BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                       AB 738


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          ASSEMBLY THIRD READING


          AB  
          738 (Beth Gaines)


          As Amended  May 11, 2015


          Majority vote


           ------------------------------------------------------------------- 
          |Committee       |Votes |Ayes                |Noes                  |
          |                |      |                    |                      |
          |                |      |                    |                      |
          |----------------+------+--------------------+----------------------|
          |Local           |9-0   |Maienschein,        |                      |
          |Government      |      |Gonzalez, Alejo,    |                      |
          |                |      |Chiu, Cooley,       |                      |
          |                |      |Gordon, Holden,     |                      |
          |                |      |Linder, Waldron     |                      |
          |                |      |                    |                      |
          |                |      |                    |                      |
           ------------------------------------------------------------------- 


          SUMMARY:  Makes changes to Sacramento Regional Transit District's  
          (RT) boundaries and establishes a new process for the annexation  
          and detachment of territory.  Specifically, this bill:  


          1)Repeals existing law which governs RT boundaries, and instead,  
            requires RT's boundaries to include the following:


             a)   The Cities of Sacramento and Rancho Cordova;









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             b)   The unincorporated territory of Sacramento County that is  
               within the urban service area, as determined by the Board of  
               Supervisors;


             c)   The Cities of Citrus Heights, Elk Grove, Davis, Folsom,  
               Rancho Cordova, Roseville, Sacramento, West Sacramento, and  
               Woodland, and the Counties of Sacramento and Yolo that have  
               annexed to RT; and,


             d)   A city incorporated on or after January 1, 2016, in which  
               the city consists entirely of territory that was included in  
               RT prior to the city's incorporation.  


          2)Prohibits RT's boundaries from being affected by the  
            incorporation of any territory wholly or partly within RT's  
            boundaries or by annexation to or detachment from any city or  
            territory wholly or partly within RT's boundaries, except as  
            follows:


             a)   If a city is included in RT and annexes territory outside  
               RT's boundaries, then that territory is deemed incorporated  
               and annexed into RT, upon completion of the city annexation  
               proceeding; and,


             b)   If territory partly within and partly outside RT is  
               incorporated as a new city, on or after January 1, 2016, then  
               the new city is deemed incorporated into and annexed into RT,  
               upon completion of the city incorporation proceeding. 


          3)Provides that territory deemed incorporated and annexed to RT,  
            pursuant to 1) and 2) above, shall be subject to taxation, in  
            accordance with the assessable valuation of the property in that  








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            territory for general district purposes and for payment of any  
            indebtedness incurred by RT, as specified.   


          4)Prohibits RT from levying an ad valorem property tax within the  
            boundaries of any city that is not within RT's boundaries.  


          5)Prohibits RT from levying an ad valorem property tax in all or  
            part of an unincorporated area of any county, if the  
            unincorporated area is not within RT's boundaries.  


          6)Repeals a provision in existing law which governs the annexation  
            process for a city or county to become part of RT which required  
            written request by that city or county and approval by  
            Sacramento Area Council of Governments, and instead, establishes  
            a negotiated annexation process.  


          7)Allows any city or county listed in 1) above, to be annexed to  
            RT in the manner provided in 8) below.  


          8)Requires the legislative body of the city or county proposed to  
            be annexed to agree in writing with RT's board of directors  
            (Board) upon the terms and conditions of annexation.  The  
            agreement, among other things, may provide for the levy and  
            collection of special taxes within the city or unincorporated  
            area of the county, the fixing of rates, rentals, and charges  
            differing from elsewhere in the district, and the transfer of  
            property.  


          9)Authorizes RT to detach territory within its boundaries by a  
            supermajority vote of the Board, which shall be at least 80% of  
            the non-weighted vote of the existing Board, and by a majority  
            vote of the governing body of the territory proposed to be  
            detached, provided that the detached territory shall not be  








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            relieved from liability for taxation for the payment of any  
            bonded indebtedness existing at the time of detachment, and  
            provided that all other pending legal and financial obligations  
            have been resolved by mutual agreement.  


          10)Provides that the detachment of territory from RT shall be  
            effective upon giving the notice to the Board of Equalization  
            and the county assessor as required by current law for local  
            agency formation commissions to file boundary changes.  


          11)Requires notice of the detachment of territory from RT to be  
            given to each assessor whose roll is used for a tax levy, as  
            specified.  


          12)Makes conforming changes to the definition of "member entity"  
            in RT's Act to mean a city or county that is within the  
            boundaries of RT as defined in 1) above.  


          EXISTING LAW:    


          1)Establishes the Sacramento Regional Transit District Act (Act)  
            which governs the powers and functions of RT, and establishes  
            RT's territory and Board.  


          2)Provides that RT shall be formed upon the adoption of a  
            resolution by the City Council of Sacramento and by the  
            Sacramento County Board of Supervisors declaring there is a need  
            for RT.  


          3)Authorizes RT to comprise the Cities of Citrus Heights, Elk  
            Grove, Davis, Folsom, Rancho Cordova, Roseville, Sacramento,  
            West Sacramento, and Woodland, and specified territory in the  








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            Counties of Sacramento and Yolo to the extent they are not  
            included in the above-mentioned cities.  


          4)Provides any city or county may annex to and become part of RT  
            upon approval by the Board following a written request by that  
            city or county and the approval of the Sacramento Area Council  
            of Governments.  


          5)Requires RT's boundaries, at any point in time, to include:


             a)   All the area of any city eligible to participate as  
               defined in 3) or 4) above, in which the governing body has  
               declared a need for RT to operate; and,


             b)   That area of any county eligible to participate under 3)  
               or 4) above, within which the governing body has declared a  
               need for RT to operate.  


          6)Authorizes RT to operate and exercise its powers within any city  
            provided that RT has no power to levy an ad valorem property tax  
            within the boundaries of any city, unless the city council  
            adopts a resolution declaring there is a need for RT to operate  
            and levy a tax within the city boundaries.  


          7)Authorizes RT to operate and exercise its powers within all or  
            part of the unincorporated area of any county provided that RT  
            has no power to levy an ad valorem property tax within any  
            unincorporated area, unless the board of supervisors of the  
            county adopts a resolution declaring a need for RT to operate  
            and levy a tax within the unincorporated area of the county.   


          8)Specifies that a city or county that is not annexed to RT may  








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            become a participating entity that is entitled to make at least  
            one appointment to the Board, if they enter into an agreement  
            with RT to pay their proportional share of RT's cost to provide  
            rail or other district-wide transit services to the entity and  
            the District agrees to maintain a specified level of services  
            and is not obligated to provide transit services along any  
            particular route or location.  


          9)Defines "member entity" to mean a city or county that is annexed  
            to RT pursuant to 2), 3), or 4) above.  Defines "member  
            entities" to mean all those cities and counties.  


          10)Defines "participating entity" to mean a city or county that is  
            not annexed to RT, but has entered into a specified agreement to  
            pay its proportional share of RT's cost to provide rail or other  
            district-wide transit services to the entity.  


          FISCAL EFFECT:  None


          COMMENTS:  


          1)RT.  The Legislature authorized the creation of the Sacramento  
            Regional Transit District in 1971 to operate a comprehensive  
            public transportation system for the Sacramento region.  RT  
            serves an area encompassing 418 square miles and 1.4 million  
            people; it operates 67 bus routes and 38.6 miles of light rail  
            service.  RT is governed by an 11-member Board of Directors  
            comprised of eight directors that are appointed by the annexed  
            jurisdictions, which are "member entities," including Sacramento  
            County, and the Cities of Sacramento and Rancho Cordova.   
            Additionally, three directors are appointed by non-annexed  
            jurisdictions, which are "participating entities," including the  
            Cities of Citrus Heights, Elk Grove, and Folsom.  Board members  
            vote based on a weighted vote system established by AB 2137  








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            (Niello), Chapter 227, Statutes of 2008, which is based upon the  
            type of membership and the financial contribution made by each  
            entity to RT.  


          2)Bill Summary.  This bill makes several changes to the way RT's  
            boundaries may be changed by establishing a new process for  
            annexation and detachment of territory.  


            Current law allows any city or county to annex and become part  
            of RT upon approval of the Board, if the request is made in  
            writing by the city or county, and the Sacramento Area Council  
            of Governments approves the annexation.  This bill repeals this  
            provision of law and establishes a new annexation process for  
            RT.  This bill authorizes RT and the legislative body of a city  
            or county proposed to be annexed to agree in writing on the  
            terms and conditions for annexation.  This process is already  
            contained in statute for several other transit districts.  Under  
            this bill, the agreement for annexation may include the fixing  
            of rates or charges, the transfer of property, or provide for  
            the levy and collection of special taxes.  The annexation  
            process would apply to any city listed in the territory defined  
            in RT's enabling act, which means the Cities of Citrus Heights,  
            Elk Grove, Davis, Folsom, Roseville, West Sacramento, Woodland  
            and specified territory in the Counties of Sacramento and Yolo  
            could be annexed pursuant to this process.  If a city or county  
            wanted to be annexed to RT and they weren't listed in RT's  
            enabling act, they would need to modify statute.  


            Under current law, if a new city incorporated entirely within  
            the territory of RT, the new city council would need to annex  
            back into the district to activate their membership as a member  
            entity.  Under this bill, if a new city incorporates after  
            January 1, 2016, and is entirely within RT's boundaries or  
            includes any territory within RT's boundaries, that city would  
            automatically be annexed to RT as a member entity.   
            Additionally, this bill authorizes RT to detach territory within  








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            its boundaries with a vote of 80% of the non-weighted Board and  
            a majority vote of the governing body of the territory proposed  
            to be detached.  


            This bill is sponsored by RT.  


          3)Author's Statement.  According to the author, "The purpose of  
            this bill is two-fold:  1) A number of jurisdictions presently  
            contract with RT for service (the Cities of Citrus Heights,  
            Folsom, and Elk Grove).  As contracting parties, these  
            jurisdictions are able to maintain a degree of control over the  
            operations of service within their boundaries; these  
            jurisdictions have expressed reluctance to annex to RT and cede  
            control over service that is of benefit to their citizens.   
            Addition of a provision for a negotiated annexation would permit  
            RT and the affected jurisdiction to negotiate an annexation  
            agreement that might commit RT to certain service levels and  
            amenities; 2) The other concern this bill addresses is future  
            incorporation of areas within RT's present boundaries.  RT has  
            made significant capital investments in bus and rail transit  
            facilities within its present boundaries and its operations are  
            designed to provide efficient transportation within those  
            boundaries.  As RT's Act is presently written, a newly  
            incorporated area must affirmatively act to annex to RT to  
            remain within its boundaries.  To protect RT's existing  
            investments in these areas and the integrity of its existing  
            transit network, this bill would specify that these areas remain  
            a part of RT notwithstanding a new incorporation."  


          4)Arguments in Support.  Supporters argue that this bill addresses  
            issues unique to the manner in which cities and counties may  
            activate their participation with RT.  


          5)Arguments in Opposition.  None on file.  









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          Analysis Prepared by:                                               
                          Misa Lennox / L. GOV. / (916) 319-3958  FN:  
          0000373