BILL ANALYSIS Ó
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 912 HEARING: 6/22/11
AUTHOR: Gordon FISCAL: No
VERSION: 5/27/11 TAX LEVY: No
CONSULTANT: Detwiler
SPECIAL DISTRICT DISSOLUTION
Expedites the dissolution of special districts.
Background and Existing Law
The Cortese-Knox-Hertzberg Act controls how local officials
change the boundaries of cities and special districts,
putting local agency formation commissions (LAFCOs) in
charge of the proceedings. LAFCOs' boundary decisions must
be consistent with "spheres of influence" that 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. LAFCOs may also conduct
special studies of local governments.
Most boundary changes begin when a city or special district
applies to LAFCO, or when registered voters or landowners
file petitions with a LAFCO. In limited circumstances,
LAFCO can initiate some special district boundary changes:
consolidations, dissolutions, mergers, subsidiary
districts, or reorganizations (AB 1335, Gotch, 1993).
Boundary changes, including district dissolutions, require
four (sometimes 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
between the county and the district.
Second, LAFCO must hold a noticed public hearing, take
testimony, and may approve the proposed district
dissolution. LAFCO may impose terms and conditions
that spell out what happens to the district's assets
and liabilities. If LAFCO disapproves, the proposed
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dissolution stops.
Third, LAFCO must hold another public hearing to
measure protests.
In general, LAFCO must order an election on the
proposed dissolution, but there are many statutory
exemptions. For example, if a district has been
inactive for three years, no election is required.
Fourth, if state law requires an election, it occurs
among the district's voters. A successful dissolution
requires majority-voter approval.
Finally, LAFCO's staff files formal documents to
complete the dissolution.
Responding to perceived problems, legislators required
voter approval to dissolve local hospital districts (AB
1015, Johnston, 1985) and made it easier for the voters in
the Newhall County Water District to force a dissolution
election (SB 609, Costa, 2001). The courts have
consistently explained that there is no constitutional
right to vote on local governments' boundaries. Elections
on district dissolutions are statutory opportunities, but
not constitutionally required.
Some LAFCOs say that these complicated procedures make it
hard to dissolve special districts that have outlived their
usefulness. Even after documentation by municipal service
reviews and spheres of influence, it's hard to get rid of
obsolete districts. They want an expedited procedure for
dissolving districts.
Proposed Law
If the proposed dissolution of a special district is
consistent with a prior action of a local agency formation
commission (LAFCO) regarding a special study, a sphere of
influence, or a municipal service review, Assembly Bill 912
allows LAFCO to order the dissolution either :
Without an election or protest proceedings if the
dissolution was initiated by the district's board, or
After holding a noticed public hearing and protest
proceedings if the dissolution was initiated by an
affected local agency, LAFCO, or a petition. If a
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majority-protest exists at the hearing, LAFCO must
stop the dissolution. Absent a majority-protest,
LAFCO must order the dissolution without an election.
State Revenue Impact
No estimate.
Comment
Purpose of the bill . Most of California's 3,300 special
districts deliver the public facilities and services that
their communities want, matching community services to
community needs. But some districts have simply outlived
their usefulness. Using special studies, municipal service
reviews, and spheres of influence, LAFCOs have identified
vestigial districts that linger because no one wants to
take the time to get rid of them. Even when LAFCO uses the
1993 Gotch law to initiate the dissolution of a special
district, the statutory hearing and protest requirements
make it hard to do the right thing. AB 912 creates an
expedited procedure for dissolving special districts. If a
district's boards asks for permission to dissolve, the bill
avoids protest hearings and elections altogether. If
someone else (including LAFCO) initiates the proposed
dissolution, the bill still requires the protest hearing.
Absent majority-protest, the dissolution occurs without an
election. For district dissolutions that are consistent
with LAFCO policies, the bill trumps special statutory
provisions, including those for hospital districts. AB 912
effectively shifts the statutory default from requiring
dissolution elections, with exceptions, to avoiding
elections.
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 79-0
Support and Opposition (6/16/11)
Support : California Association of Local Agency Formation
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Commissions; California Special Districts Association.
Opposition : Unknown.