BILL ANALYSIS Ó AB 851 Page 1 Date of Hearing: May 13, 2015 ASSEMBLY COMMITTEE ON APPROPRIATIONS Jimmy Gomez, Chair AB 851 (Mayes) - As Amended May 7, 2015 ----------------------------------------------------------------- |Policy |Local Government |Vote:|9 - 0 | |Committee: | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | |-------------+-------------------------------+-----+-------------| | | | | | | | | | | | | | | | ----------------------------------------------------------------- Urgency: No State Mandated Local Program: YesReimbursable: No SUMMARY: This bill makes changes to the city disincorporation process in the Cortese-Knox Hertzberg Act (Act). Specifically, this bill: AB 851 Page 2 1)Requires the city to provide a written statement to the local agency formation commission (LAFCO) prior to filing a proposal to initiate disincorporation proceedings that determines and certifies the indebtedness of the city, the amount of money in the city's treasury, the amount of any tax levy or other obligation due the city that is unpaid or has not been collected, and the amount of current and future liabilities. Requires the city to identify the successor agency to the city's former redevelopment agency, if any. 2)Specifies information that must be included in a plan for services with a proposal for a disincorporation. 3)Requires notification to affected local agencies and requires local agencies to provide data to the executive officer in order to process a proposal in a timely manner. 4)Requires the executive officer to prepare a comprehensive fiscal analysis for a disincorporation proposal. 5)Prohibits a LAFCO from approving or conditionally approving any proposal that includes a disincorporation, unless a LAFCO makes specified determinations. 6)Requires LAFCO to determine the amount of property tax revenue to be exchanged by the disincorporating city and any successor agency or affected local agency pursuant to a specified process that is substantially similar to the process in existing law for incorporations. FISCAL EFFECT: AB 851 Page 3 Negligible state costs. Local mandate costs to LAFCOs are non-reimbursable because they charge fees for the services they provide. COMMENTS: 1)Purpose. According to the author, "The statutes addressing disincorporation have not been updated since the inception of LAFCOs in 1963. Under existing law, the intended procedure for dispensing with debt and unfunded liabilities is not in compliance with Propositions 13 and 218. This could result in the county at large being responsible for the debts and unfunded liabilities of a city that has disincorporated. This bill brings the sections of the Act into full compliance with the mandates of Propositions 13 and 218." 2)LAFCOs. LAFCOs are responsible for coordinating logical and timely changes in local governmental boundaries. The Act establishes procedures for local government changes of organization, including city incorporations, disincorporations, annexations to a city or special district, and city and special district consolidations. LAFCOs regulate boundary changes through the approval or denial of proposals by other public agencies or individuals. 3)Disincorporation in California. Seventeen cities have disincorporated in California's history, but only two cities have disincorporated since the creation of LAFCOs in 1963. The City of Cabazon, located in Riverside County, was disincorporated in 1973, and went through the process contained in LAFCO law. The Town of Hornitos, located in Mariposa County, was disincorporated by statute in 1972 (AB 2374, Chappie). AB 851 Page 4 More recent discussions regarding disincorporation relate to several cities in California impacted by the redirection of Vehicle License Fee (VLF) revenues away from newly incorporated cities and annexations as part of the realignment shift in 2011. Analysis Prepared by:Jennifer Swenson / APPR. / (916) 319-2081