Local Agency Formation Commission s1

Local Agency Formation Commission STAFF REPORT Agenda of October 23, 2002

AGENDA ITEM 6: STUDY SESSION (GOV'T CODE '56668) FACTORS TO BE CONSIDERED IN THE REVIEW OF PROPOSALS

BACKGROUND

The Commission requested a study session about the analysis factors in contained in Government Code '56668. These factors are the foundation for consideration of proposals and the basis for LAFCO determinations. LAFCO makes both policy decisions and technical decisions within the scope of the Cortese-Knox-Hertzberg Act. In addition, the Commission makes environmental determinations, which were reviewed separately at the September meeting.

This summary report will follow the format of a typical staff report and discuss the meaning of each factor, sources for staff research, and elements of the decision making process. The Executive Officer=s recommendations are based on a review of an individual project relative to adopted policies and statutes. When there is are outstanding unresolved questions about any one of these factors, or no clear consistency with the intent of policies in the Executive Officer=s view, the staff report directs the Commission to it=s own determination for that factor.

DISCUSSION

(Numbered items 1-6 relate to services)

1. NEED FOR ORGANIZED COMMUNITY SERVICES, PROBABLE FUTURE NEEDS: Applicants shall demonstrate the need and/or future need for governmental services and that the proposal is the best alternative to provide service (Policy 2.14b, 4.18, '56668(b)).

RESPONSE: The purpose of a boundary change is often related to securing new services. The applicants are required to state the purpose of their proposal. Staff requires substantive evidence of the need for service. Examples include well reports, evidence of plans for agriculture, development entitlements, i.e. tentative maps, building permit applications, etc.

2. ABILITY TO SERVE, LEVEL AND RANGE OF SERVICE, TIME FRAMES, CONDITIONS TO RECEIVE SERVICE: Prior to annexation the applicants and proposed service providers shall demonstrate that the annexing agency will be capable of providing adequate services which are the subject of the application and shall submit a plan for providing services (Policy 2.3, '56668(j)).

RESPONSE: A Plan of Service is required for every application, prepared by the

1 applicants in conjunction with service provider agencies. In addition staff refers to numerous other sources of information such as agency master plans, when available. The ability to serve includes site-specific and off site capabilities of the agency. For example, water and wastewater service includes local distribution (pipes and hook-up) as well as transmission and treatment services. Applicants and agencies must demonstrate that additional service for the proposal area can actually be provided.

Historically, agencies and applicants indicated an indefinite time frame for needing services. For example the assertion was sometimes made that a water annexation should be approved because it couldn=t develop if water meters were Asold out." This adds an element of speculation to Commission approvals.

3. TIMELY AVAILABILITY OF ADEQUATE WATER SUPPLY: The commission shall consider the timely availability of water supplies adequate for projected needs ('56668(k)).

RESPONSE: This factor became mandatory with AB 2838, but has been considered by El Dorado LAFCO for many years. The applicant=s Plan of Service and other reports (i.e. the Water Supply and Demand report and EDU availability) are the principal sources of information for this element. Water supply must be considered for all proposals, not just requests for water services.

For EID=s area, a facility improvement letter often contains useful information for this element, however the Commission no longer relies on general statements of intent to serve such as the old documentation letter. Applicants may provide LAFCO with a service assurance for water if they are unable to complete a plan of service that includes availability of an adequate water supply.

Certainty of an adequate water supply is a controversial issue for LAFCO to consider in its review of proposals, and is complicated by difficulty getting sufficient reliable information to render an informed decision. If the Commission concludes that there is insufficient information, it may continue it=s decision and direct staff to get additional information, or the Commission may disapprove a project.

Staff believes that the completion of EID=s Water Supply Master Plan and the Water Agency=s Planning study will relieve LAFCO of many of the difficulties associated with this factor.

4. ALTERNATIVES TO SERVICE, OTHER AGENCY BOUNDARIES, AND LOCAL GOVERNMENT STRUCTURE: The commission shall consider alternatives to the proposal, proximity of other agency boundaries and alternative courses of action. Where another agency objects to the proposal, LAFCO will determine the best alternative for service (Policies 2.32.2 (g), 4.1.3).

RESPONSE: Alternatives to service means other agencies and private service providers. The absence of LAFCO sphere studies or justifications for the spheres that were adopted in the early 80's is problematic, however the topography and current organization of government services generally favors one agency. Without such objective information, controversies will increase wherever agency boundaries

2 are in close proximity or where service levels between agencies vary. There is currently a shortage of cost/service information to thoroughly evaluate alternatives. LAFCO service reviews will provide the needed technical analysis of agencies for the comparison of alternative agencies.

5. SIGNIFICANT NEGATIVE SERVICE IMPACTS: Services provided to the territory will not result in a significant negative impact on the cost and adequacy of services otherwise provided. (Policy 2.14(I), '56668.3(b))

RESPONSE: This factor directs LAFCO to consider the effect of a proposal on others currently receiving service or already within the boundaries of the annexing agency. Staff evaluates capacity and current service problems and relies on the Plan of Service as a starting point. Sources of information vary widely. Agency planning documents, where available are useful. Important to this analysis are any standards of service that may apply. For example, emergency response times, water pressure sufficient for fire flows, wastewater discharge standards are among the kinds of information that might be applicable to some projects to evaluate current conditions and potential worsening of undesirable service conditions. Known service shortages cumulative impacts and system deficiencies are also identified whenever possible.

For EID annexations, the district=s cost-benefit analysis is an excellent source of information about the cost impacts on others. The analysis will show projected revenue shortfalls or gains, and the effect on the district budget, its taxpayers, and customers. When an EIR has been completed for a proposed development there is often financial analysis that is useful to LAFCO.

Staff also tries to identify general cost impacts such as the overall district costs of such as securing a new water source, construction of new transmission and conveyance lines, storage and treatment facilities needed to add capacity. Such costs cannot always be quantified, but an attempt is made to identify such cost impacts.

6. COORDINATION OF APPLICATIONS: If a project site can be anticipated to require additional changes of organization in order to provide complete services, the proposal shall be processed as a reorganization ('56475,Policy 2.19). Where related changes of organization are expected on adjacent properties, petitioners are encouraged to combine applications and LAFCO may modify boundaries, including the addition of adjacent parcels to encourage orderly boundaries (Policy 2.18)

RESPONSE: This means that all service and boundary changes that are reasonably foreseeable be combined in a comprehensive LAFCO review. Staff identifies nearby parcels or related areas, plus whether any other services beyond those requested in the application will be needed. As an example, an application will come in for annexation to EID, but staff might find that the land is not in a fire district. The applicant would then add this change to the application. When additional parcels need to be included because those parcels would be applying later, staff encourages the owners to join together or recommends inclusion based on this analysis element.

3 The Commission may also modify boundaries on nearby areas where services will be needed, as long as CEQA review for such a modification is adequate.

(Numbered items 7-12 relate to cost and revenues)

7. PRESENT COST/ADEQUACY OF GOVERNMENTAL SERVICES, INCLUDING PUBLIC FACILITIES: The commission shall consider existing government services and facilities, cost and adequacy of such services and facilities ('56668(b), Policy 2.3). If service capacity and/or infrastructure will be expanded, the applicant will submit cost and financing plans (Policy 2.32.2).

RESPONSE: This factor directs LAFCO to look at how an agency is providing services without the proposed annexation. We consider the capabilities of an agency, any current service deficiencies, reserves and excess capacity. The applicant=s Plan of Service contains information for this analysis, and staff also uses annual reports, such as EID=s Supply and Demand report, plus financial or other reports to gather information about how services are provided. This factor is retrospective.

When the commission finds cost and/or service problems under pre-approval conditions, adding territory or increasing the service responsibility could be problematic.

8.8. EFFECT OF PROPOSAL ON COST & ADEQUACY OF SERVICE IN AREA AND ADJACENT AREAS: The commission shall consider existing and proposed government services and facilities, the cost and adequacy of such services and facilities and probable effect of the proposal on the area and adjacent areas ('56668(b) and Policy 2.3) LAFCO will discourage projects that shift the cost of service and/or service benefits to others or other service areas (Policy 4.19).

RESPONSE: Closely related to Factor #7, the Commission must evaluate what future effect the proposal will have. The Plan of Service quantifies the units of service that will be added to an agency=s responsibility if the project is approved. The Commission looks at whether the agency can do this and what would likely happen to others if the requested service is extended. This factor is prospective. For example, there would be a significant cost impact if wastewater flow from a proposed annexation for new development would exceed permit capacity at the sewer plant, citizens would have to underwrite the cost of fines for the violation.

It may be important to note that enterprise districts such as El Dorado Irrigation District have customers (rate-payers) but there are other citizen residents of the district who also contribute to the district costs as tax-payers without receiving service. This factor refers to Athe area@ and Aadjacent areas@ directing consideration of those in a broad area who may be potentially affected by costs.

9. EFFECT OF ALTERNATIVE COURSES OF ACTION ON COST & ADEQUACY OF SERVICE IN AREA AND ADJACENT AREAS: The commission shall consider the cost and adequacy of alternative services and facilities ('56668).

4 RESPONSE: This factor relates to #4, above. Where alternatives have been identified by staff, a reasonable comparison between the proposal and the alternative is required. The Plan of Service requires such information, although it is seldom provided by applicants. Staff usually compares services and charges when evaluating alternative agencies. Service Review studies will provide the needed information. Until such information is available, staff relies on the agencies plans and reports where they are available.

10. SUFFICIENCY OF REVENUES, PER CAPITA ASSESSED VALUATION: 56668(j)

RESPONSE: This factor directs LAFCO to look at the revenues that will support the needed services. In addition it means that LAFCO should consider the increase in revenues if the boundary change leads to an increased value. Where development will occur, the property tax revenue will increase with the increased AV.

11. REVENUE PRODUCING TERRITORY: The proposed annexation shall not represent an attempt to annex only revenue-producing territory (Policy 4.1.1, (2.14(b),

RESPONSE: With this direction, the legislature asks LAFCO to evaluate if the purpose of the annexation is to take in territory that will produce revenue for the agency in excess of the cost of services. The Plan of Service and Cost-Benefit Analysis contain the needed information. In some cases, an agency might negotiate an annexation agreement with a landowner that is revenue-favorable to the agency, and LAFCO reviews such revenue benefits along with all the other issues.

12. "BEST INTEREST": The commission will consider whether the proposed annexation will be for the interest of landowners or present or future inhabitants within the district and within the territory proposed to be annexed to the district. ('56668.3)

RESPONSE: This is clearly a quasi-legislative review and provides for the Commission to consider any other benefits present or future, that justify approving a proposal.

(Numbered items 13-17 relate to boundaries)

13. BOUNDARIES: LOGICAL, CONTIGUOUS, NOT DIFFICULT TO SERVE, DEFINITE AND CERTAIN: The proposed boundary shall be a logical and reasonable expansion and shall not produce areas that are difficult to serve ('56001). Lands to be annexed shall be contiguous (Policy 4.34), and should not create irregular boundaries, islands, peninsulas or flags. (Policy 2.9 ('56109). The boundaries of the annexation shall be definite and certain and conform to existing lines of assessment and ownership ('56841(f) and Policy 2.92).

RESPONSE: Contiguity requires that their be a line of connection between the annexing area and existing boundary. Neither law nor policy define how much connection is enough, but there is a link between contiguity and providing service.

5 Non-contiguous annexations are prohibited for cities, but not districts. Islands create difficulties for managing property tax and elections. Boundaries may not split parcels, although historically boundaries were set by this LAFCO that did divide parcels. Staff extensively researches proposal boundaries (Surveyor, State Board of Equalization and Assessor are the principal sources) to identify any boundary anomalies. Applicants are often willing to amend their proposals to achieve more logical boundaries, and the Commission has authority to modify boundaries as desired.

14. TOPOGRAPHY, NATURAL BOUNDARIES, DRAINAGE BASINS, LAND AREA: Natural boundary lines which may be irregular may be appropriate (Policy 2.96) The resulting boundary shall not produce areas that are difficult to serve (Policy 2.97).

RESPONSE: Again, the legislative direction is to evaluate boundaries as they relate to services and topography to ensure the Commission=s judgement reflects potentially relevant local conditions. Staff reviews proposals with a site visit in most cases and often with USGS topographic maps.

15. CREATION OF IRREGULAR BOUNDARIES: Islands, peninsulas, "flags,@ "cherry stems,@ or pin point contiguity shall be strongly discouraged. The resulting boundary shall not produce areas that are difficult to serve. The commission shall determine contiguity (Policies 2.94, 2.95, 2.97).

RESPONSE: The statutes emphasize again the important link between boundaries and ease of providing services and gives the Commission the authority to decide if the contiguity is adequate.

16. CONFORMANCE TO LINES OF ASSESSMENT, OWNERSHIP: LAFCO shall modify, condition or disapprove boundaries that are not definite and certain or do not conform to lines of assessment or ownership (Policy 2.92)

RESPONSE: All maps are reviewed by the Assessor and the Surveyor=s office. This is a technical review requirement which may lead to consideration of boundary alternatives.

17. SPHERES OF INFLUENCE: Commission determinations shall be consistent with the spheres of influence of affected local agencies (Policy 2.91).

RESPONSE: The existing spheres of influence for most agencies are inadequate and out of date; staff uses the Asphere of record@ for project review. This is the mapping that was compiled in the mid 1990's by the prior Executive Officer and plotted in the GIS system. In the absence of an adequate sphere of influence the Commission could determine it is impossible to make the required finding of consistency. This problem will become more serious in three years with the January 1, 2006 deadline for updating spheres.

(Numbered items 18-21 relate to potential effect on others and comments)

18. EFFECT ON ADJACENT AREAS, COMMUNITIES OF INTEREST: The

6 commission shall consider the proposal and alternative actions on adjacent areas, mutual social and economic interests and on the local governmental structure of the county ('56668(c)).

RESPONSE: Staff researches community groups, homeowners or business associations which may be interested in or related to the project.

19. INFORMATION OR COMMENTS FROM THE LANDOWNER OR OWNERS: The commission shall consider any information or comments from the landowner or owners.

RESPONSE: All landowners and registered voters within a 300 foot radius of a project are individually notified of the project and hearing per '56157(f). All comments received are included in the packet or distributed at the meeting.

20. EFFECT ON OTHER COMMUNITY SERVICES, SCHOOLS: LAFCO's review of services refers to governmental services whether or not those services are provided by local agencies subject to the Cortese-Knox-Hertzberg Act, and includes public facilities necessary to provide those services.

RESPONSE: This factor was originally added to the statutes to ensure that LAFCO considered the effect of a proposal on school services. However, any services not provided by cities and districts may to be considered. The County, for example, provides roads, park and recreation services. PG&E provides community services that should also be considered by the Commission. In some areas state services (parks) may be affected. Staff solicits comments from as many service providers as can be identified. The request asks providers to identify any potential effects. Any information received is included in the analysis.

21. OTHER AGENCY COMMENTS, OBJECTIONS: All affected and interested agencies are provided application related material and notified of the proposal and proposed property tax redistribution plan. Comments are been requested and shall be considered (Policy 2.17, '56668(i).

For district annexations and city detachments only, the commission shall also consider any resolution objecting to the action filed by an affected agency '56668.3(4). The commission must give great weight to any resolution objecting to the action which is filed by a city or a district. The commissions consideration shall be based only on financial or service related concerns expressed in the protest ( '56668.3 (5b)).

RESPONSE: Staff solicits comments from all affected agencies. The request asks providers to identify any potential effects. Any information received is included in the analysis. The staff report also lists the agencies who were notified under '56828.

(Numbered items 22-26 relate to land use, population and planning)

22. FAIR SHARE OF REGIONAL HOUSING NEEDS: The commission shall review the extent to which the proposal will assist the receiving entity in achieving its fair share

7 of regional housing needs as determined by Sacramento Area Council of Governments (SACOG) ('56669l(l)).

RESPONSE: This is a new factor added by AB 2838. The Sacramento Area Council of Governments has adopted regulations requiring agreement to transfer housing allocation units when cities annex unincorporated lands, although implementation of these provisions remains controversial. Staff reviews issues related to achieving fair share of housing needs in El Dorado County by researching whether existing housing will be displaced by the annexation and subsequent development of the property and whether additional water consumption following development of a project will contribute to a decrease in water supply and wastewater capacity available for the buildout of the regional housing needs allocation.

23. LAND USE, INFORMATION RELATING TO EXISTING LAND USE DESIGNATIONS: The commission shall consider any information relating to existing land use designations ('56669l(m)).

RESPONSE: The 1996 General Plan and the Project Description for the 2001 General Plan and the out-dated Area Plans are researched and summarized for the Commission. The Commission will have reliable information about Land Use designations for it=s decisions after the County adopts a valid General Plan

24. POPULATION, DENSITY, GROWTH, LIKELIHOOD OF GROWTH IN AND IN ADJACENT AREAS OVER 10 YEARS: The commission will consider information related to current population, projected growth and number of registered voters and inhabitants in the proposal area.

25. PROXIMITY TO OTHER POPULATED AREAS: The commission shall consider population and the proximity of other populated areas, growth in the area and in adjacent incorporated and unincorporated areas during the next 10 years. (2.14 (b), 3.23.2(g))

RESPONSE: Staff uses the applicants statement and number of residences to estimate current population. The Elections Office provides the current number of registered voters. Population projections are based on the County=s ususal per residence calculation. This factual information is included in the staff report. Detailed area population projections and land use trend projections are being prepared by SACOG and will be included in future analyses. A workshop about this data will be scheduled if SACOG presenters are available.

26. CONSISTENCY WITH GENERAL PLANS, SPECIFIC PLANS, ZONING: The commission shall consider the general plans of neighboring governmental entities (Policy 2.14(g)).

RESPONSE: See #23 above. This factor requires LAFCO to be aware of planning and zoning decisions made by the appropriate land use agencies. It is particularly important when city pre-zoning is different from the County zoning of unincorporated land proposed for annexation. This is factual information contained

8 in the staff report.

27. PHYSICAL AND ECONOMIC INTEGRITY OF AGRICULTURE LANDS AND OPEN SPACE LANDS: LAFCO decisions will reflect it's legislative responsibility to maximize the retention of prime agricultural land while facilitating the logical and orderly expansion of urban areas (Policy 2.10.1 and '56016 and 56064).

RESPONSE: LAFCO is charged by the legislature to prevent the premature conversion of Agricultural land. Soils, agricultural uses, unique/special farmlands and agricultural activities are identified with the assistance of the Agricultural Commission within and near the proposal area. This data is included in the staff report. Evaluating the economic integrity of agriculture requires LAFCO consider of the indirect effects of a project on agriculture. For example, the transfer of water for development may reduce the supply of water available for agricultural uses, making it less feasible or it might increase the cost of water needed for production.

28. OPTIONAL FACTOR: REGIONAL GROWTH GOALS AND POLICIES: The commission may, but is not required to, consider regional growth goals on a regional or sub-regional basis ('56668.5)

RESPONSE: Staff contacted both SACOG and the Sierra Planning Organization. Neither agency currently has applicable regional growth goals or policies under this factor.

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