BILL ANALYSIS
------------------------------------------------------------
|SENATE RULES COMMITTEE | AB 711|
|Office of Senate Floor Analyses | |
|1020 N Street, Suite 524 | |
|(916) 651-1520 Fax: (916) | |
|327-4478 | |
------------------------------------------------------------
THIRD READING
Bill No: AB 711
Author: Charles Calderon (D), et al
Amended: 4/21/10 in Senate
Vote: 27 - Urgency
PRIOR VOTES NOT RELEVANT
SENATE APPROPRIATIONS COMMITTEE : 7-2, 4/19/10
AYES: Kehoe, Alquist, Corbett, Leno, Price, Wolk, Yee
NOES: Cox, Wyland
NO VOTE RECORDED: Denham, Walters
SUBJECT : Local agency formation commissions: cost of
incorporation
proceedings
SOURCE : Author
DIGEST : This bill, provided funds are available and upon
approval and order of the Department of Finance,
appropriates an amount not to exceed $45,000 from the
California Main Street Program Fund to the Los Angeles
County Local Agency Formation Commission for a loan to the
East Los Angeles Residents Association, as specified.
ANALYSIS : Existing law, the Cortese-Knox-Hertzberg Local
Government Reorganization Act of 2000 (Act), establishes
procedures for local government changes of organization,
including city incorporations, annexations, and city and
special district consolidations. The local agency
CONTINUED
AB 711
Page
2
formation commission (LAFCO) in each county is responsible
for implementation of the Act and administers proceedings
related to incorporation applications. LAFCOs can require
an applicant to deposit any necessary fees or charges
associated with the costs of processing the application and
undertaking any LAFCO proceedings before any action is
taken and within the time period designated by LAFCO. For
incorporation proceedings that have been initiated by the
filing of sufficient voter signatures, LAFCO is authorized
to request a General Fund loan to cover the costs of
necessary proceedings when incorporation proponents certify
that they are unable to raise sufficient funds to reimburse
LAFCO for the proceedings, and the Legislature appropriates
funds for this purpose. Repayment of the loan is a
condition of approval of a successful incorporation, and
the city must repay the loan within two years of the
incorporation date. If the incorporation proposal is
denied by LAFCO or defeated at an election, the loan is
forgiven.
This bill, provided funds are available and upon approval
and order of the Department of Finance, appropriates up to
$45,000 from the California Main Street Program Fund to the
Los Angeles County LAFCO (LA LAFCO) for a loan to East Los
Angeles Residents Association (ELARA) to pay for the
comprehensive fiscal analysis required as part of
incorporation proceedings. Of the amounts that are
deposited in the Fund, priority shall be given to this
appropriation. Existing law specifies that this loan would
be repaid by the City of East Los Angeles within two years
of the date of a successful incorporation. If the
incorporation proposal is denied by LAFCO or defeated at an
election, however, the loan would be forgiven.
Comments
According to the Senate Appropriations Committee staff
analysis, the community of East Los Angeles is a part of
the unincorporated area in Los Angeles County. The ELARA
has submitted an application with sufficient local voter
signatures to the LA LAFCO to incorporate an area of 7.4
square miles and containing 140,000 residents. This bill
is intended to provide ELARA with some of the funding
necessary to pay for a comprehensive fiscal analysis that
CONTINUED
AB 711
Page
3
is required to demonstrate the city would receive
sufficient revenues to provide public services and
facilities during the three years following incorporation.
LA LAFCO has identified a consultant to perform the study
at a cost of $134,700, and ELARA indicates that it has
raised approximately $90,000 for purposes of the study. LA
LAFCO has established a deadline of April 29, 2010 for
ELARA to provide the full amount to fund the study.
The Senate Appropriations Committee analysis also notes
that apart from costs associated with the comprehensive
fiscal analysis, ELARA will be responsible for any
additional costs associated with the incorporation
proceedings. These could include any potential litigation
costs if any element of the proposal is challenged in
court, any costs associated with environmental
documentation associated with the proposal, any costs
associated with validating voter signatures on the
application, as well as any costs associated with bringing
the proposal to the voters in an election. Given the
inability of ELARA to raise the funds necessary to pay for
the comprehensive fiscal analysis over the past 16 months,
it is unclear whether the group will be able to provide
additional funding necessary to carry the proposal to an
election. This may jeopardize the ultimate success of the
incorporation and the repayment of the loan provided in
this bill. The Legislature has only appropriated funds
related to an incorporation application one other time; a
Budget Act appropriation provided a loan for incorporation
proceedings for the community of San Fernando Valley. That
loan was ultimately forgiven when the incorporation
proposal failed in a 2002 election.
Related Legislation
SB 1232 (Romero) extends the April 29 deadline by six
months for ELARA to provide necessary funds to LA LAFCO for
costs associated with the comprehensive fiscal analysis.
SB 1232 would also deem the signatures submitted with the
incorporation application to be valid through October 29,
2010, or longer if the petition continues.
FISCAL EFFECT : Appropriation: Yes Fiscal Com.: Yes
Local: No
CONTINUED
AB 711
Page
4
According to the Senate Appropriations Committee:
Fiscal Impact (in thousands)
Major Provisions 2009-10 2010-11
2011-12 Fund
Appropriation $45
Special*
* California Main Street Program Fund
AGB:mw 4/21/10 Senate Floor Analyses
SUPPORT/OPPOSITION: NONE RECEIVED
**** END ****
CONTINUED