BILL ANALYSIS Ó
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|SENATE RULES COMMITTEE | AB 781|
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THIRD READING
Bill No: AB 781
Author: John A. Pérez (D)
Amended: 8/29/11 in Senate
Vote: 21
SENATE GOVERNANCE & FINANCE COMMITTEE : 5-3, 7/6/11
AYES: Wolk, DeSaulnier, Hancock, Hernandez, Kehoe
NOES: Huff, Fuller, La Malfa
NO VOTE RECORDED: Liu
SENATE APPROPRIATIONS COMMITTEE : 6-3, 8/25/11
AYES: Kehoe, Alquist, Lieu, Pavley, Price, Steinberg
NOES: Walters, Emmerson, Runner
ASSEMBLY FLOOR : 78-0, 5/19/11 (Consent) - See last page
for vote
SUBJECT : Local government: counties: unincorporated
areas
SOURCE : Author
DIGEST : This bill enacts a successor governance
structure for a city that is disincorporated pursuant to
pending legislation. The bill establishes a Community
Services District to provide continuation of specified
services, transfer certain powers and duties to the county,
and require the local agency formation commission to
oversee the terms and conditions of the disincorporation.
This bill also allows the board of supervisors of a county
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in which city that is to be disincorporated within 90 days
following a majority vote of the board, vote by resolution
to continue the city in existence if specified conditions
are met. The bill does not become operative unless AB 46
(John A. Perez) takes effect.
ANALYSIS : The Cortese-Knox-Hertzberg Act controls how
local officials change the boundaries of cities and special
districts, and designates a local agency formation
commission (LAFCO) in each county to oversee boundary
changes. Besides the more common annexations to cities
and special districts, LAFCOs also control district
formations, consolidations, and dissolutions, as well as
city incorporations, consolidations, and disincorporations.
Existing law authorizes a county to create a municipal
advisory committee to advise the board of supervisors and
an area planning commission to carry out the county's land
use planning and development in a designated area.
The Community Services District Law generally authorizes
the establishment of Community Services Districts (CSDs) to
provide over 30 types of public services and facilities,
and provides special statutes for the delivery of
additional services. CSDs are often established to provide
services in an unincorporated area as an alternative to
incorporation or as a transition into cityhood. Existing
law provides for the election of CSD directors, and
specifies requirements for open government, such as
adoption of annual budgets, setting up designated reserves,
following the Brown Act, holding regular meetings, and
following standard auditing rules. CSD laws also require
voter approval of special taxes and property owners'
approval of benefit assessments, as required by
Propositions 13, 62, and 218.
With just over 100 residents, the City of Vernon in Los
Angeles County has the smallest population of California's
481 cities, and only 62 registered voters. Vernon's city
government has attracted attention over allegations of
corruption, misspending, and mismanagement. City officials
have since acted to reduce the salaries of city council
members, appointed a housing committee to formulate a new
policy for managing the city-owned housing, and hired an
independent watchdog to recommend further measures.
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Critics contend that these measures are insufficient to
counteract the lack of democratic checks and balances that
are essential to open and fair governance.
AB 46 (J. Pérez), which is currently pending on the Senate
Floor, would disincorporate every city that had fewer than
150 residents on January 1, 2010. Vernon is the only city
that meets the bill's population criterion. AB 46 is
silent on how local officials will implement the intricate
details surrounding Vernon's disincorporation, but this
bill addresses a number of the governance issues that will
result from disincorporation.
Among other things, this bill:
1. Provides a procedure for the board of supervisors of a
county in which a city that is to be disincorporated
pursuant to AB 46 (John A. Perez) is located, within 90
days following the effective date of AB 46, by majority
vote of the board, vote by resolution to continue the
existence of that city if (a) the state auditor has an
audit of that city, and (b) upon review, including, but
not limited to, the audit, the board and in its sole
discretion, finds based on evidence on the record that
the territory to be disincorporated is not expected to
generate revenues sufficient to provide public services
and facilities, maintain a reasonable reserve, and pay
its obligations during the five-year period following
disincorporation. If the state auditor has not
completed the audit of the city and made it public
within 60 days following the effective date of AB 46,
the date of disincorporation is to be extended by 181
days following the effective date of AB 46. If the
state auditor has not done the audit and made it public
within 150 days following the effective date of AB 46,
the board of supervisors may act pursuant to the above
on any other evidence available on the record. The city
will be required to later list an interagency agreement
with the state auditor for the purpose of reimbursing
the state auditor for the costs incurred to perform the
audit.
2. Requires the LAFCO to take all actions necessary to
provide for the formation of the CSD by the effective
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date of the disincorporation, and requires the county to
pay LAFCO's validated costs associated with formation of
the CSD.
3. Designates the county board of supervisors as the CSD
governing board and require the CSD to provide fire
protection, water, telecommunication, gas, electric
utility services, and continued street maintenance.
4. Requires the county sheriff to provide law enforcement
services, and authorize the CSD to provide special
parcel tax proceeds and other revenues to fund a higher
level of law enforcement service than is otherwise
funded by the county.
5. Designates the county board of supervisors as the
legislative body of the redevelopment area of the
disincorporated city.
6. Continues any parcel taxes previously imposed by the
disincorporated city and remit tax proceeds to the CSD
consistent with the purposes of those taxes. The CSD
would also continue other service fees, charges, or
rates, as specified, and may continue electric utility
franchise fees.
7. Requires the CSD to be the custodian of all records
pertaining to the services it provides, and the county
as the custodian of all other records.
8. Requires the county board of supervisors to negotiate
any property tax exchanges on behalf of local agencies
affected by the disincorporation.
9. Requires the county board of supervisors to appoint a
municipal advisory commission (MAC) and adopt an
expedited permit process for business, development, and
health and safety permits comparable to the permit
process that existed in the disincorporated city, as
specified.
10.Requires the county to continue the community plan,
zoning ordinances, conditional use permits, and legal
nonconforming uses, and require any land use authorized
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prior to disincorporation to continue for 10 years,
except as specified.
11.Requires the CSD to finance the operations of the MAC.
12.Prohibits the CSD from increasing gas or utility rates
for at least a year following the creation of the
district except to satisfy bond covenants or contractual
obligations, or if the MAC finds that a fiscal emergency
exists following a CSD audit, as specified.
13.Requires the county board of supervisors to maintain
existing business license tax rates for at least five
years, including any specified adjustments.
14.Prohibits the county board of supervisors from applying
any existing utility users tax in the disincorporated
city or levying a utility users tax for five years
following the disincorporation. Future utility users
taxes are subject to approval by the voters of the
unincorporated territory of the county.
15. Allows the board of supervisor may levy an additional
business license tax or business license fee within the
territory of the disincorporated city during the
five-year period following the effective date of the
disincorporation, if an audit conducted by third-party
auditor finds that additional revenues are needed in
order for the county to maintain needed services to the
territory of the disincorporated city or to make
required payments toward debt incurred by the city prior
to disincorporation.
FISCAL EFFECT : Appropriation: No Fiscal Com.: Yes
Local: Yes
SUPPORT : (Unable to verify at time of writing)
Los Angeles County Sheriff's Department
OPPOSITION : (Unable to verify at time of writing)
City of Vernon
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ASSEMBLY FLOOR : 78-0, 5/18/11
AYES: Achadjian, Allen, Ammiano, Atkins, Beall, Bill
Berryhill, Block, Blumenfield, Bonilla, Bradford,
Brownley, Buchanan, Butler, Charles Calderon, Campos,
Carter, Cedillo, Chesbro, Conway, Cook, Davis, Dickinson,
Donnelly, Eng, Feuer, Fletcher, Fong, Fuentes, Furutani,
Beth Gaines, Galgiani, Garrick, Gatto, Gordon, Grove,
Hagman, Halderman, Hall, Harkey, Hayashi, Roger
Hernández, Hill, Huber, Hueso, Huffman, Jeffries, Jones,
Knight, Lara, Logue, Bonnie Lowenthal, Ma, Mansoor,
Mendoza, Miller, Mitchell, Monning, Morrell, Nestande,
Nielsen, Norby, Olsen, Pan, Perea, V. Manuel Pérez,
Portantino, Silva, Skinner, Smyth, Solorio, Swanson,
Torres, Valadao, Wagner, Wieckowski, Williams, Yamada,
John A. Pérez
NO VOTE RECORDED: Alejo, Gorell
AGB:DWL:d 8/22/12 Senate Floor Analyses
SUPPORT/OPPOSITION: SEE ABOVE
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