BILL ANALYSIS ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 2795| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ 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 CONTINUED AB 2795 Page 2 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. CONTINUED AB 2795 Page 3 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 CONTINUED AB 2795 Page 4 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 CONTINUED AB 2795 Page 5 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 **** END **** CONTINUED