BILL NUMBER: AB 853	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MAY 18, 2009
	AMENDED IN ASSEMBLY  MAY 5, 2009
	AMENDED IN ASSEMBLY  APRIL 14, 2009

INTRODUCED BY   Assembly Member Arambula

                        FEBRUARY 26, 2009

   An act to add Sections 56375.6 and 56375.7 to the Government Code,
relating to local government.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 853, as amended, Arambula. Local government: organization.
   The Cortese-Knox-Hertzberg Act of 2000 governs the organization
and reorganization of local governmental entities, including, among
other things, the annexation of island territories to a city or
county.
   This bill would provide procedures for annexing unincorporated
fringe communities  and unincorporated island communities  ,
as defined, to a city under specified circumstances, including
provisions for a revenue neutrality agreement between the affected
local government entities.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 56375.6 is added to the Government Code, to
read:
   56375.6.  (a) As used in this section,  the following terms
have the following meanings:   "unincorporated 

    (1)     "Unincorporated  fringe
community" means any inhabited  ,  unincorporated
 area   territory  that is within 
1.5 miles of a city or within or adjacent to  a city's
sphere of influence. 
   (2) "Unincorporated island community" means any inhabited
unincorporated territory that is surrounded or substantially
surrounded by one or more cities or by one or more cities and a
county boundary or the Pacific Ocean. 
   (b) The board of supervisors shall petition the commission in the
board's county to approve the annexation to a city of any island or
fringe community after notice and hearing if all of the following
conditions exist:
   (1) Twenty-five percent of the registered voters or landowners in
the unincorporated  territory   fringe community
or unincorporated island community  file a petition with the
board to initiate an annexation of that community to a municipality.
   (2) The territory contained in the annexation petition constitutes
an island or constitutes an unincorporated fringe community that
lacks wastewater, drinking water services, storm drainage, paved
streets, sidewalks, or streetlights, or there exists a serious
infrastructure-related health hazard.
   (3) The territory that is the subject of the annexation petition
constitutes a disadvantaged community, as defined by Section 79505.5
of the Water Code. Income evidence may be provided by a community
household survey.
   (c) Notwithstanding any other provision of law, within 180 days of
a petition being mailed pursuant to subdivision (b), a separate
property tax transfer agreement shall be agreed to between the
annexing city and the county pursuant to Section 99 of the Revenue
and Taxation Code. If an agreement is not made within 180 days, a
property tax transfer agreement shall be determined pursuant to
Section  36375.7  56375.7  . That agreement
shall not affect any existing master tax sharing agreement between
the city and county.
   (d) The commission shall approve, after notice and hearing, the
annexation, and as needed, the change of organization or
reorganization of a city, subject to subdivision (a) of Section
57080, unless the commission finds, based on the preponderance of
evidence, that the change in reorganization will not result in a net
benefit to the public health of the affected communities. The
financial impact of the annexation shall not be a factor in this
determination.
   (e) Subject to the commission's approval of an annexation under
this subdivision, no affected special district shall have the
authority to terminate the annexation.
   (f) Subject to the commission's approval of an annexation under
this subdivision, the city shall amend its general plan to ensure
 the  that the annexation conforms with the
municipality's general plan.
  SEC. 2.  Section 56375.7 is added to the Government Code, to read:
   56375.7.  (a) The commission shall determine a revenue neutrality
agreement, including the amount of property tax revenue to be
exchanged by the affected local agency pursuant to this section. The
commission shall notify the county auditor of the proposal and the
services that the annexing city will assume within the territory to
be annexed and identify for the auditor the existing service
providers within the area subject to the proposal.
   (b) If the proposal would not transfer all of an affected agency's
service responsibilities to the proposed city, the commission and
the county auditor shall do all of the following:
   (1) The county auditor shall determine the proportion that the
amount of property tax revenue derived by each affected local agency
pursuant to subdivision (b) of Section 93 of the Revenue and Taxation
Code bears to the total amount of revenue from all sources,
available for general purposes, received by each affected local
agency in the prior fiscal year. For purposes of making this
determination and the determination required by paragraph (3), "total
amount of revenue from all sources available for general purposes"
means the total amount of revenue which an affected local agency may
use on a discretionary basis for any purpose and does not include any
of the following:
   (A) Revenue which, by statute, is required to be used for a
specific purpose.
   (B) Revenue from fees, charges, or assessments which are levied to
specifically offset the cost of particular services and do not
exceed the cost reasonably borne in providing these services.
   (C) Revenue received from the federal government which is required
to be used for a specific purpose.
   (2) The commission shall determine, based on information submitted
by each affected local agency, an amount equal to the total net cost
to each affected local agency during the prior fiscal year of
providing those services that the annexing city will assume within
the area subject to the proposal, including the cost of connecting
residents to wastewater or drinking water services.
   For purposes of this paragraph, "total net cost" means the total
direct and indirect costs that were funded by general purpose
revenues of the affected local agency and excludes any portion of the
total cost that was funded by any revenues of that agency that are
specified in subparagraphs (A), (B), and (C) of paragraph (1).
   (3) The commission shall multiply the amount determined pursuant
to paragraph (2) for each affected local agency by the corresponding
proportion determined pursuant to paragraph (1) to derive the amount
of property tax revenue used to provide services by each affected
local agency during the prior fiscal year within the area subject to
the proposal. The county auditor shall adjust the amount described in
the previous sentence by the annual tax increment according to the
procedures set forth in Chapter 6 (commencing with Section 95) of
Part 0.5 of Division 1 of the Revenue and Taxation Code, to the
fiscal year in which the new city or district receives its initial
allocation of property taxes.
   (4) For purposes of this subdivision, in any county in which,
prior to the adoption of Article XIII A of the California
Constitution, and continuing thereafter, a separate fund or funds
were established consisting of revenues derived from the
unincorporated area of the county and from which fund or funds
services rendered in the unincorporated area have been paid, the
amount of property tax revenues derived pursuant to paragraph (3),
may, at the discretion of the commission, be transferred to the
annexing city over a period not to exceed 12 fiscal years following
the annexation. In determining whether the transfer of the amount of
property tax revenues determined pursuant to paragraph (3) shall
occur entirely within the fiscal year immediately following the
annexation or shall be phased in over a period not to exceed 12 full
fiscal years following the annexation, the commission shall consider
each of the following:
   (A) The total amount of revenue from all sources available to the
annexing city.
   (B) The fiscal impact of the proposed transfer on the transferring
agency.
   (C) Any other relevant facts which interested parties to the
exchange may present to the commission in written form.
   The decision of the commission shall be supported by written
findings setting forth the basis for its decision.
   (c) If the proposal would transfer all of an affected agency's
service responsibilities to the annexing city, the commission shall
request the auditor to determine the property tax revenue generated
for the affected service providers by tax rate area, or portion
thereof, and transmit that information to the commission.
   (d) The executive officer shall notify the auditor of the amount
determined pursuant to paragraph (3) of subdivision (b) or
subdivision (c), as the case may be, and, where applicable, the
period of time within which and the procedure by which the transfer
of property tax revenues will be effected pursuant to paragraph (4)
of subdivision (b), at the time the executive officer records a
certificate of completion pursuant to Section 57203 for any proposal
described in subdivision (a), and the auditor shall transfer that
amount to the new jurisdiction.
   (e) An action brought by a city or district to contest any
determinations of the county auditor or the commission with regard to
the amount of property tax revenue to be exchanged by the affected
local agency pursuant to this section shall be commenced within three
years of the effective date of the annexation.