BILL ANALYSIS                                                                                                                                                                                                    



                                                                     AB 402


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          CONCURRENCE IN SENATE AMENDMENTS


          AB  
          402 (Dodd)


          As Amended  August 26, 2015


          Majority vote


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          |ASSEMBLY:  |      |(May 28, 2015) |SENATE: |39-0  |(September 1,    |
          |           |54-23 |               |        |      |2015)            |
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          |           |      |               |        |      |                 |
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          Original Committee Reference:  L. GOV.




          SUMMARY:  Establishes a pilot program, until January 1, 2021,  
          for Napa 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.  


          The Senate amendments:


          1)Remove Sonoma LAFCO from the pilot program established by this  
            bill.  


          2)Define "planned use" to mean any project that is included in  
            an approved specific plan as of July 1, 2015.  








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          3)Specify that the extension of services outside of boundaries  
            will not result in either a) adverse impacts of open space or  
            agricultural lands or b) growth inducing impacts.  


          4)Require the Napa and San Bernardino LAFCOs to submit the  
            specified report before January 1, 2020.  


          5)Require the pilot program established pursuant to this bill to  
            be consistent with existing law regarding just compensation  
            for the takings of private utilities.     


          6)Add chaptering out language to avoid conflicts with SB 239  
            (Hertzberg) of the current legislative session, currently  
            pending in the Assembly.  


          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.  










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          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 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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          AS PASSED BY THE ASSEMBLY, this bill:   


          1)Allowed 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 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)Defined planned use to mean any project that is included in an  
            approved specific plan.  


          3)Required 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.  








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          4)Declared 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)Provided that existing law, which allows LAFCO to authorize a  
            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)Made other technical and conforming changes.  


          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  








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            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 Napa  
            and San Bernardino LAFCOs, until January 1, 2021, to allow  
            service extensions outside spheres of influence and  
            jurisdictional boundaries, beyond health and safety issues.   
            Under this bill, Napa 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 either adverse impacts  
            on open space or agricultural lands, or growth inducing  
            impacts; and, c) a later sphere of influence change 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 two LAFCOs submit a  
            report, before January 1, 2020, 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.  Unfortunately,  








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            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."  


          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.   


            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.  


          7)Arguments in Opposition.  California Building Industry  
            Association, opposed unless amended, argues that LAFCO's do  








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            not have unlimited resources, therefore, some LAFCOS do not  
            conduct MSR on areas outside a sphere of influence.  However,  
            this bill requires that the extension of service or services  
            deficiency was identified and evaluated in a MSR.  


          Analysis Prepared by:                                             
                          Misa Lennox / L. GOV. / (916) 319-3958  FN:  
          0001933