BILL ANALYSIS Ó ----------------------------------------------------------------- |SENATE RULES COMMITTEE | AB 2414| |Office of Senate Floor Analyses | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ----------------------------------------------------------------- THIRD READING Bill No: AB 2414 Author: Eduardo Garcia (D) Amended: 8/16/16 in Senate Vote: 21 SENATE GOVERNANCE & FIN. COMMITTEE: 4-1, 6/22/16 AYES: Hertzberg, Beall, Hernandez, Pavley NOES: Nguyen NO VOTE RECORDED: Lara, Moorlach SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16 AYES: Lara, Beall, Hill, McGuire, Mendoza NOES: Bates, Nielsen ASSEMBLY FLOOR: 50-25, 5/12/16 - See last page for vote SUBJECT: Desert Healthcare District SOURCE: Author DIGEST: This bill establishes an annexation process to expand the Desert Healthcare Districts boundaries that is exempt from some statutes that generally govern district annexations. ANALYSIS: Existing law, pursuant to the Cortese-Knox-Hertzberg Local Government Reorganization Act (Act), generally controls how local officials change the boundaries of cities and special districts, putting local agency formation commissions (LAFCOs) in charge of the proceedings. AB 2414 Page 2 This bill: 1) Establishes an annexation process for the Desert Healthcare District (District) to include the East Coachella Valley region, and provides a new governance structure for the District's Board of Directors, 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 January 5, 2017, to file a resolution of application with Riverside LAFCO, to initiate proceedings by Riverside LAFCO for the expansion of the District to include the East Coachella Valley region. The District must pay any fees associated with the resolution of application. 3) Requires the Riverside LAFCO proceeding to be deemed initiated on the date the resolution of application is accepted for filing. Riverside LAFCO must hold a hearing and provide specified notice. 4) Requires the expanded District to include all communities currently served by the District as of the date the resolution of application is filed and 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. 5) Requires Riverside LAFCO to complete the proceeding and direct the election no later than 150 days following receipt of the completed resolution of application. 6) Prohibits the resolution of application, filed by the Board of Supervisors, from being subject to any protest proceedings and prohibits Riverside LAFCO from disapproving the resolution of application. AB 2414 Page 3 7) Requires Riverside LAFCO to order the expansion of the District subject to a vote of the registered voters residing within the territory to be annexed to the District at an election following the completion of their proceedings. Riverside LAFCO may condition the annexation on the District's imposition of sufficient revenues to provide services within the territory to be annexed, including, but not limited to, the concurrent approval of special taxes or benefit assessments that will generate those sufficient revenues. 8) Requires Riverside LAFCO to direct the Board of Supervisors to direct county officials to conduct the election, as specified, for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election. The District must pay the county for the actual costs of conducting the election. 9) Requires the District to be expanded in accordance with this bill, if the following occur: a) A majority of the voters within the territory proposed to be annexed to the 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. 10)Requires the District's Board, 30 days after the expansion of the District, 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. The Board's resolution must be effective on the date of, and subject to any conditions specified in the resolution. 11)Requires the Board to appoint two additional Board members that are registered voters and residents of the territory AB 2414 Page 4 annexed pursuant to this bill. 12)Specifies the manner in which the new Board members' term must be staggered and requires a vacancy to be filled pursuant to existing law which provides an appointment process for the Board. 13)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. 14)Exempts the expansion of the District from the Act, except as specified in this bill. 15)Provides that the Act applies to any other change of organization or reorganization, following the reorganization of the District pursuant to this bill. Background The Act controls how local officials change the boundaries of cities and special districts, putting LAFCOs in charge of the proceedings. LAFCOs' boundary decisions must be consistent with spheres of influence that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their spheres of influence, they must prepare municipal service reviews which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments. Most boundary changes begin when a city or special district applies to LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCO can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations (AB 1335, Gotch, Chapter 1307, Statutes of 1993). Boundary AB 2414 Page 5 changes, including annexations, require four (sometimes five) steps: First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, and a property tax exchange agreement between the county and the District. Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed annexation. LAFCO may impose terms and conditions relating to revenues and other considerations. If LAFCO disapproves, the proposed annexation stops. Third, LAFCO must hold another public hearing to measure protests. Fourth, if there was sufficient protest, an election must occur. A successful annexation requires majority-voter approval. Finally, LAFCO's staff files formal documents to complete the annexation. 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, including the Las Palmas Medical Plaza, while Tenet runs the operations of the 387-bed acute care hospital. AB 2414 Page 6 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. Some public officials want to expand the District's boundaries to provide services in communities within the Eastern Coachella Valley that lack adequate access to health care. Comments Purpose of the bill. This bill responds to significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services. 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 these 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. Expanding the District will help to address the persistent needs in these underserved communities. Precedent. This bill is one of several bills that the Legislature has considered in recent years that limit the discretion and authority that state law generally grant to LAFCOs over boundary changes and reorganizations. For example, AB 1232 (Huffman, Chapter 518, Statutes of 2009) allowed for the consolidation of the Sewerage Agency of Southern Marin and its member districts, after notice and hearing, but without protest hearings, AB 2453 (Achadjian, Chapter 350, Statutes of 2014) AB 2414 Page 7 established a special process for forming the Paso Robles Water District, and AB 3 (Williams, Chapter 548, Statutes of 2015) created a special process for forming the Isla Vista Community Services District. Continuing to enact special legislation circumventing the LAFCO process for individual local government boundary changes and reorganizations may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because this bill imposes additional duties on Riverside County officials, Legislative Counsel says that it imposes a new state mandate. This bill requires the state to reimburse local agencies if the Commission on State Mandates (Commission) determines that this bill imposes a reimbursable mandate. Special legislation. The California Constitution prohibits special legislation when a general law can apply (Article IV, §16). This bill contains findings and declarations explaining the need for legislation that applies only to the District. FISCAL EFFECT: Appropriation: No Fiscal Com.:YesLocal: Yes According to the Senate Appropriations Committee: Unknown reimbursable one-time costs, likely over $50,000, for the District to reimburse Riverside County for costs to prepare an application for the expansion of the District and to conduct the specified election (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the County files a successful reimbursement claim. Unknown, likely minor reimbursable ongoing costs related to AB 2414 Page 8 the mandatory addition of two District Board members, should the election on the District expansion be approved by the voters (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the District files a successful reimbursement claim. SUPPORT: (Verified8/11/16) Borrego Community Health Foundation Clinicas De Salud Del Pueblo Comite Civico del Valle Inland Congregations United for Change La Union Hace La Fuerza OPPOSITION: (Verified8/11/16) California Association of Local Agency Formation Commissions County of Riverside Riverside County Local Agency Formation Commission ARGUMENTS IN SUPPORT: Supporters argue that this bill, by facilitating the expansion of the District's boundaries, will reduce significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services. ARGUMENTS IN OPPOSITION: Opponents argue that this bill circumvents the LAFCO process for individual local government boundary changes and reorganizations, which may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues. ASSEMBLY FLOOR: 50-25, 5/12/16 AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Levine, Lopez, Low, McCarty, Medina, Mullin, AB 2414 Page 9 Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron NO VOTE RECORDED: Burke, Chang, Jones-Sawyer, Mayes, Wilk Prepared by:Brian Weinberger / GOV. & F. / (916) 651-4119 8/16/16 18:01:52 **** END ****