphs (1) and (2) of subdivision (b). Upon
notification by the auditor of the amount of, and allocation factors
with respect to, property tax subject to exchange, the local
agencies, pursuant to the provisions of paragraphs (4) and (6) of
subdivision (b), shall determine the amount of property tax revenues
to be exchanged between and among the local agencies. Notwithstanding
any other provision of law, no such jurisdictional change shall
become effective until each county and city included in these
negotiations agrees, by resolution, to accept the negotiated exchange
of property tax revenues. The exchange may be limited to an exchange
of property tax revenue from the annual tax increment generated in
the area subject to the jurisdictional change and attributable to the
local agencies whose service area or service responsibilities will
be altered by the proposed jurisdictional change. The final exchange
resolution shall specify how the annual tax increment shall be
allocated in future years. Upon the adoption of the resolutions
required pursuant to this section, the adopting agencies shall notify
the auditor who shall make the appropriate adjustments as provided
in subdivision (a). Adjustments in property tax allocations made as
the result of a city or library district withdrawing from a county
free library system pursuant to Section 19116 of the Education Code
shall be made pursuant to Section 19116 of the Education Code, and
this subdivision shall not apply.
   (d) With respect to adjustments in the allocation of property
taxes pursuant to this section, a county and any local agency or
agencies within the county may develop and adopt a master property
tax transfer agreement. The agreement may be revised from time to
time by the parties subject to the agreement.
   (e) (1) An exchange of property tax revenues that is required by
paragraph (8) of subdivision (b) to be determined pursuant to this
subdivision shall be determined in accordance with all of the
following:
   (A) The city and the county shall mutually select a third-party
consultant to perform a comprehensive, independent fiscal analysis,
funded in equal portions by the city and the county, that specifies
estimates of all tax revenues that will be derived from the annexed
territory and the costs of city and county services with respect to
the annexed territory. The analysis shall be completed within a
period not to exceed 30 days, and shall be based upon the general
plan or adopted plans and policies of the annexing city and the
intended uses for the annexed territory. If, upon the completion of
the analysis period, no exchange of property tax revenues is agreed
upon by the city and the county, subparagraph (B) shall apply.
   (B) The city and the county shall mutually select a mediator,
funded in equal portions by those agencies, to perform mediation for
a period  of  not to exceed 30 days. If, upon the
completion of the mediation period, no exchange of property tax
revenues is agreed upon by the city and the county, subparagraph (C)
shall apply.
   (C) The city and the county shall mutually select an arbitrator,
funded in equal portions by those agencies, to conduct an advisory
arbitration with the city and the county for a period  of
 not to exceed 30 days. At the conclusion of this
arbitration period, the city and the county shall each present to the
arbitrator its last and best offer with respect to the exchange of
property tax revenues. The arbitrator shall select one of the offers
and recommend that offer to the governing bodies of the city and the
county. If the governing body of the city or the county rejects the
recommended offer, it shall do so during a public hearing, and shall,
at the conclusion of that hearing, make written findings of fact as
to why the recommended offer was not accepted.
   (2) Proceedings under this subdivision shall be concluded no more
than 150 days after the auditor provides the notification pursuant to
paragraph (3) of subdivision (b), unless one of the periods
specified in this subdivision is extended by the mutual agreement of
the city and the county. Notwithstanding any other provision of law,
except for those conditions that are necessary to implement an
exchange of property tax revenues determined pursuant to this
subdivision, the local agency formation commission shall not impose
any fiscal conditions upon a city's qualified annexation of
unincorporated territory that is subject to this subdivision.
   (f) Except as otherwise provided in subdivision (g), for the
purpose of determining the amount of property tax to be allocated in
the 1979-80 fiscal year and each fiscal year thereafter for those
local agencies that were affected by a jurisdictional change which
was filed with the State Board of Equalization after January 1, 1978,
but on or before January 1, 1979. The local agencies shall determine
by resolution the amount of property tax revenues to be exchanged
between and among the affected agencies and notify the auditor of the
determination.
   (g) For the purpose of determining the amount of property tax to
be allocated in the 1979-80 fiscal year and each fiscal year
thereafter, for a city incorporation that was filed pursuant to
Sections 54900 to 54904 after January 1, 1978, but on or before
January 1, 1979, the amount of property tax revenue considered to
have been received by the jurisdiction for the 1978-79 fiscal year
shall be equal to two-thirds of the amount of property tax revenue
projected in the final local agency formation commission staff report
pertaining to the incorporation multiplied by the proportion that
the total amount of property tax revenue received by all
jurisdictions within the county for the 1978-79 fiscal year bears to
the total amount of property tax revenue received by all
jurisdictions within the county for the 1977-78 fiscal year. Except,
however, in the event that the final commission report did not
specify the amount of property tax revenue projected for that
incorporation, the commission shall by October 10 determine pursuant
to Section 54790.3 of the Government Code the amount of property tax
to be transferred to the city.
   The provisions of this subdivision shall also apply to the
allocation of property taxes for the 1980-81 fiscal year and each
fiscal year thereafter for incorporations approved by the voters in
June 1979.
   (h) For the purpose of the computations made pursuant to this
section, in the case of a district formation that was filed pursuant
to Sections 54900 to 54904, inclusive, of the Government Code after
January 1, 1978, but before January 1, 1979, the amount of property
tax to be allocated to the district for the 1979-80 fiscal year and
each fiscal year thereafter shall be determined pursuant to Section
54790.3 of the Government Code.
   (i) For the purposes of the computations required by this chapter,
in the case of a jurisdictional change, other than a change
requiring an adjustment by the auditor pursuant to subdivision (a),
the auditor shall adjust the allocation of property tax revenue
determined pursuant to Section 96 or 96.1 or its predecessor section,
or the annual tax increment determined pursuant to Section 96.5 or
its predecessor section, for each local school district, community
college district, or county superintendent of schools whose service
area or service responsibility would be altered by the jurisdictional
change, as determined as follows:
   (1) The governing body of each district, county superintendent of
schools, or county whose service areas or service responsibilities
would be altered by the change shall determine the amount of property
tax revenues to be exchanged between and among the affected
jurisdictions. This determination shall be adopted by each affected
jurisdiction by resolution. For the purpose of negotiation, the
county auditor shall furnish the parties and the county board of
education with an estimate of the property tax revenue subject to
negotiation.
   (2) In the event that the affected jurisdictions are unable to
agree, within 60 days after the effective date of the jurisdictional
change, and if all the jurisdictions are wholly within one county,
the county board of education shall, by resolution, determine the
amount of property tax revenue to be exchanged. If the jurisdictions
are in more than one county, the State Board of Education shall, by
resolution, within 60 days after the effective date of the
jurisdictional change, determine the amount of property tax to be
exchanged.
   (3) Upon adoption of any resolution pursuant to this subdivision,
the adopting jurisdictions or State Board of Education shall notify
the county auditor who shall make the appropriate adjustments as
provided in subdivision (a).
   (j) For purposes of subdivision (i), the annexation by a community
college district of territory within a county not previously served
by a community college district is an alteration of service area. The
community college district and the county shall negotiate the
amount, if any, of property tax revenues to be exchanged. In these
negotiations, there shall be taken into consideration the amount of
revenue received from the timber yield tax and forest reserve
receipts by the community college district in the area not previously
served. In no event shall the property tax revenue to be exchanged
exceed the amount of property tax revenue collected prior to the
annexation for the purposes of paying tuition expenses of residents
enrolled in the community college district, adjusted each year by the
percentage change in population and the percentage change in the
cost of living, or per capita personal income, whichever is lower,
less the amount of revenue received by the community college district
in the annexed area from the timber yield tax and forest reserve
receipts.
   (k) At any time after a jurisdictional change is effective, any of
the local agencies party to the agreement to exchange property tax
revenue may renegotiate the agreement with respect to the current
fiscal year or subsequent fiscal years, subject to approval by all
local agencies affected by the renegotiation.