BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Gloria Negrete McLeod, Chair
BILL NO: SB 819 HEARING: 5/9/07
AUTHOR: Hollingsworth FISCAL: No
VERSION: 5/2/07 CONSULTANT: Detwiler
SPECIAL DISTRICTS' CONSOLIDATIONS
Background and Existing Law
The Cortese-Knox-Hertzberg Act controls how local officials
change the boundaries of cities and special districts,
putting local agency formation commissions (LAFCOs) in
charge of the proceedings. Besides annexations and
detachments of territory, other boundary changes affect
special districts:
Formation: the creation of a new special district.
Dissolution: the elimination of an existing special
district.
Merger: the district dissolves and a city takes
over its duties.
Subsidiary district: the district continues, but
it's governed by a city council.
Consolidation: two districts combine into a single
district.
Reorganization: two or more boundary changes go
into a single proposal.
Most boundary changes begin when a city or special district
applies to LAFCO, or when registered voters or landowners
file petitions with LAFCO. In limited circumstances, a
LAFCO can initiate some special district boundary changes:
consolidations, dissolutions, mergers, subsidiary
districts, or reorganizations (AB 1335, Gotch, 1993).
LAFCOs cannot initiate the annexation of territory to
special districts nor can they initiate the formation of
new special districts.
Until 2005, a LAFCO could approve the consolidation of
special districts only when the districts relied on the
same principal act. For example, a LAFCO could consolidate
two fire protection districts into a single fire protection
district, but it couldn't consolidate a fire protection
district with a municipal water district because they
operated under different state laws. Practitioners
convinced legislators to delete the requirement that
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special districts must have the same principal act to be
eligible for consolidation (AB 2067, Harman, 2004).
Under the legislation that will expire on July 1, 2008, a
petition filed with a LAFCO that proposes to consolidate
two special districts not formed under the same principal
act must either designate which district will be the
successor and identify its principal act, or state that the
proposal requires the formation of a new district and
includes a plan for services.
Also until July 1, 2008, if reorganization includes the
consolidation of two special districts not formed under the
same principal act, the bill allows a LAFCO to approve the
proposal only if two conditions are met:
The LAFCO must be able to designate one or more
successors or form one or more new districts that have
the powers of the consolidated districts.
The LAFCO must determine that the consolidation's
public service costs are likely to be less than or
substantially similar to the alternatives, and that
the boundary change promotes public access and
accountability.
Until 2008, if a LAFCO initiates a reorganization that
includes the consolidation of two special districts not
formed under the same principal act, LAFCO can approve the
reorganization only if the LAFCO has either prepared a
study of governmental agencies, or conducted a municipal
service review that includes nine written determinations.
In addition, the LAFCO must meet three conditions:
All of the services provided by the districts
before the consolidation will be provided after the
consolidation by one or more successors or by a new
district that has the power to provide those services.
The successor must be currently providing the same
service. The LAFCO cannot designate a city as the
successor unless the city covers 70% or more of one of
the districts or the combined districts and 70% or
more of the district or districts' registered voters
reside in the city.
The consolidation's public service costs are likely
to be less than or substantially similar to the
alternatives.
The consolidation promotes public access and
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accountability.
Also until 2008, if a LAFCO intends to approve the
consolidation of two special districts not formed under the
same principal act, the LAFCO must determine whether any of
the districts' current services could be discontinued
because the successor lacks the statutory authority to
provide those services. In that case, the LAFCO must
consider forming a new special district.
Skeptical that the 2004 Harman bill would result in many
district consolidations, the Senate Local Government
Committee asked for a sunset clause, terminating these
provisions on July 1, 2008. However, six LAFCOs report
using the statute. The Lake County LAFCO, for example,
consolidated two fire protection districts, a community
services district, and a recreation and park district into
a single fire protection district. Four LAFCOs say that
they have 20 more district consolidations in process.
Twenty LAFCOs think that another 66 consolidations have
potential. Local officials want these provisions to be
permanent. LAFCOs also say that it would help consolidate
districts if they could initiate the formation of new
districts to replace the ones they're consolidating.
Proposed Law
Senate Bill 819 makes permanent the statutory provisions
that allow local agency formation commissions (LAFCOs) to
consolidate and reorganize special districts that were not
formed under the same principal act. SB 819 also allows
LAFCOs to initiate the formation of new special districts.
Comments
1. Performance speaks for itself . Government efficiency
experts have grumbled for decades that California has too
many special districts. Critics said that LAFCOs, as the
Legislature's watchdogs over local boundaries, needed to do
a better job of weeding out districts that have outlived
their usefulness. Legislators decided to experiment by
passing the 2004 Harman bill that let local officials
consolidate different types of special districts. Despite
previous skepticism, the experiment worked and holds
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promise for eliminating redundant and inefficient
districts. SB 819 makes that experiment permanent and
enhances LAFCOs' initiation powers. Legislators should
expect to see even better performance from their watchdogs.
2. Not so fast ! Are the early results from the two-year
experiment really a convincing data set? LAFCOs approved
six consolidations of dissimilar districts in 2005 and
2006, just a small fraction of the 3,400 special districts.
Before making the experimental law permanent, legislators
may want LAFCOs to establish a more reliable long-term
record. The Committee may wish to consider extending the
sunset clause for another four years, until July 1, 2012.
3. Was Tip right ? Proposing the elimination of special
districts can trigger strong political reactions from
established institutions that resist change. When the San
Bernardino Valley Municipal Water District applied to the
San Bernardino LAFCO for approval to consolidate with the
San Bernardino Valley Water Conservation District, there
was resistance and litigation. The Water Conservation
District's lawsuit to block the proposed consolidation has
not yet gone to trial. The San Bernardino litigation
appears to be the only lawsuit related to the consolidation
of dissimilar districts. Maybe former House Speaker Tip
O'Neill was right when he said all politics is local.
Support and Opposition (5/3/07)
Support : California Association of Local Agency Formation
Commissions, California Special Districts Association,
Irvine Ranch Water District, San Bernardino County LAFCO,
San Bernardino Valley Municipal Water District, San Diego
County LAFCO.
Opposition : Unknown.