BILL ANALYSIS Ó
AB 851
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CONCURRENCE IN SENATE AMENDMENTS
AB
851 (Mayes)
As Amended August 18, 2015
Majority vote
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|ASSEMBLY: | 75-0 | (May 22, |SENATE: |39-0 | (August 27, |
| | |2015) | | |2015) |
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Original Committee Reference: L. GOV.
SUMMARY: Makes changes to the city disincorporation process in
the Cortese-Knox Hertzberg Act (Act).
The Senate amendments:
1)Add to the list of information that must be included in a
comprehensive fiscal analysis prepared by a local agency
formation commission (LAFCO) executive officer in a
disincorporation proposal to include the direct and indirect
costs incurred by the city proposed for disincorporation for
current and proposed capital improvements, facilities, assets,
and infrastructure.
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2)Require, prior to the effective date of the disincorporation,
all public property of the disincorporating city under the
control or in the possession of any public officer or employee
of the city to be transferred to the possession and control of
the successor designated by LAFCO.
3)Define "indirect cost" in the Act, pursuant to the definition
provided in the Education Code.
4)Make technical and conforming changes.
FISCAL EFFECT: According to the Senate Appropriations
Committee, pursuant to Senate Rule 28.8, negligible state costs.
COMMENTS:
1)LAFCOs and Current Law. LAFCOs are responsible for
coordinating logical and timely changes in local governmental
boundaries, conducting special studies that review ways to
reorganize, simplify, and streamline governmental structures,
and preparing a sphere of influence for each city and special
district within each county. The courts refer to LAFCOs as
the Legislature's "watchdog" over local boundary changes. 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 for these procedures.
The Act prescribes a process for disincorporation, which is
similar to most boundary changes that require numerous steps:
a) application to LAFCO, by petition or resolution, for an
environmental review, and property tax exchange agreement; b)
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noticed public hearing, testimony, and approval or disapproval
by LAFCO in which they can impose terms and conditions; c)
additional public hearing for protests (if a majority of the
city's voters file protest, the disincorporation stops, and if
not, LAFCO must order an election on the proposed
disincorporation); d) disincorporation election among city
voters, which requires a majority vote approval; and, e) LAFCO
staff files documents to complete the disincorporation.
Upon the effective date of a disincorporation, the county
board of supervisors is responsible for winding up the affairs
of the former city. Residents of the former city no longer
have any rights or duties as inhabitants or voters of a city.
Prior to the effective date, public officers must turn over
public property to the county board of supervisors, and the
city council must turn over all city funds, as certified by
the LAFCO or the county, to the county treasurer. The county
tax collector may collect any levied but uncollected taxes
owed to the disincorporated city, and the county may collect
or sue for all debts owed the city. Other territories within
the county are not responsible and may not be taxed for the
debts or liabilities of the former city.
2)Bill Summary. This bill makes several changes to the statutes
that govern the city disincorporation process. In addition to
repealing several outdated code sections, this bill builds
upon provisions in existing law for incorporations which
require information about services and finances to be provided
with the proposal. For example, current law requires an
applicant to submit a plan for providing services with a
proposal. This bill specifies what must be included in that
plan for services in the case of a disincorporation, or a
reorganization that includes a disincorporation, to provide
LAFCOs with additional information about the provision of
services. This bill also requires the executive officer of a
LAFCO to prepare a comprehensive fiscal analysis as part of
the report current law requires them to provide to LAFCO in
recommendation of approving or disapproving a proposed change
of organization or reorganization. Current law requires a
fiscal analysis to be done for incorporations; this bill
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mirrors those provisions in existing law and would provide
LAFCO, successors, and the public with more information about
the financial status and impact of a city disincorporation.
Also, similar to provisions in current law for incorporations,
this bill establishes a process for the exchange of property
tax revenue for disincorporations. Under this bill, LAFCOs
must make specified determinations before approving or
conditionally approving a disincorporation proposal.
This bill does not make any changes to the existing
disincorporation process related to public involvement,
including public notice, hearing, protest, and election
requirements.
This bill is sponsored by the California Association of Local
Agency Formation Commissions.
3)Author's Statement. According to the author, "The statutes
addressing disincorporation have not been updated since the
inception of LAFCOs in 1963. This bill brings the sections of
the Act into full compliance with the mandates of Propositions
13 [1978] and 218 [1996]."
4)Disincorporation in California. Seventeen cities have
disincorporated in California's history, including the Cities
of Long Beach (1896), Pismo Beach (1940), and Stanton (1924),
each of which later reincorporated. The Legislature
disincorporated several cities by statute, including the
following cities: Columbia (1870), Dutch Flat (1866), Felton
(1917), and Hornitos (1973). Hornitos and Cabazon are the
only two cities that 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), Chapter 650, Statutes of 1972].
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More recent discussions surrounding the issue of
disincorporation are in reference to several cities in
California impacted by the redirection of Vehicle License Fee
(VLF) revenues away from newly incorporated cities and
annexations. The realignment shift in 2011 disproportionally
endangered the fiscal viability of cities that rely on VLF
revenues and after several failed legislative attempts to
remedy this issue, cities like Jurupa Valley have continued to
discuss possible disincorporation.
News reports on the possible disincorporation of the City of
Adelanto in San Bernardino County have persisted despite
assurances by city officials that the city has the budget for
one more fiscal year and that they continue to look into long
range revenue generating and saving opportunities. Most
recently, a Santa Barbara grand jury released a report earlier
this month calling for the City of Guadalupe to disincorporate
due to fiscal mismanagement, a declining tax base, and
increasing debt obligations. The Guadalupe City Council has
not taken any steps to suggest they will follow the
recommendation of the grand jury.
5)Arguments in Support. Supporters argue that this bill is not
intended to promote the use of the disincorporation process,
nor is intended to encourage cities to consider this as an
option to relieve their fiscal emergencies. The ultimate
success or failure of a proposal for disincorporation remains
with the registered voters of the city proposed to be
disincorporated. This bill just clarifies the required
process to get to that point.
6)Arguments in Opposition. None on file.
Analysis Prepared by:
Misa Lennox / L. GOV. / (916) 319-3958 FN:
0001408
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