BILL ANALYSIS Ó SENATE COMMITTEE ON GOVERNANCE AND FINANCE Senator Robert M. Hertzberg, Chair 2015 - 2016 Regular ------------------------------------------------------------------ |Bill No: |SB 1318 |Hearing |4/6/16 | | | |Date: | | |----------+---------------------------------+-----------+---------| |Author: |Wolk |Tax Levy: |No | |----------+---------------------------------+-----------+---------| |Version: |3/28/16 |Fiscal: |Yes | ------------------------------------------------------------------ ----------------------------------------------------------------- |Consultant|Favorini-Csorba | |: | | ----------------------------------------------------------------- Local government: drinking water infrastructure or services: wastewater infrastructure or services Prohibits a LAFCO from updating the sphere of influence of, or authorizing the extension of services by, a city or qualified special district if nearby disadvantaged unincorporated communities lack safe drinking water or adequate wastewater services. Background The Cortese-Knox-Hertzberg Act creates a local agency formation commission (LAFCO) in each county to control the boundaries of cities, county service areas, and most special districts. The courts repeatedly refer to LAFCOs as the Legislature's watchdog over boundary changes. To plan for the future boundaries and service areas of the cities and special districts, a LAFCO must adopt a policy document for each city and district called a sphere of influence. The LAFCOs' boundary decisions must be consistent with the spheres of influence of the affected cities or districts. Spheres must be updated at least every five years. In order to determine spheres of influence, LAFCOs must periodically conduct a "municipal service review" (MSR) to inform their decisions about spheres of influence. MSRs must analyze and make determinations about seven topics: SB 1318 (Wolk) 3/28/16 Page 2 of ? Growth and population projections; Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies, including the water, sewer, and fire protection needs of disadvantaged unincorporated communities; Agencies' financial abilities to provide services; Opportunities for sharing facilities; Accountability for community service needs; The location and characteristics of any disadvantaged unincorporated communities; and Other matters relating to effective or efficient services. Local governments can only exercise their powers and provide services where LAFCO allows them to: within their boundaries (which are set by LAFCO), within their spheres of influence but outside their boundaries (with authorization by LAFCO), and outside their spheres to address a major threat to public health if the extension is consistent with LAFCO's policies. In 2015, the Legislature approved AB 402 (Dodd), which established a pilot program in Napa County and San Bernardino County that allowed the extension of services outside a local agency's sphere of influence to support existing or planned uses, so long as (1) a MSR has identified a service deficiency, (2) the extension of service will not result in growth inducing impacts or harm to agricultural lands, and (3) a sphere of influence change is not feasible. LAFCOs, along with the planning agencies of cities and counties, are supposed to ensure that services are effectively and efficiently delivered to all communities throughout the state. Nevertheless, some communities continue to lack adequate public services, including safe drinking water and functioning wastewater systems. These communities are often poor and are located in the unincorporated area of a county. In some cases these "disadvantaged unincorporated communities" (DUCs) are SB 1318 (Wolk) 3/28/16 Page 3 of ? remote and far from other communities with better public services; in others, a city may share a border with a DUC that has been excluded from its boundaries. In recent years, the Legislature has taken several steps to try to address some of the service problems experienced by DUCs. SB 244 (Wolk, 2011) aimed to prevent cities from carving out DUCs by prohibiting annexations to a city of territory greater than 10 acres if a DUC is contiguous with the territory proposed for annexation, unless there is an application with the commission to annex the unincorporated area or if the residents of the affected territory oppose annexation. SB 244 also required LAFCOs to include in the MSR a description of the location and characteristics of any DUCs within or contiguous to the sphere of influence and to consider the water, sewer, or fire protection needs of DUCs within the sphere when considering updates. When conducting an MSR, LAFCOs can also assess options for governmental reorganizations or consolidations that improve the efficiency and affordability of service delivery and can review whether water systems in the area are in compliance with the Safe Drinking Water Act. Finally, SB 244 required cities and counties to review the water and fire service needs of DUCs in their general plans. SB 244 made it easier for LAFCOs to identify boundary changes and governmental reorganizations necessary to fix water service problems faced by DUCs. Subsequent legislation-SB 88 (Committee on Budget and Fiscal Review, 2015)-took this effort a step further by authorizing the State Water Resources Control Board (SWRCB) to order a consolidation of neighboring water systems where it is economically feasible in order to address public health threats. To date, SWRCB has begun the consolidation process with two water systems in communities that border the city of Tulare. Some advocates for disadvantaged unincorporated communities want to provide additional incentives for local governments to serve DUCs that lack safe drinking water or adequate wastewater service. Proposed Law Senate Bill 1318 restricts the cases where a LAFCO can update a SB 1318 (Wolk) 3/28/16 Page 4 of ? sphere of influence or authorize an extension of service. Specifically, the bill prohibits a LAFCO from updating the sphere of influence for a city or a special district, if the district has over 500 connections and provides either drinking water or wastewater services, until the city or special district has entered into an enforceable agreement to extend those services to all disadvantaged unincorporated communities within its sphere of influence or adjacent to its jurisdictional boundaries, if they lack safe drinking water or adequate wastewater services. The services must be extended to the disadvantaged communities within five years of the approval of the sphere of influence update, or sooner if feasible. However, LAFCO may authorize the service extension if the LAFCO finds, based on written evidence, that a majority of the residents of the relevant disadvantaged communities are opposed to receiving those services. If the LAFCO finds that the residents are opposed, those findings cannot interfere with the SWRCB's authority under SB 88 or other efforts to expand services. SB 1318 also prohibits a LAFCO from authorizing a city or a special district, regardless of size, to extend drinking water or wastewater services as provided in the Cortese-Knox-Hertzberg Act until the city or special district has entered into an enforceable agreement to extend those services to all disadvantaged communities-whether incorporated or unincorporated-within its sphere of influence or adjacent to its jurisdictional boundaries that lack safe drinking water or adequate wastewater services. The services must be extended to the disadvantaged communities within five years, or sooner if feasible. However, LAFCO may authorize the service extension if any of the following conditions apply: The LAFCO finds, based on written evidence, that a majority of the residents of the relevant disadvantaged communities are opposed to receiving those services. If the LAFCO finds that the residents are opposed, those findings cannot interfere with the SWRCB's authority under SB 88 or other efforts to expand services; The extension of services is authorized to respond to an existing or impending threat to the health or safety of the public; or The extension of services is to a disadvantaged SB 1318 (Wolk) 3/28/16 Page 5 of ? community. A similar prohibition and exceptions apply to extensions of services authorized under the pilot program in Napa County and San Bernardino County. SB 1318 further prohibits annexations of territory greater than 10 acres to city or a special district, if the district provides water or wastewater services to more than 500 connections, where there exists either (1) a DUC contiguous to the territory proposed for annexation, or (2) a DUC within the city or district's sphere of influence or adjacent to its boundaries that lacks safe drinking water or adequate wastewater services, with the same exceptions as provided elsewhere in the bill for prohibitions on extensions of services. It also prohibits LAFCOs from removing a disadvantaged community from the sphere of a city or special district unless it finds that the removal would improve service delivery to the community. SB 1318 places additional responsibilities on LAFCOs as they review and update spheres of influence. Specifically, the bill requires the periodic review of the spheres of influence of any city or special district that provides water, wastewater, or structural fire protection services to consider the need for those services of DUCs adjacent to its sphere. It also makes mandatory several currently optional LAFCO processes and studies, including to: Review government reorganizations for potential improvements to service delivery; Recommend reorganization where feasible; Review alternatives for improving the efficiency and affordability of service delivery within or contiguous with the sphere being reviewed if there is a DUC that lacks adequate drinking water and waste water services; and Review water systems in the area for compliance with the Safe Drinking Water Act, if the information is available. SB 1318 (Wolk) 3/28/16 Page 6 of ? State Revenue Impact No estimate. Comments 1. Purpose of the bill. Many communities in California continue to suffer from third-world level drinking water and wastewater services. In many cases, these communities' border cities or special districts with more than enough capacity to serve them, but their boundaries have been drawn to specifically exclude them. Despite recent legislative efforts, some cities continue to look to serve new development outside of their current boundaries before helping neighboring communities. While SB 244 helped highlight the disparity in services for DUCs, stronger measures are needed to ensure that LAFCOs and local governments faithfully carry out their responsibilities. SB 1318 is simply the next step. It incentivizes cities and special districts that want to serve new development to help meet the needs of existing communities with drinking water and wastewater problems, and codifies best practices that conscientious LAFCOs already follow. SB 1318 won't solve all of the problems of DUCs, but it provides an important tool to get the state closer to its goal of ensuring that all Californians have access to safe, affordable drinking water. 2. An offer they can't refuse . A viable development needs certain services, including drinking water and wastewater, but a local government can only provide those services where LAFCO lets them. By restricting the ability of LAFCO to approve service extensions or sphere of influence updates, SB 1318 essentially conditions new development on the provision of services to other unrelated communities, regardless of whether there is any causal link or nexus between a proposed sphere change or extension of services and the DUC that lacks drinking water or wastewater. Courts have found that there may be an unconstitutional taking when government requires development fees or exactions that don't bear a reasonable relationship to the conditions created by the new development. In addition, anti-development forces may abuse the provisions of SB 1318 to stop new housing or other facilities that they don't like. Instead of providing third parties with leverage to try to force cities and special districts to serve DUCs, it may be more SB 1318 (Wolk) 3/28/16 Page 7 of ? appropriate to directly require cities and counties, through the general planning process, to ensure that these communities have access to sustainable services. 3. Different strokes . California is a diverse state, with many unique communities and considerations. Many of the communities that lack safe drinking water are located in rural areas of sparsely populated counties. But the bill would apply statewide. There may be unintended consequences-such as a freezing of spheres of influence and jurisdictional boundaries-in densely populated urban counties such as Los Angeles or the San Francisco Bay Area where DUCs are surrounded by multiple cities and special districts. The very purpose of LAFCOs is to take into account local conditions in determining what services are provided where. The Committee may wish to consider amending SB 1318 to apply only to parts of the state where DUCs with water or wastewater inadequacies are known and there are technically and economically feasible consolidations that have been blocked for more parochial reasons. 4. Burden on LAFCOs . SB 1318 imposes a number of burdens on LAFCOs that they may not have the resources to pursue, including potential elections or polling to perform sphere updates, mandatory studies of territory outside of an agency's sphere, and mandatory assessments of alternatives for communities that lack adequate drinking water or wastewater. Cities, counties, and special districts fund LAFCO operations, but many of those agencies are still recovering from the recession. Is now the right time to impose additional financial responsibilities on local agencies that are just getting to their feet? 5. Mandate . The California Constitution generally requires the state to reimburse local agencies for their costs when the state imposes new programs or additional duties on them. According to the Legislative Counsel's Office, SB 1318 creates a new state-mandated local program. SB 1318 provides that if the Commission on State Mandates determines that the bill contains state-mandated costs, reimbursement to local agencies must be made according to an existing process in state law. 6. Double-referred . The Senate Rules Committee has ordered a double-referral of SB 1318-first to the Senate Governance & Finance Committee, which has jurisdiction over bills relating to LAFCOs and local government services, and then to the Senate SB 1318 (Wolk) 3/28/16 Page 8 of ? Environmental Quality Committee, which has jurisdiction over bills relating to drinking water and wastewater. 7. Let's be clear . The Committee may wish to consider two clarifying amendments that correct errors to further the intent of the bill: Standardize references to "disadvantaged unincorporated communities" throughout the bill. Some provisions of the bill refer instead to disadvantaged communities, which could include incorporated areas that are already within the sphere of a city or special district. Ensure that 56133(h) does not prevent cities which do not provide water or wastewater services from updating their spheres of influence. Some cities receive services by contract, and thus could be prevented from changing their spheres even though they are not able to remedy nearby water problems. Similarly, one reference to "district" in the same section is missing the modifier "qualifying," which is necessary to restrict the bill's applicability to districts that provide water or wastewater services. Support and Opposition (3/31/2016) Support : Leadership Counsel for Justice and Accountability (co-sponsor); California Food Policy Advocates; California League of Conservation Voters; California Rural Legal Assistance Foundation; Central California Asthma Collaborative; Clean Water Action; Community Water Center; Environmental Justice Coalition; Environmental Working Group; Natural Resources Defense Council; Policy Link; Pueblo Unido Community Development Coalition; Rural Communities Assistance Foundation; San Joaquin Valley Sustainable Agriculture Collaborative; Sequoia Riverlands Trust; Sierra Club California. Opposition : California Apartment Association; California Association of Local Agency Formation Commissions; California Association of Realtors; California Building Industries Association; California Business Properties Association; SB 1318 (Wolk) 3/28/16 Page 9 of ? California Chamber of Commerce; California Manufacturers and Technology Association; California Municipal Utilities Association; California Special Districts Association; Contra Costa LAFCO; El Dorado LAFCO; League of California Cities; Nevada County LAFCO; Riverside LAFCO; San Bernardino County LAFCO; San Diego LAFCO; San Luis Obispo LAFCO; San Mateo LAFCO; Sonoma LAFCO. -- END --