BILL ANALYSIS                                                                                                                                                                                                    



                                                                       



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          |SENATE RULES COMMITTEE            |                  AB 2795|
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                                    CONSENT


          Bill No:  AB 2795
          Author:   Assembly Local Government Committee
          Amended:  5/27/10 in Senate
          Vote:     21

           
           SENATE LOCAL GOVERNMENT COMMITTEE  :  3-0, 6/9/10
          AYES:  Kehoe, DeSaulnier, Price
          NO VOTE RECORDED:  Cox, Aanestad

           ASSEMBLY FLOOR  :  74-0, 5/6/10 - See last page for vote


           SUBJECT  :    Local government:  organization

           SOURCE  :     Author


           DIGEST  :    This bill makes nine changes to the state laws  
          affecting local agency formation commissions and local  
          governments' boundaries.

           ANALYSIS  :    The Cortese-Knox-Hertzberg Local Government  
          Reorganization Act delegates the Legislature's power to  
          control the boundaries of cities and special districts to  
          local agency formation commissions (LAFCOs).  The courts  
          call LAFCOs the Legislature's watchdog over local boundary  
          changes.

          As practitioners find problems with the  
          Cortese-Knox-Hertzberg Act, they ask for statutory  
          improvements.  The Assembly Local Government Committee  
          responds by authoring clean-up bills.  Last year's LAFCO  
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          clean-up bill was AB 1582 (Assembly Local Government  
          Committee, Chapter 155, Statutes of 2009).

          This bill makes makes nine changes to the state laws  
          affecting local agency formation commissions (LAFCOs) and  
          local governments' boundaries.

           1. Districts' services  .  A special district must get the  
             LAFCO's approval before it can provide new services or  
             divest itself of the power to provide services.  In  
             creating the detailed procedures for adding and  
             divesting services (AB 2484, Caballero, 2008), the  
             Legislature did not define those terms.  This bill  
             defines "divestiture of power" as the termination of a  
             district's authority to provide services. 

           2. Selection of special district members  .  Half of the 58  
             LAFCOs have used current law to seat representatives of  
             independent special districts as commissioners.  An  
             "independent special districts selection committee,"  
             composed of the presiding officers of the independent  
             special districts in that county, appoints two regular  
             members and one alternate member to the LAFCO.  The  
             LAFCO's executive officer calls for the selection  
             committee to meet when there's a vacancy, or if  
             districts with at least 10 percent of the countywide  
             taxable property request a meeting.  Some executive  
             officers say that waiting until a vacancy occurs  
             deprives special districts of representation.  They want  
             to call meetings when it's clear that a vacancy is about  
             to occur.  This bill allows a LAFCO executive officer to  
             call a meeting of the independent special district  
             selection committee when the executive officer  
             anticipates that a vacancy for a special district seat  
             on the LAFCO will occur within 90 days.

           3. Selection procedures  .  Half of the 58 LAFCOs have used  
             current law to seat representatives of independent  
             special districts as commissioners.  An "independent  
             special districts selection committee," composed of the  
             presiding officers of the independent special districts  
             in that county, appoints two regular members and one  
             alternate member to the LAFCO.  The LAFCO's executive  
             officer conducts the selection committee's meetings.   

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             Some executive officers say that running a meeting to  
             select the commissioners who will then be their bosses  
             may compromise the perception of their independence.   
             They want to delegate the conduct of these meetings to  
             others.  For the special district selection process,  
             this bill defines "executive officer" to include a  
             designee authorized by the LAFCO. 

           4. LAFCO initiation of district proposals  .  The  
             Cortese-Knox-Hertzberg Act provides three ways to start  
             boundary change proposals:  (1) by petition of the  
             affected voters or landowners, (2) by resolution of an  
             affected local agency, or (3) in the case of special  
             district boundary changes, by the LAFCO itself.  The Act  
             is silent on the form of the LAFCO's action.  To  
             initiate a special district boundary change, this bill  
             requires the LAFCO to adopt a resolution.

           5. LAFCO budgets  .  Local agencies pay for the LAFCOs'  
             annual budgets.  Where a LAFCO has only county and city  
             representatives, the county government and the cities  
             split the cost.  Where independent special districts  
             have representation, the county government, the cities,  
             and the districts each pay a third of the LAFCO's  
             budget.  State law allocates the districts' share among  
             the independent districts in proportion to their total  
             revenues.  To compute the share for most districts,  
             local officials rely on the most recent edition of the  
             State Controller's "Special Districts Annual Report."   
             They must discount a district's total revenues by the  
             amount of category aid from other governmental agencies.  
              Some executive officers note that the State  
             Controller's annual report uses a more modern term for  
             that type of revenue.  This bill substitutes the term  
             "intergovernmental revenue" in the computation of  
             special districts' shares of the LAFCOs' budgets.

           6. Boundary change elections  .  The Cortese-Knox-Hertzberg  
             Act requires voter approval of certain boundary change  
             proposals.  When a LAFCO orders an election, the  
             affected county board of supervisors or city council  
             conducts the election.  Some executive officers note  
             that the statute still implies that the LAFCOs call and  
             conduct these elections.  This bill clarifies that when  

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             a boundary change election is needed, the board of  
             supervisors or city council calls and conducts the  
             elections.

           7. New city councils  .  The Cortese-Knox-Hertzberg Act  
             spells out the terms of office for the first five city  
             council members of newly incorporated cities.  For new  
             city councils elected at large, the three council  
             members who received the lowest number of votes hold  
             office until the first general municipal election after  
             incorporation.  The other two members hold office until  
             the second general municipal election.  After those  
             elections, city council members serve staggered  
             four-year terms.  This bill increases, from two to  
             three, the number of new city council members who hold  
             office until the second general municipal election after  
             incorporation.  This bill reduces, from three to two,  
             the number of council members who hold office until the  
             first general municipal election. 

           8. Property tax revenue negotiations  .  Before a LAFCO  
             executive officer can accept a proposed boundary change,  
             local officials must negotiate a transfer of property  
             tax revenues.  State law provides an elaborate process  
             for local officials to follow, including gathering  
             information from county officials and conducting  
             negotiations that can last for up to 60 days.  Because  
             these negotiations can be contentious, some local  
             officials want more time to talk.  This bill allows a  
             90-day negotiation period if any of the involved local  
             agencies notifies the other local agencies, the county  
             auditor, and the LAFCO in writing.

           9. Property tax revenue changes  .  Before a LAFCO executive  
             officer can accept a proposed boundary change, local  
             officials must negotiate a transfer of property tax  
             revenues.  If the LAFCO later modifies the boundary  
             change, state law allows an affected local agency to  
             have 15 days to renegotiate the property tax revenue  
             transfer.  Some executive officers say that 15 days  
             isn't long enough for local officials to renegotiate.   
             This bill extends, from 15 days to 30 days, the amount  
             of time that local officials can renegotiate a property  
             tax transfer agreement if the LAFCO modifies the  

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             proposed boundary change.

           Technical amendments  .  In addition to its substantive  
          changes to the Cortese-Knox-Hertzberg Act, this bill makes  
          formatting amendments.

           FISCAL EFFECT :    Appropriation:  No   Fiscal Com.:  No    
          Local:  No

           SUPPORT  :   (Verified  6/10/10)

          California Association of Local Agency Formation  
          Commissions
          California Special Districts Association


           ASSEMBLY FLOOR  :  
          AYES:  Adams, Ammiano, Anderson, Arambula, Beall, Bill  
            Berryhill, Tom Berryhill, Blakeslee, Blumenfield,  
            Bradford, Brownley, Buchanan, Caballero, Charles  
            Calderon, Carter, Chesbro, Conway, Cook, Coto, Davis, De  
            Leon, DeVore, Emmerson, Eng, Evans, Feuer, Fletcher,  
            Fong, Fuentes, Fuller, Furutani, Gaines, Galgiani,  
            Garrick, Hagman, Hall, Harkey, Hayashi, Hernandez, Hill,  
            Huber, Huffman, Jeffries, Jones, Knight, Lieu, Logue,  
            Bonnie Lowenthal, Ma, Miller, Monning, Nava, Nestande,  
            Niello, Nielsen, Norby, V. Manuel Perez, Portantino,  
            Ruskin, Salas, Saldana, Silva, Skinner, Smyth, Solorio,  
            Audra Strickland, Swanson, Torlakson, Torres, Torrico,  
            Tran, Villines, Yamada, John A. Perez
          NO VOTE RECORDED:  Bass, Block, De La Torre, Gilmore,  
            Mendoza


          AGB:nl  6/10/10   Senate Floor Analyses 

                         SUPPORT/OPPOSITION:  SEE ABOVE

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