BILL ANALYSIS �
SENATE GOVERNANCE & FINANCE COMMITTEE
Senator Lois Wolk, Chair
BILL NO: AB 743 HEARING: 6/5/13
AUTHOR: Logue FISCAL: No
VERSION: 4/3/13 TAX LEVY: No
CONSULTANT: Lui
LOCAL AGENCY FORMATION COMMISSIONS
Makes permanent local agency formation commissions' ability
to waive protest hearings for the annexation of
unincorporated islands.
Background and Existing Law
The California Constitution requires the Legislature to
"prescribe [a] uniform procedure for city formation and
city powers" (Article XI, �2[a]). The Legislature
delegated its authority over cities and special districts'
boundaries to a local agency formation commission (LAFCO)
in each county. In efforts to promote orderly growth and
efficient provision of services, the Cortese-Knox-Hertzberg
Local Government Reorganization Act (the CKH Act)
establishes a LAFCO's powers and the procedures for
changing cities and special districts' boundaries, like
annexation (AB 2838, Hertzberg, 2000). An annexation
occurs when a city or district attaches additional
territory to its boundary.
Boundary changes, known as a change of organization or
reorganization, require four (sometimes five) steps:
First, there must be a completed application to the
LAFCO, including a petition or resolution, an
environmental review document, and a property-tax
exchange agreement between the county and the annexing
city.
Second, the LAFCO must hold a noticed public
hearing, take testimony, and approve or disapprove the
proposed city annexation.
If the LAFCO approves the city annexation, the
LAFCO must hold another public hearing to measure
protests.
Fourth, if there was sufficient protest, an
election occurs among the voters in the proposed
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annexation area. A successful annexation requires
majority-voter approval.
Finally, LAFCO staff files formal documents to
complete the annexation.
Many cities in California contain "islands," which are
unincorporated pockets of land surrounded by cities.
Unincorporated islands can lead to expensive and
inefficient service delivery problems for cities and
counties.
In 1977, the Legislature enacted the Municipal Organization
Act, which created an expedited procedure for cities to
annex unincorporated islands surrounded or "substantially
surrounded" by the annexing city (AB 1533, Knox). If a
city applies to annex an unincorporated island, the LAFCO
must approve the annexation if the island meets statutory
requirements. The property must:
Be surrounded or substantially surrounded by:
o The annexing city;
o The annexing city and a county boundary;
or ,
o The annexing city and the Pacific Ocean.
Be substantially developed or developing.
Not be prime agriculture land.
Be designated for urban growth in the annexing
city's general plan.
Not be in another city's sphere of influence.
Another statutory provision further expedites island
annexations. To qualify, the unincorporated island must
meet additional statutory criteria. If a city applies for
one of these island annexations between January 1, 2000,
and January 1, 2014, the LAFCO must waive the protest
proceedings. Without a second public hearing to measure
protests, the city avoids the possibility of an election
(CKH Act). The Legislature also increased the size of
unincorporated islands from 75 acres to 150 acres (SB 1266,
Torlakson, 2003). In 2011, the Legislature enacted SB 244
(Wolk), which encourages annexation and extension of
services to disadvantaged unincorporated communities,
including islands.
This expedited annexation process is set to expire on
January 1, 2014 (AB 2227, Harman, 2002; AB 2223, Salinas,
2006). Some LAFCOs want the Legislature to make the
streamlined procedures permanent.
AB 743 -- 4/3/13 -- Page 3
Proposed Law
Assembly Bill 743 eliminates the January 1, 2014, sunset
date that allows a local agency formation commission to
waive the protest hearing for the annexation of territory
that meets specified requirements in state law.
The bill provides that the authority to initiate, conduct,
and complete changes in organization or reorganization does
not apply to any territory that, after January 1, 2014,
became surrounded or substantially surrounded by the city
to which the annexation is proposed, except for islands
created after January 1, 2014 as a result of boundary
adjustments between two counties.
AB 743 repeals language that specifies the process for
island annexations on or after the January 1, 2014 sunset
date.
State Revenue Impact
No estimate.
Comments
1. Purpose of the bill . County islands are inefficient
and costly for county governments to serve. State law,
which charges LAFCOs with encouraging local boundary
changes, discouraging urban sprawl, and promoting orderly
growth, expedites their elimination. Using the current,
but temporary, statute that allows for expedited city
annexations, LAFCOs, county governments, and cities have
eliminated more than 93 islands. In a 2012 informal survey
of LAFCOs, 20 out of 57 LAFCOs reported that around 378
islands could benefit from the expedited annexation
process. Another 2012 survey found that 15 LAFCOs would
benefit from an extension of the expedited annexation
process, while 22 would not oppose a time extension.
Specifically, out of a total of 28 respondents, LAFCOs in
the counties of Alameda, Butte, Contra Costa, El Dorado,
Kern, Los Angeles, Napa, Orange, Riverside, San Joaquin,
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Santa Clara, Santa Cruz, Solano, Sonoma, Tulare, and
Ventura have remaining islands that would potentially
benefit from the extension of the sunset date. The sunset
date has been extended before. AB 743 recognizes that the
established island annexation provisions are a productive
tool in creating more logical local government boundaries,
increasing efficiencies in the delivery of government
services, and improving the services available to
low-income neighborhoods equal to their neighbors within
the city surrounding them.
2. The big picture . One goal of the expedited annexation
process was to eradicate the existence of unincorporated
islands. Given the continued existence of these islands, a
streamlined annexation process has not entirely addressed
the issue. Removing the sunset date is a partial solution.
Many island annexations remain because of changes in
property tax revenues and the high costs of providing
municipal services. Without addressing other factors that
discourage cities from annexing islands, like the fiscal
disincentives cities face when annexing islands, it is
unclear how much a difference eliminating the sunset date
on the expedited LAFCO process will make.
3. Related legislation . SB 56 (Roth), among other
provisions, requires county auditors to calculate cities'
vehicle license fee adjustment amounts using a new formula
that includes assessed property value of parcels within
territories annexed by cities after 2004. The bill is
currently in the Senate Governance and Finance Committee.
Assembly Actions
Assembly Local Government:9-0
Assembly Floor: 77-0
Support and Opposition (5/30/13)
Support : California Association of Local Agency Formation
Commissions; California State Association of Counties; City
of Napa; Local Agency Formation Commission of Napa County;
Orange County LAFCO; Riverside Local Agency Formation
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Commission;
Opposition : Unknown.