BILL ANALYSIS
AB 711
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Date of Hearing: April 29, 2010
ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT
Cameron Smyth, Chair
AB 711 (Charles Calderon) - As Amended: April 22, 2010
SUBJECT : Local agency formation commissions: cost of
incorporation proceedings.
SUMMARY : Loans $45,000 from the Environmental Enhancement and
Mitigation Program (EEMP) Fund to the Los Angeles County Local
Agency Formation Commission (LA LAFCO) to cover costs related to
incorporation proceedings by the East Los Angeles Residents
Association (ELARA), and provides for other specified
conditions. Specifically, this bill :
1)Transfers $45,000 from the EEMP Fund to the state's General
Fund (GF).
2)Appropriates $45,000 from the GF to the State Controller for
allocation to LA LAFCO for a loan to ELARA.
3)Provides that the loan shall be made pursuant to existing law
which allows incorporation proponents to request a loan from
the state's GF.
4)Finds and declares that this is a special law because of the
unique circumstances of LA LAFCO and ELARA.
5)Provides that this act is an urgency statute and shall go into
effect immediately, in order for LA LAFCO to grant a loan to
ELARA to complete incorporation proceedings and to meet a
contractual deadline to pay for and start an economic impact
study.
The Senate amendments delete the Assembly version of this bill,
and instead, provide for a loan to ELARA for incorporation
proceedings related to the East Los Angeles incorporation.
EXISTING LAW :
1)Establishes procedures for local government changes of
organization, including city incorporations, annexations, and
city and special district consolidations.
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2)Authorizes a LAFCO to establish a schedule of fees and costs
for proceedings taken pursuant to that act, including
incorporation proceedings.
3)Authorizes a LAFCO to request a loan from the GF to cover the
expenses of incorporation proceedings under specified
circumstances.
4)Provides that repayment of the loan shall be made as a
condition of approval of the incorporations, if successful,
and shall become an obligation of the newly formed city.
5)Provides that repayment shall be made within two years of the
effective date of the incorporation.
6)Provides that if the proposal is denied by the commission or
defeated at an election, the loan shall be forgiven.
AS PASSED BY THE ASSEMBLY , this bill required a qualified
purchaser, as defined, to register with the Board of
Equalization and report and pay, by April 15, the use tax owed
for the previous calendar year.
FISCAL EFFECT : According to the Senate Appropriations
Committee, the fiscal impact is $45,000 in fiscal year 2009-10.
If the incorporation efforts are successful, the loan would be
repaid within two years of the incorporation date. However, if
the incorporation effort fails, the loan would be forgiven.
COMMENTS : This bill provides a loan of $45,000 to fund the
comprehensive fiscal analysis that is required to be completed
in the East Los Angeles incorporation efforts. ELARA, the
incorporation proponents, have raised $90,000 toward the study,
but need help to meet the total cost of approximately $135,000
for the cost of the consultant who will complete the fiscal
analysis.
Existing law allows a LAFCO, for incorporation proceedings that
have been initiated by the filing of sufficient voter
signatures, 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 the LAFCO
for the proceedings. Existing law states that the Legislature
may appropriate funds for this purpose, and provides that
repayment of the loan is a condition of approval of a successful
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incorporation, to be paid back within two years of the
incorporation date. If the incorporation proposal is denied by
LAFCO or defeated by voters at an election, existing law
provides that the loan be forgiven.
ELARA has submitted an application with sufficient local voter
signatures to LA LAFCO to incorporate an area of 7.4 square
miles which contains 140,000 residents. LA LAFCO has
established an April 29, 2010, deadline for ELARA to provide the
full amount to fund the study. This bill contains an urgency
clause and would take effect immediately.
EEMP [AB 471 (Katz and Willie Brown), Chapter 106, Statutes of
1989] was created as a depository for annual allocations made by
the Legislature for the purpose of providing grants to undertake
environmental enhancement and mitigation projects. Grants are
provided to local, state, and federal agencies and non-profit
entities to undertake environmental enhancement and mitigation
projects which are directly or indirectly related to the
environmental impact of modifying existing transportation
facilities or for the design, construction, or expansion of new
transportation facilities.
Support Arguments : Existing law allows a LAFCO to request a
loan from the GF to cover the expenses of incorporation
proceedings under specified conditions. AB 711 uses provisions
that are in existing law to help a community undertake the
necessary fiscal analysis to determine whether cityhood is
financially viable. Supporters argue that incorporation of East
Las Angeles will not only help this thriving community secure
and manage their local resources, but also achieve greater
social and economic empowerment.
Opposition Arguments : The Legislature has only provided
financial assistance related to incorporations in one other
instance - the incorporation application for the community of
San Fernando Valley. That loan was forgiven when the
incorporation proposal failed in the 2002 election. The
Legislature may wish to consider whether it is appropriate to
continue the precedent of giving loans for incorporation
efforts, especially given the inability of ELARA to raise the
necessary funds to pay for the comprehensive fiscal analysis.
The Legislature may wish to also consider whether ELARA will be
able to provide the additional funding necessary to carry the
proposal to an election, which will ultimately determine whether
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the loan is paid back or forgiven.
REGISTERED SUPPORT / OPPOSITION :
Support
Central Basin Municipal Water District
East Los Angeles Residents Association (ELARA)
Opposition
None on file
Analysis Prepared by : Debbie Michel / L. GOV. / (916)
319-3958