BILL ANALYSIS Ó
AB 46
Page 1
ASSEMBLY THIRD READING
AB 46 (John A. Pérez)
As Amended April 4, 2011
Majority vote
LOCAL GOVERNMENT 8-0
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|Ayes:|Smyth, Alejo, Bradford, | | |
| |Campos, Davis, Gordon, | | |
| |Hueso, Norby | | |
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SUMMARY : Establishes a uniform disincorporation process for any
city with a population of less than 150 persons as of January 1,
2010, and allows that city's respective county board of
supervisors to vote to continue the existence of that city
within the county's boundaries in certain circumstances.
Specifically, this bill :
1)Provides that every city with a population of less than 150
persons, according to the official records of the Department
of Finance as of January 1, 2010, be disincorporated into that
city's respective county, as of 91 days after the effective
date of the bill.
2)Allows the county board of supervisors to determine, by
majority vote, within 90 days of the effective date of the
bill, that continuing a city within that county's boundaries
that would otherwise be disincorporated pursuant to 1) above,
would serve a public purpose if the board of supervisors
finds, on the basis of substantial evidence on the record
before it, that the city is in an isolated, rural location
that makes it impractical for the residents of the community
to organize in another form of local governance.
3)States that if the county board of supervisors votes to
continue a city in existence, the city shall not be
disincorporated and shall continue as a city.
4)Requires, if a city is disincorporated pursuant to the
provisions of this measure, that the local agency formation
commission (LAFCO) in the county oversee the terms and
conditions of the disincorporation of the city pursuant to the
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provisions in the Cortese-Knox-Hertzberg Act (Act).
5)States that the LAFCO authority shall include, but not be
limited to, the power to enforce a writ of mandate.
EXISTING LAW :
1)Allows, pursuant to Article XI, Section 2 of the California
Constitution, the Legislature to prescribe uniform procedure
for city formation and provide for city powers.
2)Establishes the procedures for the organization and
reorganization of cities, counties, and special districts
under the Act.
3)Defines "change of organization" in the Act to include any of
the following: a city incorporation, a district formation, an
annexation to, or detachment from, a city or district, a
disincorporation of a city, a district dissolution, a
consolidation of cities or special districts, or a merger or
establishment of a subsidiary district.
4)Defines "disincorporation" to mean the disincorporation,
dissolution, extinguishment, and termination of the existence
of a city and the cessation of its corporate powers, except
for the purpose of winding up the affairs of the city.
5)Defines "city" to mean a chartered or general law city,
including any city the name of which includes the word "town."
6)Requires that an area proposed for incorporation as a new city
must have at least 500 registered voters residing within the
affected area at the time the LAFCO proceedings are initiated.
7)Establishes, in Chapter 5 of Part 5 of the Act, procedures for
the disincorporation of a city on and after the effective date
of a disincorporation, including:
a) Provides, on or after the effective date of a
disincorporation, that the territory of the disincorporated
city, all inhabitants within the territory, and all persons
formerly entitled to vote by reason of residing within the
territory shall cease to be subject to the jurisdiction of
the disincorporated city and shall have none of the rights
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or duties of the inhabitants or voters of a city;
b) Requires, prior to the effective date of the
disincorporation, every public officer of the city to turn
over to the board of supervisors the public property in his
or her possession;
c) Requires the commission to determine and certify in a
written statement to the board of supervisors the
indebtedness of the city, the amount of money in its
treasury, and the amount of any tax levy or other
obligation due the city which is unpaid or has not been
collected;
d) Requires that the county establish a special fund for
the purpose of settling the affairs of the disincorporated
city, and requires that the disincorporated city turn over
to the county treasurer all city money in its possession;
e) Requires the board of supervisors to provide for
collection of debts due to the city and wind up its
affairs;
f) States that the county succeeds to all of the rights of
the city in the debts and may collect or sue for them in
the name of the county;
g) Requires that all costs and expenses incurred in winding
up city affairs are part of the special fund; and,
h) Allows, by ordinance, the board of supervisors to assume
control of, and continue to administer, all electric,
power, lighting, or gas plants and all systems of
waterworks, street lighting, or any other public utility
owned by the city at the time of its disincorporation.
FISCAL EFFECT : None
COMMENTS :
1)BILL SUMMARY AND AUTHOR'S ARGUMENT
This bill establishes a uniform disincorporation process for
any city with a population of less than 150 persons as of
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January 1, 2010, according to the Department of Finance's
official records. The disincorporated territory would then
become part of the county unincorporated area, unless the
county board of supervisors votes to continue the city in
existence because the city meets specified conditions in the
bill. If the disincorporation carries, the county's LAFCO
would be responsible for the unwinding of the former city's
affairs and debts.
The author argues that smaller cities often lack the needed
checks and balances that all levels of government deserve.
When the population is so small, the burden of monitoring
government activities falls on the few and therefore no real
protections exist. Additionally, cities with very small
populations may face political instability because there are
too few residents to support the government, and this may
contribute to public corruption, voter fraud, and stalled
growth.
2)HISTORY OF MUNICIPAL INCORPORATION IN CALIFORNIA
The Legislature has a long history of exercising control over
the formation of municipalities, stemming back from the first
legislative session of the California Legislature.
Prior to 1880, communities incorporated and/or became charter
cities by special act legislation, or by following the methods
specified in statute to become a city or town. The Cities Act
(Chapter 30, Statutes of 1850) required new cities to have a
minimum of 2,000 residents for an area limited to four square
miles, and authorized such an incorporation to happen through
either the Legislature or the County Court. The Towns Act
(Chapter 48, Statutes of 1850), allowed residents in a town to
petition the County Court for incorporation of their town,
provided the population of the town exceeds two hundred people
and the area is no bigger than three square miles.
The Constitutional Convention held in 1879 resulted in a
constitutional amendment that prohibited the formation of
cities by special law, and instead, provided that the
Legislature had the authority to prescribe how cities were to
be organized and classified. This Cities, Counties and Towns
Act (Article XI of the California Constitution) also granted
the right to frame its own charter to cities over 100,000 in
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population.
In 1892, a constitutional amendment gave the right to become a
charter city for those cities with population over 3,500.
This threshold remained until its repeal by voters in 1970.
3)LEGISLATIVE POWER AND MUNICIPAL ORGANIZATION
The state Legislature retains significant power over municipal
organization. In Board of Supervisors of Sacramento County v.
Local Agency Formation Commission of Sacramento County, the
Supreme Court stated, "In our federal system the states are
sovereign but cities and counties are not; in California as
elsewhere they are mere creatures of the state and exist only
at the state's sufferance" (Bd. of Supervisors of Sacramento
County v. Local Agency Formation Commission of Sacramento
County, 838 P.2d 1198, 1205 (Cal.1992)).
Additionally, "the creation, alternation, and dissolution of
municipal Ýcorporations] or other subordinate public
corporations is a matter entirely in the control of the
Legislature." (Allen v. Board of Trustees (1910) 157 Cal.
720,726).
The Legislature has already exercised this authority in
Government Code Section 56757 by adopting an alternative
system for certain annexations to cities in Santa Clara County
which do not undergo LAFCO review.
The state has the authority pursuant to Hunter v. Pittsburgh
(1907) 207 U.S. 161, under the federal constitution, to
create, expand, diminish, or totally abolish municipal
corporations with or without the consent of its voters, or
even against their protest. This authority is only limited by
each state's constitution.
Article XI Section 2 of the California Constitution states
that the Legislature shall prescribe uniform procedure for
city formation and provide for city powers. Article XI
Section 2 also specifically states that a city may not be
annexed to or consolidated into another unless the annexation
is approved by a majority of its electors voting on the
question.
Some opponents to this bill have argued that the Legislature
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does not have the authority to disincorporate a charter city.
Although the California Constitution gives charter cities the
authority to control their own "municipal affairs," the court
says that the state government has occupied the field when it
comes to boundary change procedures. (Ferrini v. City of San
Luis Obispo (1983)150 Cal.App.3d 239).
4)LAFCOS: CREATION, POWERS AND PROCESS
LAFCOs were created by the Legislature in 1963 in the
Knox-Nisbet Act, which gave LAFCOs regulatory authority over
local agency boundary changes. Since that time there have
been several rewrites of LAFCO law including the merging of
the Knox-Nisbet Act with the District Reorganization Act of
1965 and the Municipal Organization Act of 1977, and the
Cortese-Knox-Hertzberg Local Government Reorganization Act of
2000 re-write, which governs current law for LAFCOs.
The Cortese-Knox-Hertzberg Act establishes procedures for
local government changes of organization, including city
incorporations, disincorporations, annexations to a city or
special district, and city and special district
consolidations. The provisions of the Act are applicable to
both charter and general law cities.
LAFCOs review proposals for the formation of new local
governmental agencies and for changes in the organization of
existing agencies. There are 58 LAFCOs (one in each county)
working with nearly 3,500 governmental agencies (450 cities,
and 3,000+ special districts). Agency boundaries are often
unrelated to one another and sometimes overlap at random,
often leading to higher service costs to the taxpayer and
general confusion regarding service area boundaries. LAFCO
decisions strive to balance the competing needs in California
for efficient services, affordable housing, economic
opportunity, and conservation of natural resources.
5)DISINCORPORATION PROCESS CONTAINED IN LAFCO LAW
Existing law prescribes a process for disincorporation, as
specified in the Cortese-Knox Hertzberg Act. Upon the
effective date of a disincorporation, the county board of
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supervisors is responsible for winding up the affairs of the
former city. Residents of the former city no longer have any
rights or duties as inhabitants or voters of a city. Prior to
the effective date, public officers must turn over public
property to the county board of supervisors, and the city
council must turn over all city funds, as certified by the
LAFCO or the county, to the county treasurer. The county tax
collector may collect any levied but uncollected taxes owed to
the disincorporated city, and the county may collect or sue
for all debts owed the city. Other territories within the
county are not responsible and may not be taxed for the debts
or liabilities of the former city.
This bill gives the process of winding up of the
disincorporated city's affairs to the local LAFCO, pursuant to
provisions in existing law.
6)PREVIOUS DISINCORPORATIONS IN CALIFORNIA
Seventeen cities have disincorporated in California's history,
including the cities of Long
Beach (1896), Pismo Beach (1940), and Stanton (1924), each of
which later reincorporated. The
Legislature disincorporated several cities by statute, including
the following cities:
Columbia (1870), Dutch Flat (1866), Felton (1917), and Hornitos
(1973). Hornitos and
Cabazon are the only two cities that have disincorporated since
the creation of LAFCOs in
1963. The cities that were incorporated by special statute in
the mid-1800's were only able to be
disincorporated by special statute.
The City of Cabazon, located in Riverside County, was
disincorporated in 1973, and went through the process
contained in LAFCO law. Cabazon faced years of
city-government turmoil related to the regulation of local
gambling, including multiple recalls, resignations, and
arrests of city council members. A group of citizens filed a
disincorporation proposal with the local LAFCO, which held a
hearing, approved the proposal with no additional terms or
conditions, and set the disincorporation proposal for
election, which was approved. Today, Cabazon remains in the
unincorporated area, although a few years ago talks resumed
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locally about trying to re-incorporate.
The Town of Hornitos, located in Mariposa County, was
disincorporated by statute in 1972 (AB 2374, Chappie).
Hornitos, represented by Assemblymember Chappie, was first
incorporated by special act in 1860, which was repealed by
statute in 1868. The town reincorporated by special act in
1870; it differed from the first incorporation by the smaller
size of the town and different boundaries, and a different
Board of Trustees was appointed. At the time of incorporation
in 1870, the city had a population of about 15,000, but in
1972 the city had only about 100 people. AB 2374 (Chappie),
in addition to disincorporating the town of Hornitos, also
specified that the area of Hornitos was to become the
unincorporated territory of Mariposa County. That area is
still unincorporated today.
7)Support arguments: Central City Association, in support,
writes that "an active citizenry is a necessary component of
any city, providing the necessary checks and balances to keep
government accountable. Since Ýthe City of] Vernon's founding
over 100 years ago, the city has changed dramatically, and in
ways that make its continued existence unsustainable.
Although the city's population peaked in the 1930s with nearly
1,300 residents, that population has now fallen to under 100
residents. Even more importantly, most of these citizens are
city employees who live in city-owned housing that has been
made available to them at below-market prices, by virtue of
employment with the city. As a result, virtually the entire
citizenry of Vernon relies on continued municipal existence
for their jobs and their homes. The city presents such an
extreme and unusual set of circumstances that we believe the
only available remedy is the one ÝAB 46] proposes."
Opposition arguments: The City of Vernon argues that this
bill will have a harmful impact on the city employees and
private business located in Vernon. The California Teamsters
Public Affairs Council (Teamsters) states that Vernon is an
industrial city and is set up to serve industrial enterprises
in an efficient and cost effective way. The Teamsters argues
that Vernon's energy prices are far lower in comparison to
other service providers, and Vernon has one of the few
specialized hazardous materials trained fire department, which
has led to lower fire insurance rates. Additionally, the
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California Contract Cities Association believes that this bill
is "an attempt to usurp the authority of a city to exercise
local control over planning and land use decisions" and that
the bill's precedent could potentially "impact any city in
California should the Legislature wish to impose its misguided
authority in the future."
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958
FN: 0000292