BILL NUMBER: AB 2032 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Linder
FEBRUARY 16, 2016
An act to amend Section 56770 Sections
56770, 56804, 56813, 56816, 57405, 57407, and 57412 of the
Government Code, relating to local government.
LEGISLATIVE COUNSEL'S DIGEST
AB 2032, as amended, Linder. Change of organization: cities:
disincorporation.
Existing
(1) Existing law, the
Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000,
provides the authority and procedure for the initiation, conduct, and
completion of changes of organization and reorganization for cities
and districts. The act prohibits the local area formation commission
from approving or conditionally approving any proposal that includes
a disincorporation of a city unless the commission determines, among
other things, that the disincorporation is consistent with the intent
of the act, the disincorporation will address necessary changes to
spheres of influence of affected agencies, and the service
responsibilities of the city proposed for disincorporation have been
assigned.
This bill would make a nonsubstantive change to this provision.
This bill would additionally require the commission to determine
that the proposed disincorporation is consistent with the intent that
all debt and contractual obligations and responsibilities of the
city being disincorporated be the responsibility of the same
territory for repayment, that existing and projected future revenues
of the city to be disincorporated are sufficient to meet all
expenditures, debts, and obligations of the former city, as
specified, and that the appropriate appointing power of the successor
or successors approves the terms of continuing employment or
transfer of any employees from employment with the disincorporated
city to employment with the successor or successors. By imposing new
duties on local officials, this bill would impose a state-mandated
local program.
(2) Existing law requires the executive officer of the commission
to prepare a comprehensive fiscal analysis for any proposal that
includes an incorporation, as specified. Existing law requires the
comprehensive fiscal analysis to include, among other things, a
review and documentation of specified costs associated with the
proposed disincorporation.
This bill would require the comprehensive fiscal analysis to
include an analysis of the former city's most recently completed
financial statements audited by a certified public accountant, as
specified. The bill would additionally require the executive officer
to obtain written input from the successor or successors proposed to
assume responsibility for the former city's operations during the
preparation of the comprehensive fiscal analysis, as specified. The
bill would additionally require the comprehensive fiscal analysis to
include, among other things, a review and documentation of all debt
obligations and current long-term liabilities of the city proposed
for disincorporation and specified revenue sources. The bill would
require the executive officer to provide the successor or successors
at least 30 days to evaluate and validate the accuracy and
sufficiency of the data used to prepare the comprehensive fiscal
analysis. By imposing new duties on local officials, this bill would
impose a state-mandated local program.
(3) Existing law requires the commission to determine the amount
of property tax revenue to be exchanged by the affected city and any
successor or affected local agency for a proposal that includes a
disincorporation of a city and sets forth the procedures to be
followed in making that determination.
This bill would revise these provisions to require the
determination to be included in the comprehensive fiscal analysis, as
specified.
(4) Existing law states the intent of the Legislature that a
proposal that includes a disincorporation of a city result in a
determination that the debt or contractual obligations and
responsibilities of the city being disincorporated be the
responsibility of the same territory for repayment. Existing law
requires the city being disincorporated to provide a written
statement prior to issuance of a certificate for filing for a
proposal that includes a disincorporation that includes specified
information relating to its debts and contractual obligations.
This bill would additionally require that statement to include,
among other things, the amount of money in the possession of
custodians and trustees and an identification of whether any of the
money is restricted, and a statement of whether there is any pending
or potential litigation or claims against the city proposed to be
disincorporated.
(5) Existing law requires the county tax collector to collect a
tax that has been levied by the disincorporated city that remains
uncollected.
This bill would additionally require the county tax collector to
collect an assessment that has been levied by the disincorporated
city that remains uncollected. By imposing new duties on local
officials, this bill would impose a state-mandated local program.
(6) Existing law requires all money paid into the county treasury
pursuant to provisions relating to the disincorporation of a city to
be placed to the credit of a special fund established for the purpose
of settling the affairs of the disincorporated city.
This bill would provide that the successor or successors to the
disincorporated city are not liable to creditors of the former city,
if at all, other than for those amounts actually paid into that
special fund.
(7) Existing law requires the board of supervisors to provide for
the collection of debts due to a city being disincorporated and to
wind up its affairs, as specified.
This bill would instead require the governing board of the
successor to the city being disincorporated to provide for the
collection of debts due to the city and to wind up its affairs, as
specified.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that, if the Commission on State Mandates
determines that the bill contains costs mandated by the state,
reimbursement for those costs shall be made pursuant to these
statutory provisions.
Vote: majority. Appropriation: no. Fiscal committee: no
yes . State-mandated local program: no
yes .
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 56770 of the Government Code is amended to
read:
56770. The commission shall not approve or conditionally approve
a proposal that includes a disincorporation, unless, based on the
entire record, the commission makes all of the following
determinations:
(a) The proposed disincorporation is consistent with the
both of the following:
(1) The intent of this division
to provide for a sustainable system for the delivery of services.
(2) The intent stated in Section 56816 that all debt and
contractual obligations and responsibilities of the city being
disincorporated shall be the responsibility of the same territory for
repayment.
(b) The commission has considered the service reviews of municipal
services and spheres of influence of the affected local agencies,
and the disincorporation will address the necessary changes to those
spheres of influence, if any.
(c) It has reviewed the comprehensive fiscal analysis prepared
pursuant to Section 56804.
(d) It has reviewed the executive officer's report and
recommendation prepared pursuant to Section 56665, and the oral or
written testimony presented at its public hearing.
(e)
(e) Existing and projected future revenues of the city to be
disincorporated are sufficient to meet all expenditures, debts, and
obligations of the former city or, if there are not sufficient
revenues, the tax rate upon which the commission conditions its
approval for disincorporation shall be sufficient to meet all
identified financial shortfalls of the former city.
(f) The service responsibilities of the city proposed
for disincorporation have been assigned through terms and conditions
authorized by Sections 56885.5, 56886, and 57302, and Chapter 5
(commencing with Section 57400) of Part 5.
(g) The appropriate appointing power of the successor or
successors approves the terms of continuing employment or transfer of
any employees from employment with the disincorporated city to
employment with the successor or successors.
SEC. 2. Section 56804 of the Government
Code is amended to read:
56804. (a) For any proposal that includes a
disincorporation, the executive officer shall prepare, or cause to
be prepared by contract, a comprehensive fiscal analysis that
includes an analysis of the former city's most recently completed
financial statements audited by a certified public accountant and
identifies any concerns raised by the certified public accountant.
The executive officer shall obtain written input from the successor
or successors or the petitioners proposed to assume responsibility
for the former city's operations during the preparation of the
comprehensive fiscal analysis to assist in determining whether
revenue shortfalls, if any, will leave unfunded debts or
liabilities after disincorporation . This analysis shall become
part of the report required pursuant to Section 56665. Data used for
the analysis shall be from the most recent fiscal year for which
data is available, preceding the issuances of the certificate of
filing. When data requested by the executive officer in the notice to
affected agencies, pursuant to paragraph (2) of subdivision (b) of
Section 56658, is unavailable, the analysis shall document the source
and methodology of the data used. The analysis shall review and
document each of the following:
(a)
(1) The direct and indirect costs incurred by the city
proposed for disincorporation for providing public services during
the three fiscal years immediately preceding the submittal of the
proposal for disincorporation.
(b)
(2) The direct and indirect costs incurred by the city
proposed for disincorporation for current and proposed capital
improvements, facilities, assets, and infrastructure.
(c)
(3) The sources of funding, if any, available to the
entities proposed to assume the obligations of the city proposed for
disincorporation.
(d)
(4) The anticipated costs, including all direct and
indirect costs, to the entities proposed to assume the obligations of
the city proposed for disincorporation in the provision of services
to the area proposed for disincorporation.
(e)
(5) When determining costs, the executive officer shall
also include all direct and indirect costs of any public services
that are proposed to be transferred to state agencies for delivery.
(f)
(6) The revenues of the city proposed for
disincorporation during the three fiscal years immediately preceding
the initiation of the disincorporation proposal.
(7) All debt obligations and current and long-term liabilities of
the city proposed for disincorporation, including the balance of
restricted and unrestricted funds available to extinguish the
obligations and liabilities.
(8) The required financing mechanism(s) to address any shortfalls
and obligations for those responsibilities identified in this
section, including, but not limited to, taxes or assessments.
(9) A determination of the proportion that the amount of property
tax revenue derived by the city being disincorporated pursuant to
subdivision (b) of Section 93 of the Revenue and Taxation Code bears
to the total amount of revenue from all sources available for general
purposes received by the city being disincorporated in the prior
fiscal year. For purposes of making this determination and the
determination required by paragraph (3) of subdivision (c) of Section
56813, "total amount of revenue from all sources available for
general purposes" means the total amount of revenue that the city
being disincorporated may use on a discretionary basis for any
purpose and does not include any of the following:
(A) Revenue that, by statute or ordinance, is required to be used
for a specific purpose.
(B) Revenue from fees, charges, or assessments that are levied to
specifically offset the cost of particular services and that do not
exceed the cost reasonably borne in providing these services.
(C) Revenue received from the federal government that is required
to be used for a specific purpose.
(g)
(10) Any other information and analysis needed to make
the findings required by Section 56770.
(b) The executive officer shall provide the successor or
successors at least 30 days to review, evaluate, and validate the
accuracy and sufficiency of the data used to prepare the
comprehensive fiscal analysis.
SEC. 3. Section 56813 of the Government
Code is amended to read:
56813. (a) If the proposal includes the disincorporation of a
city, as defined in Section 56034, the commission shall determine the
amount of property tax revenue to be exchanged by the affected city
and any successor or affected local agency pursuant to this section.
(b) The commission shall notify the county auditor of the
proposal, the affected local agencies to be extinguished, and the
services proposed to be transferred to new jurisdictions, and
identify for the auditor the changes to occur.
(c) If the proposal would not transfer all of the service
responsibilities of the disincorporating city to the affected county
or to a single affected agency, the commission and the county auditor
shall do all of the following:
(1) The county auditor shall determine the proportion that the
amount of property tax revenue derived by the city being
disincorporated pursuant to subdivision (b) of Section 93 of the
Revenue and Taxation Code bears to the total amount of revenue from
all sources, available for general purposes, received by the city
being disincorporated in the prior fiscal year and provide his or her
response within 15 days of receiving notification from the
commission pursuant to subdivision (b). For purposes of making this
determination and the determination required by paragraph (3), "total
amount of revenue from all sources available for general purposes"
means the total amount of revenue which the city being
disincorporated may use on a discretionary basis for any purpose and
does not include any of the following:
(A) Revenue that, by statute or ordinance, is required to be used
for a specific purpose.
(B) Revenue from fees, charges, or assessments that are levied to
specifically offset the cost of particular services and that do not
exceed the cost reasonably borne in providing these services.
(C) Revenue received from the federal government that is required
to be used for a specific purpose.
(2)
(c) The commission shall determine, based on
information submitted certified by the
governing body of the city being disincorporated, an
amount equal to the total net cost to that city during the prior
fiscal year of providing those services that an affected agency will
assume within the area subject to the proposal. For purposes of this
paragraph, "total net cost" means the total direct and indirect costs
that were funded by general purpose revenues of the city being
disincorporated and excludes any portion of the total cost that was
funded by any revenues of that agency that are specified in
subparagraphs (A), (B), and (C) of paragraph (1).
paragraph (9) of subdivision (a) of Section 56804.
(3)
(d) For the services to be transferred to each affected
local agency, the commission shall multiply the amount determined
pursuant to paragraph (2) subdivision (c)
by the proportion determined pursuant to paragraph (1)
(9) of subdivision (a) of Section
56804 to derive the amount of property tax revenue used to
provide services by the city being disincorporated during the prior
fiscal year within the area subject to the proposal. The county
auditor shall adjust the amount so determined by the annual tax
increment pursuant to the procedures set forth in Chapter 6
(commencing with Section 95) of Part 0.5 of Division 1 of the Revenue
and Taxation Code, to the fiscal year in which the affected agency
receives its next allocation of property taxes.
(d)
(e) If the proposal for disincorporation would transfer
all of the service responsibilities of the city proposed for
disincorporation, other than those that are proposed to be
discontinued, to a single successor, the commission shall request the
auditor to determine the property tax revenue allocated to the city
being disincorporated by tax rate area, or portion thereof, and
transmit that information to the commission.
(e)
(f) The executive officer shall notify the auditor of
the amount determined pursuant to paragraph (9) of
subdivision (c) or (d), (a) of Section 56804
or of subdivision (e) of this section, as the case may be, and,
where applicable, the period of time within which and the procedure
by which the transfer of property tax revenues will be effected
pursuant to this section, at the time the executive officer records a
certificate of completion pursuant to Section 57203 for any proposal
described in subdivision (a), and the auditor shall transfer that
amount to the affected agency or agencies that will assume the
services as determined by the commission. Any property tax not
transferred to an affected agency pursuant to paragraph (9) of
subdivision (c) (a) of Section 56804
shall be transferred to the affected county.
(f)
(g) For purposes of this section, "prior fiscal year"
means the most recent fiscal year preceding the issuance of the
certificate of filing for which data is available on actual direct
and indirect costs and revenues needed to perform the calculations
required by this section.
(g)
(h) Any action brought by a city, county, or district
to contest any of the determinations of the county auditor or the
commission with regard to the amount of property tax revenue to be
exchanged by the affected local agencies pursuant to this section
shall be commenced within three years of the effective date of the
disincorporation.
SEC. 4. Section 56816 of the Government
Code is amended to read:
56816. (a) It is the intent of the Legislature that any proposal
that includes the disincorporation of a city result in a
determination that the debt or contractual obligations and
responsibilities of the city being disincorporated shall be the
responsibility of that same territory for repayment. To ascertain
this information, the city shall provide a written statement that
is certified by its legislative body and determines
and certifies all of the following to the
commission prior to the issuance of a certificate of filing for a
disincorporation proposal, pursuant to Sections 56651 and 56658:
(1) The indebtedness of the city.
(2) The amount of money in the city's treasury , including an
identification of any money that is restricted .
(3) The amount of money in the possession of custodians and
trustees and an identification of any money that is restricted.
(3)
(4) The amount of any tax levy
levy, direct assessment, or other obligation due the city that
is unpaid or has not been collected.
(5) Current and long-term receivables owed to the city.
(6) A statement of whether there are any pending or potential
litigation or claims against the city, including potential liability.
(4)
(7) The amount of current and future liabilities, both
internal debt owed to other special or restricted funds or enterprise
funds within the agency and external debt owed to other public
agencies or outside lenders or that results from contractual
obligations, which may include contracts for goods or services,
retirement obligations, actuarially determined unfunded pension
liability of all classes in a public retirement system, including any
documentation related to the termination of public retirement
contract provisions, and the liability for other postemployment
benefits. The information required by this paragraph shall include
any associated revenue stream for financing that may be or has been
committed to that liability, including employee contributions.
(8) The annual amount of voter-approved pensions levied by the
city and a determination of unfunded pension tax liability owed to
the California Public Employees' Retirement System.
(b) The city shall provide a written statement
identifying the successor agency to the city's former
redevelopment agency, if any, shall be determined pursuant
to Section 34173 of the Health and Safety Code.
SEC. 5. Section 57405 of the Government
Code is amended to read:
57405. If a tax or assessment has been levied by the
disincorporated city and remains uncollected, the county tax
collector shall collect it when due and pay it into the county
treasury on behalf of the designated successor agency or county to
wind up the affairs of the disincorporated city.
SEC. 6. Section 57407 of the Government
Code is amended to read:
57407. (a) All money paid into the county
treasury pursuant to this chapter shall be placed to the credit of a
special fund established for the purpose of settling the affairs of
the disincorporated city.
(b) The successor or successors to the disincorporated city shall
not be liable to creditors of the former city, if at all, other than
for those amounts actually paid into the special fund established
pursuant to subdivision (a). For purposes of this section, creditors
include, but are not limited to, employees and bondholders of the
disincorporated city.
SEC. 7. Section 57412 of the Government
Code is amended to read:
57412. The board of supervisors governing
body of the successor shall provide for collection of debts
due the city and wind up its affairs. Upon an order by the
board of supervisors, commission, the
appropriate county officer of the successor
shall perform any act necessary for winding up the city
affairs, with the same effect as if it had been performed by the
proper city officer.
SEC. 8. If the Commission on State Mandates
determines that this act contains costs mandated by the state,
reimbursement to local agencies and school districts for those costs
shall be made pursuant to Part 7 (commencing with Section 17500) of
Division 4 of Title 2 of the Government Code.