BILL ANALYSIS Ó
AB 2414
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Date of Hearing: April 13, 2016
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Susan Talamantes Eggman, Chair
AB 2414
(Eduardo Garcia) - As Introduced February 19, 2016
SUBJECT: Desert Healthcare District.
SUMMARY: Establishes an annexation process for the Desert
Healthcare District (District). Specifically, this bill:
1)Establishes an annexation process for the District to include
the East Coachella Valley region, and provides a new
governance structure for the District's Board of Directors
(Board) if the District is expanded pursuant to the process
established by this bill.
2)Requires the Riverside County Board of Supervisors (Board of
Supervisors), on or before 15 days after the effective date of
this bill, to file a resolution of application with Riverside
County Local Agency Formation Commission (Riverside LAFCO), to
initiate a comprehensive review and recommendation by
Riverside LAFCO for the expansion of the District to include
the East Coachella Valley region, as specified pursuant to 7),
below.
3)Requires the Board of Supervisors to pay any fees associated
with the resolution of application.
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4)Requires Riverside LAFCO, in consultation with the Board of
Supervisors, the Board, Riverside County Auditor-Controller,
local entities affected by the expansion, and other relevant
stakeholders, to conduct and complete an analysis of the
funding sources available to the expanded District.
5)Provides that the financial analysis completed pursuant to
this bill is not binding with respect to the final funding
allocated to the District, if it is expanded pursuant to this
bill.
6)Requires the review and recommendation of Riverside LAFCO to
include a recommendation of the boundaries of the expanded
District.
7)Requires the expanded District to include all communities
currently served by the District as of the date the resolution
of application is filed. Requires the expanded District to
also include, but not be limited to, the communities of Indian
Wells, La Quinta, Indio, and Coachella, and the unincorporated
areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore,
and Vista Santa Rosa.
8)Requires Riverside LAFCO to complete the review on or before
August 1, 2016.
9)Prohibits the resolution of application, filed by the Board of
Supervisors, from being subject to any protest proceedings.
10)Prohibits Riverside LAFCO from disapproving the resolution of
application.
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11)Requires Riverside LAFCO, if a funding source sufficient to
support the operations of the expanded District is identified,
to order the expansion of the District subject to a vote of
the registered voters residing within the boundaries of the
proposed expanded District at an election following the
completion of their review.
12)Requires Riverside LAFCO to direct the Board of Supervisors
to direct county officials to conduct the election for the
District's expansion and any necessary funding source that
requires voter approval on the ballot at the next countywide
election.
13)Requires the District to be expanded in accordance with this
bill, if the following occur:
a) A majority of the voters within the boundaries of the
expanded district vote in favor
of the expansion; and,
b) A number of voters required under applicable law to
approve any necessary funding source that requires voter
approval vote in favor of that funding source.
14)Requires the Board, no later than December 1, 2016, to adopt
a resolution to increase the number of board members from five
to seven without the petition or approval of the voters
residing within the District.
15)Requires the Board's resolution to be effective on the date
of, and subject to any conditions specified in the resolution.
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16)Requires the Board to appoint two additional Board members
that are registered voters and residents of the territory
annexed pursuant to this bill.
17)Requires the Board, upon appointment, to designate by lot one
appointed member to leave office when their successor takes
office, pursuant to the Uniform District Election Law, and one
appointed member to leave office two years thereafter.
18)Requires a vacancy to be filled pursuant to existing law
which provides an appointment process for the Board.
19)Provides that the increase to the membership of the Board and
appointment of two new members only becomes operative if the
District is expanded in accordance with the annexation process
established by this bill.
20)Exempts the expansion of the District from the
Cortese-Knox-Hertzberg Local Government Reorganization Act
(Act), except as specified in this bill. Provides that the
Act applies to any other change of organization or
reorganization, following the reorganization of the District
pursuant to this bill.
21)Exempts the District from the formation process established
in the Local Healthcare District Law and authorizes the
District to be expanded in accordance with this bill.
Provides that all other provisions of the Local Healthcare
District Law apply to the District following its
reorganization, except as specified in this bill.
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22)Contains an urgency clause in order to improve the provision
of healthcare services and access to healthcare services by
the residents of the Coachella Valley region as soon as
possible.
23)Finds and declares that a special law is necessary and
general law cannot be made applicable because of the unique
community needs in Riverside County that would be served by
the expansion of the District to include the entire Coachella
Valley region, including the limited access in the eastern
Coachella Valley to healthcare services by an underserved
population that suffers from a higher than average prevalence
of preventable disease.
24)Provides that, if the Commission on State Mandates determines
that this bill contains costs mandated by the state,
reimbursement to local agencies and school districts for those
costs shall be made, pursuant to current laws governing state
mandated local costs.
FISCAL EFFECT: This bill is keyed fiscal.
COMMENTS:
1)LAFCO 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,
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disincorporations, city and special district consolidations,
and annexations to a city or special district. 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 the inclusion or addition of
territory to a district (district annexation), which is
similar to most boundary changes that requires numerous steps:
a) application to LAFCO, by petition or resolution; b) 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 more than 25% of
voters file protest, the LAFCO must order an election on the
proposed annexation, and if more than 50% of voters protest
then the LAFCO must terminate the proceedings); d) an
election, if there were significant protests; and, e) LAFCO
staff files documents to complete the annexation.
In the past several years the Legislature has established a
modified LAFCO process or exempted specified requirements in
the LAFCO process for the formation of several special
districts following a history of failed attempts at the local
level including AB 2453 (Achadjian), Chapter 350, Statutes of
2014, for the creation of the Paso Robles Water District, and
AB 3 (Williams), Chapter 548, Statutes of 2015, for the
formation of the Isla Vista Community Services District.
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2)Bill Summary. This bill establishes an annexation process for
the District to include the East Coachella Valley region that
is exempt from the statutes that govern the usual process
under LAFCO for district annexations. This bill requires the
Riverside County Board of Supervisors, within 15 days after
the effective date of this bill, to submit to Riverside LAFCO
a resolution of application to initiate a comprehensive review
and recommendation of LAFCO to expand the District's
boundaries to include the East Coachella Valley region. This
bill requires Riverside LAFCO, by August 1, 2016, to complete
an analysis of the funding available to the expanded District
and to recommend the boundaries of the expanded District.
Under this bill, the expanded District must include all
communities current served by the District and the communities
of Indian Wells, La Quinta, Indio, Coachella, and the
unincorporated area of Bermuda Dunes, Mecca, Thermal Oasis,
North Shore, and Vista Santa Rosa. Riverside LAFCO would not
have the usual power to disapprove the application and protest
provision would not apply to the proposed annexation. The
District would only be expanded if supported by a majority of
voters within the boundaries of the expanded district and the
number of voters required by existing law for any necessary
funding. If the District is expanded, this bill requires the
five-member Board to appoint two new Board members who are
residents and registered voters in the area annexed to the
District. This bill is author-sponsored.
3)Author's Statement. According to the author, "Currently,
there are significant barriers preventing Eastern Coachella
Valley residents' access to health care providers and
services. This has been well-documented by numerous
stakeholders in the region. Some of the barriers include
shortages in the number of primary care providers, shortages
in various medical and surgical specialties, a lack of urgent
care services, and a lack of transportation. Solving the
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persistent barriers has proven to be challenging. Even with
expanded Medicaid or commercial insurance coverage for
eligible residents through the Affordable Care Act, industry
analysts remain concerned that the number and capacity of
providers will prove inadequate to meet demand. Eastern
Coachella Valley stakeholders and I believe that expanding the
current healthcare district is best to address these
persistent needs. Pointing to the impact and success of the
Desert Healthcare District in addressing the health needs of
its current constituency."
4)Desert Healthcare District. The District was created in 1948
to provide healthcare services to residents in the Coachella
Valley within a 457 square mile area that includes Palm
Springs, Desert Hot Springs, Cathedral City, Thousand Palms,
Rancho Mirage, Mountain Center, San Gorgonio, and the area of
Palm Desert west of Cook Street. The District built and began
operating Desert Hospital, which is now known as Desert
Regional Medical Center. Since 1986, the District's Board had
leased hospital operations to medical facility providers. In
1997, the Board voted to lease the hospital to Tenet Health
Systems for a 30-year period. The District continues to own
the lease and other assets includes the Las Palmas Medical
Plaza, while Tenant runs the operations of the 387-bed acute
care hospital.
According to the District, with an operating budget of roughly
$9 million, the District allocates more than $3 million each
year on grants and other programs. The District has adopted a
grant program to invest in non-profits and public agencies
whose activities and programs improve the health and wellbeing
of District residents. The District is funded by property tax
paid by the residents of the District, revenue for working
capital for the hospital in the event the lease with Tenet is
terminated, and rental income from the medical plaza. The
District is governed by a five-member Board elected at-large.
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5)Committee Amendments. The Committee may wish to consider the
following:
a) Timeline. In order to provide more time at the local
level for the annexation process established by this bill,
the Committee may wish to ask the author to remove the
urgency clause from this bill. Additionally, the Committee
may wish to ask the author to provide more time for
Riverside County to submit the resolution of application
and to Riverside LAFCO to produce the review required by
this bill. The author may wish to consider further
examining the timelines once a funding source is identified
in the bill.
b) Election. This bill requires that an election be held
on both the expansion of the District's boundaries and on
the necessary funding. Current law for district
annexations provides discretion to LAFCOs to order the
election only within the territory ordered to be annexed or
both within the territory ordered to be annexed and within
the existing district. In order to ensure that the voters
in the area proposed for annexation who will be paying for
the proposed funding are the ones voting, the Committee may
wish to require the election to be held only within the
territory proposed for annexation.
c) LAFCO Requirements. Under this bill, Riverside LAFCO
would need to propose the boundaries of the expanded
district and identify a funding source. The Committee may
wish to remove these requirements on LAFCO, and instead,
require the resolution of application for the proposed
annexation to identify a source of funding and include the
proposed area for annexation consistent with the expanded
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boundaries identified by this bill. Riverside LAFCO may
include additional areas to the proposed territory for
annexation.
The Committee may also wish to ask the author to include in
the annexation process a LAFCO hearing to receive
objections or evidence regarding the resolution of
application. These changes would more closely align the
annexation process established by this bill with the
process under LAFCO law.
6)Policy Considerations. The Committee may wish to consider the
following:
a) Limiting LAFCO Powers. The Legislature has delegated
the power to control local boundaries to the 58 LAFCOs.
This bill places several requirements on LAFCO, but does
not allow for the usual annexation process to occur. This
Committee has seen an increasing number of bills seeking to
bypass the LAFCO process, therefore, the Committee may wish
to consider if prohibiting LAFCO from disapproving the
application is taking away one of the fundamental powers
the Legislature has tasked LAFCOs with.
The author may wish to consider allowing LAFCO to
disapprove the application based on findings by the LAFCO
that there is an insufficient source of funding, which
would be consistent with the author's goal of ensuring
adequate funding for the expanded District.
b) Healthcare Districts and LAFCO. The relationship
between LAFCOs and healthcare districts is unique in
comparison to other special districts. The Local Hospital
District Law (now called the Local Healthcare District Law)
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and the formation of some healthcare districts predate the
Knox Nisbet Act, which created LAFCOs and formalized the
process for establishing a hospital district. As a
consequence of the ambiguity in current law, the District
has experienced past issues with allegations of grant
recipients providing service outside of the boundaries of
the District and within the communities identified for
potential annexation by this bill. Due to the unique
nature of healthcare services and the long history of
healthcare district's principal act, the Committee may wish
to consider, beyond the scope of this individual bill, if
there is a need to more clearly define the relationship
between LAFCOs and healthcare districts, and undertake a
closer examination of healthcare district's service
boundaries.
c) Applicant. The Committee may wish to consider if
Riverside County is the best applicant to begin the
annexation process established by this bill. The District
may have a better sense of the services and funding
necessary to support the expanded District and may
therefore be the best applicant.
7)Arguments in Support. The Borrego Community Health Foundation
argues, "The [District] has a long history of acknowledged
success in serving [their] residents. [The District's]
leaders are acutely aware of and are sympathetic to health
disparities in the East Coachella Valley and have collaborated
with other agencies to provide services within the limitation
of their fiduciary obligations to the District's residents.
Expanding the current District will take away their limitation
to help end the healthcare disparities that currently exist."
8)Arguments in Opposition. Riverside LAFCO argues, "Annexation
of the eastern Coachella Valley communities has been a topic
of discussion at times over the past two decades, but has not
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been pursued, likely since no existing revenues would be
available to fund services to the expanded area. Annexation
under the normal process could have been initiated at any time
and still can be. In addition to the elimination of virtually
all LAFCO discretionary authority, the timeframes set out in
the bill are unrealistic and carry unfunded mandates for local
agencies."
9)Urgency Clause. This bill contains an urgency clause and
requires a two-thirds vote on the Assembly floor.
REGISTERED SUPPORT / OPPOSITION:
Support
Borrego Community Health Foundation
Clinicas De Salud Del Pueblo
Comite Civico del Valle
Inland Congregations United for Change
La Union Hace La Fuerza
Opposition
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California Association of Local Agency Formation Commissions
Riverside County Local Agency Formation Commission
Analysis Prepared by:Misa Lennox / L. GOV. / (916) 319-3958