BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 46 HEARING: 6/22/11
AUTHOR: John A. Pérez FISCAL: No
VERSION: 4/4/11 TAX LEVY: No
CONSULTANT: Detwiler
CITY DISINCORPORATION
Disincorporates cities with fewer than 150 residents.
Background and Existing Law
The California Constitution requires the Legislature to
"prescribe uniform procedure for city formation and provide
for city powers." The Constitution also prohibits the
annexation of a city to or consolidation with another city
without the approval of the city's voters.
The Cortese-Knox-Hertzberg Act controls how local officials
change the boundaries of cities and special districts,
putting local agency formation commissions (LAFCOs) in
control. LAFCOs' boundary decisions must be consistent
with "spheres of influence" which LAFCOs adopt to show the
future boundaries and service areas of the cities and
special districts. Before LAFCOs can adopt their spheres
of influence, they must prepare "municipal service reviews"
which review population growth, public facilities, and
service demands.
Besides the more common annexations to cities and special
districts, LAFCOs also control city incorporations,
consolidations, and disincorporations as well as special
district formations, consolidations, and dissolutions.
Boundary changes usually begin when a city or special
district applies to LAFCO, or when registered voters or
landowners file petitions with a LAFCO. Most boundary
changes, including city disincorporations, require five
steps:
First, there must be a completed application to LAFCO,
including a petition or resolution, an environmental
review document, and a property tax exchange agreement
AB 46 -- 4/4/11 -- Page 2
between the county and the city.
Second, LAFCO must hold a noticed public hearing, take
testimony, and may approve the proposed city
disincorporation. LAFCO may impose terms and
conditions that spell out what happens to the city's
property, assets, and liabilities. If LAFCO
disapproves, the proposed disincorporation stops.
Third, LAFCO must hold another public hearing to
measure protests. The proposed disincorporation stops
if there is a majority protest; that is, if more than
50% of the city's voters file written protests.
Absent a majority protest, LAFCO must order an
election on the proposed disincorporation.
Fourth, a disincorporation election occurs among the
city's voters. A successful city disincorporation
requires majority-voter approval.
Finally, LAFCO's staff files documents to complete the
disincorporation.
The courts have consistently explained that there is no
constitutional right to vote on local governments'
boundaries. The Cortese-Knox-Hertzberg Act's elections are
statutory opportunities, but not constitutionally required.
With just over 100 residents, the City of Vernon (Los
Angeles County) has the smallest population of California's
481 cities. Vernon's city government has attracted
attention over allegations of corruption, misspending, and
mismanagement. City officials have started to react, but
Vernon's critics say that small cities lack the democratic
checks and balances that are essential to open and fair
governance. With few voters and fewer candidates, small
cities can become politically isolated and fail to respond
to broader needs.
Proposed Law
On the 91st day after the bill's effective date, Assembly
Bill 46 disincorporates every city that had fewer than 150
people on January 1, 2010.
AB 46 -- 4/4/11 -- Page 3
AB 46 exempts these disincorporations from specified
provisions of the Cortese-Knox-Hertzberg Act. The bill
specifically applies the Act's provisions for terms and
conditions for disincorporated cities. AB 46 requires
LAFCO to oversee these conditions. AB 46 allows LAFCO to
enforce its provisions with writs of mandate.
The bill allows a county board of supervisors to continue a
city in existence if the board determines within 90 days of
the bill's effective date that continuing the city would
serve a public purpose. The board must find that the city
is in an isolated, rural location that makes it impractical
for residents to organize another form of local governance.
If the board meets these conditions, the city will not
disincorporate.
AB 46 -- 4/4/11 -- Page 4
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . Two axioms guide California
public officials: the noblest motive is the public good,
and good government demands the intelligent interest of
every citizen. Responsive local democracy depends on aware
and attentive residents. Maintaining the integrity of the
relationship between the governed and those who govern is
hard in the dozen California cities that have fewer than
1,000 residents. Although Vernon is the only city that
meets the population threshold in AB 46, it's not hard to
imagine problems occurring in Amador (185 residents), Sand
City (334), Trinidad (366), Tehama (418), Point Arena
(449), and Industry (480), all of which have fewer than 500
residents. For decades, state law required unincorporated
communities to have at least 500 residents before they
attempted cityhood. The current threshold is 500
registered voters, a standard which implies about 1,000
residents. When political insularity occurs in city
governments because of their communities' small
populations, there are few good options. Unless there are
spontaneous and thorough internal reforms in Vernon, the
only other options are intensive external law enforcement
or disincorporation. AB 46 chooses the latter alternative,
ending Vernon's city government and returning control to
the Los Angeles County Board of Supervisors.
2. Ask good questions . The intense controversy around AB
46 challenges the members of the Senate Governance &
Finance Committee to ask good questions to find good
answers at its June 22 hearing. This bill analysis
explores five questions:
Can we? Can the Legislature disincorporate a city?
Should we? Is disincorporation worthwhile public
policy?
Will it work? What happens after disincorporation?
Another approach to disincorporation? Should LAFCO
have a role?
Another approach to corruption? Would tougher law
enforcement help?
AB 46 -- 4/4/11 -- Page 5
3. Can we ? The California Constitution requires uniform
procedures for city incorporation, but it doesn't mention
other types of boundary changes (Article XI, §2 Ýa]). The
Constitution requires city voter approval for city
consolidations, but it doesn't mention disincorporations
(Article XI, §2 Ýb]). The Constitution allows charter
cities to control their own municipal affairs, while
general laws control issues of statewide concern (Article
XI, §5 Ýa]). The Constitution prohibits special
legislation when general laws could apply (Article IV, §16
Ýb]). These constitutional provisions (and perhaps others)
may be the basis for the lawsuits that are likely to
challenge AB 46. Nevertheless, the courts have held that
the Cortese-Knox-Hertzberg Act and its statutory
predecessors have fully occupied the topic of boundary
changes, even controlling charter cities' boundary changes
(Ferrini v. City of San Luis Obispo, 1983). The courts
have upheld provisions in the Cortese-Knox-Hertzberg Act
and its predecessors that waive voter-approval for specific
types of boundary changes, even the city annexation of
inhabited islands (I.S.L.E. v. County of Santa Clara,
1983). The courts have upheld the practice of classifying
cities by size, even when the category required only one
charter city to follow a general law that intruded into
what traditionally was a municipal affair (City of Los
Angeles v. State of California, 1982). Although AB 46 has
constitutional foundations (Hunter v. City of Pittsburgh,
1907), legislators should expect lawsuits that challenge
their authority to pass a bill that classifies cities by
population size and creates a procedure for
disincorporating cities in that class, even if those cities
have charters.
4. Should we ? Even if the Legislature has the
constitutional power to disincorporate charter cities,
legislators may wish to consider if that is worthwhile
public policy. In a large and diverse state with varied
topography and demography, should legislators make detailed
decisions about how to govern particular communities?
Vernon may be notorious, but other county governments,
cities, redevelopment agencies, special districts, school
districts, and joint powers agencies also attract media
scrutiny and public criticism. With more than 5,000 local
agencies operating under state laws, why should legislators
pass a bill that effectively singles out one small city?
Instead of intervening in the governance of a particular
AB 46 -- 4/4/11 -- Page 6
local government, isn't the Legislature's responsibility to
enact a broad set of laws that allow communities the chance
for self-governance?
5. Will it work ? AB 46's solution to Vernon's troubles is
clear: in April 2012, the Los Angeles County Board of
Supervisors replaces the current Vernon City Council. The
bill is silent on how local officials will implement the
intricate details surrounding Vernon's disincorporation.
What becomes of Vernon's city's records, municipal
employees, public services (e.g., law enforcement, fire
protection, water and electrical utilities, local streets),
land use decisions, utility rates, regulatory permits, city
revenues, and long-term debts? Further, how can the Los
Angeles County Board of Supervisors focus on governing the
Vernon area in addition to other problems that compete for
its attention? Will the County set up advisory panels or
form special districts? How will the Los Angeles LAFCO
oversee the terms and conditions set by AB 46? The
Committee may wish to consider whether the Legislature
should insist on having answers to these questions before
acting on AB 46.
6. Another approach to disincorporation ? With AB 46,
Vernon would be the fifth city to be disincorporated by
statute, joining Columbia (1870), Dutch Flat (1866), Felton
(1917), and Hornitos (1973). Bypassing the LAFCO process,
the Legislature directly repealed the 1870 statute that had
incorporated the Town of Hornitos, returning the community
to unincorporated status within Mariposa County (AB 2374,
Chappie, 1972). Although constitutional, these direct
disincorporations raise policy questions about perceptions
of fairness, due process, and public participation.
Further, the disincorporation of rural towns with few
assets don't raise the practical questions about how to
dispose of assets and liabilities that the disincorporation
of a more affluent city government raises. The Riverside
LAFCO tackled those questions when it reviewed and approved
Cabazon's disincorporation in 1973. Using the predecessor
of the Cortese-Knox-Hertzberg Act, the Riverside LAFCO
maneuvered through the statutory steps leading to a
successful election and the eventual winding-up of the
former city's affairs. To promote public participation and
to increase efficiency, the Committee may wish to consider
an alternative approach. Instead of directly ordering
disincorporation as in AB 46, the Legislature could adapt
AB 46 -- 4/4/11 -- Page 7
the Cortese-Knox-Hertzberg Act much as it did when it
wanted to expedite city annexations of unincorporated
islands. If a proponent (possibly the Los Angeles County
Board of Supervisors) applied to the Los Angeles LAFCO to
disincorporate a city, then the LAFCO would hold its
regular noticed public hearings and, if the proposed
disincorporation met the specified statutory criteria,
LAFCO would have to approve the application. LAFCO could
attach detailed terms and conditions to its approval which
would not be subject to the usual requirements for
measuring protests or holding an election. In this way,
there would be more opportunities for local public
participation and local officials would have more control
over the implementing details. The Committee may wish to
consider whether adapting the LAFCO process is a feasible
alternative to the solution proposed by AB 46.
7. Another approach to corruption ? AB 46 proposes an
institutional solution to a set of perceived problems that
may not need institutional changes. If legislators believe
that Vernon's problems are not about institutions, but
political and economic problems, then changing the form of
governance may not resolve those deeper problems. Using
the governmental tools that are already available,
legislators could direct state law enforcement agencies and
the Los Angeles District Attorney to end to the perceived
corruption. Investigators and attorneys from the Attorney
General, the Bureau of State Audits, the California Public
Utilities Commission, the California Public Employees
Retirement System, the Department of Finance, the Fair
Political Practices Commission, and the Little Hoover
Commission could create a joint task force to focus on
investigation and enforcement. The Committee may wish to
consider whether concentrated enforcement is a feasible
alternative to the institutional solution proposed by AB
46.
Assembly Actions
Assembly Local Government Committee: 8-0
Assembly Floor: 62-7
Support and Opposition (6/16/11)
Support : Adult Day Health Care Association; Bienestar;
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Central City Association; City of Los Angeles; City of
Maywood; Coalition for Clean Air; Common Cause;
Communications Workers of America, Local 9000; Communities
for a Better Environment; County of Kern; County of Los
Angeles; Huntington Park City Councilman Andy Molina;
Huntington Park City Councilman Elba Guerrero; LA Voice
PICO; Latino Business Chamber of Greater Los Angeles; Los
Angeles County Sheriff's Department; Monica Garcia,
President of the Los Angeles Unified School District Board;
Mayor of the City of Fresno; Mayor of the City of Los
Angeles; Mayor of the City of Santa Ana; Mona Field, Los
Angeles Community College Board of Trustees; Mothers of
East Los Angeles; Mujeres de la Tierra; Nancy Pearlman, Los
Angeles Community College Board of Trustees; National
Association of Women Business Owners; Service Employees
International Union; William C. Velasquez Institute; Saul
H. Kay; Richard Polanco, Chairman of the California
Legislative Latino Institute for Public Policy.
Opposition : City of Vernon; All American Manufacturing;
AmeriPride Uniform Services; Baker Commodities; Bandini
Truck Terminal; Ben's General Store; Berney-Karp Inc.;
Brotherhood of Locomotive Engineers & Trainmen; California
Contract Cities Association; California Labor Federation;
California Teamsters Public Affairs Council; Cargill Meat
Solutions; Castle & Cooke Cold Storage; Charlie's Pride
Meats; City of Cerritos; Clean Foods, Inc.; Coast Packing;
Command Packaging; Cooperative Purchasers; CR Laurence
Company; Crown Poly, Inc.; Culver City Meat Company;
Douglas Steel Company; Epic Textiles, Inc.; F. Gaviña &
Sons, Inc.; Food Industry Business Roundtable; Farmer John
Meats; Golberg and Solovy Foods, Inc.; Hercules Forwarding,
Inc.; IBEW, Local 47; International Association of
Machinist and Aerospace Workers, Local 947; Jobbers Meat
Packing Company, Inc.; Kal Plastics/Tom York Enterprises;
King Meat, Inc.; L.A. Washrack; Los Angeles Area Chamber of
Commerce; Los Angeles County Business Federation; Los
Angeles/Orange Counties Building and Construction Trades
Council; Los Angeles County Federation of Labor; Marantz &
Associates; Mt. Vernon Industrial; Nai Capital; National
Meat Association; Neptune Foods; Overhill Farms; PABCO
Paper; Pacific Coast Coffee Association; Papa Cantella's,
Inc.; Petrelli Electric; Preferred Freezer; ProCases, Inc.;
Purchase Environment Consulting & Analytics, LLC; Rehrig
Paper Company; Rite-Way Meat Packers, Inc.; Rose and Shore;
Rose Meat Services, Inc.; Sir Speedy; Square H Brands,
AB 46 -- 4/4/11 -- Page 9
Inc.; Steel Services Company; Sweetner Products; T & T
Foods, Inc.; Teamsters Joint Council 42; Teamsters, Local
572; Teamsters, Local 63; Teamsters, Local 848 Division 56;
Teamsters, Local 986; True World Foods Los Angeles, LLC;
The Ligature; Tom Anderson of Morgan Stanley; Tool &
Abrasive Supply, Inc.; UFCW, Local 770; Union Ice Company;
United Food Group, Inc.; United Steel Fence Company; United
Transportation Union; U.S. Growers Cold Storage, Inc.;
Vernon Chamber of Commerce; Vernon Police Officers' Benefit
Association; Vivion Inc.; Valley Industry & Commerce
Association; Walters Wholesale Electric; Wayne Provision
Company; West Coast Protective League, Glass Molders,
Pottery, Plastic International Union; Yonekyu USA, Inc.;
letters from approximately 150 individuals; petitions with
approximately 2,600 signatures.