BILL ANALYSIS SB 894 Page 1 Date of Hearing: June 30, 2010 ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT Cameron Smyth, Chair SB 894 (Committee on Local Government) - As Amended: June 7, 2010 SENATE VOTE : 30-0 SUBJECT : Local Government Omnibus Act of 2010. SUMMARY : Enacts the "Local Government Omnibus Act of 2010" and makes 24 changes to the state laws affecting local agencies' powers and duties. Specifically, this bill makes changes in the following subject areas: 1)City boundary lawsuits . The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (Cortese-Knox-Hertzberg) controls cities' boundaries, including the incorporation of new cities, city annexations, and city consolidations. Cortese-Knox-Hertzberg explains that any lawsuits challenging boundary changes are required to be filed under the standard Code of Civil Procedure methods that set a 60-day statute of limitations. The author, however, notes an older, separate provision in the Code of Civil Procedure sets a 90-day statute of limitations for filing lawsuits that challenge city incorporations, annexations, and consolidations. The last time the Legislature amended that section was 1957, and it appears to have been forgotten when legislators rewrote the city boundary laws in 1977, 1985, and 2000. To avoid confusion over two different deadlines, the author wants the Legislature to repeal the contradictory provision in the Code of Civil Procedure. SB 894 repeals the outdated deadline for filing lawsuits affecting city incorporations, annexations, and consolidations. 2)Land use mediation law clean-up . Judges can resolve land use and environmental lawsuits through mediation. A judge can invite the litigants to use a mediator to resolve their case before it goes to trial. Judges can use these mediation procedures for lawsuits that affect 10 specified statutes: a) Development projects; b) California Environmental Quality Act decisions; SB 894 Page 2 c) Time limits in the Permit Streamlining Act or Subdivision Map Act; d) School districts' developer fees; e) Developer fees; f) The adequacy of general plans or specific plans; g) Local agency formation commission decisions; h) The adoption or amendments of redevelopment plans; i) Zoning decisions; and, j) Airport land use decisions. Although no one keeps track, practitioners say judges do not use these mediation procedures often. The author believes one reason judges may not use the law is the authority appears only in a general statutory location and not in each of the affected laws. The author wants the Legislature to insert a cross-reference to the existing mediation procedures in each of the affected statutes. SB 894 inserts the statutory cross-reference to the existing land use and environmental dispute mediation law in each of the affected statutes. SB 894 also corrects the references to the existing laws that describe school districts' developer fees and the Mitigation Fee Act. The changes in SB 894 are consistent with current law and do not change state policies or result in new state-mandated local programs. 3)Commission on State Mandates reports . The California Constitution requires the state to reimburse local governments for the cost of new programs or higher levels of service mandated by the Legislature or any state agency. The Commission on State Mandates (Commission) is a quasi-judicial body that decides test claims for reimbursable state-mandates. If the Commission identifies a state-mandated program, it adopts parameters and guidelines defining what activities will be reimbursed and adopts statewide cost estimates. The Commission reports to the Legislature semiannually on the status of state-mandate claims. In 2007, the Legislature allowed the Department of Finance and local governments to use SB 894 Page 3 alternative processes to resolve claims and parameters and guidelines for state mandates. In October 2009, the State Auditor questioned why public officials were not using these alternative processes. The State Auditor recommended the Commission add additional information in its semiannual report about the status of these alternative measures and any delays. The Commission agrees and wants the Legislature to require this information in the semiannual reports. SB 894 requires the Commission to include more information in its semiannual reports to the Legislature, specifically explaining the use of alternative processes and any delays. 4)Fresno and Merced counties' boundaries . State statutes recite the official boundary descriptions of all 58 counties. Existing law also allows counties to adjust their mutual boundaries. After counties use this procedure, they ask the Legislature to revise their statutory boundary descriptions to match the new realities. For example, Kern and Los Angeles county officials used this procedure in 2000 when property owners asked to transfer about 1,000 acres near the Tejon Pass from Los Angeles County to Kern County. The Legislature then corrected the counties' statutory boundary descriptions. In 2007, Fresno and Merced county officials used the same procedures to shift 4,175 acres from Fresno County to Merced County near the City of Dos Palos. The county boundary changes took effect on January 1, 2008, and county officials want the Legislature to conform their statutory boundary descriptions to match the new legal reality. SB 894 amends the statutory boundary descriptions for Fresno County and Merced County to conform to the counties' current boundaries. 5)County boundary lawsuits . State law spells out the procedures for changing county boundaries, either as minor boundary changes or boundary changes. State law also spells out the procedures for forming new counties and for consolidating counties. Unlike the statute that controls boundary changes for cities and special districts, state law does not set a deadline for filing lawsuits to challenge county boundary changes, formations, and consolidations. The standard statute of limitations for lawsuits that challenge government decisions is 60 days. The author wants the Legislature to apply the standard statute of limitations to lawsuits that challenge county boundary changes, formations, and consolidations. SB 894 requires lawsuits that challenge county boundary changes, formations, and consolidations to SB 894 Page 4 follow the standard procedures and deadlines for lawsuits that challenge government decisions. 6)SLON cross-references . The California Constitution prevents counties and cities from creating multi-year general obligation debt without 2/3-voter approval. Because this constitutional ban does not mention special districts, the Legislature has allowed some districts to borrow money without voter approval by issuing "promissory notes." Special districts' promissory notes are not backed by a guaranteed source of revenue. This lack of security makes them a relatively risky investment that drives up their borrowing costs. Because promissory notes do not require voter approval, they are attractive financing tools. In 1994, as a more secure and less expensive alternative to potentially risky promissory notes, the Legislature allowed all special districts to issue securitized limited obligation notes (SLONs). SLONs are like promissory notes in that they do not require voter approval, but a special district must secure its SLONs by pledging a dedicated stream of revenues. It takes a 4/5 vote of a district's governing board to issue SLONs. The authority for districts to issue SLONs sunsets on December 31, 2014. Although the SLON law applies to all special districts, none of the districts' principal acts contains cross-references to the SLON statute. SB 894 inserts references to the SLON law in the special district statutes that list the districts' short-term borrowing powers. SB 894 says these cross references are declaratory of existing law. 7)MACs & CSDs . A municipal advisory council (MAC) is an appointed or elected body that advises county supervisors on topics that affect an unincorporated community. State law prohibits public officials from holding incompatible offices, with exceptions. One exception is state law may expressly authorize holding dual offices. In 1991, the Legislature expressly declared service on a recreation and park district's board is not incompatible with service on a MAC. In 2001, the Legislature revised the state laws that govern park districts and restated the MAC exception in the Recreation and Park District Law. In 2005, when the Legislature revised the state laws that govern community services districts (CSDs), it also declared service on a CSD board was not incompatible with serving on a MAC. However, the Legislature failed to make the parallel change in the MAC law. To avoid misunderstandings, the author wants the Legislature to add CSDs to the list of SB 894 Page 5 special districts' boards that are not incompatible with serving on a MAC. SB 894 adds community services districts to the statute that declares service on a municipal advisory council is not an incompatible office. 8)Gender-specific city council references . All general law cities have city councils with at least five members. Although older statutes still refer to city council members as "councilmen" or "councilwomen," state law makes it clear that any member of a city council can be called a "council member." Nevertheless, at least 16 older sections in the Government Code and the Health & Safety Code still use the terms "councilman" and "councilmen," or use the male pronoun "his." The author wants the Legislature to use gender-neutral terms in the state laws that refer to city council members. SB 894 changes the statutory references to city "councilman" and "councilmen" to city "council member" and "council members." 9)Health care districts' assets . The Local Health Care District Law governs the 80 special districts that own and operate local public hospitals and clinics. In 1982, the Legislature authorized health care districts to transfer some of their assets to nonprofit corporations. In 1992, the Legislature required health care districts to get majority-voter approval before transferring 50 percent or more of their assets to nonprofit corporations. In 1998, the Legislature required health care districts to get majority-voter approval before transferring or leasing 50 percent or more of their assets to any corporation at fair market value. That requirement would have automatically terminated on January 1, 2001. In 2000, the Legislature extended the sunset date to January 1, 2006, and directed the Legislative Analyst's Office (LAO) to determine if the requirement should be permanent. A November 2004 LAO report concluded that, after studying just one transfer from a district to a for-profit corporation, there was no basis to recommend a continuation of the requirement for voter approval. In 2005, the Legislature extended the sunset date to January 1, 2011. The Washington Township Healthcare District wants the Legislature to make the requirement permanent. SB 894 makes permanent the requirement that healthcare districts get majority-voter approval before they transfer or lease 50 percent or more of their assets to corporations. Specifically, SB 894 deletes the sunset clauses and repeals the outdated statutory versions. 10)Permit Streamlining Act clean-up . More than 30 years ago, SB 894 Page 6 the Legislature passed the Permit Streamlining Act after the Dow Chemical Company dropped its plans to build a plant in Solano County. Once a public agency receives a development permit application, officials have 30 days to determine if it is complete. If the application is not complete, the agency is required to explain what is missing. If the agency fails to determine an application's completeness, the Act declares the application is deemed complete. The Act also sets deadlines for public officials to act on development permit applications. For applications pending when the Legislature passed the Act, those time limits are measured from January 1, 1978. The author notes this 33-year old section is obsolete and wants the Legislature to repeal it. SB 894 repeals the outdated time limits in the Permit Streamlining Act. 11)Redevelopment audit terms . When a redevelopment agency presents its annual report, including its annual independent financial audit report, to its underlying city council or county board of supervisors, the agency is required to explain any "major violations" the auditor found. In 2003, the Legislature changed this term to "major audit violation," but neglected to change all the other references. To avoid confusion, the author wants the Legislature to use the correct term. SB 894 changes statutory references to "major violations" to "major audit violations" in the state law that tells redevelopment agencies what to do with their annual reports. 12)Redevelopment spending outside project areas . The Community Redevelopment Law allows redevelopment officials to pay for public works projects inside redevelopment project areas. Before they can pay for public works that are located outside project areas, officials are required to make five findings. These new requirements took effect on January 1, 2010, but a 2009 bill (SB 93 (Kehoe), Chapter 555, Statutes of 2009) grandfathered public works projects with financing, construction, or installation underway. Redevelopment officials note, however, that state law does not explain that grandfathered projects can still proceed under the former statute. SB 894 clarifies that, when redevelopment officials pay for public works projects that are located outside a redevelopment project area but were underway before the Legislature imposed the new requirements, they can proceed under the former statutory requirements. 13)Air pollution control officers' deputies . State law governs SB 894 Page 7 the structure and powers of air pollution control districts (APCDs) and air quality management districts (AQMDs). Each county's APCD appoints an air pollution control officer (APCO) who in turn appoints the APCD's personnel. Formally appointed deputies have general statutory authority to perform their superiors' powers. Citing Rauer v. Lowe (1885)107 Cal. 229, a 1987 Attorney General's opinion explained that a "government official may not appoint a deputy without appropriate legal authority" (70 Ops.Cal.Atty.Gen. 250 [1987]). Although many APCOs designate deputies to carry out delegated duties, there is no explicit authority to appoint Deputy APCOs for APCDs. However, state law explicitly allows deputies for the South Coast AQMD, the Mojave Desert AQMD, and the Antelope Valley AQMD. County officials want the Legislature to give APCOs the explicit statutory authority to appoint deputies, subject to the APCD boards' direction. SB 894 allows air pollution control officers to appoint deputies. 14)West Nile virus and intergovernmental cooperation . State law requires an agency that responds to an outbreak of West Nile virus or other mosquito-borne disease to either contract with a local mosquito and vector control agency that has a cooperative agreement with the State Department of Health Services (Department) or consult directly with the Department. This law would have automatically terminated on January 1, 2009, but the Legislature extended the sunset date to January 1, 2011. The Mosquito and Vector Control Association of California wants the Legislature to extend the sunset date for another year so legislators will have more time to consider a permanent statute. SB 894 extends the sunset date from January 1, 2011, to January 1, 2012, for the state law that requires public agencies to work with the Department during an outbreak of West Nile virus or other mosquito-borne diseases. 15)Publishing water reservoir rules . Counties, cities, and special districts with water reservoirs that are used for fishing or recreation are required to publish their watershed rules and regulations at least once in a general circulation newspaper in the county where the reservoir is located. The East Bay Municipal Utility District (EBMUD) operates seven drinking water reservoirs, five of which are used for fishing and recreation. Also, the reservoirs are in five different counties. Publishing the full text of EBMUD's watershed rules and regulations costs approximately $20,000 each time the District changes them, although it is not clear if public SB 894 Page 8 agencies are required to republish their rules and regulations when they are amended. Other statutory publishing requirements allow public officials to print only summaries of their ordinances when they change. Instead of publishing the full text of changes to its reservoir rules and regulations, EBMUD wants the Legislature to allow public agencies to publish summaries of the changes. SB 894 allows public agencies to publish summaries of the changes to their watershed rules and regulations for reservoirs. 16)County public works contracts and change orders . State law spells out the competitive bidding procedures that counties follow when they issue public works contracts. The county board of supervisors (board) is required to approve changes to these contracts by a 4/5 vote. However, the board can delegate this authority to the county engineer or other county officer. For a contract worth more than $250,000, the change order cannot be more than $25,000, plus 5 percent of the amount over $250,000. In no event can the change order be more than $150,000. Los Angeles County officials note inflation has eroded the purchasing power of the $150,000 limit since the Legislature last raised that amount. The equivalent of $150,000 in 1998 dollars would be $209,100 in 2009. SB 894 raises the limit on change orders for public works contracts that a board can delegate to county officials from $150,000 to $210,000. 17)County bridge contracts and change orders . State law spells out the competitive bidding procedures that counties follow when they issue contracts to build or alter bridges and subways. The board is required to approve changes to these contracts by a 4/5 vote. Los Angeles County officials note that, unlike the laws governing other county public works contracts, this statute does not allow the board to delegate the authority to approve change orders to county officials. Taking individual change orders to the board is time consuming and increases the costs of bridge projects. They want the Legislature to allow boards to delegate change orders for bridge and subway construction contracts, following the same thresholds as change orders for other county construction contracts. SB 894 allows a board to delegate its authority to approve change orders on county bridge and subway construction contracts to county officers: a) For contracts of $50,000 or less, the maximum amount is SB 894 Page 9 $5,000; b) For contracts worth between $50,000 and $250,000, the maximum amount is 10 percent of the amount of the cost of the original contract; and, c) For contracts worth more than $250,000, the maximum amount is $25,000 plus 5 percent of the amount over $250,000. In no event can the change order be more than $210,000. 18)County waterworks districts' contracts and change orders . The County Waterworks District Law says a board is the ex officio governing board of a county waterworks district. State law spells out the competitive bidding procedures that county waterworks districts follow when they issue contracts to build water facilities. Los Angeles County officials note that, unlike the laws governing county public works contracts, this statute does not allow the boards to approve changes to county waterworks districts' contracts or to delegate the authority to approve change orders to county officials. They want the Legislature to allow boards to delegate change orders for construction contracts, using the same thresholds as change orders for county construction contracts. SB 894 allows a board, acting as a county waterworks district's governing board, to delegate to the district manager or other district official the authority to approve change orders on construction contracts: a) For contracts of $50,000 or less, the maximum amount is $5,000; b) For contracts worth between $50,000 and $250,000, the maximum amount is 10 percent of the amount of the cost of the original contract; and, c) For contracts worth more than $250,000, the maximum amount is $25,000 plus 5 percent of the amount over $250,000. In no event can the change order be more than $210,000. 19)Redevelopment agencies' design-build cross-reference . Redevelopment agencies can use the design-build contracting method until January 1, 2016. In describing the public works projects to which the language applies, the statute SB 894 Page 10 incorrectly cites Health & Safety Code Section 33455 instead of Section 33445. Also, the Legislature created a new provision for public works projects outside redevelopment project areas, but current law does not recognize the new provision. SB 894 corrects the statutory cross-references in state law that allows redevelopment agencies to use the design-build contracting method. 20)Los Angeles County Flood Control District's contracts and change orders . The Los Angeles County Flood Control District Act says the Los Angeles County Board of Supervisors is the Los Angeles County Flood Control District's (District) ex officio governing board. State law spells out the competitive bidding procedures the District follows when it issues contracts to build water facilities. Los Angeles County officials note that, unlike the laws governing county public works contracts, this statute does not allow the county supervisors to approve changes to the District's contracts or to delegate the authority to approve change orders to county officials. They want the Legislature to allow the Los Angeles County Board of Supervisors to delegate change orders for the District's construction contracts, using the same thresholds as change orders for county construction contracts. SB 894 allows the Los Angeles County Board of Supervisors to delegate to the District's chief engineer or other District officer the authority to approve change orders on construction contracts: a) For contracts of $50,000 or less, the maximum amount is $5,000. b) For contracts worth between $50,000 and $250,000, the maximum amount is 10 percent of the amount of the cost of the original contract. c) For contracts worth more than $250,000, the maximum amount is $25,000 plus 5 percent of the amount over $250,000. In no event can the change order be more than $210,000. 21)Property tax transfer clarification . Existing law spells out how county officials are required to allocate property tax revenues to counties, cities, special districts, and school districts. Local officials can agree among themselves to reallocate property tax revenues, transferring revenue from one local agency to one or more other agencies, provided four SB 894 Page 11 conditions exist. The second condition is the transfer will not increase the ratio between the transferring agency's user charges and the revenues the agency uses to pay for services. When interpreting this language, a 2006 Attorney General's opinion noted words were missing from the description. SB 894 clarifies the state law that permits local agencies to voluntarily transfer property tax revenues by inserting language suggested by an Attorney General's opinion and using consistent statutory terms. 22)Publishing water districts' regulations . Water districts can adopt "equitable rules and regulations" that govern the sale and distribution of water. After they publish these rules and regulations once a week for two weeks in a general circulation newspaper, they can enforce the regulations. The Irvine Ranch Water District says it costs between $10,000 and $20,000 to publish its lengthy rules and regulations. Other statutory publishing requirements allow public officials to print only summaries of their ordinances when they change. Instead of publishing the full text of its amended water rules and regulations, the Irvine Ranch Water District wants the Legislature to allow water districts to publish summaries. SB 894 allows districts to publish summaries of the changes to their water rules and regulations. 23)Reclamation districts' seals . State law recognizes public agencies' seals as formal signs of executing documents. State law allows many types of special districts to adopt and alter official seals. For example, community services districts, mosquito and vector control districts, and county water districts can adopt and alter seals. A reclamation district is required to adopt a seal that contains its number and county's name. All reclamation district documents that require the board of trustees' approval need the district's seal. The California Central Valley Flood Control Association says requiring seals on reclamation districts' documents is antiquated. SB 894 allows rather than requires a reclamation district to adopt and alter a seal. SB 894 requires reclamation districts' documents that need the board of trustee's approval to be signed by either a district trustee or the board's secretary, instead of requiring the district's seal. 24)North Delta Water Agency's elections . Formed in 1973 as one of the three successors to the Delta Water Agency, the North SB 894 Page 12 Delta Water Agency (Agency) operates under its own special act. The Agency's voters are landowners within its boundaries and each landowner gets one vote for every acre owned. The Agency's principal act says the board of directors has five members, one from each of the Agency's divisions. Each board member must be a property owner or a property owner's legal representative within the division the member represents. The Agency's general manager notes the statute is unclear about which voters elect the board members. SB 894 clarifies the Agency's board members are elected by divisions, elected only by the voters of each division and not at large. 25)Legislative declarations . SB 894 expresses the Legislature's intent to cut costs by combining several noncontroversial items relating to local government into a single bill. FISCAL EFFECT : Unknown COMMENTS : 1)Each year local officials discover problems with the state statutes that affect counties, cities, special districts, and redevelopment agencies, as well as the laws on land use planning and development. The Senate Local Government Committee believes that these minor problems do not warrant separate (and expensive) bills. According to the Legislative Analyst, in 2001-02 the cost of producing a bill was $17,890. 2)The Senate Local Government Committee responds by combining several of these minor topics into an annual "omnibus bill." For example, SB 113, Chapter 332, Statutes of 2009, was the Committee's annual omnibus bill, which contained 39 noncontroversial statutory changes, avoiding about $700,000 in legislative costs. Although this practice may violate a strict interpretation of the single-subject rule expressed in Harbor v. Deukmejian (1987) 43 Cal. 3d 1078, and Californians for an Open Primary v. McPherson (2006) 38 Cal.4th 735, the Senate Local Government Committee believes it is an expeditious and relatively inexpensive way to respond to multiple requests. SB 894 Page 13 REGISTERED SUPPORT / OPPOSITION : Support Association of CA Water Agencies CA Association of Local Agency Formation Commissions CA Central Valley Flood Control Association CA Redevelopment Association CA Special Districts Association CA State Association of Counties Commission on State Mandates Counties of Fresno, Los Angeles, and Merced East Bay Municipal Utility District Howard Jarvis Taxpayers Association Irvine Ranch Water District Mosquito and Vector Control Association of CA San Francisco Bay Area Rapid Transit District South Coast Air Quality Management District Washington Hospital Healthcare System Individual letter (1) Opposition None on file Analysis Prepared by : Jennifer R. Klein / L. GOV. / (916) 319-3958