BILL ANALYSIS
SENATE LOCAL GOVERNMENT COMMITTEE
Senator Dave Cox, Chair
BILL NO: AB 2795 HEARING: 6/9/10
AUTHOR: Local Government Committee FISCAL: No
VERSION: 5/27/10 CONSULTANT: Detwiler
LOCAL AGENCY FORMATION COMMISSIONS
Background and Existing Law
The Cortese-Knox-Hertzberg Local Government Reorganization
Act delegates the Legislature's power to control the
boundaries of cities and special districts to local agency
formation commissions (LAFCOs). The courts call LAFCOs the
Legislature's watchdog over local boundary changes.
As practitioners find problems with the
Cortese-Knox-Hertzberg Act, they ask for statutory
improvements. The Assembly Local Government Committee
responds by authoring clean-up bills. Last year's LAFCO
clean-up bill was AB 1582 (Assembly Local Government
Committee, 2009).
Proposed Law
Assembly Bill 2795 makes nine changes to the state laws
affecting local agency formation commissions (LAFCOs) and
local governments' boundaries.
I. Districts' services . A special district must get the
LAFCO's approval before it can provide new services or
divest itself of the power to provide services. In
creating the detailed procedures for adding and divesting
services (AB 2484, Caballero, 2008), the Legislature did
not define those terms. Assembly Bill 2795 defines
"divestiture of power" as the termination of a district's
authority to provide services. [See 1 of the bill.]
II. Selection of special district members . Half of the 58
LAFCOs have used current law to seat representatives of
independent special districts as commissioners. An
"independent special districts selection committee,"
composed of the presiding officers of the independent
special districts in that county, appoints two regular
members and one alternate member to the LAFCO. The LAFCO's
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executive officer calls for the selection committee to meet
when there's a vacancy, or if districts with at least 10%
of the countywide taxable property request a meeting. Some
executive officers say that waiting until a vacancy occurs
deprives special districts of representation. They want to
call meetings when it's clear that a vacancy is about to
occur. Assembly Bill 2795 allows a LAFCO executive officer
to call a meeting of the independent special district
selection committee when the executive officer anticipates
that a vacancy for a special district seat on the LAFCO
will occur within 90 days. [3]
III. Selection procedures . Half of the 58 LAFCOs have
used current law to seat representatives of independent
special districts as commissioners. An "independent
special districts selection committee," composed of the
presiding officers of the independent special districts in
that county, appoints two regular members and one alternate
member to the LAFCO. The LAFCO's executive officer
conducts the selection committee's meetings. Some
executive officers say that running a meeting to select the
commissioners who will then be their bosses may compromise
the perception of their independence. They want to
delegate the conduct of these meetings to others. For the
special district selection process, Assembly Bill 2795
defines "executive officer" to include a designee
authorized by the LAFCO. [3]
IV. LAFCO initiation of district proposals . The
Cortese-Knox-Hertzberg Act provides three ways to start
boundary change proposals: (1) by petition of the affected
voters or landowners, (2) by resolution of an affected
local agency, or (3) in the case of special district
boundary changes, by the LAFCO itself. The Act is silent
on the form of the LAFCO's action. To initiate a special
district boundary change, Assembly Bill 2795 requires the
LAFCO to adopt a resolution. [4]
V. LAFCO budgets . Local agencies pay for the LAFCOs'
annual budgets. Where a LAFCO has only county and city
representatives, the county government and the cities split
the cost. Where independent special districts have
representation, the county government, the cities, and the
districts each pay a third of the LAFCO's budget. State
law allocates the districts' share among the independent
districts in proportion to their total revenues. To
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compute the share for most districts, local officials rely
on the most recent edition of the State Controller's
"Special Districts Annual Report." They must discount a
district's total revenues by the amount of category aid
from other governmental agencies. Some executive officers
note that the State Controller's annual report uses a more
modern term for that type of revenue. Assembly Bill 2795
substitutes the term "intergovernmental revenue" in the
computation of special districts' shares of the LAFCOs'
budgets. [5]
VI. Boundary change elections . The Cortese-Knox-Hertzberg
Act requires voter approval of certain boundary change
proposals. When a LAFCO orders an election, the affected
county board of supervisors or city council conducts the
election. Some executive officers note that the statute
still implies that the LAFCOs call and conduct these
elections. Assembly Bill 2795 clarifies that when a
boundary change election is needed, the board of
supervisors or city council calls and conducts the
elections. [6, 7, & 8]
VII. New city councils . The Cortese-Knox-Hertzberg Act
spells out the terms of office for the first five city
council members of newly incorporated cities. For new city
councils elected at large, the three council members who
received the lowest number of votes hold office until the
first general municipal election after incorporation. The
other two members hold office until the second general
municipal election. After those elections, city council
members serve staggered four-year terms. Assembly Bill
2795 increases, from two to three, the number of new city
council members who hold office until the second general
municipal election after incorporation. Assembly Bill 2795
reduces, from three to two, the number of council members
who hold office until the first general municipal election.
[9 & 10]
VIII. Property tax revenue negotiations . Before a LAFCO
executive officer can accept a proposed boundary change,
local officials must negotiate a transfer of property tax
revenues. State law provides an elaborate process for
local officials to follow, including gathering information
from county officials and conducting negotiations that can
last for up to 60 days. Because these negotiations can be
contentious, some local officials want more time to talk.
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Assembly Bill 2795 allows a 90-day negotiation period if
any of the involved local agencies notifies the other local
agencies, the county auditor, and the LAFCO in writing.
[11]
IX. Property tax revenue changes . Before a LAFCO
executive officer can accept a proposed boundary change,
local officials must negotiate a transfer of property tax
revenues. If the LAFCO later modifies the boundary change,
state law allows an affected local agency to have 15 days
to renegotiate the property tax revenue transfer. Some
executive officers say that 15 days isn't long enough for
local officials to renegotiate. Assembly Bill 2795
extends, from 15 days to 30 days, the amount of time that
local officials can renegotiate a property tax transfer
agreement if the LAFCO modifies the proposed boundary
change.
X. Technical amendments . In addition to its substantive
changes to the Cortese-Knox-Hertzberg Act, Assembly Bill
2795 makes formatting amendments. [2]
Comment
Avoiding costs and controversies . Even the best written
statutes contain minor flaws. When statutory problems
appear in the state law affecting LAFCOs, the Assembly
Local Government Committee avoids legislative costs by
combining several changes to the state laws into a single,
consensus bill. By carefully reviewing each item with the
affected parties, the Committee also avoids controversy.
The changes made by AB 2795 don't raise statewide policy
questions. Further, the bill's changes to the terms of
council members in new cities are within AB 1668 (Knight)
which the Committee approved in May. AB 2795 makes a
complex statute easier for property owners, residents, and
local officials to use.
AB 2795 -- 5/27/10 -- Page 5
Assembly Actions
Assembly Local Government Committee: 9-0
Assembly Floor: 74-0
Support and Opposition (6/3/10)
Support : California Association of Local Agency Formation
Commissions, California Special Districts Association.
Opposition : Unknown.