BILL ANALYSIS                                                                                                                                                                                                    



                                                                       AB 402


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          ASSEMBLY THIRD READING


          AB  
          402 (Dodd)


          As Amended  May 18, 2015


          Majority vote


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          |Committee       |Votes |Ayes                |Noes                  |
          |                |      |                    |                      |
          |                |      |                    |                      |
          |----------------+------+--------------------+----------------------|
          |Local           |6-3   |Gonzalez, Alejo,    |Maienschein, Linder,  |
          |Government      |      |Chiu, Cooley,       |Waldron               |
          |                |      |Gordon, Holden      |                      |
          |                |      |                    |                      |
          |                |      |                    |                      |
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          SUMMARY:  Establishes a pilot program, until January 1, 2021, for  
          the Napa, Sonoma, and San Bernardino local agency formation  
          commissions (LAFCOs) to authorize a city or district to extend  
          services outside of boundaries for additional purposes beyond  
          responding to a threat to public health or safety.  Specifically,  
          this bill:   


          1)Allows the Napa, Sonoma, and San Bernardino LAFCOs, until  
            January 1, 2021, to authorize a city or district to provide new  
            or extended services outside its jurisdictional boundaries and  
            outside its sphere of influence, if consistent with adopted  
            policy, to support existing or planned uses involving public or  








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            private properties, subject to approval at a noticed public  
            hearing where LAFCO makes all of the following determinations:


             a)   The extension of service or services deficiency was  
               identified and evaluated in a review of municipal services  
               (MSR) prepared, pursuant to existing law;


             b)   The extension of service will not result in adverse  
               impacts on open space or agricultural lands, or have growth  
               inducing impacts; and,


             c)   A later change of organization involving the subject  
               territory and its affected agency is not feasible under  
               existing law or desirable based on the adopted policies of  
               LAFCO.  


          2)Defines planned use to mean any project that is included in an  
            approved specific plan.  


          3)Requires the Napa, Sonoma, and San Bernardino LAFCOs to submit a  
            report to the Legislature on their participation in the pilot  
            program, including how many requests for extension of services  
            were received pursuant to the authority granted by this bill,  
            and the action by the LAFCO to approve, disapprove, or approve  
            with conditions the extension of services.  


          4)Declares that a special law is necessary and that a general law  
            cannot be made applicable within the meaning of the California  
            Constitution because of the unique circumstances in Napa,  
            Sonoma, and San Bernardino.  


          5)Provides that existing law, which allows LAFCO to authorize a  








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            city or district to provide new or extended services outside it  
            jurisdictional boundary and outside its sphere of influence to  
            respond to an existing or impending threat of public health and  
            safety, must be consistent with adopted policy.  


          6)Makes other technical and conforming changes.  


          





          EXISTING LAW:   


          1)Establishes the Cortese-Knox-Hertzberg Local Government  
            Reorganization Act of 2000 (Cortese-Knox-Hertzberg Act), which  
            defines the procedures for the organization and reorganization  
            of cities, counties, and special districts.  


          2)Authorizes a city or district to provide new or extended  
            services by contract or agreement outside its jurisdictional  
            boundaries, if it requests and receives written approval from  
            the LAFCO in the affected county.  


          3)Allows a LAFCO to authorize a city or district to provide new or  
            extended services outside its boundaries, but within its sphere  
            of influence in anticipation of a later change of organization.   



          4)Allows a LAFCO to authorize a city or district to provide new or  
            extended services outside its boundaries and outside its sphere  
            of influence to respond to an existing or impending threat to  








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            the public health or safety of the residents of the affected  
            territory, if both of the following requirements are met:


             a)   The entity applying for the contract has provided LAFCO  
               with documentation of a threat to the health and safety of  
               the public or the affected residents; and,


             b)   The LAFCO has notified any alternate service providers,  
               including any water corporation or sewer system corporation  
               that has filed a map and statement of service capabilities  
               with the LAFCO.  


          5)Establishes requirements and a timeframe for an executive  
            officer, upon receipt of a request for approval by a city or  
            district of a contract to extend services outside boundaries.   
            Requires, upon receipt of a complete request, the request to be  
            placed on the agenda or a LAFCO meeting, unless the LAFCO has  
            delegated the approval of requests to the executive  
            commissioner.  


          6)Requires the LAFCO or executive officer to approve, disapprove,  
            or approve with conditions the contract for extended services.   
            Allows an applicant, if a contract is disapproved or approved  
            with conditions, to request reconsideration and cite the reasons  
            why.  


          7)Provides exemptions to the requirement in existing law for  
            specified contracts or agreements, including contracts or  
            agreements solely involving two or more public agencies,  
            contracts for the transfer of nonpotable or nontreated water,  
            and contracts or agreements solely involving the provision of  
            surplus water to agricultural lands and facilities.  










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          FISCAL EFFECT:  None


          COMMENTS:  


          1)Current Law.  The Cortese-Knox-Hertzberg Act delegates the  
            Legislature's power to control the boundaries of cities and  
            special districts to LAFCOs.  The Legislature created LAFCOs to  
            discourage urban sprawl, preserve open space and prime  
            agricultural lands, encourage the orderly formation and  
            development of local agencies, and to ensure the efficient  
            provision of government services.  


            The Cortese-Knox-Hertzberg Act requires that cities and  
            districts must get a LAFCO's written approval before they can  
            serve territory outside their boundaries pursuant to AB 1335  
            (Gotch), Chapter 1307, Statutes of 1993.  This requirement was  
            established because of a concern that some cities and districts  
            might be circumventing LAFCO review by signing contracts to  
            provide services outside their boundaries without annexing the  
            territory.  AB 1335, however, recognized the need to accommodate  
            unexpected local conditions and several exemptions were  
            established.  LAFCO approval is not required for contracts or  
            agreements solely involving two or more public agencies where  
            the public service to be provided is an alternative to, or  
            substitute for, public services already being provided by an  
            existing public service provider and where the level of service  
            to be provided is consistent with the level of service  
            contemplated by the exiting service provider.  In 1999, the  
            Legislature expanded these provisions to allow services outside  
            spheres of influence to correct public health and safety  
            problems, pointing to failing septic tanks and water wells to  
            exemplify the necessity for the change.  

          2)Bill Summary.  This bill establishes a pilot program for the  
            Napa, Sonoma, and San Bernardino LAFCOs, until January 1, 2021,  
            to allow service extensions outside spheres of influence and  








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            jurisdictional boundaries, beyond health and safety issues.   
            Under this bill, Napa, Sonoma and San Bernardino LAFCOs may  
            authorize, if consistent with their adopted policies, a city or  
            district to extend services to support existing or planned uses,  
            as defined by this bill, involving public or private properties,  
            if the approval is done at a noticed public hearing where the  
            LAFCO makes specified determinations.  The determinations must  
            include that:  a) the extension of service or service deficiency  
            was identified and evaluated in an MSR; b) the extension of  
            service will not result in adverse impacts on open space or  
            agricultural lands, or have growth inducing impacts; and, c) a  
            later change of organization involving the subject territory and  
            its affected agency is not feasible, or desirable based on the  
            adopted policies of the LAFCO.  Additionally, this bill requires  
            that the three LAFCOs submit a report to the Legislature on  
            their participation in the five-year pilot program.  


            This bill is sponsored by the author.  


          3)Author's Statement.  According to the author, "There are  
            instances when existing or approved developments lie outside a  
            sphere of influence of a municipal service provider, and that  
            are in need of those municipal services.  For example, the ABAG  
            [Association of Bay Area Governments] Regional Housing Needs  
            Allocation (RHNA) process may require the location of affordable  
            housing outside the City of Napa's sphere of influence.   
            Unfortunately, current law will not permit municipal services to  
            be extended outside the service provider's sphere of influence  
            unless a city or district receives written approval from the  
            LAFCO in the affected county pursuant to a very limited set of  
            special circumstances.  


            "An additional example would be Whetstone winery in Napa.  This  
            existing development lies adjacent to a city water line and is  
            outside of the city's sphere of influence in an unincorporated  
            area surrounded by agricultural lands.  When the property owner  








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            submitted the application for water service to be extended to  
            this property to allow for a fire hydrant to be serviced, the  
            extension was denied because this was not a residential property  
            and the health and safety exemption in [current law] could not  
            be applied.  The only means to extend water to this property  
            would be to annex it into the city's sphere of influence.  With  
            a city water line running adjacent to the property, allowing  
            Whetstone an exemption to access this city water rather than  
            annexing the property into the city's sphere of influence would  
            be a greater protection to the surrounding agricultural lands  
            than extending the sphere of influence into the unincorporated  
            area."  


          4)Policy Considerations.  Proposed changes to the laws governing  
            outside service extensions have been debated among LAFCOs for  
            many years and have largely divided practitioners.  On one hand,  
            some LAFCOs can provide examples where outside service  
            extensions seem to be the only option because of local  
            geography, politics, and other circumstances, so more  
            flexibility is appealing.  On the other hand, some LAFCOs feel  
            that an expansion to this provision of law is fundamentally  
            against the core purpose and mission of LAFCOs and could impact  
            agricultural lands or have growth inducing effects.   


             a)   Growth Inducing?  In opposition to this bill, the  
               California Farm Bureau Federation argues "In order to carry  
               out these responsibilities for planning and shaping the local  
               and orderly development, LAFCOs must develop and determine a  
               [sphere of influence] SOI for each city and special district  
               and enact policies designed to promote logical and orderly  
               development of areas within the SOI.  By providing  
               significantly broader authority for LAFCOs to approve service  
               extensions beyond SOIs in support of urban development, we  
               believe that [this bill] would render SOIs moot as probable  
               service area boundaries."  










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             b)   Terminology.  The Legislature may wish to ask the author  
               to strike out the term "existing or planned use" to be  
               consistent with the author's intent to address service  
               extensions to existing developments.  


               The Legislature may wish to consider whether it would be  
               possible for LAFCO to approve an extension of services for a  
               planned use that would not inherently have growth inducing  
               impacts.  The Legislature may wish to consider if this bill  
               may lead to costly litigation for LAFCOs if this bill  
               requires substantive changes in LAFCO policies which will  
               influence growth patterns and affect land use, thus leading  
               to potential impacts to the environment that may be subject  
               to California Environmental Quality Act.  


             c)   Impact on Voters.  The Legislature may wish to consider if  
               this bill will result in more cities and districts extending  
               services outside their boundaries instead of annexing  
               territory into their boundaries.  If more services are  
               extended outside of boundaries, instead of annexing territory  
               into a district, then voters within that territory cannot  
               vote in the elections that directly impact the service they  
               are receiving.  


          5)Related Legislation.  This bill is substantially similar to SB  
            1498 (Emmerson) of 2012, which was never heard in the Senate  
            Governance and Finance Committee.  


          6)Arguments in Support.  Napa County argues that this bill seeks  
            to provide LAFCOs with more flexibility to approve service  
            extensions outside of a sphere of influence without requiring  
            annexation of territories that might lead to unintended sprawl.   











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          7)Arguments in Opposition.  The California Farm Bureau Federation  
            argues, "As amended in the Assembly Local Government Committee,  
            the damage caused by the bill would be limited to three  
            counties: Napa, Sonoma, and San Bernardino and for a period of 5  
            years.  The specific plan requirement will do nothing to limit  
            the negative impacts of urban development outside a  
            jurisdiction's SOI while creating a huge loophole in the  
            landmark regional transportation planning, housing, and  
            greenhouse gas reduction measure:  SB 375 (Steinberg) [Chapter  
            728, Statutes of 2008]."  




          Analysis Prepared by:                                               
                          Misa Lennox / L. GOV. / (916) 319-3958  FN:  
          0000455