BILL ANALYSIS                                                                                                                                                                                                    Ó






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          |SENATE RULES COMMITTEE            |                       AB 2414|
          |Office of Senate Floor Analyses   |                              |
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                                   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.  










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          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.  









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           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  







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             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  







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          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.  








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          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)  







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          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  







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            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,  







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            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


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