GROWTH WITHIN BOUNDS Report of the Commission on Local Governance for the 21St Century Cover Photograph

STATE OF CALIFORNIA GROWTH WITHIN BOUNDS Report of the Commission on Local Governance for the 21st Century Cover photograph:

Report of the Commission on Local Governance for the 21st Century

Susan Golding, Chair Ruben Barrales, Vice-Chair Jacqueline Bacharach Marian Bergeson Patricia Clarke Cody Cluff Michael Colantuono Robert Hunt Nicholas Petris Timothy Raney Carolyn Ratto William D. Ross John Schatz Larry Zarian

January 2000

Commission on Local Governance for the 21st Century   ,   • ,  - -- •  -- • ...

Gray Davis January 2000 

Susan Golding  Dear Governor Davis and Members of the California Legislature: Ruben Barrales   In 1997, AB 1484, authored by Assemblyman Robert Hertzberg and enacted as Chapter 943, established the Commission on Local Governance for the 21st Century. In August  1998, the Commission held its first meeting in Sacramento. I was honored to be elected Jacki Bacharach Chair at that meeting. As our first order of business, plans were laid out and a timeline was Marian Bergeson adopted for completing a study on local governance in California. Patricia Clarke Cody Cluff The legislation directed the Commission to review current statutes and, where appropriate, Michael Colantuono recommend revisions to the laws that govern city, county, and special district boundary Robert Hunt changes. My fellow commissioners and I believe this task cannot be undertaken in isola- Nicholas Petris tion. Consequently, we also looked at general governance issues that need to be addressed Timothy Raney by the Legislature and Governor. Carolyn Ratto William Ross Over a period of 16 months, we held 25 days of public hearings throughout the state, heard John Schatz testimony from more than 160 individuals and groups, received over 100 recommendations, Larry Zarian and had nearly 90,000 visits to the commission’s website, www.cla2l.ca.gov. Based upon this extensive input and our deliberations on the information received, we are pleased to present the attached report and recommendations. The report concludes with a strategic plan for its implementation. We urge you to adopt all of the actions recommended.

It is our goal that this report bring about reforms to governance in California and help make California government more accessible, responsive, and transparent to the people who support it and depend upon it. We thank you for this opportunity to serve the people of California.

Sincerely,

Susan Golding Chair iv Growth Within Bounds: Planning California Governance for the 21st Century Growth Within Bounds: Planning California Governance for the 21st Century v

Commission Members Commission Staff Susan Golding, Chair Ben Williams Mayor, City of San Diego Executive Director San Diego Jolena Voorhis Ruben Barrales, Vice-Chair Assistant Executive Director President, Joint Venture Silicon Valley Dara Wheeler San Jose Associate Governmental Program Analyst Jacqueline Bacharach Owner, Jacki Bacharach and Associates Maria Delk Rancho Palos Verdes Staff Services Analyst Marian Bergeson Christine Sproul Member, State Board of Education Commission Counsel Newport Beach (Deputy Attorney General, Department of Justice) Patricia Clarke Nick Vogel Supervisor, Shasta County Board of Supervisors Student Assistant Anderson Bernetta K. Reade Cody Cluff Editor President, Entertainment Industry Development Corporation Bill McGuire Hollywood Graphic Designer Michael Colantuono (Office of Planning and Research) Attorney, Richards, Watson & Gershon Los Angeles Robert Hunt Attorney, Service Employees International Union, Local 347 Los Angeles Nicholas Petris Retired Legislator Oakland Timothy Raney Owner, Raney Planning & Management Mayor of Citrus Heights Carolyn Ratto Councilwoman, City of Turlock Turlock William D. Ross Attorney, Law Offices of William D. Ross Palo Alto John J. Schatz General Counsel, Santa Margarita Water District Rancho Santa Margarita Larry Zarian Radio Show Host Former Glendale City Councilman Glendale Herbert Boeckmann (resigned August 1999) President, Galpin Motors, Inc. Northridge vi Growth Within Bounds: Planning California Governance for the 21st Century

Acknowledgments

The Commission on Local Governance for the 21st Century would like to acknowledge and thank the many individuals whose contributions were so important to this report. Collectively, the Commission heard testimony from over 160 individuals representing state and local government, businesses, non-profit organizations, and the public.

The Commission appreciates the support of Assemblyman Robert Hertzberg, the author of the legislation that created the Commission, and Christopher Carlisle, Assemblyman Hertzberg’s Legislative Director.

We appreciate the help and energy given by Mike Gotch, former Executive Director, and S.R. Jones, Executive Officer of California Local Agency Formation Commission (CALAFCO). Their contributions were essential to understanding LAFCOs statewide. LAFCO members and officers throughout the state graciously provided information about LAFCO operations and assistance with meeting logistics. At the risk of omitting an important contributor, special thanks is extended to: Jim Colangelo (Monterey), Dana Smith (Orange), George Spilliotis (Riverside), Jim Roddy (San Bernardino), Michael Ott and Shirley Anderson (San Diego), Autumn Arias (Santa Clara), Patrick McCormick (Santa Cruz), Julie Howard (Shasta), and Bob Braitman (Ventura).

The following individuals were also instrumental in advising the Commission on local governance issues: Peter Detwiler, Chief Consultant, California State Senate Local Government Committee; Hugh Bower, former Consultant, Assembly Local Government Committee; Dan Carrigg, Legislative Representative, League of Cities; Pat Leary, Legislative Representative, California State Association of Counties; Catherine Smith, Executive Director, California Special Districts Association; and Robert Reeb, Legisla- tive Director, Association of California Water Agencies.

Other individuals like: Fred Silva, Visiting Policy Analyst, Public Policy Institute of California; Nancy Lyons, Deputy Executive Director, Little Hoover Commission; Paul Antilla, Deputy Legislative Counsel, Office of Legislative Counsel; Pedro Reyes, Principal Program Budget Analyst, Department of Finance; Holly King, Agricultural Programs Manager, Great Valley Center; and Erik Vink, California Field Director, American Farmland Trust were of great assistance throughout the life of the Commission. Vital to the final production were Kathy Mitchell and Dave Dickey of the Office of State Publishing. An unsung hero, OPR graphic artist Bill McGuire, contributed long hours and Herculean efforts to complete the graphics and layout under intense time pressures.

Perhaps most helpful to the Commission, were the real life experiences provided by the numerous LAFCO representatives, local government officials, and individual citizens who testified before the Commission. A complete list of all of the individuals can be found in Appendix B. Growth Within Bounds: Planning California Governance for the 21st Century vii

Table of Contents

Executive Summary ES-1

Chapter 1: Outlook for California: 2000, 2020, and Beyond 1

Chapter 2: Local Government in California 11

Chapter 3: LAFCO Reform 25

Chapter 4: Forming New Cities and Changing Municipal and District Boundaries 49

Chapter 5: Special Districts — Tailor-Made Government for Californians 69

Chapter 6: LAFCO and the Prevention of Sprawl 87

Chapter 7: Reform of Local Government 103

Chapter 8: Government Of the People, By the People, and For the People 117

Chapter 9: Implementing the Commission’s Vision 131

Appendices:

Photograph and Graphic Reproduction Credits 135

References Consulted 136

Appendix A: Commissioner Biographies 141

Appendix B: Meeting Locations and Presenters 145

Appendix C: Detailed Recommendations and Draft Statutory Changes 149

Appendix D: Outline of Proposed Restructuring of Local Government Reorganization Act 171

Appendix E: Summaries of Local Agency Reorganization Bills Introduced Since 1963 173

Appendix F: Local Government Functions and Organization in Other States 195

Appendix G: Analysis of LAFCO Survey 203

Executive Summary Growth Within Bounds: California Governance in the 21st Century ES-1

Report of the Commission on Local Governance for the 21st Century Growth Growth Within Bounds: Within Planning California Governance for the 21st Century Bounds Executive Summary

hroughout the world, California important first step towards managing and symbolizes success, achievement, and visualizing the future role of government. The T prosperity. We are the incubator of Commission’s report and recommendations many of today’s leading industries, including are intended to provide new tools to enable entertainment, aerospace, computer and California to cope with growth in a rational communications technology, and genetic manner, in part by making better use of the Faced with surging engineering. California has been the nation’s often invisible LAFCOs in each county. We growth, dynamic leading agricultural producer for five decades, have also worked to improve the procedural despite having only three percent of the framework outlined in the Local Government change, and greater nation’s farmland. The Golden State is the Reorganization Act which should assist diversity than the premier destination point worldwide for Californians in organizing more coherent vacationers, business people, and those governmental entities. world has ever known, seeking a better life. The Commission, however, recognizes that the time is right for As California enters a new millennium, we time constraints prevented a more thorough find ourselves at a crossroads. Faced with analysis of other critical issues. We are California to set a new surging growth, dynamic change, and greater particularly concerned over the lack of course. diversity than the world has ever known, the coordination and accountability for many time is right for California to set to a new governmental services. The Commission course. We must start by examining the believes that a complete reexamination is system of governance (the way that govern- warranted of the fundamental structure of ment is organized and operates) and we must governance in California. The Legislature establish a vision of how the state will grow. should commission a task force to undertake As a state, we need to ask ourselves if our this responsibility, or extend the term of the existing system can carry us for another Commission on Local Governance for the 21st century. Century. Recognizing the challenges facing The task of investigating future local California governance in the 21st Century, the governance options is formidable and must State Legislature in 1997 enacted AB 1484 include a fundamental assessment of the (Hertzberg), establishing the Commission on functions performed by cities, counties, Local Governance for the 21st Century special districts, and regional agencies. Any (“Commission”). The Commission was asked excessive fragmentation of government to assess governance issues and make services among numerous, inefficient, or appropriate recommendations, directing overlapping providers must be discouraged; special attention to the Cortese-Knox Local and effective, efficient, and easily understand- Government Reorganization Act of 1985, the able local government must be encouraged. 57 local agency formation commissions Nevertheless, the scale of public institutions (LAFCOs) governed by the Act, and citizen and the growing complexity of the services participation in local government. they provide must also be considered. As local Our current institutions of government agencies grow and reorganize, means must be were designed when our population was much found to empower neighborhoods and smaller and our society was less complex. The individuals and to re-engage them in deter- Commission believes that it has taken an mining the shape of their communities in the ES-2 Growth Within Bounds: California Governance in the 21st Century Executive Summary

future. Local government institutions need to provide essential services and have little be (1) small enough to be accessible; (2) large latitude to adjust resources to match enough to be effective and efficient (econo- residents’ priorities. mies of scale need to be recognized); and (3) adaptable enough to remain accountable 4. The public is not engaged. Although while serving diverse communities across the there clearly is frustration with traffic state. gridlock and the high cost of housing, Four points should be recognized in order most Californians have little interest in the to frame the debate about the future role of day-to-day functioning of government or Local governments government: preparing plans for future growth. struggle to provide 1. The future will be shaped by continued It was within this context that the Com- essential services and phenomenal growth. If we fail to mission initiated its legislatively directed recognize, accept, and respond to this, we review “ . . . of the current statutes, including, have little latitude to risk making California an unattractive but not limited to, this division [the Local adjust resources to place to live and work. Government Reorganization Act], regarding the policies, criteria, procedures, and prece- match priorities. 2. California does not have a plan for dents for city, county, and special district growth. If we stay the current course, we boundary changes.” To accomplish this task, may one day wake up to discover a world the Commission held 25 days of public marred by sprawling suburbs, expensive hearings throughout the state, receiving input and overextended public services, a from over 160 individuals and organizations. decimated agricultural industry, less open The Commission’s Internet website, space, and fewer recreational opportuni- www.clg21.ca.gov, received 90,000 “hits” ties. In a state that on the East Coast between January and December 1999 and would cover all or part of a dozen states, many visitors took advantage of the opportu- there is no formal intermediate planning nity to submit questions and suggestions authority between the State and individual electronically. The Commission’s report and local governments. recommendations are based upon this extensive input and the Commission’s 3. Local government budgets are perenni- deliberations on the information received. ally under siege. Because of taxing and spending constraints enacted over the past two decades, local governments struggle to

Fig. ES-1 Meeting of the Commission on Local Governance for the 21st Century

Staff photo Executive Summary Growth Within Bounds: California Governance in the 21st Century ES-3

California Fig. ES-2 New Mexico Projected California Hawaii Population Growth Rate Arizona Compared to Other States Nevada 1995 Through 2025 Idaho SOURCE: U.S. Department of Commerce, Utah Census Bureau, Current Population Reports: Alaska Population Projections: States, 1995-2025, May 1997. Florida Texas Wyoming Washington Oregon Colorado Georgia Rest of the US

0 10% 20% 30% 40% 50% 60% PERCENT INCREASE

21st Century Challenges to the millennium. Unless, that is, failure to There is no Local Government invest in education, infrastructure, and smart growth policies leads businesses to seek other comprehensive Wave after wave of immigrants have locations. strategy to determine poured into California since the Gold Rush, While the immediate future looks bright bringing about a steady increase in the state’s for California’s economy, it will present some how the burdens of population. This trend will continue well into real challenges to our longer-term resolve to growth will be shared. the next century, but most new growth will be maintain livable communities. Currently, generated internally, through the natural there is no comprehensive strategy to increase of the existing population. Closing determine how the burdens of growth will be the gates will not solve the growth problem. shared, how resources benefiting more than By 2020, California will add 11 million people one locality will be protected, and how to its current population of over 34 million, necessary but locally undesirable facilities will then it will grow by another 13 million in the be sited. As a result, farmland and open two decades that follow. This four decade gain spaces continue to be swallowed up by will exceed the present populations of Texas or sprawling suburban expansion. As develop- New York. According to the Census Bureau, ment pushes ever outward from existing California’s rate of increase will exceed that of cities, expensive extensions and improve- every other state, including those with much ments will be needed for freeways, water and smaller population bases. sewer lines, and other infrastructure. Job In the 21st Century, California will centers will become farther removed from the continue to be the most diverse civilization housing that supports them, leading to longer ever known to mankind. By 2040, more than commutes, increased air pollution, and a more two-thirds of the state’s population will be stressful lifestyle. At the same time, many non-Anglo, representing a multitude of contaminated former industrial sites near national and ethnic extractions. Moreover, downtown areas lie abandoned due to the cost demographers believe that it will still be a of cleaning them up. relatively young population forty years from The growth in the next century will now, foreshadowing continued growth in the present an unparalleled test for the local latter part of the century. This growth and governments upon which we depend for diversity, fueling opportunity for the state’s essential public services and community ever-present entrepreneurial penchant, should leadership. Several barriers may hinder local keep California’s economy vibrant well into governments’ ability to deal with 21st Century ES-4 Growth Within Bounds: California Governance in the 21st Century Executive Summary

challenges, including the following: review and approve city and special district • Local finance sources are unstable, boundary and service area changes in each uncertain, often inadequate, and subject to county except San Francisco. Nevertheless, unpredictable revisions by the Legislature. the Commission recognizes that LAFCOs, • Land use decisions are often made for acting alone, can do little to transform the reasons that have more to do with the ability of California’s local governments to finances of the local government than the address the pressures on planning and land use needs of the local community, governance in the 21st Century. Consequently, and some decisions may ultimately erode broad recommendations are also provided future quality of life. regarding the necessity to reform the state- local fiscal balance, the need for the State and local governments to adopt smart growth policies, and ways to promote accessibility and understandability of government. Together, these recommendations comprise a blueprint for California’s transition to the new millenium.

Recommendations

The major recommendations below are composites of the specific individual proposals which follow them. A reference to the chapter in the report which discusses the concept more completely is indicated in parentheses. Additional suggested technical Fig. ES-3 • People are confused by the array of changes are included in the text of the report, California encapsulates the government agencies — 58 counties, 473 but are not replicated here. world’s diversity cities, about 1,800 dependent and 2,200

Staff photo independent special districts, 800 jointly- controlled agencies, nearly 1,000 school ISSUE: REFORM OF LOCAL districts. The mere numbers suggest GOVERNMENT REORGANIZATION LAW potential cross-purpose efforts. • Many voters and taxpayers feel alienated Problem: Current procedures in the Local and are declining to become involved in Government Reorganization Act were the debate over public policy. enacted prior to Proposition 13 and the • The legal process that must be followed to extensive growth of the past 35 years. The restructure local government to meet these law is a composite of three previous challenges has not been comprehensively procedural statutes that were not substan- revisited since 1963, and is commonly tially modified when combined, nor have viewed as arcane, incomprehensible, and they been since. Consequently, policies are sometimes biased. often unclear and procedures are cumber- The Commission was specifically tasked some and uncertain. Moreover, LAFCOs are with addressing only a portion of these viewed by many local officials as biased problems, but with clear direction to look at and non-responsive to local development governance broadly. The Commission believes needs. that all of these issues are interrelated and demand a comprehensive solution. Most of 1. The Commission recommends that the Commission’s recommendations are LAFCO policies and procedures be stream- directed toward reform of the state’s 57 lined and clarified. LAFCOs, the often invisible agencies that • The Cortese-Knox Act must be compre- Executive Summary Growth Within Bounds: California Governance in the 21st Century ES-5

hensively reorganized and re-drafted to ISSUE: ORDERLY GROWTH AND make procedures more consistent and RESOURCE PROTECTION easier to understand. (Chapter 3) • Consistent procedures must be established Problem: Urban sprawl persists and for voter/land owner petitions to initiate a growth sometimes proceeds into areas change of organization or reorganization. where extension of services is inefficient, (Chapter 3) expensive, or ill-timed. Despite the policies • All LAFCOs must adopt written policies and procedures of the Cortese-Knox Act, and procedures. (Chapter 3) the loss of prime agricultural and open- • LAFCO must be the conducting authority space lands continues to occur at an LAFCOs , acting alone, for all city and special district reorganiza- alarming pace. tion proceedings. (Chapter 3) can do little to address • New incorporations ought to be statutorily 3. The Commission recommends strength- the pressures on exempt from CEQA, since the new city ening LAFCO powers to prevent sprawl and must initially adopt the existing general ensure the orderly extension of govern- planning and plan and zoning ordinances of the county, ment services. governance in the or the city if incorporation is part of a • Pre-zoning must be required for territory special reorganization. Environmental proposed to be annexed to a city to ensure 21st Century. impacts will not be encountered at the clear knowledge of plans and potential planning level until a new general plan is impacts. (Chapter 4) adopted. (Chapter 4) • LAFCO must be required to update spheres of influence at least once every five 2. The Commission recommends that years. (Chapter 6) LAFCOs be neutral, independent, and • LAFCO approval must be required for provide balanced representation for extension of major “backbone” infrastruc- counties, cities, and special districts. ture to serve regionally significant • Except for special statutory exceptions development projects, whether in an (Los Angeles, San Diego, Santa Clara, and incorporated or an unincorporated area. Sacramento counties), a uniform member- (Chapter 6) ship selection scheme must apply to all • LAFCO must initiate periodic regional or LAFCOs as follows: 2 from counties, 2 sub-regional service reviews, not less from cities (except counties with no cities), frequently than every five years, to 2 from special districts (if requested), and determine whether local government 1 public member, whose selection shall services are adequate. (Chapter 6) require an affirmative vote from at least • The current statutory provisions allowing one of the members from each selection unilateral termination of proceedings by authority. (Chapter 3) special districts (annexations) and cities • All LAFCOs must select their own (detachments) must be rescinded, so that executive officers and counsel, although all proposals may be fully examined at a LAFCOs may select county or other public public hearing. Nevertheless, substantial employees for these roles. (Chapter 3) weight must be afforded an objection by • Conflict of interest and lobbying disclosure an affected city or special district. (Chap- laws must apply to LAFCO members and ter 3) staffs. (Chapter 3) • LAFCOs must be funded jointly and 4. The Commission recommends that equally by each appointing category. policies to protect agricultural and open (Chapter 3) space lands and other resources be strengthened. • A more precise definition of “prime agricultural lands” must be adopted. (Chapter 6) ES-6 Growth Within Bounds: California Governance in the 21st Century Executive Summary

• When making a decision, LAFCO must 6. The Commission recommends that the consider urban limit lines, densities, in-fill State develop incentives to encourage opportunities, and regional growth goals compatibility and coordination of plans and policies. (Chapter 6) and actions of all local agencies, including • LAFCO must be prohibited from approv- school districts, within each region as a ing a proposal that might lead to develop- way to encourage an integrated approach ment of prime agricultural or open-space to public service delivery and improve lands if a feasible alternative exists. overall governance. (Chapter 6) • The State’s infrastructure financing Land use decisions are • Water supply considerations must be programs must create incentives that integrated into LAFCO boundary change further its growth planning goals and sometimes made for decisions. (Chapter 3) priorities, and all State policies, regula- reasons that have tions, and programs must be implemented in a manner consistent with these goals. more to do with ISSUE: LOCAL FISCAL REFORM (Chapter 8) finances than the land • Allocation of the sales tax on a point-of- Problem: Local government financing sale basis must be revised to reduce its use needs of the local options are limited, difficult to understand, incentive effect, and property tax alloca- often inadequate, and subject to unforeseen tions to general purpose local govern- community. changes by the Legislature. ments must be increased. (Chapter 8) • LAFCO policies must be revised, as 5. The Commission recommends that the necessary, to make better use of LAFCOs state-local fiscal relationship be compre- to support growth planning goals. hensively revised. (Chapter 8) • Negotiations must be initiated between the State and local governments to comprehensively realign State and local fiscal ISSUE: LOCAL GOVERNMENT resources and must aim for a Constitu- COORDINATION AND EFFICIENCY tional amendment. (Chapter 8) • The State must provide full funding for Problem: State and local agencies often any activities mandated upon local proceed with their own plans without government at the time that the mandate recognizing the potential effects on other is imposed. (Chapter 8) agencies and the public. The result can be • Tax bills must be informative and easy for confusion and dissatisfaction with services. taxpayers to understand, providing One situation that illustrates this problem information on which agency receives is the site selection decision for a new funds, which agency is responsible for school, which is not subject to broader local levying the tax, and whom to contact for planning review. information. (Chapter 8) 7. The Commission recommends enhancements to communication, coordination, ISSUE: GUIDING THE DIRECTIONS OF and procedures of LAFCOs and local FUTURE GROWTH governments. • Notification and coordination procedures Problem: Land use decisions are sometimes between local governments and school made for reasons that have more to do with districts must be strengthened. (Chapter the finances of the local government than 3) the land use needs of the local community, • Procedures similar to those for LAFCO and some decisions may result in costly proceedings (i.e., notice, public hearing, extensions of public services which ulti- opportunity for public comment, and mately erode future quality of life. written statement of determinations) must Executive Summary Growth Within Bounds: California Governance in the 21st Century ES-7

apply to school district reorganization. of fees to cover the cost of processing the (Chapter 3) application, and LAFCO must be able to • The value and consistency of the compre- petition the State to provide a loan, hensive fiscal analysis must be improved repayable by the new city, to cover the cost. and the State must prepare guidelines for (Chapter 4) its preparation. (Chapter 4) • A proposed new city under a special • A special blue ribbon commission must be reorganization must be permitted to appointed to undertake a study of water include in its incorporation proposal the governance in California. (Chapter 5) election of 5, 7, or 9 council members by • Extension of services outside its jurisdic- district. (Chapter 4) These tion by a city or special district must be • The cost of verifying citizen petitions for subject to LAFCO approval, even if the any change of organization must be recommendations service recipient is a public agency. considered a governmental cost. (Chapter will begin a debate (Chapter 6) 4) • Proponents of reorganization actions must that may compel the be required to report campaign contribu- State to prepare for ISSUE: PUBLIC INTEREST IN tions and expenditures, in accordance with GOVERNMENT the Political Reform Act and the Elections the next century. Code. (Chapter 3) Problem: Voter turn-outs and public • A commission must be established to opinion surveys indicate an alarming level comprehensively examine state and local of apathy by the public regarding govern- governance structures and recommend ment processes and actions. This poses a fundamental changes where necessary. risk to democracy by enhancing the (Chapter 8) influence of organized special interests.

8. The Commission recommends that Conclusion opportunities for public involvement, active participation, and information Enacting the Commission’s recommenda- regarding government decision-making be tions will be an important first step toward increased. reforming state and local governance in • LAFCOs must be required to maintain web California. The actions proposed are incre- sites. (Chapter 7) mental, recognizing that California agencies • LAFCO public and governmental notifica- and institutions generally are not inclined tion requirements must be expanded. toward extreme or precipitous changes. These (Chapters 3 and 7) recommendations will, nevertheless, begin a • Proponents of a new incorporation or debate that may compel the State to prepare special reorganization must be permitted for the next century. If that effort succeeds, to petition LAFCO for full or partial waiver the California of tomorrow will be a better place to live.

Outlook for California Growth Within Bounds: Planning California Governance for the 21st Century 1

CHAPTER ONE Growth Within Outlook for California: Bounds 2000, 2020, and Beyond

Growth, Change, Diversity, and inhabitants, between January 1, 2000 and Opportunity January 1, 2020, a horizon within the lifetimes of most of the readers of this report. Demog- ince the days of Father Serra, continuing raphers project that the high growth rate will through the gold rush, the Southern continue. Shortly after 2030, the State’s SCalifornia water wars, the rise of the increase since the millennium will be equal to motion picture industry, and the post-World the current population of the state of New California’s rate of War II booms (baby, housing, and economic), York. In 2040, the number of California growth will outstrip and into the advent of the age of technology, inhabitants will approach 60 million. California has been defined by one consistent What’s more, unlike the past, most of every other state theme — opportunity. California’s future growth will be self- during the first This opportunity, in turn, has translated generated. Immigration, both from other into unabated growth. According to demogra- states and other parts of the world, will quarter of the 21st phers, this growth is destined to continue into account for only a small portion of the next the foreseeable future. Already the nation’s century’s increase. According to U.S. Census Century. most populous and most urbanized state, Bureau projections, natural increase (births California’s rate of growth, according to the over deaths) will account for nearly 80% of U.S. Bureau of the Census, will outstrip every California’s growth through 2025. For other state during the first quarter of the 21st comparison, natural increase accounted for Century, even those beginning with much only about one-third of total state growth smaller population bases. between 1940 and 1965 and slightly more California is destined to grow by an than half between 1965 and 1995. additional 31 percent, or nearly 11 million

4 Natural Increase Fig. 1-1

3.5 Net Immigration Components of California 3 Population Growth 2.5 1940 – 2025

SOURCE: U.S. Department 2 of Commerce, Census Bureau, Economic and 1.5 Statistics Administration, Current Population Reports: 1 Population Projections: States, 1995-2025, May

Net Population Change (Millions) Net Population 1997. 0.5

0 1941-45 1946-50 1951-55 1956-60 1961-65 1966-70 1971-75 1976-80 1981-85 1986-90 1991-95 2001-05 2021-25 2006-10* 2011-15* 2016-20*

*Projection date interpolated. 1996-00 2 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 1

The story of California has not only been Many of the fastest growing ethnic groups one of opportunity and growth, but of in the state are also the youngest. While the continual change. California possesses the current median age (i.e., the mid-point of all most diverse civilization ever known to the ages of an entire population) of mankind. The State Department of Education California’s white population is 39, the median officially records 54 languages that are spoken Hispanic age is 25, the median for all Asians California is second by significant numbers of students in and Pacific Islanders is 32, and the median for California schools. The Los Angeles Unified African-Americans is 31. The gap between home to many School District claims that over 80 languages the Anglo population and the population as a nationalities. In some or dialects are spoken in the homes of whole is projected to widen steadily through students in the district. More than one in four 2040, when half of the white population will cases, these are the of California’s 5.6 million school children have be over 44. The median age of the State’s world’s largest limited English proficiency. Hispanic population, on the other hand, is California is the second home to many of projected to increase to only 26 years, descendent the world’s nationalities. It contains the indicating continued rapid growth in the populations outside largest U.S. descendent populations of latter half of the 21st Century. individuals of Chinese, Korean, Mexican, This foreshadows some significant social their national Japanese, Filipino, Vietnamese, Cambodian, changes. As Figure 1-2 indicates, California’s and numerous other national extractions. In dominant Anglo population no longer boundaries. some cases, these are the world’s largest represents a majority, and is becoming descendent populations outside their national eclipsed by Hispanic and other ethnic boundaries. We even have the largest Native groupings. As the political balance shifts, American population in the United States. state and local government will need to This diversity contributes to California’s rich recognize and respond to possible changes in culture and entrepreneurial spirit and it is a preferences for services, life styles, and major factor in the State’s relentless economic governmental institutions. machine. It has been said that if a product cannot be sold in California, it can’t be marketed anywhere.

Fig. 1-2 California Ethnic Diversity 2000, 2020, and 2040

American Indian American Indian American Indian 1% 1% 1% African-American African-American African-American 7% 6% 6% Asian/ Asian/ Asian/ Pacific Islander Pacific Islander Pacific Islander 12% 14% 15% White White 31% White 40% 49% Hispanic Hispanic Hispanic 31% 39% 47%

2000 2020 2040

SOURCE: California Department of Finance, Demographic Research Unit, Race/Ethnic Population with Age and Sex Detail, 1970-2040. Outlook for California Growth Within Bounds: Planning California Governance for the 21st Century 3

20 Fig. 1-3 0-19 20-34 35-49 50-64 65+ California Population 15 by Age 1990-2040

10 Population (millions) Population 5

0 1990 2000 2010 2020 2030 2040

SOURCE: California Department of Finance, Demographic Research Unit, Race/Ethnic Population with Age and Sex Detail, 1970-2040.

Implications for Governance expand disproportionately, it may demand yet Population explosions a larger share of available public funds. As we enter the 21st Century, this ethnic A more dramatic situation faces our public will occur at both ends transition will be accompanied by another institutions of higher education (community of the age spectrum, demographic phenomenon that has implica- colleges, CSU, and UC). According to the tions for state and local government. Popula- California Postsecondary Education Commis- segments that tion explosions will occur at both ends of the sion, enrollment in the state’s public cam- traditionally require a age spectrum. Between 2000 and 2040, the puses, currently about 2 million, will increase most dramatic population growth will be by 36% between 1998 and 2010. Based upon higher level of among those 19 and under and those over 65 age-specific growth projections, still higher government services. — segments that traditionally require a enrollments should be expected in the higher level of government services. This may decades to follow. At current per student increase the competition for funding of local spending levels, this could require an addi- government programs, especially funding tional $2.7 billion in state support by 2010 if which originates from the State, and should student tuition is not increased or efficiencies invite a re-examination of land use and implemented. Fig. 1-4 housing needs in light of the public service While school and college age populations Jonas Salk Middle School, and lifestyle changes implied. will experience the greatest numerical Sacramento A steady increase in numbers of children increases, the largest proportional change will Staff photo will further strain the State’s schools, which must absorb an additional 550,000 children in the next 10 years, on top of current K-12 enrollment of 5.8 million. To keep pace with the student population explosion, California must build a new school every five days for the next decade. In financial terms, this will mean an increase in state educational expenditures approaching $3 billion per year in current dollars (in FY 1999-2000, a total of $38 billion will be spent statewide on K-12 education), in addition to capital costs for new school construction. K-12 education is the largest area of expenditure for state and local government and, as school age populations 4 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 1

Fig. 1-5 California Population Change by Age Group 1990-2040

65+

50-64

35-49

20-34

0-19

0% 50% 100% 150% 200% 250%

SOURCE: California Department of Finance, Demographic Research Unit, Race/Ethnic Population with Age and Sex Detail, 1970-2040.

With its growing be among the elderly. Throughout its history, nation. Just as its population mirrors a broad California has been a youthful state, with little cross-section, California’s economy is population and need to make broad provision for its elderly similarly diverse. This will be an extraordi- economy, California population. After the millennium, however, nary strength in the fast moving world of the the State and local governments will clearly 21st Century. stands on the have to concern themselves with housing, According to the Center for Continuing recreation, and health care for their older Study of the California Economy (CCSCE), an threshold of citizens. independent, private economic research unparalleled organization based in Palo Alto, the State’s economy is led by the very sectors that are opportunities. California’s Economy and expected to provide the strongest long term the Challenge of Growth growth potential — high tech manufacturing, foreign trade, entertainment & tourism, and Without doubt, California’s growth will be professional services. expensive. Fortunately, the State’s economic California’s high tech credentials are prowess is expected to continue to lead the affirmed by the U.S. Patent and Trademark

Fig. 1-6 Major Growth Trends, California and the U.S. 1998 - 2005

Cealifornia Percent Chang 1998 2a005 C.aliforni U.S

Total Jobs (Thousands) 15,503.5 1%7,766.9 1%4.6 8.1

Income (Billions of 98$) $905.2 $%1,151.1 2%7.2 19.7

Households (Thousands) 11,127.6 1%2,682.6 1%4.0 7.5

Population (Thousands) 33,550.0 3%7,800.0 1%2.7 5.9

SOURCE: Center for Continuing Study of the California Economy,California Economic Growth, 1999 Edition. Outlook for California Growth Within Bounds: Planning California Governance for the 21st Century 5

Office, which awarded 20 percent of all U.S. on the life style amenities that will attract In a growing number patents to Californians in 1998 and the first entrepreneurs, managers, and workers. half of 1999. Since 1977, California residents CCSCE observes that land use decisions, of California have received nine percent of all patents which broadly include the organization or communities, the awarded worldwide. extension of local government services, play a These emerging industries are buttressed critical role in determining the quality of life response of citizens by strength in traditional markets, such as in California and, therefore, the ultimate shape and their elected textiles, apparel, furniture, and toys. The of the future economy. result is that through 2005, California is Critics charge that poor planning and land representatives to expected to outpace the nation as a whole in use decisions have led to the urban sprawl all major economic indicators. that exists in many areas of California. The unbridled growth has With its growing population and economy, image of Los Angeles creeping slowly into been to take matters California stands on the threshold of unparal- surrounding counties during the 1950s and leled possibilities. Opportunity, however, does 1960s has led to a common refrain in other into their own hands. not guarantee success, as those who failed in areas that they not be turned into “another the past to invest in California industry can Los Angeles.” For some California metropoli- attest. In a report commissioned by Califor- tan areas, however, it may be too late. nians and the Land, a foundation sponsored The two and three hour commute day is collaboration formed to study critical issues now commonplace in large urban areas. The affecting sustainable land use policies in desert regions of the Victor Valley and California, CCSCE identifies five land use Antelope Valley have become the new principles to support a growing economy:

• Principle One: Regional perspectives are required • Principle Two: Land must be used more efficiently • Principle Three: Public investment is required • Principle Four: Fiscal reform is essential • Principle Five: Equity considerations must be included

These principles emphasize CCSCE’s belief that today’s local land use choices will be vital to sustaining California’s economic growth in the future. Failure to address the challenges posed by these principles, in the view of CCSCE, could jeopardize the Golden State’s golden future. These principles clearly challenge state bedroom communities for the Los Angeles Fig. 1-7 and local government. Maintaining a high basin. The tentacles of the Silicon Valley Inland Empire growth quality of life is a matter that requires State stretch to Tracy and Modesto. Commuters (San Bernardino County) leadership and must be addressed at the from Fairfield and Vacaville split destination Staff photo community and regional level, as well. directions between San Francisco and Concern for quality of life and adequate Sacramento. The high cost of land in many of growth planning should not solely be the our job-rich areas drives needed worker interest of environmentalists. Having been housing to remote, detached enclaves. Recent freed of many of the locational constraints of public opinion surveys by the Public Policy a traditional industrial economy, businesses Institute of California (PPIC), a private, non- in the information, technology, and service profit organization which conducts indepen- sectors increasingly base location decisions dent, non-partisan research on economic, 6 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 1

Fig. 1-8 Voter-Approved Urban Limit Line Initiatives 1995-1999

Pct. Voter California has been Year Cyity Count Approval called a nation-state. 1995 Vaentura Ventur 52% Its trillion dollar 1996 Saanta Rosa Sonom 59% economy is eighth 1996 Saebastopol Sonom 67% largest in the world, 1996 Haealdsburg Sonom 71% having only recently 1996 Paleasanton Alamed 75% been surpassed by 1997 Nnovato Mari 70% China. Ventura County 1998 Ventura 63% (unincorporated areas) 1998 Waindsor Sonom 72%

1998 Mailpitas Santa Clar 55% 1998 Caotati Sonom 71% 1998 Paetaluma Sonom 79% 1998 Caamarillo Ventur 68% 1998 Oaxnard Ventur 70% 1998 Saimi Valley Ventur 70% 1998 Tahousand Oaks Ventur 67% 1999 Maoorpark Ventur 68%

SOURCE: The Greenbelt Alliance and various news sources.

social, and political issues affecting California, areas according to development status. have found that Californians are generally Special general plan policies to manage happy with their future prospects and their growth were initiated by elected officials in communities. Nevertheless, nearly four in ten such diverse locales as the City of Lodi and expressed dissatisfaction with government Marin and Ventura counties. Voter initiatives handling of traffic and transportation, which were passed in San Diego, Modesto, Contra is destined to become much worse in the Costa County, and elsewhere. Overall, coming decade. responding to the Office of Planning and In a growing number of California Research 1998 survey of city and county communities, the response of citizens and planning activities, 95 cities and counties their elected representatives to unbridled claim to have enacted some sort of urban growth has been to take matters into their growth boundary or urban limit line. own hands. A number of local jurisdictions Recently, there has been a surge of interest adopted various types of growth management in legislating urban limit lines, often through measures from the late 1970s through the voter initiatives (see Figure 1-8). These early 1990s. In one of the early local measures measures draw artificial boundaries around in 1979, San Diego instituted a “tiered” existing urban areas and in some way restrict approach, delineating specific geographic urban development beyond those lines, often Outlook for California Growth Within Bounds: Planning California Governance for the 21st Century 7 requiring voter approval of any such develop- It is clear that the ment. Since 1996, the only voter initiative to The Regions of establish an urban limit line that has been California effects of growth will defeated was in Santa Paula in Ventura County be much broader than in 1998. While growth management efforts have Other California communities have been initiated in many localities, it is clear any individual adopted urban growth limits through council that the effects of growth will be much jurisdiction. action, with most of these occurring since broader than any individual jurisdiction or 1995. Cities adopting such measures include region. California has been called a nation- San Jose, Modesto, Santa Barbara, Cupertino, state, with substantial justification. Its trillion Morgan Hill, Monte Sereno, Los Gatos, Napa, and Palo Alto. DEL The results of the November NORTE SISKIYOU 1 1999 elections may indicate that MODOC enthusiasm for voter-initiated Fig. 1-9 growth controls may be waning. Growth Rates of Economic Regions While a slow-growth initiative TRINITY SHASTA HUMBOLDT LASSEN of California passed in Half Moon Bay, an open space measure failed in 2 TEHAMA 3 1 Mountain Newark. More significantly, PLUMAS 2 North Coast three severe anti-growth GLENN BUTTE 3 Sacramento Valley SIERRA measures failed in San Ramon, MENDOCINO 4 San Francisco Bay Area A AD Livermore, and Pleasanton, with COLUSA S YUBA EV LAKE U N 5 Sacramento T PLACER T E negative vote tallies of 52%, 61%, R 6 Coastal

YOLO EL DORADO and 56%, respectively. Had they SONOMA 5 7 San Joaquin Valley NAPA passed, these ordinances would have ALPINE 8 Los Angeles Basin 4 AMADOR SOLANO SACRAMENTO 9 Inland Empire been among the most extreme in the MARIN CALAVERAS TUOLUMNE 10 San Diego nation, requiring voter approval of new CONTRA SAN SAN COSTA JOAQUIN MONO FRANCISCO developments of as few as 10 houses. The ALAMEDA STANISLAUS MARIPOSA result would probably have been to push SAN MATEO SANTA CLARA still more Silicon Valley housing into the San MERCED SANTA Joaquin Valley. CRUZ MADERA 1

Although California has not adopted a SAN 7 INYO BENITO FRESNO comprehensive growth management policy MONTEREY for the state as a whole, State officials have TULARE begun to consider some of the effects of 6 KINGS growth, particularly the need for investment in infrastructure. The State Senate and SAN LUIS OBISPO Governor Davis’ administration have created KERN task forces to examine infrastructure needs, SAN BERNARDINO with initial emphasis on schools, transporta- SANTA BARBARA tion, and water. A separate administration VENTURA 9 LOS ANGELES task force is looking at housing, which is 8 generally not subject to public infrastructure Over 100% ORANGE funding. State Treasurer Phil Angelides has RIVERSIDE developed a “Smart Investment” initiative for 70% – 99% targeted placement of State financing SAN DIEGO IMPERIAL programs for infrastructure and housing. 10 While these task groups have yet to issue final Less than 70% reports, the California Business Roundtable estimates public infrastructure needs over the SOURCE: California Department of Finance, Demographic Research Unit, Race/Ethnic Population with Age and next decade to be over $90 billion. Sex Detail, 1970-2040. 8 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 1

Fig. 1-10 Per Capita Income by Economic Region 1998-2010

Region 10998 201 Percent Increase

San Francisco Bay $835,694 $44,43 24.5%

Coastal 296,544 32,99 24.3%

Los Angeles Basin* 266,955 32,59 20.9%

California 286,930 32,96 22.4%

Sacramento 276,242 32,50 23.9%

San Diego 295,777 31,71 23.1%

Mountain 220,777 25,61 23.3%

Inland Empire* 240,432 26,18 28.2%

North Coast 270,631 25,42 23.2%

Sacramento Valley 169,851 24,80 25.0%

San Joaquin Valley 169,115 23,98 25.5%

* Commission estimates, using CCSCE data. SOURCE: Center for Continuing Study of the California Economy,California County Projections, 1999 Edition.

One major reason for dollar economy is eighth largest in the world, regions — the Los Angeles Basin and the San having only recently been surpassed by China. Francisco Bay Area — will be its slowest the differing growth It is not a monolithic expanse of homogenous growing at 43 and 37 percent respectively. rates among political subdivisions. Rather, it is an assem- Despite a relatively slow rate of growth, the blage of vast regions differentiated by unique Los Angeles area will nevertheless gain nearly California’s regions physical and economic features. 6 million new inhabitants and will have a are enormous Although there are numerous ways that population exceeding all but five states. the regions of California might be defined, we Projected growth rates through 2040 of the differentials in will use a variation of the nine economic ten regions are illustrated in Figure 1-9. housing costs. regions identified by CCSCE. Our variant, for One major reason for the differing growth purposes of discussion, is to carve out a tenth rates among California’s regions are enormous economic region by splitting the Inland differentials in housing costs. According to the Empire, with its remarkable growth, from the California Association of Realtors, median immense but slower growing Los Angeles resale home prices in mid-1999 were $412,450 basin. in Santa Clara County and $381,610 in the San California’s regions will not feel the effects Francisco Bay Area, which are within the of 21st Century growth uniformly. While the region expected to grow the slowest. By population of the state as a whole will grow by comparison, the fast growing Inland Empire 69 percent between 2000 and 2040, the Inland and Central Valley regions had median home Empire will experience a colossal growth rate prices of $135,820 and $124,060, respectively of 165 percent. The San Joaquin Valley and — about one-third the value of the Bay coastal counties will also see their populations region. more than double. California’s two largest Not surprisingly, the major metropolitan Outlook for California Growth Within Bounds: Planning California Governance for the 21st Century 9 areas are wealthier than the more rural and would appear incapable of producing the jobs agrarian ones. According to CCSCE projec- needed to support such substantial population tions, this relative standing will continue into increases. the next century. Some changing trends will The relatively low cost of land in the begin to emerge, however. The greatest region, however, could stimulate growth and income gains will occur in the Inland Empire diversification in the economic base. More- California’s challenge and the San Joaquin and Sacramento Valleys, over, the current proposal by the High-Speed while the Los Angeles Basin is expected to Rail Authority to construct an inter-city rail in the 21st Century experience the slowest growth. line between San Diego and Northern will be to manage its CCSCE also expects uneven rates of job California, with stops in the San Joaquin growth among California’s economic regions. Valley, would likely assure the current inevitable growth in The state as a whole is projected to add 14.6% population growth projections and might such a way that more jobs through 2005, compared to 8.1% even prove them conservative. To accommo- for the nation. Although the largest number of date substantial population and economic irreplaceable new jobs between 1998 and 2005 will occur in growth throughout the entire Central Valley, the Los Angeles and San Francisco Bay areas, some policy trade-offs may be debated. These resources, government job growth of 14.6% and 14.5% in those will involve reconciling traditional California services, and quality of respective regions will be well below the suburban growth patterns with policies regional rates of increase in San Diego encouraging the preservation of agricultural life are maintained. (20.6%) and Sacramento (17.4%). Jobs in the land, and the potential effect this might have balance of the state will grow more slowly on one of California’s traditionally dominant than in these four large metropolitan regions, industries. but will nevertheless exceed the national pace. California’s challenge in the 21st Century There are questions that naturally arise will be to manage its inevitable growth in from examining the projections. One such a way that irreplaceable resources, concerns the future of the San Joaquin Valley, government services, and quality of life are where significant population gains are maintained. This will require smart govern- forecast in the early 21st Century. Paradoxi- ment action and sustained citizen involve- cally, the region’s economy, based largely on ment. If successful, California will retain its agriculture and lacking a strong presence of standing as the world’s foremost land of any of the major future growth industries, opportunity.

Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 11

Growth CHAPTER TWO Within Local Government in California Bounds

sked what he or she wants from level of services demanded by their citizens government, the typical citizen may and in their ability to finance these services. A well answer “nothing.” The stereotype Beginning with the passage of Proposition 13 of government is irrelevant bureaucracy, in 1978, local governments have been in a At the outset of the endless and pointless meetings, and red tape. continual state of transition, adapting to a 21st Century, The reality, however, is that government world in which expectations remain high, but provides the services that distinguish most control over financing local services has California local American society from Third World squalor. been taken from their hands or turned into a governments face Police officers, firefighters, teachers, building sweepstakes competition with other localities. inspectors, and other government workers The result has been frustration and disillu- unprecedented make modern society possible. Without sionment, both for citizens and their local reliable water and sewer systems, well- elected officials. challenges. maintained roads, and environmentally safe This reality has led in many cases to subtle waste disposal facilities, businesses would not changes in the roles traditionally played by invest in job-producing office parks and each level of local government as decisions factories. Public parks, libraries, open spaces, over land use planning and the provision of and recreation centers make life sustainable in services have been driven increasingly by congested urban areas, while judicial, revenues. Counties have actively entered into correctional, and probation systems keep competition with cities for development. Fig. 2-1 society secure and the men and women who Cities and special districts sometimes Health care worker and provide social, health, and welfare services compete with the private sector and with one patient, Kaweah Delta Health weave a safety net that diminishes alienation. another to capture a “market share” for Care District, Visalia Local governments in California render all utilities and other enterprises. Time will tell if Photo: Dave Thurber of these essential services, in whole or in part. They are part of California’s scheme of “governance”– the way that we exercise political authority to control and regulate public policies and actions. Although to many people, it is unimportant to know how local governments are formed, organized, or financed, these matters are critical to governments’ ability to perform in the next millennium. The ability of governments to adapt to change may, in fact, determine whether some public services can continue to be provided at all. An understanding of the structure and functions of local government, and the challenges faced, is, therefore, a central component to planning a livable California in the 21st Century. At the outset of the 21st Century, Califor- nia local governments face unprecedented challenges, both in their ability to deliver the 12 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 2

this era of governmental entrepreneurism will Fig. 2-2 benefit the taxpayers or simply confuse them. Local Government Revenues 1995–96 Fiscal Year

Redevelopment Agencies California’s Scheme of Local 3% Government

The California Special Although grouped in different ways for Districts School 15% Districts Constitution different purposes, six “classes” of local 27% recognizes the special government are generally recognized in Cities California. The six groupings and numbers of Community 24% standing of counties, governmental units reported by the State College Counties Districts Controller’s Office in 1995-96 are as follows: 3% which are legal 28% subdivisions of the Counties 58

Cities 470 TOTAL REVENUES: $115.6 BILLION State, specifying Special Districts 4,816 greater organizational Community Redevelopment Agencies 399 SOURCE: California State Controller, Annual Reports: Counties, School Districts 993 Cities, Special Districts, Community Redevelopment Agencies, School Districts, 1995-96; California Department of Finance, detail than for any Community College Districts 71 Governor’s Budget, 1997-98 (past year, California Community other form of local Total units of local government 6,807 Colleges). government. Combined revenues of all these local government units totaled $116 billion in 1995-96, sources for counties, cities, and special apportioned as indicated in Figure 2-2. These districts is indicated in Figure 2-3. Despite revenues derive mostly from taxes, fees for some functional overlaps, each of these levels services, and intergovernmental transfers of government has a unique role in (primarily state and federal funds). The focus California’s scheme of local governance and of this report will be on counties, cities, and each has its own historical and legal status. special districts, the providers of general local The California Constitution recognizes the government services. The major revenue special standing of counties, which are legal

Property Tax Fig. 2-3 20 Sales Tax County, City, and Special Intergovernmental Revenues District Revenues by Source Fees & Enterprises 15 Other

10 Dollars in Billions 5

0 COUNTIES CITIES SPECIAL DISTRICTS

SOURCE: California State Controller, Annual Reports: Counties, Cities, Special Districts, 1995-96 (some figures derived). Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 13 subdivisions of the State and also serve as counties, cities, and special districts — on the agents for the State for various functions, other hand, most often are the providers of specifying greater organizational detail than direct services to the people, under general for any other form of local government. It rules established by the State. prescribes general guidelines for county formation, consolidation, and boundary Counties changes, and provides for certain elected county officers. The Constitution allows for California counties have three fundamen- the formation of cities, but leaves all details to tal areas of responsibility within the State’s the Legislature, instructing it to prescribe a system of governance. They serve as adminis- “uniform procedure,” which it has done through the Cortese-Knox Local Government Fig. 2-4 Reorganization Act of 1985. The Constitution does not directly discuss the formation of Functions of County Government by Service Classification special districts, but their existence is Primary Service Regulator or Beneficiary acknowledged by reference in several sections. Function Setate Countywid Municipal Interestingly, the only constitutionally guaranteed voter rights pertaining to local General administration ✖✖ ✖ government organization concern the Elections ✖ formation or consolidation of counties and the consolidation of two or more cities. Property management ✖ Contrary to popular belief, there is no constitutional right to choose one’s own form Judicial ✖ of local government. Police protection ✖ These provisions indicate that the Framers viewed the roles of counties, cities, and special Detention & correction ✖ districts differently. Indeed, the California State Association of Counties (CSAC) states Fire protection ✖ that there is a fundamental distinction Flood control ✖ between a county and a city in that cities have broader revenue generating authority and are Protective inspection ✖ subject to less control by the State than are counties. The Legislature may delegate to the Roads ✖ counties any of the functions which belong to Transportation facilities ✖ the state itself. Nevertheless, in the unincorporated portions of some urban counties, the Public health services ✖ distinctions between the roles of cities and the Medical, mental health, ✖ county, and sometimes even special districts, substance abuse are often blurred. Sanitation ✖

Public assistance ✖ Roles of Local Governments General relief ✖ Traditionally, government at the state level ✖ ✖ is broadly responsible for financing funda- Libraries mental health and human services, protecting Other education ✖ consumers and the environment, providing for public education, promoting job and Recreational facilities ✖ economic development, supervising the Cultural programs and regional ✖ justice and correctional systems, and con- recreation structing major statewide infrastructure. ✖ General purpose local governments — Debt service Source: Commission on Local Governance for the 21st Century 14 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 2

trators of State programs, providers of 2. Countywide support services are countywide support functions, and furnishers provided to all citizens and local agencies of municipal services. These three functions within the county, including those in the are further identified by service type in Figure incorporated areas. These services include 2-4 and are summarized in the narrative supervision of elections, collection and which follows the table. disbursement of taxes, criminal investigation This wide variety of service functions can and prosecution by the district attorney, prove challenging both to county elected operation of the county jail, management of officials and county budgets. Performance is the court system, probation services, public Local governments dictated by a complex array of regulations and health services, and funding for local agency supported by various sources of funds. Some formation commissions. most often are the programs are general county-wide govern- providers of direct mental functions while others benefit only 3. Municipal-type services are furnished certain groups of citizens or specific parts of only to unincorporated areas, though some of services to the people, the county. these services may instead be provided by under general rules special districts. Municipal services include 1. State programs, for which counties are law enforcement, fire protection, parks, established by the the primary direct implementers, comprise recreation programs, water, sewer, trash the largest portion of county budgets — collection, planning, and building inspection. State. nearly two-thirds. The largest are health, The cost of providing services to unincorpo- human services, and justice programs, the rated areas varies from county to county, implementation of which is virtually dictated based largely on the portion of the county that by state and federal regulations. Although is outside cities and the extent of urbanization most funding for these services derives from in unincorporated areas. Overall, based upon state and federal sources, a significant match an analysis of data compiled by the State is nevertheless required from general purpose Controller, the Commission estimates that discretionary funds available to the county. municipal-type services consume about ten percent of county budgets statewide. This overall estimate is consistent with testimony Fig. 2-5 presented to the Commission by David Estimated Costs of County Functions Janssen, Chief Administrative Officer for Los 1996-97 Fiscal Year Angeles County, who stated that municipal services account for about ten percent of his 20 county’s budget.

The above named responsibilities compete 15 for the limited general purpose discretionary funds that comprise only a small portion of counties’ total available revenues. Many county programs, especially administrative 10 functions, may overlap these three county areas of responsibility, and expenditures for each role vary greatly among counties. Although counties are not required to report

BILLIONS OF DOLLARS 5 their costs in a manner that precisely relates program expenditures with funding sources, the Commission has estimated in Figure 2-5 the approximate allocation of statewide costs 0 of these three general county roles, along with State-controlled Countywide Municipal Fee-supported services services services services fee-supported activities, based upon financial reports submitted by counties to the State SOURCE: California State Controller, Counties Annual Report, 1996-97 (figures derived). Controller. Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 15

Cities Today, about 81% of Californians live in cities, compared to 75% in 1974. The range of Cities are independent general purpose services provided by cities is very broad, but local governments which provide municipal specific types and levels of services vary services that are uniquely tailored to and considerably among individual cities. controlled by the communities they serve. Whereas many cities, particularly California’s Like counties, they also are authorized to largest metropolises, provide a full range of Cities are independent exercise land use planning and control. municipal services, others rely upon special Several factors distinguish city govern- districts for some functions or contract with general purpose local ment from county government. Budget and the county or other cities for services. This governments which land use decisions affecting residents of latter approach, known as the “Lakewood unincorporated areas are made by a county Plan” for the Los Angeles County municipality provide municipal board of supervisors that may be located that pioneered it in the 1950s, is popular services that are many miles distant. The board must, while among newly incorporated cities as a means dealing with municipal service issues of reducing costs and facilitating the transi- uniquely tailored to throughout the county, also make complex tion away from county services. Services decisions concerning massive health and provided by cities commonly include: and controlled by the human services programs. A city council, on • Public safety (police, fire, building communities they the other hand, is usually much closer and inspection, etc.) deals only with direct services to city resi- • Local streets, roads, transit, airports, serve. dents. Cities do not serve as agents of the harbors State in the delivery of social programs. In • Public utilities (usually solid waste and testimony before the Commission, the League local sewers, sometimes water and of California Cities provided this explanation electricity) for why cities are formed: • Parks, recreation, libraries, museums, arts “People form cities because they want local • Planning and zoning control over the growth and development over Figure 2-6 depicts combined statewide their communities. Moreover, they want spending in 1995-96 by the 470 cities then- services tailored to their particular needs and established, along with the restricted and visions and they want greater control over how unrestricted revenues available for providing those services are performed and plans carried municipal services. out.”

Fig. 2-6 California City Spending and Revenues 1995–96

Expenditures Revenues

Licenses Other Special Taxes 3% & Permits/ Assessments !% Libraries Fines, etc 4% Debt Service !% Other 2% Fees for Service 7% City Council & 6% Management Intergovernmental 7% 9% Sales & Use Tax 10%

Parks & Public Utilities Recreation & Enterprises 7% Property Taxes 7% 33% NOT RESTRICTED RESTRICTED Fire & EMS 64% 36% Other General Taxes 7% 7% Service Charges (water, sewer, Utility User Taxes 4% refuse, etc.) Planning & Police 40% Other General Revenues 4% Development 17% Intergovernmental 4% 10% Streets, Drainage & Lighting SOURCE: League of California Cities, State Controller. 10% 16 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 2

essentially taxing mechanisms to finance a particular type of service or improvement, such as street lighting. Independent special districts, on the other hand, are defined in the Cortese-Knox Act as those having elected boards or boards appointed to fixed terms. These districts are, therefore, independent governmental entities which make program and spending decisions unencumbered by the actions of other elected boards. There is no authoritative count of the number of independent special districts in California. The State Controller does not classify its district reports in precisely this way. The Controller identifies 3,043 districts as having “other” governing boards, but this figure certainly exceeds the valid number of Fig. 2-7 Special Districts independent special districts. The Controller’s The largest tax-supported total includes districts, joint powers authori- municipal expenditure is for Special districts are formed to perform ties, and non-profit corporations having joint public safety one or more specific services, such as governing boards or appointed boards that provision of water, sewer, lighting, or fire serve at the pleasure of county supervisors or Staff photo protection. Traditionally, most were estab- city councils, as well as truly independent lished in rural areas when populations began government agencies. to grow and become more dense, thereby Two alternate sources provide a truer requiring public agencies to be formed to estimate of the total. To provide information provide services previously provided indi- for this report, the Commission sponsored a vidually or jointly by residents. survey of local agency formation commis- Districts do not have broad governing sions.* These LAFCOs identified a total of Special districts are authority. In some rural areas, however, 2,586 independent special districts. For community services districts and even some national comparisons, the 1992 Census of formed to perform public utility districts assume nearly a full Governments, published by the U.S. Census one or more specific range of municipal functions. For this reason, Bureau, counted 2,797 independent districts. special district offices have occasionally been The Bureau defines as special districts, services, such as termed the “town halls” of rural California. entities “… which are established to provide provision of water, Planning and zoning decisions in unincorpo- only one or a limited number of designated rated areas, however, are vested in the county functions and having sufficient administrative sewer, lighting, or fire board of supervisors, even if a community and fiscal autonomy to qualify as independent protection. services district providing nearly a full array governments.” of services is present. The State Controller currently groups special districts into 54 categories for compiling annual fiscal reports, according to the primary services provided by each district. Moreover, the Controller also classifies each district according to its governing board. Of the 4,816 districts reporting to the Controller in 1995-96, 1,773 * Throughout this report, local agency formation are governed by a county board of supervisors commissions, established in every county except San or a city council, making them dependent Francisco, will be referenced by their commonly known special districts. Most of these districts are acronym, LAFCO. Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 17

Trends in Local Finance governments, not only by limiting their overall funding but, perhaps more significantly, by As previously indicated in Figure 2-3, constraining their ability to raise their own services provided by cities, counties, and revenues and to spend what funds are special districts are financed in a number of available on the most pressing priorities of ways. Five primary sources predominate: their constituents. Following is a summary of • Local property taxes the major measures enacted since 1978 that • Sales taxes have combined to permanently alter the fiscal • Vehicle license fees relationship between the State and its local • State subventions and intergovernmental agents: It is notable that the transfers property tax, • Fees and user charges 1978 Voters approved Proposition 13, which The other major potential source for taxation, cut property taxes by 56 percent, estab- traditionally the the incomes of individuals and businesses, lished a 1% cap on the tax rate, prohibited has been preempted exclusively by the State. increasing the ad valorem rate above 1% primary financing The relative importance of each of the local for any new expenditures, and, perhaps mechanism for local revenue sources varies among the levels of most significantly, shifted control over local government and from jurisdiction to allocation of the resulting property tax services in California, jurisdiction. Whereas intergovernmental revenues to the State Legislature. today accounts for revenues comprise two-thirds of county 1979 The Legislature enacted AB 8, which funds, for example, special districts rely shifted a portion of remaining property only a very small mostly on user charges, while cities receive tax revenues from schools to other local portion of local revenues from much more broadly based governments, making up the difference sources. Moreover, the “revenue mix” differs from the State General Fund, and allocated government budgets. for each individual jurisdiction, making local property taxes by formula in each county, financial reform more complicated. based primarily on each entity’s propor- Although it is important to all levels of tionate share of pre-1978 property taxes. local government, it is notable that the 1979 Voters approved Proposition 4, which property tax, traditionally the primary established Constitutional spending limits financing mechanism for local services in for each government entity and required California and throughout the nation, today the State to reimburse local agencies for accounts for only a very small portion of the cost of any state-mandated local California local government budgets. The programs. property tax is nevertheless significant 1982 The Legislature allowed local govern- because it is one of the few sources of ments and schools to pass parcel taxes discretionary funding for local governments (not ad valorem taxes) to fund public and because it is the primary source of works and limited services, subject to 2/3 funding for many types of independent voter approval. The Legislature also special districts, such as those providing transferred responsibility for medically library, park, fire, and pest control services. In indigent adult health care to counties, testimony before the Commission, representa- which were to provide a reduced scope of tives of these districts urged that special benefits commensurate with reduced consideration be given to funding these funding. important functions, which have been hit 1984 The Legislature raised vehicle license especially hard since the State implementation fees (VLF) and gave local governments the of the Education Revenue Augmentation Fund new revenues. (ERAF) in 1992 and 1993 (see text box). 1986 Voters approved Proposition 47, Discretionary funding has become a guaranteeing that VLF revenues would go progressively more sensitive subject among to counties and cities and allowing an local governments in recent years. A series of override of the 1% cap on ad valorem mostly voter-adopted initiatives have steadily property taxes for bonded indebtedness eroded the independence of California local for acquisition or improvement of real 18 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 2

Education Revenue Augmentation Fund

(Abridged from Briefing Paper for Senate Local Government Shift Committee interim hearing on Property Tax Allocation, Value in September 21, 1999) (Dollars in millions) 14992-93 1993-9 1998-99 Faced with significant budget problems in 1992-93 Counties $3585 $82,02 $2,79 and then again in 1993-94, the Legislature and Governor Cities 2340 371 53 Pete Wilson faced tough political choices. While some legislators were willing to raise taxes again, as they did in Special Districts 3475 254 28 1991-92, Wilson resisted. While Wilson was willing to cut Redevelopment 2500 60 state spending and entitlement programs, many legislators resisted. Instead, they settled on an expedient third Totals $51,400 $02,64 $3,62 alternative, shifting property tax revenues from counties, cities, redevelopment agencies, and special districts to measures that are associated with the ERAF property tax schools and community colleges. Boosting schools’ local shifts: revenues eased the pressure on the State General Fund. Proposition 172, the 1/2¢ state sales tax for local public Every new dollar in property tax revenue for schools was safety programs, produces about $1.9 billion in 1998-99, a dollar that the State General Fund avoided spending on mostly for counties. schools. The Educational Revenue Augmentation Fund (ERAF) Trial Court Funding provided counties with about $357 is the mechanism for shifting property tax revenues from million in 1998-99. local governments to schools. Blamed for nearly every- COPS program delivers $100 million a year for local law thing except El Niño, ERAF has become the icon for all that enforcement. is wrong with state-local relations. Even to the most thoughtful observers, ERAF continues to be the major ir- General Assistance grants by counties declined by about ritant in the state’s relationship with its local governments. $200 million, saving money for county governments. Local officials rate reversing the property tax shifts as their Fines and forfeiture revenue for counties and cities grew highest priority, as resentment over ERAF infects nearly by $62 million because of changes in state formulas. all other debates over programs and fiscal policy. However, from the state government’s point of view, While these countermeasures ameliorated some of ERAF is the logical consequence of Proposition 13 and its the fiscal problems caused by the ERAF shifts, the relief aftermath. After the voters cut property tax revenues in has not been uniform. Counties were the direct benefi- 1978, the Legislature used its budget surplus to bail-out ciaries of the boosts in funding for public safety and trial schools and local governments. The AB 8 shift in 1979 courts. Cities received some relief from the COPS program solidified the state’s post-Proposition 13 subsidies by and, although politically unpopular, raised local revenues. boosting state funding for schools and shifting schools’ Special districts — particularly non-enterprise, non-pub- property tax revenues to counties, cities, and special dis- lic safety programs — suffered the most. tricts. By spending more on schools and then sending Lacking the political cachet of police and fire protec- schools’ property tax revenues to local agencies, the State tion and without the ability to charge user fees to offset General Fund indirectly subsidized local governments their costs, the special districts that provide non-enterprise from 1979 to 1992. The state government was able to services are still reeling from ERAF’s aftershocks. Recre- sustain this indirect bail-out so long that local officials ation and park districts, mosquito abatement districts, and came to accept it as the normal state of fiscal affairs. When library programs are among the most obvious victims. the state government’s budget crisis got worse in 1992- Some suburban park districts have decided to fill in neigh- 93, ERAF reversed the 13-year old property tax shift [see borhood swimming pools because they can’t afford to table]. ERAF played havoc with local governments’ bud- operate them anymore. ERAF’s property tax shifts and re- gets, but the result may not have been much different than lated budget problems hammered library districts and what would have happened in the late 1970s without the county free libraries (run as if they were districts). Accord- AB 8 property tax shift. ing to the State Library’s California Research Bureau, Since the 1992-93 and 1993-94 crises, the Legislature Alameda County’s library program suffered a 45.5% loss has limited some local governments’ shifts. Although dif- and Contra Costa’s library a 20.8% loss. These losses were ferent observers count the types and amounts of fiscal not confined just to metropolitan counties, as Colusa relief differently, the Legislative Analyst recognizes five County’s library faced a 38.8% hit. Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 19

property, with 2/3 voter approval. Fig. 2-8 1986 Voters approved Proposition 62, Percentage Share of Overall Discretionary Revenues requiring majority voter approval for any By Level of Government and Year new or increased local general taxes and 2/ 3 voter approval for any new special taxes. Level of Government 11978 198 12988 199 1995 Because of legal challenges, many local State 610 6 663 5 52 governments did not immediately comply with the new voting requirements for Counties 527 4 412 4 31 general and special taxes. Cities 469 4 479 4 44 1988 Voters approved Proposition 98, which required a minimum funding level for Special districts 665 6 617 7 69 schools, effectively limiting funds available School districts 982 8 734 7 71 for other purposes. Public higher 668 6 633 6 62 1988 The Legislature enacted the Brown- education Presley Trial Court Funding Act, which Overall, California 614 6 660 5 52 increased the State share and reduced the government county share of trial court costs. SOURCE: Michael A. Shires, Patterns in California Government Revenues Since Proposition 13, Public Policy Institute of California, 1991 The Legislature “realigned” several 1999. health and human services programs by transferring responsibilities to counties proposes two reasons why reducing local along with an increased sales tax share. control over revenues may be important to 1992 and 1993 The Legislature, in response citizens: (1) it reduces the accountability of to a $14 billion State budget shortfall, local government and (2) it significantly transferred a portion of local property decreases the ability to raise revenues for taxes back to the schools by creating an locally desired services. Educational Revenue Augmentation Fund Coupled with this loss of control over (ERAF) in each county, effectively cutting revenues has been an increased reliance by property taxes to other local governments California local governments on two contro- by $3.6 billion (1999 dollars), as estimated versial sources of funds: user fees and sales by the Legislative Analyst. Because taxes. These revenue-driven priorities have funding for certain programs was simulta- had a profound effect on local governance in neously transferred to the State, the California. Analyst estimates the current net loss to Fig. 2-9 local governments to be nearly $1.4 billion. Revenues of Counties, Cities, and Non-Enterprise Special Districts 1994 Voters approved Proposition 172, which established a 1/2-cent sales tax for local 50 public safety. Fees 1996 Voters approved Proposition 218, which re-affirmed the Proposition 62 voting 40 Other Revenues requirements for general and special taxes and restricted the ability of local governments to increase other revenues by 30 extending voting requirements to property-related fees and benefit assessments. 20

A recent study by the Public Policy BILLIONS OF DOLLARS Institute of California (PPIC) found that the 10 diminution of local control over revenues has, in fact, been quite pronounced, especially in counties, which have seen the percentage of 0 their revenues that are discretionary nearly 1985-86 1995-96 halved, as indicated in Figure 2-8. PPIC SOURCE: California State Controller, Annual Reports: Counties, Special Districts, 1985-86 and 1995-96. 20 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 2

In the ten years from 1985-86 to 1995-96, produces only slight revenues from property revenues derived from user charges rose more taxes for the typical city, but requires the than one-third faster than did other revenues support of extensive police, fire, recreational, among counties, cities, and non-enterprise and other expenditures. special districts. According to the California Until recently, evidence of the fiscalization Taxpayers’ Association, California state and has been largely anecdotal. A 1999 study by local governments rank 13th among all the PPIC, however, provides the first real measur- states in per capita fees and assessments. able proof, revealing through a survey of city Although user financing is appropriate for managers that retail land-use is in fact the many services, this increasing reliance has preferred development and is the most likely implications for the less affluent. to receive a general plan change or financial Competition for sales Higher fees and assessments are apparent incentive. Multi-family residential and heavy tax revenues has been for a wide range of local services, from park industry were least desired. Testimony admission charges where none were previ- presented to the Commission, moreover, cited by many ously assessed to regular increases in trash reveals that many cities and counties offer authorities as one of collection fees due, in part, to assessments for financial inducements to retailers to locate environmental protections. Perhaps the most within their jurisdictions, sometimes effec- the most significant controversial charges have been the developer tively rebating up to one-half of sales tax unintended fees now routinely assessed against construc- proceeds to retailers in the form of publicly tion projects. Although not a new phenom- financed infrastructure and improvements consequences of enon, developer fees have risen dramatically benefiting the retailers. Proposition 13. throughout California since passage of This competition for sales taxes seemingly Proposition 13. According to the California leads to no net overall economic benefit either Building Industry Association, fees have for a region or for the state. According to the reached levels as high as $20,000 in many PPIC study, retail industry sources report that parts of California and are reportedly as much California does not devote a significantly as $40,000 for middle income housing in higher portion of land to retail uses than other some parts of Contra Costa County. Many states and that retail location decisions are claim these fees are one of the most oppres- dictated mostly by demographic and business sive barriers to production of affordable considerations that are outside the control of housing in California. any local government. Government financial Competition for sales tax revenues has inducements merely determine winner and been cited by many authorities as one of the loser locales within a defined geographic area. most significant unintended consequences of Moreover, the PPIC analysis indicates that Proposition 13. In the mid-1980s, government municipal competition for retail activity has policy guru Dean Misczynski, then with the had no discernible effect on the overall Senate Office of Research, predicted that a pattern of retail location. “fiscalization of land use” would occur as local As a matter of public policy, the current governments began scrapping over sales tax fiscal incentives for local government are and other previously obscure revenue sources. clearly counterproductive. Noting that “the According to this theory, local government raw material of a municipality is land,” the planning and zoning decisions will favor comments of urban planner William Fulton, revenue producing uses, especially retail, over though addressed to Los Angeles, apply housing and industry, which generate only equally to other California cities: property tax money, of which only small amounts accrue to local government coffers. “ . . . the post-Proposition 13 era in Los The sales tax, on the other hand, is one of the Angeles has been an era during which, more few revenue sources which can be signifi- than ever before, growth patterns have been cantly enhanced through entrepreneurial driven by money — and not just the desire for efforts of cities. Moreover, relatively little private profit, but by the desire for public profit expenditure is needed to support retail as well. If a city or county owned a choice piece establishments. Housing, by contrast, of real estate, the property’s fate was usually Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 21 determined not by what was best for the town overall per capita sales tax revenues available but what was best for the treasury. . . The result, to California cities have been stagnant, leaving not surprisingly, was a dismal urban landscape. cities to fight over a largely fixed pie. More- Towns designed by bean-counters are rarely over, the situation is not likely to improve. The towns that anyone would want to live in.” trend in recent years has been toward a — William Fulton, The Reluctant Metropolis, greater percentage of disposable income being An analysis of major Solano Press Books, 1997 spent on non-taxable personal services rather than traditional consumer goods. tax sources reveals Of perhaps greater concern to cities reliant that investing a city’s Revenue Reliability and Stability on situs sales tax revenues, however, is the rapid growth of electronic commerce and future in sales tax Is reliance on sales taxes a wise choice for Internet sales, which are currently exempt revenues may be cities? An analysis of major tax sources (see from California sales taxes because of a three- Figure 2-10) reveals that investing a city’s year moratorium on Internet taxation enacted short-sighted. future in sales tax revenues may be short- by Congress in 1999. Nearly non-existent sighted. To correct for changes in rates of three years ago, Internet sales nationally taxation, the Commission compared indices of totaled $9 billion in 1998 and are projected by the underlying derivatives of major tax the U.S. Commerce Department to rise to $30 sources — personal income, corporate profits, billion in 2000. Forrester Research, Inc., an assessed value of real estate, and taxable retail independent private market research firm, sales — and reached some conclusions. Since projects that Internet sales will top $180 1981, only corporate income showed less billion in 2004. The number of companies cyclical stability than retail sales, and retail selling on the Internet tripled between 1997 sales was the only measure of taxation sources and 1998, when 39% of all retailers offered that did not out-perform a “population/ on-line shopping opportunities. inflation” index (i.e., a measure of population Even big ticket items are being purchased growth adjusted for inflation that serves as a through e-commerce. J.D. Power and Associ- “baseline” for essentially a no revenue growth ates reports that 40 percent of recent car scenario). buyers used the Internet to help them shop, The PPIC Local Sales Tax study reached and that the number of purchasers who used essentially the same conclusion, noting that an on-line buying service doubled during the

250 Fig. 2-10 Corporate Profits Indices of Major Tax Sources Assessed Value Compared to Population 200 and Inflation Personal Income

150 Population/Inflation Index Retail Sales 100

PERCENT CHANGE SINCE 1981 50

0 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997

SOURCES: Sales taxes: California Board Of Equalization, Annual Report, various years. Assessed value: California State Controller, Counties Annual Report, various years. CPI and personal income: Department of Finance, California Consumer Price Index, All Urban Consumers; Governor’s Budget Summary, various years. Corporate profits: Franchise Tax Board, Corporate Profits Before Taxes by Income Year, various years. 22 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 2

first quarter of 1999 to more than 25,000 per local government reorganization law, the month nationwide. Those local governments central charge of the Commission, is one which have invested tax dollars in incentives aspect of this reform, though by no means the to attract auto malls may be understandably sole focus. concerned about this trend. California’s cities and counties would be Local Fiscal Reform wise to consider seriously the merits, both in terms of public policy and fiscal health, of California cannot long prosper in the next reforming local government finances to century under the current state-local fiscal Cities and counties reduce reliance on sales taxes, even at the arrangement. Local governments are closest expense of some temporary decline in to the needs of citizens and are best able to will serve their citizens revenues. Over the long term, cities and quickly adjust to changing service needs. best if their decisions counties will serve their citizens best if their Consequently, the principles which follow decisions are driven by strategic planning should guide reform of fiscal relationships to are driven by strategic vision rather than ephemeral market gains. better serve the public. planning vision rather 1. There must be a logical nexus between a than ephemeral Guiding Principles for tax imposed and the resultant expenditure market gains Governance Reforms of those tax funds. 2. To the greatest extent possible, local An examination of the fiscal conditions property-related services must be faced by local government, combined with the supported by the property tax. demographic outlook for California’s future, 3. Taxpayers must be able to easily under- lead to an inevitable conclusion that gover- stand the sources and uses of their tax nance reforms are needed if localities are to dollars; tax bills must include a break- adapt to the momentous changes of the 21st down of the taxes billed, specifying which Century and continue to provide services agency receives funds and the responsible valued by their customers — the voters, taxing authority. taxpayers, and residents of their communities. 4. The point-of-sale allocation of the sales These reforms should be comprehensive, tax must be revised to mitigate its effect as addressing fiscal needs, government organiza- an incentive for “fiscalization of land use.” tion, infrastructure planning, land-use Any changes to existing tax allocations decisions, and the resulting quality of life must be phased-in over a period of time consequences. The Commission believes that and all units of local government must be needed governmental reforms must consider: held harmless by the initial reallocation plan. • involving citizens in government decision- 5. When a change of organization or making and valuing their input; reorganization is authorized, there must be • enhancing fiscal stability and accountabil- sufficient resources available for transfer ity for all levels of government; and to cover the costs of providing the services • developing local, regional, and statewide transferred and to continue to fund the strategies for planning and channeling the ongoing responsibilities of the previous effects of future growth. service provider. The balance of this report will discuss the 6. Any proposal for modification of State and ways that local governments can become more local government financing must include a responsive to citizen demands, beginning legally adequate commitment by the State with the procedures for adapting their to continually and adequately fund its organizations, through the Local Government obligation to local government for State Reorganization Act, to 21st Century needs. mandated costs. The Commission has adopted a series of 7. Meaningful State and local government principles to guide local fiscal and growth financing modifications to ensure planning reforms for California. Reforming adequate financing availability for local Local Government in California Growth Within Bounds: Planning California Governance for the 21st Century 23

government can only be assured if the 3. Government service delivery systems must State acknowledges and legally confirms be transparent to the people, so that they its constitutional obligation to reimburse can readily determine a responsible local government for the full costs service provider who can provide assis- associated with State mandates that have tance or solve problems. People must not been imposed on local government. be repeatedly referred from one public 8. For over 20 years, the State has consistently service bureaucracy to another. avoided any on-going, periodic and legally 4. Government service delivery must be binding commitment to provide funds for accountable to those who are served and reimbursement for State mandated costs policy decisions must be made by decision California’s imposed on local government. Any makers who are visible and accessible to reallocation of revenue sources for local the affected individuals. fundamental structure government to ensure the stability of local 5. Government must take active steps to and system of government financing as well as the extent increase the ability of individuals to of its availability must include a legally participate in making decisions that affect governance has binding commitment by the State to their lives. changed little since reimburse local government for State 6. State policies, regulations, and programs mandated costs. must reflect the above principles and be the 19th Century. implemented in a consistent manner by all Local Governance and state agencies. Growth Planning 7. State infrastructure financing and programs must create incentives that California’s fundamental structure and further state growth planning goals and system of governance has changed little since priorities. the 19th Century. As we enter a new 8. The state must provide incentives to millennium, it is time to re-examine the encourage compatibility and coordination current local government paradigm. Although of plans and actions of all local agencies a specific proposal is beyond the scope of this (including school districts) within each report, the current functions and configura- region, to encourage an integrated tion of counties, cities, and special districts approach to public service delivery and should be tested thoroughly against the overall governance. resources, needs, and realities of California’s 9. The state must actively promote a strong emerging future. The Commission suggests economy, preservation of agricultural and the following principles to guide that analysis. open space resources, ample stock of affordable housing, reliable transportation 1. The fundamental structure of governance infrastructure, adequate supplies of water, in California, including school district and a clean environment. governance, must be examined and modified as necessary to meet people’s On all of these matters, it is the State’s needs and service expectations in the 21st responsibility to lead and to encourage Century, recognizing fiscal constraints and compliance — through incentives for those the need for greater efficiencies. willing to change and, where absolutely 2. Fragmentation of government services necessary, penalties for the averse. If Califor- among numerous, small, inefficient, or nia is to be prepared to meet the challenge of a overlapping providers must be discour- new era, the Governor and the Legislature aged; and effective, efficient, and easily must be willing to assume the risks of understandable local government must be confronting the status quo and considering encouraged. Consolidation of such new forms of governance. providers must be facilitated by State and local policy, consistent with principles of democracy and accessible, understandable local government.

LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 25

Growth CHAPTER THREE Within LAFCO Reform Bounds

Local Agency Formation in 50 new city incorporations, and the state’s The decision by the California population had doubled over a period of only 20 years. In Los Angeles County alone, 10 new Legislature to create “At the present time, no one is charged with cities formed in the single year of 1957. LAFCOs can be traced the responsibility of determining the effect of Many of these incorporations were each one of hundreds of annexations or attributed to what is termed the “Lakewood to the incredible formations upon the future development of the Plan.” In the early 1950s the community of growth that occured entire county. Lack of any coordinated review Lakewood was being considered for annex- of such proposals has created many of our ation to the City of Long Beach. While during the 1950s in urban problems.” incorporation was also suggested, many California. Richard Carpenter, Executive Director, League citizens did not believe it was financially of California Cities feasible. However, the organizers realized that Los Angeles Times, August 25, 1963 the community could incorporate if it continued to contract with the county for In an effort to reign in what many saw as many of its municipal services. After success- an unfettered proliferation of urban govern- ful negotiation with the county, the incorpora- ments, Governor Edmund G. (“Pat”) Brown tion was approved by 60% of the voters. signed into law the original act which created The Lakewood Plan was advertised by Los a local agency formation commission in each Angeles County and the new City of Lake- county (except San Francisco) in 1963. The wood as a means by which to incorporate Fig. 3-1 legislation was an attempt to curb urban successfully without having the additional The freeway systems built in sprawl at a time when this phenomenon was financial burden of providing services which the 1950s allowed growth to proceeding unchecked by any state or regional could be more cheaply provided by the spread to far-flung suburbs. agency. County. Thereafter, Los Angeles County Photo: Diversity Alliance for a Sustainable Prior to 1963, any proposal for incorpora- established the Office of County-City Coordi- America tion, annexation or formation of a new district was formulated through petition to the local governing body, except where the Legislature pre-empted local action. Petition requirements varied, depending upon the specific action requested and the type of local jurisdiction. If the petition signatures were valid, a hearing was held on the proposal. If more than 51% of the landowners protested, the proposal was denied. Otherwise an election was held. Therefore, it was entirely up to the local government and the voters to decide when new governments or boundary changes were needed. The decision by the Legislature to create LAFCOs can be traced to the incredible growth that occurred during the 1950’s in California. During this decade there were over 26 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

nator to encourage new incorporations and counties believing that these bodies would be promote county contracting. The County was controlled by the opposing group of interests. often supportive of incorporation movements Concern was raised regarding the makeup of in the hope that the new city would contract LAFCO, which consisted of elected officials with county departments for services. and one public member. Among the oppo- LAFCOs were charged The proliferation of incorporations in the nents was then-Assemblyman Tom with reviewing and 1950s spurred many to be critical of the urban Lanterman who stated that this proposal sprawl it encouraged. In 1959, Governor Pat would be “the first step in superimposing approving or Brown created the Governor’s Commission on metropolitan government on people living disapproving Metropolitan Area Problems to study urban outside of cities.” sprawl and its effects on California. AB 1662 established a local agency proposals for The Governor’s Commission presented formation commission in each county, which incorporation, three major recommendations in December, would generally be made up of two represen- 1960 after conducting several hearings tatives from the county, two from the cities in creation of special throughout the state: the county, and one public member. The districts, and 1. Improve present laws concerning incorpo- legislation outlined the scope and intent of the ration, annexation and special districts. commissions, as well as procedures for annexations. 2. Enact legislation enabling the formation of incorporation and annexation. metropolitan area multi-purpose districts LAFCOs were charged with reviewing and with planning functions. approving or disapproving proposals for 3. Establish a State Metropolitan Area incorporation, creation of special districts, Commission. and annexations. In reviewing these propos- In response, legislation was proposed to als, LAFCO was required to consider several establish a state commission to deal with the factors, such as population, need for commu- issues of urban sprawl and incorporation. An nity services, and the effect of the formation alternative measure was introduced that or annexation on adjacent areas. After would create a local agency formation approval of a proposal by LAFCO, the affected commission in each county. The proposed jurisdiction would hold a protest hearing on creation of a state commission garnered the proposal and, if no majority protest strong opposition from the county supervi- existed, it would be put before the voters for sors’ association and eventually, in 1963, a approval or deemed approved if a vote was not compromise was reached between the required under the provisions of the statute. Fig. 3-2 Governor, major legislative leaders, cities, and The League of California Cities and County The Commission on Local counties to instead provide for a local Supervisors’ Association memberships had Governance for the 21st commission in each county. mixed views about the legislation. Ultimately, Century This measure (AB 1662, Knox) was hotly however, both organizations strongly en- Staff photo debated in the legislature, with both cites and dorsed the creation of LAFCOs. In addition, LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 27

many legislators felt that the legislation was a Year Legislation Adopted step in the right direction, although there were immediate calls for amendments to the 1963 LAFCOs created original act by various groups. 1965 District Reorganization Act (DRA)

“The LAFCO boards do not do anything 1965 Knox-Nisbet Act that was not previously done elsewhere; they 1977 Municipal Organization Act (MORGA) simply represent a different balance of power by 1985 Consolidated all three Acts into the Cortese-Knox Act creating an extra review step in the incorporation process. The extra review step allows 1989 Changes and clarifications to comprehensive fiscal analysis municipal governments a voice in a process 1992 Revenue Neutrality enacted that the county supervisors had performed virtually alone.” 1993 LAFCOs authorized to initiate reorganization proposals. Gary Miller, Cities by Contract, 1981 1997 City veto authority over detachment and incorporation repealed Commission on Local Government for the 21st Century Since the passage of the original legislation 1997 creating LAFCOs, there have been few established significant legislative revisions to the statute. In 1965, technical changes were made to requirement that any area proposed for Fig. 3-3 the statute, and the division of the Govern- incorporation must have at least 500 regis- Local Agency ment Code was re-designated the Knox-Nisbet tered voters residing in the proposed city. Reorganization Legislation Act. Also in 1965, the District Reorganization This was aimed, in part, at eliminating the Act (DRA) was passed, establishing the types of incorporations which occurred from procedure for change of organization or the 1950s to the 1970s for the purpose of reorganization of special districts, separate protecting an industrial area from annexation and distinct from the Knox-Nisbet Act. by an adjoining city. In 1989, legislation was Under the DRA, LAFCO was nevertheless enacted which added procedural require- authorized to review and approve or disap- ments to the comprehensive fiscal analysis. prove these proposals. The first major policy change to the Since the passage of In 1977, the Municipal Organization Act Cortese-Knox Act came in 1992, when the the original legislation (MORGA) was adopted, consolidating several “revenue neutrality” provision was incorpo- procedures governing annexation, detach- rated, providing that the amount of revenues a creating LAFCOs, there ment, incorporation, disincorporation and new city takes from a county after incorpora- have been few consolidation of cities into one Act. MORGA tion must be substantially equal to the also added legislative intent language, which amount of savings the county would attain significant legislative declared as State policy the encouragement of from no longer providing the transferred revisions to the orderly growth and development of cities, the services. In 1993, legislation was adopted need for logical local agency formation, and authorizing LAFCO to initiate proposals for statute. the finding that a single governmental agency the consolidation of special districts or the is better able to respond to community service dissolution, merger or establishment of needs. This legislation also enacted a subsidiary districts. procedure for city annexations of unincorpo- The last major change to occur in local rated “islands” without a protest provision, government reorganization law was made in made minor changes to timelines for LAFCO, 1997, when the Legislature repealed the ability and specified who would bear the costs of of a city to veto a simultaneous detachment LAFCO proceedings. and incorporation proposal. It termed this In 1985, legislation was passed which type of action a “special reorganization.” This consolidated the Knox-Nisbet Act, the DRA, legislation has allowed the proposed secession and MORGA into one statute, named the of the San Fernando Valley from the City of Cortese-Knox Local Government Reorganiza- Los Angeles to proceed without the threat of a tion Act of 1985. The only significant policy unilateral veto by the Los Angeles City change in this reform package was the Council. 28 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

With the exception of the ability to initiate sion must determine the following: reorganization of special districts and minor • An equitable distribution of the indebted- instructions and clarifications, the basic ness of each affected county. powers and duties of a LAFCO have changed • The fiscal impact of the proposed bound- little since the original enabling legislation in ary change in each affected county. 1963. The debate which occurred in 1963 • The economic viability of each affected regarding the independence of LAFCOs is still county. The debate which being waged today both at the local and • A procedure for the orderly and timely statewide levels. A complete summary of all transition of services, functions and occured in 1963 LAFCO legislation proposed since 1963 responsibilities from the transferring regarding the (whether enacted or not) is provided in county to the accepting county. Appendix E. To resolve some of the controver- • The division of each affected county into independence of sies that have continued to surround the Local five supervisorial districts. LAFCOs is still being Government Reorganization Act, the Legisla- • The division of each affected county into a ture established the Commission on Local convenient and necessary number of waged today. Governance for the 21st Century in 1997. judicial, road, and school districts, the territory of which shall be defined.

Reorganizations Not Subject to The County Formation Review Commis- LAFCO Review sion is required to hold hearings on the new formation, and once it makes its decision, New County Formation forward it to the counties that will be affected. If the decision of the commission regarding Special procedures have been enacted in the feasibility of the new county is in the the Government Code for the creation of new affirmative, the affected counties must place counties, recognizing that counties are the issue before the voters for approval. political subdivisions and agents of the state. The statute governing new county formation District Exclusions is not part of the Cortese-Knox Act. Since it was enacted in 1975, there have been eight The Cortese-Knox Act was enacted attempts at new county formation, and all primarily to provide for the orderly formation have failed. Because all parts of California are of local governments, excluding counties. within a county, the formation of a new This charge includes the formation, consolida- county must always involve a secession from tion or reorganization of most types of special one or more existing counties. districts. However, existing law excludes a The process for county formation (see number of districts from this review, entirely Figure 3-4) requires that the proceedings for or in part. There are three types of statutory the creation of a proposed county must be exclusions from the Act. initiated by petitions signed by qualified voters in the territory of the proposed county. Level 1 – Blanket Exclusion After the petition is filed with the clerk of the One of the recommendations of the county, it is submitted to the Governor. Upon Commission on Metropolitan Area Problems receipt of the petition, the Governor is was stated as follows: “Improve, simplify, and required to create a five-member County rationalize the structural relationship of Formation Review Commission to review the existing and future local government units. proposal. This commission acts in place of (The Commission’s recommendations do not LAFCO, which would handle similar actions include or relate to school districts).” This for city and special district reorganizations. parenthetical phrase was significant. In part One significant difference is that the Legisla- because the Commission did not consider ture envisioned that county formation school districts to be within the purview of its commissions would be funded by the State. investigation, they were subsequently The County Formation Review Commis- excluded from the Cortese-Knox Act. In fact, LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 29

Fig. 3-4

COUNTY FORMATION PROCEDURE

Proponents must gather 25% of qualified electors signatures within the proposed new county. When the population of the proposed county is less than 5% of the population of the affected counties, the petition must also include 10% of the electors within the balance of the affected counties.

Commission Funding Commission may ask the State Controller for a loan Petition is submitted to county elections official who must from the County Formation verify the signatures. If verified, the petitions are then Revolving Fund to meet transmitted to the county board of supervisors. necessary expenses. Loans cannot exceed $100,000 and are to be repaid by the county.* The Commission is to be made up of two individuals The county board of supervisors must then transmit the from the proposed new petition to the Governor who must create a county, two from the County Formation Review Commission. existing county, and one from else-where in the state.

The commission must determine:

• economic viability of the proposed county. • fiscal impact of the proposed new county on each affected county. The Commission must • equitable distribution of the indebtedness. hold public hearings • procedure for transition of services, functions and responsibilities to the on county formation. new county. • division of the proposed county into five supervisorial districts. • appropriations limit for the proposed new county.

If the commission determines that the new county is viable, the board of supervisors in each affected county must order an election. If a majority of voters in the proposed county, as well as a majority in the existing counties approve the pro-posal, it is deemed adopted.

* In 1984, an appellate court ruled that the State was restrained from collecting any moneys from the county to recover the amount of the loan because the requirement to create the commission was deemed a state-mandate. Source: Commission on Local Governance for the 21st Century four types of districts are entirely excluded from the Act seems entirely reasonable. from its provisions: School districts were not originally included 1. School district or community college in the Cortese-Knox Act because these district districts were formed strictly for educational 2. Special assessment district purposes and were not considered a part of 3. Improvement district the general fabric of government. As such, 4. Communities facilities district formed they may not have been seen as a source of under Mello-Roos urban sprawl and unbridled development. The latter three types of districts are Moreover, every part of the state is currently formed solely for the purpose of financing within a school district and procedures were infrastructure. Consequently, they are not already provided in the Education Code to true government agencies and their exclusion deal specifically with school district reorgani- 30 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

zation and boundaries. Essentially, these School District Reorganization Procedures procedures, which are explained in detail in the accompanying text box, are as follows: Pursuant to §§35700-35712 of the Education Code, a school district • Every county superintendent of schools reorganization may be initiated in any of the following ways: must inquire and ascertain whether the boundaries of school districts and • A petition signed 25% of the registered voters residing in the territory to be reorganized may be submitted. community college districts are definitely • The owner of the property, if it is uninhabited, may request the and plainly described in the records of the reorganization. board of supervisors. • An action may be filed by the majority of the members of the govern- • If the boundaries are conflicting or ing boards of each of the districts that would be affected by the incorrectly described, the board of reorganization. supervisors may correct and relocate the • A petition signed by10% of the registered voters may be filed to split a boundaries to follow established property school district. lines. However, the board of supervisors Once a petition is submitted, the county superintendent of schools may not substantially alter the boundaries must examine the petition to determine whether the signatures are of school districts and community college sufficient and must transmit the petition to the county committee on districts. school district reorganization (county committee) and to the State Board • Whenever any school district or commu- of Education (SBOE). nity college district has been intersected Within 60 days after receipt of the petition the county committee by any county boundary line due to the must hold a public hearing. Within 4 months of the first public hearing formation of a new county or a change of the county committee must recommend approval or disapproval of the the boundary of a county, and portions of petition and transmit it to the SBOE along with its recommendations. It the district lie in different counties, the must also report on whether any of the following would be true regard- district shall be established as a joint ing the reorganization: school district. • It would adversely affect the school district organization of the county. • No new school district may be formed • It would be compatible with any master plans approved by the SBOE. except through the reorganization of • It would comply with the conditions provided by the SBOE. existing districts, because all territory in Parties may appeal the county committee’s decision to the SBOE. If California is currently within one or more challenged, the SBOE must hold a hearing on the petition and may school districts. approve the proposal if it meets 10 conditions specified in statute. If approved, either by the county committee or by the SBOE, an election is Level 2 – Exclusions from Part 4 and Part 5 held on the proposal. Within existing law, the following types of Under existing law, the county superintendent of schools must call an districts are excluded from the conducting election in the territory of the districts as determined by the county authority proceedings for changes of organi- committee. The election must be held in the territory proposed for zation (Part 4), and the effects of the changes reorganization. However, dissatisfied parties may also contest the decision on where the election is held to the SBOE. of organization in the Act (Part 5): The SBOE has adopted the following guidelines for how a county 1. Unified or union high school library commission determines where the election is held: district 2. Bridge and highway district 1. Officials should identify all of the affected school districts. 3. Transit or rapid transit district 2. Officials should determine if there is a compelling government 4. Metropolitan water district interest to limit the election to an area that is smaller than the combined territory of the affected school districts and whether the 5. Separation of grade district reduction is needed to further the reorganization purpose. These districts are excluded because they 3. Local officials must balance compelling government interest with the are essentially financing mechanisms used by substantial interests of the voters in the areas that will not be voting. an existing local government body or are regional entities established by special state There are exceptions to these provisions for Los Angeles that provide provisions. The conducting authority for a lower threshold on petitions required to be gathered (8% of the number of votes cast in the affected area in the last gubernatorial proceedings established by the Cortese-Knox election), and additional conditions that officials must consider before Act are not necessary for these types of making a decision to split up the Los Angeles Unified School District. financing mechanisms or appropriate for State-established regional districts, which LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 31

usually extend beyond the jurisdiction of any general purpose local government has the single LAFCO. The Metropolitan Water authority to challenge a school district District of Southern California, for example, is decision to build in an area which may be excluded because it consists of a group of considered prime agricultural or open-space several agencies combined by state legislation land, or that may simply be difficult to serve. into one for regional water planning purposes, The Commission received testimony similar to a joint powers authority. Similarly, indicating that school district development is transit districts often have multi-county an area of concern. Three case studies of jurisdiction and are usually established by projects in Orange County illustrated coordi- School district state legislation. nation problems that can occur between development school districts, local governments, and Level 3 – Exclusion after determination by developers. The three cases were described by decisions are not LAFCO Carol Hoffman, a Vice President of the Irvine subject to review or The Cortese-Knox Act also allows a local Company, and illustrated the difficulties that LAFCO to determine if the following districts can arise when a housing project crosses consistency with other are not a district or a special district for the municipal and school district boundaries. purposes of “conducting authority” proceed- Families in a single community generally local government ings under the Act: want their children to attend the same planning. 1. A flood control district schools, but districts often make boundary 2. A flood control and floodwater conserva- and school site decisions based upon rev- tion district enues, school space availability, and developer 3. A flood control and water conservation dedications of school sites. Moreover, under district provisions of the Education Code, local 4. A conservation district governments do not have the authority to 5. A water conservation district propose changes in school district boundaries, 6. A water replenishment district even when their service capabilities are 7. The Orange County Water District affected. Negotiations are made more 8. A California water storage district complex because of the variations in the 9. A water agency procedures for determining school district 10. A county water authority or a water boundaries and municipal boundaries. In the authority Irvine cases, two of the three communities This provision gives LAFCO discretion to remain split between two school districts. The decide whether an above listed district should third was successfully unified only after the be required to adhere to the provisions of the departure of a district superintendent and Cortese-Knox Act when a reorganization is changes of positions of the affected school contemplated or to follow the procedures of its boards. These sorts of difficulties might be principal act. mitigated if better coordination were encouraged between local governments and school School District Reorganization districts and if local governments were able to Issues initiate proceedings for school district boundary changes. School districts operate virtually independent of other units of local government. RECOMMENDATION 3-1 School district reorganization is perhaps the The Commission recommends that school most significant type of boundary issue districts and LAFCOs be required to which does not come before LAFCO. Similarly, mutually notify one another of pending school district development decisions are not annexations, new formations, or other subject to review or consistency with other boundary changes, and that each is local government planning. While school afforded the opportunity to comment. districts may voluntarily notify other agencies Notification shall mean transmittal of regarding plans for school construction or notice to the members and executive district reorganization, neither LAFCO nor a officers of each affected jurisdiction. 32 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

Fig. 3-5 School site located on agricultural land Staff photo

In many cases school district boundaries do not correspond to city and county boundaries... children within the same neighborhood RECOMMENDATION 3-2 respect city and special district bound- may have to attend The Commission recommends that cities, aries. counties and LAFCOs be permitted to different schools propose changes in school district bound- Coordination among local governments is aries to the county superintendent and/or imperative to ensure that appropriate county committee on school district development decisions are approved. Cur- reorganization, in a manner similar to the rently, there often is not sufficient coordina- existing petition process in the Education tion among cities, counties, and school Code, and that similar authority be districts. Any decision of a public agency accorded to school districts with regard to should be subject to a public hearing at which local government boundaries. all affected parties may testify and deliberate over the possible effects of the proposal. In many cases school district boundaries Commission members further noted that do not correspond to city and county bound- hearings by county committees on school aries, which may sometimes lead to confusion district reorganization are often held with and disappointment for residents. As little awareness by general purpose local illustrated in Orange County, children within governments. In many cases, boundary issues the same neighborhood may have to attend can be quite controversial. The Commission different schools because of lack of alignment believes that all affected residents and local between school and municipal boundaries. agencies should be notified and given an Making the boundaries consistent is difficult opportunity to speak before the county because both affected school districts must committee. Moreover, procedures should be agree to any changes. The Commission known and predictable and decision param- believes that, where possible, school district eters should be specified. and municipal boundary lines should be aligned. RECOMMENDATION 3-4 The Commission recommends that RECOMMENDATION 3-3 procedures similar to those for LAFCO The Commission recommends that county proceedings (i.e. notice, public hearing, committees on school district reorganiza-

tion be required to consider, to the extent * Throughout this report, references to specific sections of the * feasible (as defined in new GC §56038.5), Government Code will be uniformly identified with the making school district boundary changes shorthand notation: GC §XXXXX. LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 33 opportunity for public comment, and ing urban sprawl, preserving open space and written statement of determinations as in prime agricultural lands, and efficiently GC §56851 and §56852) be required for providing for government services — are local county committee review of a emphasized throughout the Act but are not proposed school district reorganization clearly stated in a single place. This can lead under the Education Code. to confusion for LAFCOs, since it might incorrectly imply a lower priority for one policy compared to others. General legislative LAFCO must balance Local Agency Formation Law – intent is stated in GC §56001 and legislative Legislative Intent and Policies intent regarding LAFCO powers and duties is competing interests stated in GC §§56300-56301. The Commis- when approving or In 1985, the Knox-Nisbet Act was reorga- sion believes that legislative intent and nized to make it easier to understand and policies would be clearer if all were clearly disapproving a follow. At that time, it was renamed the stated in these sections. Cortese-Knox Act. Prior to this reorganiza- proposal. tion, LAFCOs were required to consult three RECOMMENDATION 3-5 different sets of laws in order to process The Commission recommends that all various types of applications. Since 1985, existing general legislative intent provi- several amendments have been made to the sions (promoting orderly development, law. discouraging urban sprawl, preservation The Cortese-Knox Act created a LAFCO in of open space and prime agricultural each county except San Francisco and lands, efficient extension of government specifies general procedures and overall services) be consolidated in §56001 and policies that LAFCOs must follow when additional legislative intent provisions processing proposals for annexations, changes relating specifically to LAFCO be incorpo- of organization, reorganizations, incorpora- rated into §56301 and a new, correspond- tions, special reorganizations, consolidations, ing section on LAFCO determinations. dissolutions, and conducting authority proceedings. While each LAFCO may have a The Commission also believes that different approach for handling an applica- additional legislative intent language should tion, the general procedure has several be added to these sections. First, the Legisla- uniform steps: (1) a proponent files an ture should recognize that LAFCO must application; (2) the LAFCO executive officer balance competing interests when approving reviews the application; (3) if complete, a or disapproving a proposal. In many cases, public hearing date is set; (4) notice is sent to depending on the local economic condition affected parties; and (5) a written report and and pressures for development, a LAFCO may recommendation are completed. If approved have to decide whether to approve a proposal at the public hearing, the proposal is sent to involving open-space or prime agricultural the conducting authority for conduct of a land in order to provide for needed develop- protest hearing and final approval. Figure 3-6 ment in an area. The Commission was often is a general schematic, adapted from the San urged to allow LAFCOs to retain flexibility in Diego LAFCO procedure guide and the these decisions because they are often decided Cortese-Knox Act. on a case-by-case basis depending upon a During the course of its hearings, the variety of local factors. The Commission Commission received testimony from nearly proposes that the legislative intent section be half of the state’s LAFCOs. Each noted amended to include the following: problems and concerns with the Act. One fundamental issue concerns the policies and “The Legislature recognizes that the legislative intent that LAFCO must consider logical formation and determination of when approving a proposal. Several basic local agency boundaries is an important policies — encouraging the orderly formation factor in promoting orderly development and development of local agencies, discourag- and in balancing such development with 34 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

Fig. 3-6

LAFCO PROCEDURE FOR PROCESSING APPLICATIONS

Proponents or LAFCO staff may provide for a meeting with affected Proponent prepares application material for proposal and residents to give delivers to the Executive Officer a complete application, which information and may include the petition, map and description of the boundaries. receive comments.

Executive Officer The Executive Officer has 30 days in which to determine if the Fees charged to the must mail notice to application is complete. If appropriate fees have been paid, it is applicant are based interested agencies at deemed accepted. Within 90 days of this approval, LAFCO must on the LAFCOs least 20 days prior to conduct a public hearing. adopted schedule of issuing certification of fees, which varies from application. county to county.

At least 15 days prior to the date set for the hearing, the Executive Officer must give notice of the meeting through a newspaper of general circulation, posting near the door of the hearing room and mailed notice to each affected agency.

The Executive Officer reviews the application and any comments For incorporation received and prepares the written report and recommendation. proposals, the The Executive Officer mails the report at least five days prior to Executive Officer must the hearing to each commissioner, each person named in the also prepare a application to receive a report, each affected local agency. comprehensive fiscal analysis.

The LAFCO hears the proposal on the noticed date and time. The hearing may be continued for up to 70 days. LAFCO must consider a number of factors and policies in compliance with the Cortese-Knox Act.

If LAFCO denies the proposal the proceedings are terminated If LAFCO approves the proposal, the conducting authority and no similar proposal may be made within one or two years, (designated by LAFCO) must hold a public hearing, and provide depending on the proposal. notice to affected parties within 35 days of the hearing.

The hearing is held on the date and time noticed and may be continued for up to 60 days. If a majority of the voters or landowners protest the proposal, it is terminated. However, if less than 50% protest, the conducting authority must call an election on the proposal.

If the voters approve, the conducting authority adopts a If the voters disapprove, the proposal is terminated and a resolution of approval. resolution is sent to LAFCO.

If the voters approve, the conducting authority adopts a resolution of approval.

SOURCE: Assembly Committee on Local Government, San Diego LAFCO, Commission on Local Governance for the 21st Century LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 35

sometimes competing state interests in agencies can feasibly provide the needed discouraging urban sprawl, preserving service or services in a more efficient and open space and prime agricultural lands, accountable manner. If a new single- and efficiently extending government purpose agency is deemed necessary, the services . The Legislature further finds commission shall consider reorganization and declares that this policy should be with other single-purpose agencies that effected by the logical formation and provide related services. modification of the boundaries of local agencies, with a preference granted to To reinforce the new language in GC accommodating additional growth within, §56301, which provides that LAFCO should or through the expansion of, the bound- make determinations when a new entity is aries of those agencies which can best proposed, a directive must be given to LAFCO accommodate and provide necessary elsewhere in the Act. The additional section governmental services in the most will establish a determination that LAFCO compact form. . .“ must make when reviewing a proposal.

56301. Among the purposes of a commis- 56842.7 (NEW SECTION) sion are the discouragement of discourag- If a proposal includes the formation ing urban sprawl, preserving open space of a new government, the commission and prime agricultural lands, and effi- shall determine whether existing ciently providing government services, agencies can feasibly provide the and the encouragement of the orderly needed service or services in a more formation and development of local efficient and accountable manner. If a agencies based upon local conditions and new single-purpose agency is deemed circumstances. One of the objects of the necessary, the commission shall commission is to make studies and to consider reorganization with other obtain and furnish information which will single-purpose agencies that provide contribute to the logical and reasonable related services. development of local agencies in each county and to shape the development of The Commission also proposes that GC local agencies so as to advantageously §56001 be amended to recognize that no one provide for the present and future needs of particular form of government is uniformly each county and its communities. When preferable. This proposal is discussed in the formation of a new government entity detail in Chapter 5, since it relates most is proposed, a commission shall make a directly to decisions regarding formation of determination as to whether existing special districts.

Fig. 3-7 One clear LAFCO policy is the protection of prime agricultural land and open-space. Staff photo 36 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

The Commission discussed at lenght what Sufficiency and Clarity of LAFCO factors LAFCO should consider when review- Policies ing a proposal for annexation, incorporation or any other proposal. A guiding principle Are LAFCOs arbitrary and capricious? upon which the commissioners agreed was This is one issue that the Commission that dollars should follow boundary changes. attempted to test through a survey of LAFCOs In other words, the area which is to be in mid-1999. This survey collected data from annexed or incorporated must produce all 57 LAFCOs through a written question- sufficient revenues to serve the population of naire and follow-up telephone interviews. Many issues could be that area. DeAnn Baker, Legislative Coordina- Each LAFCO was contacted and asked a series tor, California State Association of Counties of questions regarding staffing, budgets, fee remedied if all LAFCOs (CSAC), agrees that LAFCOs should: “require schedules, policies, independent or dependent had written policies thorough fiscal reviews of all boundary designation, frequency of meetings, number changes, including the fiscal impact of each of projects processed each year, and status of and procedures. affected public agency, prior to boundary comprehensive sphere of influence updates. changes. For new city incorporations, require Complete results of the survey are included in the proponents to provide information this report as Appendix G. regarding what services available funds will As part of the survey, each LAFCO was provide, and what additional funds would be asked for copies of its adopted policies and necessary to provide higher levels of services procedures. Judging from the 38 LAFCOs that if those levels were sought by the proponents.” responded by providing the Commission with such documentation, it appears that there is a RECOMMENDATION 3-6 great deal of consistency among the LAFCOs The Commission recommends that, when in policy language and provisions. Most considering any boundary change, LAFCO frequently, the policies addressed preservation be required to consider the ability of the of agriculture, spheres of influence, annex- new or expanding entity to deliver the ations, incorporations, consolidations, and services which are the subject of the dissolutions. Table G-3 (in Appendix G) application and the adequacy of available summarizes the policies received from the revenues for funding such services. LAFCOs. One reason for the consistency in policy Draft Language: language is that some LAFCOs do not actually 56841. Factors to be considered: adopt their own unique policies, relying (j) The ability of the newly formed or instead on re-stating the policies in the receiving entity to provide the services Cortese-Knox Act. This, obviously, is not which are the subject of the application to instructive with regard to local conditions and the area, including the sufficiency of priorities. On the other hand, many of the revenues for such services following the larger LAFCOs and those which have high proposed boundary change. volumes of projects have extensive policies to help the public understand the LAFCO GC §§56300-56301 state legislative intent process and the types of decisions to expect with regard to LAFCO actions and procedures. from LAFCO. The Commission received testimony from Ventura LAFCO, for example, has adopted some applicants who believe that LAFCOs written policies and procedures that provide may act arbitrarily and that their actions may clear guidance to applicants. The Ventura not always be consistent. Many of these issues “Guidelines for Orderly Development” include could be remedied if all LAFCOs had written specific policies regarding growth, and “ . . . policies and procedures. maintain the theme that urban development should be located within incorporated cities whenever and wherever practical.” Several other LAFCOs, including San Diego and Orange County, offer detailed and comprehen- LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 37 sive policies peculiar to those local areas. ing the protest process. The Commission These could be emulated by other LAFCOs believes that adequate public knowledge of which do not have the need or resources to the LAFCO process must be ensured, and develop unique guidelines. Even the mimics, recommends that examples of the forms or however, should adapt these policies to meet format required to process a particular specific local conditions. procedure or protest against a proposal be included in the policies and procedures. More RECOMMENDATION 3-7 in-depth discussion of public participation The Commission recommends that and public information is included in Chapter LAFCOs be required to adopt and maintain 8. The Commission written policies, procedures and guidelines. RECOMMENDATION 3-9 believes that The Commission recommends that the adequate public RECOMMENDATION 3-8 written guidelines, which must be adopted The Commission recommends that the by every LAFCO, should include specific knowledge of the LAFCO intent language of GC §56300 criteria for all proposals before LAFCO, LAFCO process must include a provision that LAFCO policies including examples of the forms required and procedures be in writing. in order to protest LAFCO proceedings and be ensured. hearings. The text of the proposed amendments to the Cortese-Knox Act to implement these and all other recommendations in this report are Streamlining the included in Appendix C. The proposed Cortese-Knox Act amendment to §56300 is as follows: While Figure 3-6 illustrates a seemingly “56300. It is the intent of the Legislature straightforward procedure, the reality is that that each commission shall establish the Cortese-Knox Act is quite convoluted and written policies and procedures and complex. Even LAFCO officers who have exercise its powers pursuant to this part in worked with the law for many years find it a manner consistent with those policies confusing and occasionally contradictory. and procedures and that encourages and Testimony presented to the Commission provides planned, well-ordered, efficient supports this conclusion. urban development patterns with appro- San Diego City Councilman and LAFCO priate consideration of preserving open- member Harry Mathis noted that LAFCO space lands within those patterns. If, not statutes have been “ . . . subject to an annual later than July 1, 2001, a commission has onslaught of piecemeal legislative amend- not adopted written policies and proce- ments and incremental changes” and “having dures, any actions taken by that commis- been enacted in an era prior to the passage of sion may be voidable.” major fiscal and planning laws in California . . . are out of touch with current conditions.” The Commission also discussed what Ventura County LAFCO’s 1999 Legislative information should be included in the written Platform states, in part: “Cortese-Knox was policies and procedures adopted by LAFCOs. put into place in October of 1985 and has been Testimony presented to the Commission has amended each year since that time. During indicated that it is sometimes difficult to this fifteen year period the consistency and ascertain what documentation is required in logical order of this body of law has gotten order to protest a proposal before LAFCO. more confusing and disjointed. Ventura This is in part because the protest process is LAFCO would support legislation which currently managed by individual local would call for a full review of the body of law governments as the conducting authorities, known as Cortese-Knox which would result in rather than the LAFCOs. Each locality may a more coherent and usable document.” have its own unique procedures for conduct- Jeff Tweedie, Executive Officer of the 38 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

Fresno County LAFCO, testified: “Over the organization or reorganization.” Typically, years, legislative amendments have modified after LAFCO has approved a proposal, it the original text to deal with special circum- designates the jurisdiction most affected by stances. Such piecemeal changes have resulted the proposal as the conducting authority, in instances of inconsistency, ambiguity, responsible for conducting a protest hearing, fragmentation, and unnecessary duplication. scheduling and conducting an election if This makes it difficult to ensure that all warranted, and adopting a resolution certify- applicable provisions are complied with…. ing the results of the election. In most cases, The Act should be comprehensively reviewed the conducting authority performs only a Even LAFCO officers with the aim of streamlining processes and ministerial function, with no discretion to eliminating instances of duplication and alter or disapprove the LAFCO action. who have worked fragmentation.” Moreover, many agencies that are so desig- with the law for many Based upon its review of the statute, the nated are unfamiliar with the correct proce- Commission concurs that a comprehensive dures because they seldom file applications years find it confusing reorganization of the Act is warranted. with LAFCO. Consequently, conducting and occasionally Redrafting the statute would provide LAFCOs authority proceedings may sometimes delay and the public with a better understanding of final action on a proposal. contradictory. the law and would promote additional reforms In one instance reported to the Commis- to streamline LAFCO procedures. sion, the conducting authority delayed holding the required hearing in order to stall proceed- RECOMMENDATION 3-10 ings. A representative of the California Special The Commission recommends that the Districts Association (CSDA) cited another Cortese-Knox Act be comprehensively instance, saying, “. . . if the conducting reorganized and re-drafted to provide authority fails to complete the proceedings LAFCOs and the public with a better within one year, LAFCO appears to be understanding of the law and to remove powerless. We are aware of one case where any duplication and obsolete provisions in two districts initiated a proposal for their own the Act. consolidation. Once LAFCO approved the application and designated the board of An outline of the Commission’s proposed supervisors as the conducting authority, the reorganization of the Cortese-Knox Act is board failed to complete the proceedings.” included as Appendix D. The Commission This experience, and perhaps other similar believes that many other technical and instances, led the California Association of procedural changes are needed to streamline Local Agency Formation Commissions LAFCO proceedings and make them more (CALAFCO) and CSDA to call for designation understandable to the public. The most of an alternate conducting authority when the important and far-reaching of these is the current conducting authority fails to act. substitution of LAFCO for the “conducting These organizations opined that LAFCO is authority” established under current law. often the most appropriate alternate conducting authority. Conducting authority proceedings have LAFCO Process and the Conducting been part of the Cortese-Knox Act since its Authority inception in 1963. It is probably a holdover from the predecessor laws, which provided for Part 4 of the Cortese-Knox Act is entirely the county or city to conduct a protest hearing devoted to outlining the role of the “conduct- on a proposal placed before it. This, however, ing authority” in LAFCO proceedings. Section was before the creation of LAFCOs. Retaining 65029 of the Act defines the conducting this additional procedure on the part of a authority as “the legislative body of an third party is duplicative and unnecessary affected city, affected district, or affected today. The Commission finds that the county which is authorized by the commis- conducting authority process unnecessarily sion to conduct proceedings for a change of introduces a second lead agency into the LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 39 reorganization process, causing confusion and Fresno LAFCO further expressed a delay. The LAFCO executive officer could concern that the timelines in the Act do not complete this function, holding the protest correspond to other timelines applicable for hearing in the affected community and new development. For example, when vacant eliminating delays. land is proposed for residential development, a final tract map often must be filed before the RECOMMENDATION 3-11 annexation can be completed. This is to verify The Commission recommends that LAFCO that urban services will be needed on the be assigned the responsibilities of the property in the near future. Pursuant to the conducting authority and be authorized to Subdivision Map Act, a developer may take as The conducting make the findings that would require the long as 7 to 10 years to file a final map. Fresno appropriate local agency to call an elec- LAFCO recommends that “where filing of an authority process tion, if warranted. acceptable final map has been made a unnecessarily condition of an annexation, the life of the There are numerous code sections which approval should be the same as that of the introduces a second reference conducting authority actions. The tentative map,” instead of just one year. lead agency into the Commission recommends that these be The Commission believes that these amended to replace the conducting authority amendments are reasonable and will provide reorganization with the LAFCO (referred to in the Act as clarification to LAFCOs regarding timelines process, causing commission) or the executive officer, as and possible extensions of an action. appropriate. These changes should be made confusion and delay. as part of the comprehensive re-drafting of RECOMMENDATION 3-12 the Cortese-Knox Act. It is the intent of the The Commission recommends that the Commission that the process not be abridged LAFCO approval expiration date refer to in any manner that reduces access to the completion of the entire annexation decision making process on the part of process instead of just the conducting citizens and local governments. authority proceeding and, where a final Several technical changes should be map is required as an annexation condi- considered for the revised protest hearing and tion, the approval life be the same as that completion process. For example, LAFCO will of the tentative tract map. need the authority to direct a local agency to call an election, if one is indicated, since One of the effects of designating LAFCO as LAFCO does not have the statutory authority conducting authority is that two current to do so. It does not make sense to staff each exceptions in the Cortese-Knox Act which LAFCO with an elections clerk to meet the allow unilateral termination of proceedings by need of an occasional election. the conducting authority will be eliminated. Fresno LAFCO, in testimony to the Under the current statute, if a city detachment Commission, suggested that an amendment proposal is approved by LAFCO, the conduct- be made to GC §57001. This section states ing authority is the affected city, which has the that conducting authority proceedings must ability to veto the proposal by terminating be completed within one year or they are proceedings. A similar provision is in effect deemed to be abandoned unless the LAFCO for a special district annexation. grants an extension. Fresno LAFCO has found These provisions allow the affected city or that the one-year time limit is generally district to have a final say in the proceedings. interpreted by LAFCOs to include all of the The Commission believes that this is inappro- actions necessary to complete an annexation, priate, and that there should be no exceptions not just the conducting authority proceedings, placed on the ability of LAFCO to administer and that this interpretation should be clearly the conducting authority proceedings. affirmed in statute. Under the new proce- However, the Commission recognizes that a dures recommended by the Commission, the city or district must have the ability to protest entire process will be under LAFCO control, so an annexation or detachment and recom- maintaining this timeline will be easier. mends that LAFCO give great weight to such a 40 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

protest if it is based on financial or service LAFCO, the Commission believes that related concerns. clarification of its meaning and intent should be included in the statutory definitions. The RECOMMENDATION 3-13 recommended definition was adapted from The Commission recommends that the two the use of the term in the State Guidelines for current exceptions allowing unilateral implementation of the California Environ- termination of proceedings by cities (for mental Quality Act (CEQA). detachments) and special districts (for annexations) be deleted, but that great RECOMMENDATION 3-15 There should be no weight be given to any objections by an The Commission recommends adding a affected city or district. new definition of “feasible,” consistent with exceptions placed on the definition used in the CEQA Guidelines. the ability of LAFCO to This word is used in several places in Other Technical Revisions Cortese-Knox, but is currently not defined. administer the The Commission’s intent is that this conducting authority The Commission received testimony recommended language be construed supporting a number of technical revisions to consistent with existing CEQA case law. proceedings. the Cortese-Knox Act. Enacting these changes as part of a comprehensive revision to the Act The Cortese-Knox Act also makes refer- will further streamline and improve LAFCO ence to “prejudicial abuse of discretion” in GC processes. §56107. The Commission believes that this One such change concerns GC §56857, section should be amended to reflect recent which provides that within 30 days of court decisions on this issue. Current law adoption of a LAFCO resolution, any person provides that all determinations made by or affected agency may request LAFCO to LAFCO shall be final and conclusive in the reconsider its action. This provision can lead absence of fraud or prejudicial abuse of to reconsideration requests being filed by discretion. Prejudicial abuse of discretion is those who simply disagree with the LAFCO established if the court finds that the agency decision, or it could be used as a delaying has not proceeded in a manner required by tactic. If reconsideration is requested, LAFCO law or if any determination of a commission has no option under current law. It must or a legislative body is not supported by convene another public hearing and take substantial evidence in light of the whole testimony regarding the reconsideration record. request, even if no reason is given for the It has generally been recognized that request. To limit abuses, LAFCOs could be LAFCO determinations as to boundaries of authorized to require that the appellant local agencies and possible annexation of requesting reconsideration state what new territory, are quasi-legislative in nature since facts or circumstances have become available “the nature of the power exercised is legisla- since the previous hearing. This would permit tive and political rather than judicial…” (City LAFCO to evaluate whether or not a new of Santa Cruz v. LAFCO (1978) 76 Cal.App.3d hearing would be productive. 381,387). However, courts have applied different tests to review LAFCO determina- RECOMMENDATION 3-14 tions under the Code of Civil Procedure. The Commission recommends that a To the extent that LAFCO decisions are LAFCO be permitted to establish criteria required to be supported by written findings, for filing a request for reconsideration. courts have also differed in opinion. Some decisions have required a more detailed During the Commission’s deliberations it statement of finding in order to permit the was noted that the Cortese-Knox Act uses the court to review the substantiality of the term “feasible” in a number of instances (for evidence before LAFCO. Other courts have example, GC §56108 and §56332). Because rejected a requirement for formal detailed this term is used to limit potential actions by findings. The statutory definition proposed LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 41 by the Commission is adapted from §1085 of counties or the cities, and that there should be the Code of Civil Procedure. some level of independence. Currently, LAFCOs are funded by counties. Although RECOMMENDATION 3-16 Los Angeles County has an arrangement The Commission recommends that whereby costs are shared between the county prejudicial abuse of discretion, as refer- and the City of Los Angeles, funding for every enced in GC §56107, be amended to other LAFCO is provided by the county, which provide clarification, in light of recent also must provide offices and supplies if they court rulings on this subject, that in any cannot be acquired in some other way. From action or proceeding to attack, review, set the standpoint of finances, this makes every From the standpoint aside, void, or annul a determination by a LAFCO “dependent” upon the county. It is not public agency on the grounds of noncom- difficult, therefore, to understand why of finances, every pliance with the Cortese-Knox Act, the LAFCOs might be viewed with suspicion by LAFCO is “dependent” inquiry shall extend only to whether there the non-county members. was prejudicial abuse of discretion. upon the county. It is Independence of California LAFCOs not difficult, therefore, Under existing law, the expiration of the term of office of each member is the first One of the objectives of the survey to understand why Monday in May of the year in which the term undertaken for the Commission was to LAFCOs might be of the member expires. This date was determine how many LAFCOs would be presumably established to allow time for the classified as independent or dependent. Each viewed with suspicion city and special district selection committees LAFCO was asked if the staff were employees by the non-county to meet after November elections. The of LAFCO (independent) or of the county Commission received testimony from (dependent). It should be noted that even in members. Mendocino LAFCO that this provision did not independent LAFCOs, payroll functions, job work for all jurisdictions, since election dates classifications, and benefits for LAFCO may vary. The result could be an extended employees are generally provided by the “lame duck” term for a member. The Com- county. mission believes that allowing LAFCO the Of the 57 LAFCOs, a clear majority of 40, flexibility to set an alternate date would not or 70% of the total, are county-dependent. harm any other jurisdictions or delay the Seventeen LAFCOs (30%), are independent. appointment of members. However, the Independent LAFCO employees serve at the Commission does want to ensure that such pleasure of the LAFCO or its executive officer. flexibility would not allow for a length of a One LAFCO (San Mateo) changed its indepen- term to be extended more than once. dent status to dependent within the last three years, one LAFCO (El Dorado) became RECOMMENDATION 3-17 independent, and one LAFCO (Solano) is The Commission recommends that a investigating the feasibility of becoming technical change be made to GC §56334 to independent. give local flexibility to the effective date of Both dependent and independent LAFCOs member appointments. The provision report complaints from constituents about the should allow that the length of the term of perceived lack of impartiality of LAFCO office would not be extended more than decisions. Generally, however, this was not once for any individual member. viewed as a serious issue by the LAFCOs themselves. Based upon LAFCO testimony to the Commission and survey comments, it Making LAFCO More Independent would appear that there is little support among LAFCOs for requiring that they all be LAFCO reform has been a constant refrain made independent. The biggest problem, since 1963. An always prevalent theme behind outside of funding, reported by dependent the call for reform is that the makeup of LAFCOs regarding their status was the lack of LAFCO is somehow biased towards the “protected” staff time for LAFCO work. 42 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

Commissioner Independence To further promote neutrality of LAFCO membership, the Commission recommends LAFCO independence was a recurring that the public member selection require theme of presentations to the Commission. approval by each constituency on LAFCO (i.e. But the suggestions regarding changing the cites, counties, and special districts). The composition of LAFCO membership varied. Commission believes that by requiring The ideas range from increasing the number consensus by LAFCO on selection of the of public members to direct county-wide public member, the perception that a public election of LAFCO members. The League of member “belongs” to a certain block could be LAFCO must represent California Cites (LCC) had three recommen- eliminated. dations. The first was to require an affirma- Another concern noted by the Commis- all levels of tive vote from at least one of the members sion was the selection of the city and special selected by each of the other selection district members on LAFCO. In counties with governance in its authorities for the public member. The many cities and special districts, or a mix of jurisdiction. second was to increase the number of public large and small cities, the Commission members. The third was to include special believes that there should be rotation of the criteria for membership in single-city jurisdictions having a board member seated counties, counties with a single dominant city, on LAFCO in order to ensure fair population or counties with no cities. and geographic representation of all cities and The commissioners do not believe that special districts within the county. LAFCO changing the basic composition of LAFCO membership rotation is not always the will, by itself, change the public perception. practice. For example, Fresno informed the Staff and funding independence are just as Commission that, despite being the largest important. Consequently, the Commission city in its county, it has never held a LAFCO elected to leave basic LAFCO structure and seat. At the other extreme, Huntington Park selection procedures unchanged, except that it City Councilman Thomas E. Jackson has been supports expanding all LAFCOs to include voted the Los Angeles cities selection commit- special district members and conferring equal tee representative on LAFCO since 1983, and membership for all forms of government. he has chaired LAFCO since 1988. Special district membership is supported by CSDA and CALAFCO, which stated that it RECOMMENDATION 3-18 “supports having special districts seated on The Commission recommends that a each LAFCO as a matter of right, just as is uniform LAFCO member selection presently the case for cities and counties.” The procedure be adopted, to apply in all League of California Cities and the California counties except the four counties having State Association of Counties (CSAC) are not special statutory arrangements (Los opposed to special district representation. Angeles, San Diego, Sacramento, and Santa The Commission believes that special Clara), which should remain unchanged. district representation is essential to the The pattern should be as follows: two success of LAFCO, since many decisions selected by the county, two selected by the regarding special districts are made by this cities (except in counties having no cities), body and, to be effective, LAFCO must two selected by special districts (if re- represent all levels of governance in its quested), and one public member selected jurisdiction. Moreover, special district by the others. The city and special district representation may mitigate the perception of selection committees are encouraged to the public member as the tie-breaking vote. select members to fairly represent the Many LAFCOs are currently comprised of two diversity of the cities or special districts in county members, two city members, and one the county, with respect to population and public member. Because proposals are geography. The selection of the public sometimes viewed as city versus county member should be subject to the affirma- issues, the public member may be placed in tive vote of at least one of the representa- the difficult position of tie-breaker. tives selected by each of the three appointing authorities. LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 43

Other measures are needed to help 25 Fig. 3-8 LAFCOs act more independently. To promote Number of LAFCO LAFCO independence, the Commission 20 Projects Per Year believes that LAFCO members need to adopt a comprehensive perspective on governance 15 issues and not simply represent the parochial views of their appointing agencies. Current 10 language in GC §56325 encourages the latter, implying that members of LAFCO “represent” 5 the constituency that appoints the member. The Commission believes that this perception 0 1-10 11-25 25-50 51+ must be changed. SOURCE: Joyce Crosthwaite, Analysis of a Survey of Local Agency Formation Commissions, RECOMMENDATION 3-19 Report to the Commission on Local Governance for the 21st Century, 1999 The Commission recommends that a provision be added to the Cortese-Knox LAFCO commissioners, saying they “should Act emphasizing that the role of LAFCO rely upon their expertise and experience while commissioners is to act in the best interest on LAFCO and exercise responsibility through of the public as a whole and not solely in a regional, LAFCO perspective in making the interests of their respective appointing decisions.” authority. Staff Independence Several individual LAFCOs have adopted policies that include a provision specifying The Commission believes that promoting that LAFCO members represent the interests independent staffs and budgets are just as of the entire county and not any one appoint- important as changing the methods of ing authority, consistent with this recommen- selecting LAFCO members. Many organiza- dation. For example, the Nevada LAFCO has a tions, including several LAFCOs, agree that detailed policy on a commissioner’s role and staff independence is indeed important. duties as a member of LAFCO. The Commis- However, numerous other LAFCOs testified sion agrees with this practice of reminding that many small counties cannot afford an members of their allegiance. The purpose of independent staff and should continue to be the above recommendation is to help establish allowed to use county staff. a standard of ethical professionalism and to This concern appears to be justified for fight any public perception of partiality. There many smaller LAFCOs, especially in rural is evidence that such perception may not areas. Those meeting infrequently may not reflect reality. As Ventura LAFCO Executive have sufficient work to support an indepen- Officer Bob Braitman testified, dent staff. The Commission’s LAFCO survey indicated a wide variation in the number of “A member of the Ventura LAFCO was meetings held annually, which roughly once accused by a city of having a strong correspond with the number of projects filed ‘pro-county bias.’ This caused the LAFCO with LAFCOs each year (indicated in Figure 3- staff to study every vote of every commis- 8). Most “low or no” activity LAFCOs hold sioner at every meeting for three years. meetings on an as-needed basis. For example, The result? There was no discernible Amador LAFCO had not met within the last difference in voting based on the catego- 18 months before the survey, Del Norte within ries of commissioners. You could not tell the last 12 months, and Mariposa within 24 city members from county members or months. The longest drought was in Sierra from the public member by votes cast.” County, where LAFCO had not met for 36 months. Among all LAFCOs, 18 generally The Ventura LAFCO Commissioner meet three or fewer times per year, 16 meet Handbook describes the appropriate role of between six and eight times per year, and 23 44 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

meet ten or more times per year. All LAFCOs nevertheless, that staffing independence could reported increased activity concurrent with be achieved by providing LAFCOs with the economic booms. Several LAFCO officers ability to hire their own staff, contract with volunteered that the complexity of projects the county, hire a consultant on an as-needed has increased significantly in the last five basis, or pooling resources with other years. LAFCOs. The benefits would make such Shasta County Supervisor and LAFCO arrangements worthwhile. The Commission member Irwin Fust expressed the view of is not alone in its belief that the independence many rural LAFCOs. “Like many LAFCOs in of LAFCO is vital to ensuring that LAFCO LAFCOs reported our region — and perhaps in other parts of decisions are credible to the public, as the State — we simply do not have the indicated in testimony to the Commission: increased activity ‘business’ to support a full-time operation. We • The Association of California Water concurrent with do not always have boundary change propos- Agencies: “Clearly, if LAFCOs are to als to consider, nor new district formations, or become more aggressive in pursuing the economic booms... reorganizations, or consolidations. Further- goal of ensuring the most efficient and the complexity of more, the times when LAFCO will be ‘busy’ effective delivery of local services, LAFCOs cannot always be predicted. I have seen will need greater funding and greater projects has increased months go by without an annexation to independence from the local agencies that consider, nor any other matters requiring make-up the commission.” significantly commission [LAFCO] action.” • The Southern California League of Others are of the opinion that the compo- California Cities: “Each LAFCO needs an sition of the staff is not the most critical factor independent staff, one that is only influencing LAFCO independence and that answerable to the LAFCO Commissioners. local preferences should be considered. The statutes should require that each Blanca Alvarado, a county supervisor and LAFCO be responsible for the hiring and LAFCO member from Santa Clara County firing of its staff. Furthermore, the statutes testified, “We feel that the independent should make it clear that no member of decision making ability of the commissioners the County staff can be a LAFCO staff is what makes a LAFCO independent, and not person.” whether the LAFCO staff is employed by After weighing arguments both for and independent contract or by county govern- against LAFCO staff independence, the ment. Santa Clara LAFCO is termed a Commission is convinced that each LAFCO ‘dependent’ LAFCO by CALAFCO . . . “ should select its own executive officer and Diane Williams, Chair of the San Bernar- legal counsel. This does not preclude a dino LAFCO, agreed that local discretion is LAFCO from selecting staff from the county important, but offered a slightly different or any other public or private entity for the global perspective. “The San Bernardino job, so long as it is a voluntary and considered LAFCO believes that the question of whether decision and staff is accountable to the LAFCO’s should be staffed by county employ- LAFCO under some formal arrangement, such ees, or hire its own staff, or use outside as a contract. Allowing LAFCO, rather than consultants, should be an area where ‘local the county, to make staffing decisions should conditions and circumstances’ should prevail allay any perceived bias. rather than a statewide mandate. Philosophi- The Commission is also concerned about cally, however, we believe that every LAFCO possible conflicts of interest regarding use of with a sufficient level of activity would do well county legal counsel or county staff, especially to hire its own staff rather than relying on if the staff person also represents the county staffing assignments provided by a county in jurisdictional negotiations. While existing board of supervisors or chief administrative laws regarding financial conflicts of interest officer.” apply to these individuals currently, commis- Clearly, many smaller counties do not have sioners believe that the Act should explicitly sufficient workload to support a full-time bar conflicts, to ensure that there is no independent staff. The Commission believes, ambiguity. LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 45

RECOMMENDATION 3-20 identify contributors. The FPPC has directed The Commission recommends that LAFCO its staff to draft disclosure options for its select its own executive officer and January, 2000 meeting. FPPC Commissioners counsel. It may nevertheless opt to use warned, however, that a new rule should not staff provided by the county or another be so broad that it includes every petition or public or private entity. The Commission proposal before LAFCO. further recommends that conflict of The Commission agrees that the propo- interest provisions be specified for LAFCO nents of such a proposal should be required to staff. disclose campaign contributions, especially in light of the large amount of public funding Because a LAFCO RECOMMENDATION 3-21 committed to the study. The secession would The Commission recommends revisions to affect a large number of Los Angeles residents, petition is not the definition of “Executive Officer” in so the Commission believes that the public considered a conformance with the recommendation on has a right to know who is funding and LAFCO staff independence. promoting the effort. “measure” until it

During the course of the Commission’s RECOMMENDATION 3-22 receives LAFCO deliberations, a question arose in Los Angeles The Commission recommends approval and is placed County regarding disclosure of campaign that proponents of reorganization contributions for a proposal before LAFCO. actions be required to report on the ballot, it is not Currently the Los Angeles LAFCO is reviewing campaign contributions in the subject to the current a proposal whereby the San Fernando Valley same manner that local initiative would secede from the City of Los Angeles proponents are required to report. disclosure and form a new city (for more information see requirements for Chapter 4). Many observers of the process A closely related matter involves lobbyist have requested that the proponent of the disclosure. On July 8, 1999 the Los Angeles initiatives. secession (Valley Voters Organized Toward City Ethics Commission asked the Los Angeles Empowerment, or “Valley VOTE”) disclose its LAFCO to adopt lobbying disclosure regula- financial backers. The secession proposal is tions for its members and those lobbying probably the most costly local reorganization LAFCO. However, on the advice of counsel, the attempt in California history. The LAFCO Los Angeles LAFCO determined that it does study alone is estimated to cost approximately not possess the authority necessary to $1.2 million. Many believe that the public has establish its own lobbying disclosure rules. A a right to know who is providing financial motion to require LAFCO members to reveal support to this effort. While Valley VOTE has any ex parte communication with prospective released the names of some of its donors, it bidders for the fiscal study contract or their claims that it is hesitant to release a complete paid agents was defeated by a 6-3 LAFCO vote. list for fear that those contributing could be Under the Political Reform Act (PRA), an subject to retribution from the City of Los officer of an agency may not participate in a Angeles. decision if the officer has received a contribu- The Los Angeles City Ethics Commission tion of $250 or more within the preceding 12 considered this issue and concluded that there months from a party involved in the decision. is an exemption in existing law regarding While this prohibition does not affect county disclosure of supporters of an incorporation supervisors, city council members, or elected or a special reorganization. Because a LAFCO members of special district boards, the FPPC petition is not considered a “measure” until it has ruled that it does cover LAFCO commis- receives LAFCO approval and is placed on the sioners. However, this does not cover those ballot, it is not subject to the current disclo- lobbying LAFCO who have not contributed sure requirements for initiatives. money to a campaign account. In November 1999, the Fair Political The PRA requires those who lobby state Practices Commission (FPPC) agreed to government or a state agency to register and consider requiring secession groups to file with the State. However, this law does not 46 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 3

apply to the federal government or local consistent with requirements for State governments. The FPPC has ruled that appointed boards. LAFCOs are not a state agency and therefore do not have to comply with lobbying provisions of the PRA. The FPPC stated in its LAFCO Budgets Madden Advice Letter that because the composition of LAFCO “does not include Virtually every LAFCO testified to the officials as defined in FPPC Regulation 18249 Commission that their funding is inadequate (b), LAFCO is not a state agency for purposes and expressed the view that counties alone of the Act’s lobbying provisions.” This should not be expected to cover all LAFCO regulation requires that at least one voting costs. Data gathered in the Commission’s member be an elected state officer. LAFCO survey affirms the general paucity of The Commission believes that LAFCOs funding for LAFCOs. should be subject to uniform regulation with Each LAFCO was asked its adopted budget regard to lobbying disclosure, but that some for the previous fiscal year. Those “no or low sort of threshold should apply to avoid activity” LAFCOs that do not maintain subjecting LAFCO officials and those inter- budgets separate from their county’s depart- ested in LAFCO actions from having to file on mental budget were asked to estimate their trivial matters. The PRA defines a “lobbyist” total budgets, including staff costs. The (GC §82039) as any individual who receives estimated total of the budgets of all 57 $2,000 or more in economic consideration for LAFCOs is $7,170,570. Individual budgets lobbying in a calendar month or whose ranged from less than $1,000 to more than principal duties are to communicate with any $650,000. Thirty LAFCOs have budgets of less elective state official, agency official or than $50,000. All of the low-budget agencies legislative official for the purpose of influenc- are “dependent” except Lake County LAFCO, ing legislative or administrative action. This which has a budget of $16,000 to cover a part- threshold effectively eliminates insignificant time executive officer who is a private activities from regulatory scrutiny. attorney hired under contract. Figure 3-9 summarizes the survey results. RECOMMENDATION 3-23 Each LAFCO has the authority to charge The Commission recommends that fees to recover costs for the various types of disclosure requirements be adopted jurisdictional changes; 98% have adopted fee regarding efforts to lobby LAFCO or schedules. Most of these fee schedules allow influence a LAFCO decision or decisions, the LAFCO staff to charge a flat fee, usually on a per acre basis, as well as recover direct Fig. 3-9 30 extraordinary costs of time and materials. The estimated total amount returned to all LAFCO Budgets 25 LAFCOs in fee recoveries was $1.6 million. Therefore, of the approximate $7,170,570 20 budgeted for LAFCOs statewide, 22% is returned to the various counties through fee 15 revenues. Several LAFCOs do not keep accurate or 10 updated figures regarding budgets, revenues or costs of staff time. Therefore, a unified 5 format for reporting revenues, expenditures and time may be needed. 0 Most of the suggestions made to the <$50,000 $51,000- $151,000- $251,000+ 150,000 250,000 Commission for reform of LAFCO funding can be grouped into four basic schemes, or

SOURCE: Joyce Crosthwaite, Analysis of a Survey of Local Agency Formation some combination thereof: (1) provide state Commissions, Report to the Commission on Local Governance for the 21st Century, 1999 funding of LAFCOs; (2) provide LAFCO with a LAFCO Reform Growth Within Bounds: Planning California Governance for the 21st Century 47 share of the property tax; (3) have cities and 15 Fig. 3-10 special districts share funding responsibility Percent of with the counties; or (4) continue the current 12 LAFCO Budgets practice of limited funding from the county Returned and recovery of fees from applicants. 9 Through Fees In his testimony to the Commission, San

Diego LAFCO Executive Officer Michael Ott 6 summarized the key funding issues. “Devel- oping an equitable funding program is crucial 3 for LAFCO, especially if the Legislature wants LAFCOs to have a positive effect on local 0 government structure in California. Any 0-5 6-10 11-20 21-30 31-40 41-50 51-60 61-70 71+ major changes to the LAFCO statutes . . . would essentially be negated if LAFCOs would SOURCE: Joyce Crosthwaite, Analysis of a Survey of Local Agency Formation Commissions, be left with an inadequate funding source. A Report to the Commission on Local Governance for the 21st Century, 1999 three-way funding split matched by contributions from the state received the endorsement RECOMMENDATION 3-24 of San Diego LAFCO in 1998.” The Commission recommends that LAFCO San Luis Obispo LAFCO Chairman Bill costs be apportioned equally among all Engels agrees, citing the need for indepen- constituencies that select members to the dence in fulfilling broad State mandates of commission. LAFCO. “Amore equitable means of funding LAFCOs needs to be found. The current Language previously considered in method of county general fund and fees unsuccessful legislation (AB 270, 1997-98) discourages LAFCOs from being most forms the basis for this recommendation. The effective because expensive sphere of influ- language from AB 270 would repeal the ence studies and special district consolidation existing policy, which makes LAFCO a county studies are not completed due to lack of cost center, and instead provide that opera- sufficient financial resources.” tional costs would be shared equally by the The issue of funding for LAFCOs comes county, cities, and special districts. The down to a question of fairness. Cities and specific allocation language recommended by special districts produce much of the the Commission, adapted from AB 270, would workload of LAFCOs and have the greatest amend GC §56381 and add a new GC interest in promoting an independent §56381.5. The suggested draft is included in decision-making body. The Commission Appendix C. believes that all entities will benefit from LAFCO procedures, policies, membership, LAFCO independence, which can only be and staffing must be reformed if LAFCOs are assured if all share equally in the cost. A to be respected arbiters in boundary matters specific model was developed for legislation and if they are to contribute to the broader proposed in 1997-98 (AB 270, Torlakson) goal of preparing California governance for which provided for a one-third cost split the 21st Century. The Commission believes among the three constituencies and required that adoption of the recommendations in this special district representation. Although the chapter will represent a major step forward in legislation was unsuccessful, the Commission achieving these objectives. believes that the basic formula is worth exploring once again.

Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 49

CHAPTER FOUR Growth Within Forming New Cities and Changing Bounds Municipal and District Boundaries

“Without land use control, we are requesting LAFCO or the local jurisdiction to ‘dependent upon the kindness of initiate proceedings. In addition, LAFCO on strangers.’” its own authority may initiate the consolida- David Spiselman, tion of one or more special districts (see Member of Mid-Coast Community Council Chapter 5). When the process is initiated by Commission Hearing, December 2, 1998 citizens, the first step is the gathering of petition signatures, after which the signatures LAFCO actions are a ne of the most important and must be verified. The remaining procedures key step in the process controversial exercises of government are the same no matter how the action was O power occurs in making decisions initiated. Minimally, the required actions, if which results in major concerning land use — decisions which successful at each step, are: an initial LAFCO land-use change involve balancing the sometimes competing hearing on the proposal; a final protest interests of individuals and communities and hearing; and an election, if required under the through annexations providing necessary municipal services. provisions governing the type of organiza- Although the Cortese-Knox Act denies tional change proposed. The discussion below and incorporations. LAFCOs the power to directly control land focuses on proceedings initiated by petition. use, they are nevertheless indirectly involved. By exercising their powers under the Cortese- Initiation of a LAFCO Action by Knox Act, LAFCO actions are a key step in the Petition process which results in major land-use change through the approval or disapproval of The right and ability of citizens to petition annexations and incorporations. A proposal their government was a basic principle of the to join an existing city or special district American Revolution. The Declaration of through annexation, or to create a new city, Independence and the California Constitution may be based on the desire for self-determi- both provide that citizens may petition to alter nation, to preserve community identity, to or change their government. In addition, the obtain more services, or a combination of California Constitution permits citizens to these and other factors. Incorporations and petition, either through initiative or referen- annexations are important tools for allowing dum, concerning decisions by the Legislature communities to guide their own destinies. and by local legislative bodies. However, the Reforms are needed, however, to improve State has the authority within Constitutional these important processes. limits, to establish the structures of local government as it sees fit. With regard to most local government Initiating Boundary Changes actions in California, the Legislature has provided procedures for citizens to voice their Under the Cortese-Knox Act, two methods concerns and objections regarding proposals are available to initiate a city or special district at public hearings before the proposed actions formation or boundary change: (1) the are taken or approved. The Cortese-Knox Act legislative body of a city or special district includes numerous provisions for enabling may adopt a resolution requesting an annex- public participation and allowing citizen ation or detachment; or (2) voters or land- protests. In a sense, there may be too many owners in the affected area may sign petitions provisions, or at least too many procedural 50 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

variations for similar types of LAFCO vote requirements and changes recommended decisions. For example, requirements differ by the Commission. for numbers of signatures to be gathered, numbers of protests to be filed, and the voting RECOMMENDATION 4-1 qualifications for various proposals that a The Commission recommends that LAFCO must approve or disapprove. uniform requirements be established for Current law provides that proposals may petitions to initiate a change in organiza- be initiated by petitions signed by registered tion or reorganization. Currently, the voters or landowners. However, the petition percentages of voter or landowner signa- Incorporation should requirements are widely varied. For example, tures required for types of proposed petitions including the signatures of 25% of actions varies. It is recommended that the not be entered into the affected registered voters are required to percentage of signatures required for lightly. It is a lengthy, initiate incorporation or disincorporation incorporations, detachments, and proposals, 20% are required for consolidation disincorporations, be uniformly estab- expensive process and of cities, 20% for detachments from cities, 5% lished at 25%, that the percentage required carries a permanent for annexations, most reorganizations, district for dissolutions be uniformly established dissolutions or consolidations, and 10% for at 10%, and that the percentage required responsibility. district mergers or subsidiary district for annexations, consolidations, and proceedings. mergers be uniformly established at 5%. Testimony received by the Commission When a proposal includes one or more indicated that the current petitioning changes of organization, the higher requirements are confusing and that there petition threshold should apply. Broadly should be some attempt to make the require- speaking, the higher percentage would be ments more consistent and understandable. for actions that increase governmental Diane Williams, Chairperson of San Bernar- fragmentation while the lower percentage dino LAFCO, noted that the original intent of would be for actions that reduce fragmen- the different petition requirements was to tation. encourage annexation while making it more difficult to incorporate, but that the number of The current petitioning standard for a incorporations since 1963 seems to indicate proposed incorporation, requiring 25% of that these barriers were not a success. She registered voter signatures to initiate a review testified that “all that remains in current law is by LAFCO, was raised as a concern by the a confusing and apparently arbitrary set of Valley Voters Organized Toward Empower- differing petition requirements. Perhaps the ment (Valley VOTE), which contends that it is Commission might give some thought to too difficult to achieve. As Valley VOTE making petition requirements consistent, President Jeff Brain testified, “the special thereby making them more understandable to reorganization process requires [that] 25% of the public.” the TOTAL registered voters sign the petition. . Ron Wooten, Vice-Chair of CALAFCO also . . Consideration should be given to adjusting testified that “current law provides that either the percentage of required signatures or petitions signed by registered voters or the basis of the percentage.” landowners can initiate proposals. However, The Commission believes that there are the petition requirements are widely varied…. legitimate policy reasons for the high thresh- Whatever the legislative intent at the time, the old for new incorporations and special result is a confusing and arbitrary set of reorganizations. Incorporation should not be differing petition requirements.” entered into lightly. It is a lengthy, expensive After a review of the current structure and process and the result, if successful, carries a requirements, the Commission concluded that permanent responsibility. Many commission- consistent standards for initiating and filing ers feel that it should be difficult for a petitions would streamline LAFCO procedures community to incorporate in order to ensure and make them more understandable to the needed and logical formation of new govern- public. Figure 4-1 summarizes the existing ments. Moreover, the success of many Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 51

Fig. 4-1 Current Requirement Current and Recommended Gov Code Registered Number of A. V. Proposed Voter/Land Owner Petition Description of Petition Sec No Voters Owners of Land Change Requirements to Initiate Organization or 56750 I%ncorporation of a city 2%5 2%5 2e5 No chang Reorganization Proposals SOURCE: Commission on Local 56751 D%isincorporation of a city 2e5 No chang Governance for the 21st Century

Consolidation of two or 56752 2%0% 5 more cities

56753 A%nnexation to a city 5%5%5eNo chang

Annexation to a city of more 56753 (b) than 100,000 in Los Angeles 8%% 8%8%5 County

56754 D%etachment from a city 2%0 2s0 s%25

Annexation to registered 56755 (a) 5%% 5%5eNo chang voter district

Detachment from registered 56755 (a) 5%% 5%5%25 voter district

Annexation to a landowner- 56755 (b) 5%% 5eNo chang voter district

Detachment from a 56755 (b) 5%% 5%25 landowner-voter district

Consolidation of registered 56757 (a) 5e% No chang voter districts

Consolidation of landowner- 56757 (b) 5%% 5eNo chang voter districts

Dissolution of a resident 56758 (a) 5%% 5%5%10 voter district

Dissolution of a landowner- 56758 (b) 5%% 5%10 voter district

Merger of a district which overlaps a city or 56760 (a) 1%0% 5 establishment of the district as a subsidiary district

Merger of subsidiary 56760 (b) 1%0% 1%0 5 landowner-voter district incorporation efforts – including the recent that proponents notify LAFCO before experiences of Valley VOTE and Harbor VOTE circulating a petition. This may lead to format – in successfully obtaining the requisite or procedural errors on the part of proponents number of signatures is evidence that the and may delay LAFCO’s timely response to current threshold, although it may be difficult, receipt of the petitions. The Commission is not unattainable. believes that all parties would benefit if, prior Although the Commission believes that to circulating petitions, proponents registered signature thresholds should remain signifi- their intent with LAFCO. The Cortese-Knox cant, it believes that LAFCO could assist Act already has such a provision for petitions proponents if advance notice of a petition circulated in Los Angeles County. This type of were given. Currently, there is no requirement notification will help LAFCOs plan their 52 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

workload, resolve any concerns or problems As a matter of fairness and equity, the that proponents may have with the process, Commission believes that a petition before and provide consistent and reliable informa- LAFCO should be treated similarly to a state tion to the public. or local initiative with regard to signature verification. RECOMMENDATION 4-2 The Commission recommends that RECOMMENDATION 4-3 proponents of a change in organization The Commission recommends that the (e.g., incorporation or annexation) be cost of verifying petition signatures for a The requirement that required to file a notice with LAFCO of citizen-initiated incorporation, special their intention to circulate a petition. reorganization, or other change of organi- proponents cover the Under current law, the first required notice zation be considered a governmental cost cost of verifying to LAFCO is the actual filing of all petition in the same manner as a local initiative signatures, which initiates LAFCO’s petition covered under the provisions of signatures... is unique certification of signatures and commence- the Elections Code. to the LAFCO process ment of procedures. A provision similar to this proposal already exists for large cities Clarification of Petitioner in Los Angeles County (GC §56700.5). A technical change to the petition process Signature Verification under the Act was recommended by Harbor VOTE, the advocacy group for a proposal from Currently, most LAFCOs require that the Harbor communities of Wilmington and proponents of an incorporation, annexation or San Pedro to secede from the City of Los other petition-generated proposal assume Angeles (the Los Angeles secession move- responsibility for the cost of verifying ments are discussed in further detail later in signatures. The requirement that proponents this chapter and in Chapter 8). During the cover this cost is unique to the LAFCO drive to gather petition signatures, the group process. In any other type of initiative, when encountered an internal dispute when the voters submit signatures it is the responsibil- petitions were submitted to LAFCO by one of ity of a government agency to verify the the chief petitioners, who then created his signatures without charging the proponents. own organization independently of the other This is true for both state and local initiatives. two chief petitioners and Harbor VOTE. While This question also arose with regard to this involved an internal struggle among the Valley VOTE. This organization submitted secession proponents, Harbor Vote correctly 205,000 signatures requesting a study of the noted some possible discrepancies in the Act secession of the San Fernando Valley from the dealing with the term “Chief Petitioner.” City of Los Angeles. LAFCO informed Valley Under current law, “Chief Petitioner” and Vote that it would have to pay the cost of “Proponent” are used interchangeably verification, which was estimated at over throughout the Act. For example, in GC $200,000. After negotiations between Valley §56706, which relates to the insufficiency of VOTE and the County, the County agreed to petitions, the “Chief Petitioners” are to receive absorb the cost, citing the need for the process notice of the insufficiency, while the “Propo- to move forward. During the deliberations in nent,” as used in the next paragraph, is which the Los Angeles County Board of allowed additional time to gather signatures. Supervisors agreed by a vote of 3-2 to pay for The Elections Code uses only the term the signature verification, Supervisor Mike “Proponent” when referring to an initiative Antonovich stated, “Part of the democratic petition. process is to allow people to address their The Commission believes that clarification government through petitions. . . Not to allow of these terms is needed, so that it is clear [Valley VOTE] to move forward would be a with whom LAFCO should communicate and denial of their due process.” negotiate. To avoid confusion, only one term should be used throughout. The Commission Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 53 agrees that the Act should be consistent with thresholds for protests and determined that the Elections Code. the variations were not significant. Therefore, the Commission has not proposed revisions. RECOMMENDATION 4-4 The Commission recommends eliminating the term “Chief Petitioner” and redefining Special Considerations When the term “Proponent” to include responsi- Setting Local Boundaries bilities of the chief petitioner. This will eliminate confusion, as the terms are used Decisions to annex or incorporate are ones interchangeably, and will align petitioning that affect several levels of public policy. Among the procedures in the Act with those included When a LAFCO is considering such proposals, in the Elections Code for other types of it must take into account who is affected, considerations that a petitions. whether services can be provided by the new LAFCO must take into city or annexing jurisdiction, if there are Hearing and Protest sufficient revenues to sustain future develop- account are any ment, and the potential impact on revenues implications for voting After a proposal for an organizational for affected local governments. Among the change is accepted by LAFCO, it is reviewed considerations that a LAFCO must take into rights. and, if it meets criteria established by the account are any implications for voting rights LAFCO, it may be approved or denied, and any potential increase in taxes to regis- following at least one public hearing. A tered voters and landowners. This section LAFCO decision to approve is then subject to discusses the potential implications of a protest by residents or property owners in the LAFCO decision on the Voting Rights Act and affected area. Existing law provides a Proposition 218. procedure whereby the conducting authority, usually the jurisdiction most affected by the Voting Rights Act proposed action, must hold a protest hearing. If there is dissatisfaction with the proposed The federal Voting Rights Act imposes LAFCO action, opponents may file a protest some special considerations on boundary either at or before the protest hearing, which determinations. The potential implications of may be continued up to 60 days. The protest this federal law are clearly a concern of some may be filed either in person or in writing legislators. The statute which created the directly to the conducting authority, or Commission specifically directed it to “report through a petitioning procedure. The law on proposals to ensure conformity with the does not specify a uniform procedure. requirements of federal law, including, but not The conducting authority must evaluate limited to, the federal Voting Rights Act of the validity of each protest and, if valid 1965.” (42 USC §1973 et seq.) protests are received from a specified percentage (depending on the action) of landowners Background or voters, the proposal must be terminated or The Voting Rights Act (VRA) was enacted submitted to the voters for approval. The in 1965 to guarantee minority voters an equal protest thresholds differ somewhat for various opportunity to elect the candidate of their types of proposals. Generally speaking, choice. It has been amended in 1970, 1975, however, if the protest rate is less than 25%, and 1982. In order to implement the VRA, the the LAFCO action is approved without an federal court is authorized to appoint examin- election; if 25%-50% protest, an election must ers to certify persons as qualified to vote, and be held; if a majority protest, the proposal the Act empowers federal courts to require must be terminated. The precise require- some political subdivisions to pre-clear ments are different for annexations in Los election changes with a district court or with Angeles County and for inhabited versus the U.S. Attorney General. The VRA allows the uninhabited areas. The Commission reviewed U.S. Attorney General to send federal regis- the existing statutes specifying the various trars (or examiners) to register voters in 54 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

counties where the local registrar refuses to 6. Provisions setting bilingual election register minorities, monitor elections to procedures and assistance. ensure that eligible minorities are able to vote, and that their votes are counted. VRA and Local Boundary Changes There are special provisions, which apply As noted previously, the provisions of the only to several states, which have had a history VRA apply to local government as political of racial discrimination. These states include subdivisions of the state and to local govern- Arizona, Georgia, Louisiana, Mississippi, and ment organization changes. An annexation or Texas. Also included are several individual new incorporation brings about a boundary counties and towns, including jurisdictions in change that might affect the political access or California (pre-clearance is required in Kings, representation of minorities, and if it results Merced, Monterey, and Yuba Counties), in ethnically-adverse gerrymandering, a Colorado, Florida, Idaho, and New York. challenge may be initiated by the Department Under Section 5 of the VRA, any election of Justice (DOJ) or private parties in federal changes in covered jurisdictions to a voting court. Changes resulting from annexation and qualification, prerequisite, standard practice, incorporation must be reviewed case-by-case or procedure are subject to pre-clearance. to analyze their impacts for purposes of the Section 5 freezes election procedures in a Voting Rights Act. covered jurisdiction until that jurisdiction An example of an annexation, which proves that its proposed changes do not have provoked a Federal challenge, occurred in the purpose and will not have the effect of Houston, Texas, in 1977 and 1978. The denying or abridging the right to vote on annexations were approved by the city account of race. It is designed to combat council, which did not believe the action to be effects which are retrogressive. In addition, covered by the VRA. A DOJ review of the Section 2, which applies in all jurisdictions, annexations resulted in a formal objection on bars all states and their political subdivisions the grounds that they had substantially from maintaining any voting standard, reduced minority voting percentages in practice, or procedure that results in denial or Houston’s at-large municipal elections. The abridgment of the right to vote on account of DOJ indicated that it would consider with- race or color. This section was designed as a drawing the objection if Houston reformed its means of eradicating voting practices that electoral system so that minorities were minimize or cancel out the voting strength afforded representation equal to their political and political effectiveness of minority groups. strength. A process of negotiations began, To establish a claim of voting dilution under leading to a change in Houston’s city council Section 2, it must be shown that the totality of selection procedure to a combination of the circumstances supports a finding that the district members and at-large members. This voting scheme is dilutive. plan was approved by the DOJ and the voters. The list of election issues potentially subject to challenge under the Voting Rights VRA and Voter Representation Act includes the following: A recent example of a voter discrimination 1. Changes in electoral boundaries resulting complaint occurred in Santa Paula, California. from reapportionment or redistricting. In August 1999, the DOJ announced that it 2. Changes in the method of election. would sue the city if it didn’t switch from at- 3. Changes in the composition of the large council selection to a district system in electorate resulting from annexations, order to improve Latino representation. The consolidations or incorporations. DOJ found that while Latinos make up a 4. Provisions establishing voter registration majority of the city’s population, they requirements and candidate qualifica- continue to be underrepresented on the city tions. council. To support a claim of voting dilution, 5. Changes in the form of government (from it must be established that (1) the racial group a council-manager to a strong mayor affected is sufficiently large and geographi- form). cally compact to constitute a majority in a Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 55 single member district; (2) the group is Legislative Counsel issued two opinions which politically cohesive; and (3) the white concluded that the provisions of Proposition population votes sufficiently as a bloc to 218 would prevail over the provisions of the enable it usually to defeat the majority’s Cortese-Knox Act. Therefore, in the opinion of preferred candidate. The person claiming the Legislative Counsel, the imposition of a dilution must also suggest a reasonable City’s local taxes, assessments, fees, and alternative voting practice to serve as the charges to a territory approved for annexation benchmark of “undiluted” voting practice, must first be approved by a vote of those in such as different voting district boundary the annexed territory. A special twist occurs lines. with an uninhabited annexation, since there The Attorney General These examples are directly related to the are no voters available to approve the new tax Commission’s charge and should be heeded by scheme. opinion reasoned that LAFCO. An annexation may change voting In October, 1999, the Attorney General the protest procedures patterns in a city if a new large voting bloc released a formal opinion which concluded, resides in the annexed territory. LAFCOs may contrary to the views of Legislative Counsel, in the Cortese-Knox be able to avoid challenges under the federal that “if LAFCO conditions approval of a Act provide for citizens Voting Rights Act if they carefully ensure that change of organization or reorganization upon communities of interest are left intact by a requirement that the subject agency levy or to object to the annexations and that boundary lines for fix and collect a previously established and voting districts are not gerrymandered to collected tax, assessment or fee on parcels conditions of an affect voting patterns. being annexed to the agency, the voter annexation, and LAFCOs are often responsible for deciding, approval requirements of Proposition 218 do in concert with proponents, how a city council not apply.” The opinion reasoned that the Proposition 218 was will be selected, either at-large or by districts, protest procedures in the Cortese-Knox Act not intended to apply and how a new city’s boundary will be drawn. provide for citizens to call for a vote if they The Commission sees no need for additional object to the conditions of an annexation, and to LAFCO actions. state statutory guidance in this area because Proposition 218 was not intended to apply to federal law takes precedence. However, it is LAFCO actions. critical that LAFCOs be cognizant of potential The Commission, while noting concern federal jurisdiction and make their decisions over the possible repercussions of a decision accordingly. The Commission recommends that might require all annexations to go to a (see Recommendation 4-16, below) that when vote of the people, believes that caution an incorporation proposal is placed before the should be exercised in trying to craft legisla- voters, the proposal may include establishing tive fixes pending further judicial treatment of districts to elect council members at the same these issues. Because Proposition 218 was a time, in which case the provisions of the Constitutional measure, and statutes cannot Voting Rights Act should also be taken into directly change constitutional provisions, any consideration. additional statutory responses should be carefully crafted and must take into account Proposition 218 any court rulings on these issues.

In 1996, California voters approved Proposition 218, which required local Annexations governments to obtain voter approval (majority or two-thirds) for all general and An annexation is a type of boundary special taxes. In addition, Proposition 218 change which increases the jurisdictional area enacted stricter requirements on the use of of a city or special district. Under current law, assessments and fees. Effectively, this LAFCO must establish a sphere of influence Constitutional initiative created another for each city and independent special district special consideration when setting local as a means of promoting advance planning. boundaries These spheres generally delineate the antici- Following passage of Proposition 218, the pated future boundaries of the entities and 56 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

serve as a plan for future annexations in order urban growth by the city’s general plan. to provide for orderly growth and develop- • Territory to be annexed must be in the ment. The Cortese-Knox Act prescribes that same county and be contiguous to one of an agency may only annex territory that is the boundaries of the city. There are within its LAFCO-approved sphere of several exceptions to this law for annex- influence. In reality, however, sphere exten- ations of noncontiguous state correctional sions and coterminous annexations often facilities, which increases the official city occur simultaneously. The discussion which population count and, in turn, can increase follows pertains directly to city annexations, the revenues received from vehicle license LAFCO must establish but the procedures for special districts are fees and gas tax allocations. essentially the same. • LAFCOs may approve an annexation of spheres of influence As stated previously, an annexation noncontiguous territory that does not which delineate the request may be initiated by voter petition or exceed 300 acres, as long as it is within the by resolution of the governing body of a city county, is owned by the city, and is being future boundaries and or special district, with the latter the more used for municipal purposes. serve as a plan for common means. In order for a city or district • If 50% or more of the registered voters or to annex land, the annexation area must be land owners protest the annexation, the future annexations. within the entity’s sphere of influence and be application is denied. If 25%-50% protest, contiguous to its boundaries. The petition or the annexation must be submitted to the proposal is then submitted to LAFCO, which electorate for approval. may approve or deny the application or may LAFCO terms and conditions may include approve it subject to conditions, except as changing or altering the boundaries of the follows: proposed annexation. However, within • LAFCOs cannot deny an annexation if the LAFCO’s ability to impose conditions is a territory constitutes an “island,” as defined specific prohibition, pursuant to GC in law. §56375(2)(a), against imposing any land-use • LAFCOs must approve a city annexation if restrictions. Nevertheless, LAFCO actions the area is within the LAFCO-adopted usually carry land-use implications. In most Urban Service Area, the area is not prime cases, an annexation is part of a specific agriculture land, and is designated for development proposal, and LAFCOs may, and

Figure 4-2 The former MCAS El Toro has been proposed as the future site of an international airport. The matter may ultimately be determined by an Orange County LAFCO annexation decision.

Photo courtesy of the Flying Leatherneck Aviation Museum, MCAS Miramar Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 57 the Commission recommends that they during that period in which protests to the always should, require pre-zoning. In some proposal may be filed. The Advisory Commit- cases, LAFCO decisions carry major regional tee believed that the 15 day period should be land-use implications. A current example is increased to 30 days to allow the public more an annexation proposal pending before time to evaluate the proposal and prepare a Orange County LAFCO. The City of Irvine case for or against it. The Commission found proposes to annex the former Marine Corps the Advisory Committee’s arguments gener- Air Station (MCAS) El Toro, now closed. ally persuasive. Orange County has proposed converting the The Commission has noted concern property, presently within its jurisdiction, into about the possibility that these citizens were LAFCOs may, and the a major international airport, an idea which is not given ample notice or information strongly opposed by south county cities, regarding the annexation. The Commission Commission including Irvine. The ultimate land-use believes that these two recommendations recommends that they decision, which may well be determined by would give property owners and citizens more the outcome of the annexation attempt, will information on future annexations, and more always should, require affect future generations throughout the time with which to respond to such a pro- pre-zoning. region. posal.

Technical Revisions RECOMMENDATION 4-5 The Commission recommends that the Annexation procedures are often difficult Cortese-Knox Act be amended to require to explain in an understandable fashion to the use of the most recent assessment infor- general public. The Commission heard mation available for purposes of mailing testimony concerning some annexation notices to property owners. procedures which a citizen’s committee believes need to be reformed or clarified. The RECOMMENDATION 4-6 Kern County Citizens’ Advisory Committee on The Commission recommends that the Annexations, a group formed to track time for gathering protests to an annex- annexation decisions by the local government, ation be extended from 15 days to 30 days. indicated frustration and general confusion regarding several annexation procedures, The Advisory Committee also objected to based upon its experience with an annexation the “bundling” of annexation proposals by proposal initiated by the City of Bakersfield LAFCO. Currently, if several small areas are that was unwanted by many property owners. proposed for annexation, a LAFCO often may The Advisory Committee provided several bundle these proposals together for purposes recommendations to clarify and update of efficiency. The Advisory Committee current annexation procedures. For example, believes that this bundling makes the protest under existing law, a landowner is defined as requirement harder to attain than it would be that shown on the “last equalized assessment if each of the areas were treated separately. roll.” Kern County Supervisor Barbara The Commission agrees that in some Patrick testified that “the Committee discov- instances bundling could affect the ability of a ered that the last equalized assessment roll is particular community to protest an annex- not the most recent roll…. Due to technologi- ation and believes that LAFCO should not be cal advances, assessors’ offices now continu- allowed to bundle annexations in certain ally update the assessment roll.” It is the circumstances. However, the Commission Advisory Committee’s recommendation that does not want this “unbundling” to result in the language be changed to the most recent fragmentation of small segments or unincor- assessment roll. porated islands (discussed in more detail later The Advisory Committee also noted that in this chapter). the existing statute provides that hearing notices must be published or mailed at least 15 days prior to the hearing date, and that it is 58 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

RECOMMENDATION 4-7 be repealed, and instead provide a process for The Commission recommends that, where any city to proceed with such an annexation. annexation is proposed of two or more There is one annexation provision in the Act “bundled” non-contiguous inhabited involving the City of Willits (GC §56111.5) segments, a protest from one must be that should not be repealed because it deals considered separately if the segment has a with a particular water facility rather than a population of more than 500. This provi- correctional facility. sion would not apply to island annexations authorized under AB 1555. Island Annexations The creation of an Non-Contiguous Annexations Since the enactment of the Cortese-Knox unincorporated island Act, unincorporated islands have always been can lead to difficult Generally speaking, LAFCOs may not a source of concern for LAFCOs and cities. approve the annexation to a city of territory Generally, islands are defined as unincorpo- service delivery that is not contiguous to the city. Very often, rated pockets of land which are completely problems for both however, the Legislature has authorized such surrounded by cities. Islands occur when an annexations through special legislation where area is incorporated or annexed and a cities and counties. state prisons are sited near an existing city. particular area does not want to be included. The cities seek the annexations because of the Often, the creation of an island is not the population increase they realize from the result of a deliberate action, but it neverthe- inmates. This, in turn, produces additional less can lead to difficult service delivery revenues from population-based state problems for both counties and cities. subventions, such as vehicle license fees and In 1977, legislation was enacted which gas tax allocations. In fairness, the location of allowed LAFCOs to initiate annexation of a prison near a city does require the city to islands not exceeding 75 acres to cities provide additional services and increases road without a protest vote. This program maintenance and other costs. The legislature continued for eleven years. While certainly has created a clear precedent for approving this legislation helped to eliminate some these special annexations by creating 11 islands, many are still in existence today. special exceptions in statute currently. The Commission received testimony from Therefore, the Commission recommends that numerous LAFCOs wishing to have this it is more logical and less confusing to create a program reinstated or to simply have all general statute which allows LAFCOs to islands eliminated by statutory decree. Santa proceed with such an annexation routinely Clara LAFCO noted that many of these islands under certain conditions. are difficult to serve and that there is often confusion as to which agency is responsible RECOMMENDATION 4-8 for service delivery in these areas. Autumn The Commission recommends that Arias, Executive Director of Santa Clara LAFCOs be given ongoing authority to LAFCO, testified that, “in light of these authorize annexation of non-contiguous realities, we believe it is imperative to territory to a city where the territory is a reexamine the issue of island annexations, state correctional facility. The Legislature even while we understand (many of us routinely authorizes such annexations, through personal experience), the bitter with LAFCO approval. Generic language resistance of unincorporated residents toward would obviate the need to pass special forced city annexations. Most of us are legislation and allow LAFCOs to establish familiar with the… MORGA annexation law, processes to determine how and when such which allowed cities to annex island areas annexations should occur. without the usual protest or election process for a time limited period from 1978- The Commission proposes new language 83….Santa Clara LAFCO approved the to replace existing Government Code Sections annexation of 3,791 acres of island areas 56111.1, and 56111.6-56111.14, which would during this time period, moving 26,400 Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 59 residents into cities. Of the islands that were not annexed, many were larger than the 100 acres that MORGA law required as a maxi- mum size.” As noted by Santa Clara LAFCO, there were significant successes in the previous program to eliminate islands, but reluctance and resistance continues. In some cases, as illustrated in Figure 4-3, an island may consist of only a few individual housing lots within a city’s boundaries. San Bernardino LAFCO described a locally adopted policy which encouraged voluntary citizen-initiated efforts to eliminate islands by agreeing to waive all filing fees, but it still encountered resistance. As Diane Williams, Chairperson of San Bernardino LAFCO testified, “the County will not initiate the proceedings, the cities are reluctant to do so because of political and financial issues, the people within the islands typically see little urgency in the need to initiate proceedings, and of course LAFCO is not legally empowered to initiate island annexation proceedings. The San Bernardino LAFCO therefore suggests that your Commis- sion revisit the island annexation provisions that existed . . . in the old Municipal Reorgani- zation Act of 1977 (MORGA).” During 1999, the Commission voted to Additional LAFCO Considerations Figure 4-3 support then-pending legislation (AB 1555, The shaded areas are unincor- Longville) which proposed to restore for As noted previously, there are several porated “islands” within a another limited period the island annexation factors which a LAFCO must consider when residential neighborhood in program enacted in 1977. This legislation was reviewing an annexation proposal. One factor the City of Cupertino signed by Governor Davis, but includes that many believe LAFCO and cities should SOURCE: Santa Clara County Planning several restrictions, including a 75-acre consider prior to approving development on Office limitation. Many LAFCOs testified that they the “fringes” are the current availability of have islands exceeding 100 acres within their vacant land and development densities within counties. It should be noted that this legisla- existing incorporated areas. John Benoit, tion was opposed by residents and property Executive Officer, Glenn County LAFCO owners who, like the Kern County Citizens’ testified, “Infilling criteria should be estab- Advisory Committee members, indicated lished by local LAFCOs. Any annexation their objection to being annexed to a city should be required to meet the locally without any ability to protest such a decision. established criteria. This would enable local The Commission believes that the LAFCOs to guide infilling to meet local program reinstated through AB 1555 should needs.” be given an opportunity to succeed without Development on open-space and prime immediate further revision. However, it agricultural lands in California continues believes that future consideration should be despite current LAFCO policies. The Commis- given to increasing or eliminating the size sion believes that consideration by LAFCO of restriction and making the program perma- the current opportunities for development by nent. cities within their existing jurisdictions should be encouraged prior to any approval of 60 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

an annexation which would entail develop- land, from a county government’s jurisdiction. ment of prime agricultural or open-space Therefore, an agreement is necessary to lands. This type of review could help to determine what portion, if any, of the county’s decrease the development of these lands and property tax revenue generated in this area is help to curb sprawl in California. to be ceded to the annexing jurisdiction. Under current law, property tax exchange RECOMMENDATION 4-9 agreements are completed through negotia- The Commission recommends that a tions between the affected city and the county LAFCO be authorized to address densities before an annexation proposal can be The Commission and in-fill when processing annexation submitted to LAFCO. To facilitate the requests of a city, as a specified factor to be property tax exchange agreement, existing law believes that an considered in a LAFCO action. provides for a process which includes annexation proposal preparation of a comprehensive fiscal analysis The Commission also heard concerns that and may include mediation and arbitration. If should not proceed LAFCO may not be fully aware of planned the matter is arbitrated, the city and the without presentation land uses for a proposed annexation or that county ultimately must each present a last and proposed uses may change after LAFCO gives best proposal. The arbitrator must select one of a clear its approval. Some LAFCOs feel, therefore, of the proposals and recommend it to the that they should have some ability to enforce governing bodies of the city and the county. development plan the land use assumptions upon which the However, if either party disapproves the to LAFCO. approval was given. As John Benoit of Glenn proposal, stating its reasons at a public LAFCO testified, “. . . some of LAFCO’s hearing, the annexation proceedings are conditions after approval of an annexation, for terminated. This ability of either party to veto example, should be binding upon a jurisdic- a proposed annexation has led many cities to tion.” believe that this process is weighted in favor of The Commission believes that an annex- the counties. ation proposal should not proceed without The Commission believes that the presentation of a clear development plan to property tax exchange process needs to be LAFCO. The city should then be expected to equitable to both parties and should allow for adhere to this plan unless unforeseen negotiations, mediation, and arbitration, as is circumstances or legal obligations require a available under current law. The Commission change. discussed several possible solutions, including binding arbitration and establishing RECOMMENDATION 4-10 LAFCO as the final arbitrator in tax exchange The Commission recommends that pre- proceedings. However, the Commission zoning be required for territory proposed recognizes that the negotiation and mediation to be annexed to a city. The implementing procedures were only added to the Cortese- plan and ordinances must remain in effect Knox Act in 1997 and were the result of for five years following the annexation extensive negotiations between the League of unless the legislative body makes a finding Cities and CSAC at that time. The Commis- that a change is necessary to protect sion believes that this process should be given private property rights or public health or a longer period of time to work, but notes that safety. LAFCO could be a valuable resource in the mediation process, especially if it were Property Tax Exchange included at a much earlier time, before the parties have reached an agreement or In any proposal for an annexation, the deadlocked. affected parties must enter into a property tax exchange agreement. In all annexations, the entity proposing the annexation, whether a city or a district, is removing that land, and potentially any tax sources accruing to the Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 61

Incorporation of New Cities Revenue Neutrality

New cities in California can only be One of the major obstacles to forming a created by voter petition, followed by a lengthy new city is the requirement that an incorpora- study and approval process supervised by tion be “revenue neutral.” In 1992, as part of a LAFCO. The Cortese-Knox Act procedures package of budget “trailer bills” necessary to that must be followed for processing applica- balance the State budget, Governor Wilson tions for the creation of a new city are signed SB 1559 (Maddy) which required a schematically illustrated in Figure 4-4. finding of “revenue neutrality” for all incorpo- Essentially, the first step is to gather signa- rations. This bill was enacted as part of an tures from 25% of the registered voters or agreement to placate counties somewhat by landowners in the area proposed for incorpo- limiting the impact of the ERAF shift (see ration. Generally, proponents are given six Chapter 2), which was also part of the 1992 months to gather the signatures, which must budget package. Under the revenue neutrality then be validated by the LAFCO executive law, LAFCO cannot approve a proposal for officer. Once verified, the executive officer incorporation unless it finds that the amount must take each of the following actions: of revenues the new city takes from the county * Prepare a report (including an environ- after incorporation would be substantially mental document), and make a recom- equal to the amount of savings the county mendation to the LAFCO. The report must would attain from no longer providing include a comprehensive fiscal analysis, services transferred to the new city. which analyzes the proposed city’s Prior to enactment of the revenue neutral- anticipated costs and revenues for its first ity law, when an incorporation occurred, three years of existence. LAFCO was required to split the property tax * Determine an equitable property tax revenues among both jurisdictions, essentially exchange between the affected local by formula. However, because property taxes entities. This exchange agreement and any were constrained after Proposition 13, related tax exchanges or required pay- counties argued that this split resulted in a net ments are subject to the revenue neutrality loss to them because it did not take into provisions of the Cortese-Knox Act, account the continuing cost of countywide described subsequently. services, such as elections, jail operations, and * If the proposal is approved, the LAFCO probation, that still had to be provided. The confers conducting authority status upon revenue neutrality provision in SB 1559 was the affected agency (usually the county). an attempt to make the tax allocation more This entails the responsibility for holding a equitable by requiring LAFCO to ensure that public hearing to receive protests to the counties are held harmless from new incorpo- proposal. rations. The unintended result was that in the * The conducting authority must approve seven years following enactment of revenue the proposal if it has received protests neutrality, only six incorporations have been from less than 25% of the registered voters successful: Citrus Heights, Shasta Lake, in the affected area. If protests are filed by Truckee, Oakley, Laguna Woods, and Rancho more than 25% but less than 50% of the Santa Margarita. This compares to 27 in the registered voters, the conducting authority immediately preceding seven year period. must call an election on the question. An In 1999, two bills were introduced in an election requires majority voter approval attempt to reform the process: AB 1495 (Cox) in the area proposed for incorporation. and AB 1526 (Thompson). These bills had * If over 50% of the registered voters in the many similar provisions to which both affected area file a written protest, the sponsors — the League of California Cities proposal must be abandoned. and the California State Association of Counties — have agreed. Nevertheless, some differences still must be resolved. The provisions in these bills (as amended in 62 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

Figure 4-4 Incorporation and Special Reorganization Procedure

Proponents must gather 25% of registered voters signatures or landowners in the area to be incorporated within 6 months of LAFCO Funding the date of the first signature. According to Cortese-Knox, LAFCO’s usual expenses are a county charge, but LAFCOs are authorized to charge fees Petition is submitted to LAFCO which must verify the signatures. to recover costs. If verified, the proponents must submit to LAFCO an application, which includes the petitions, map and description of the boundaries, and the names of three proponents.

Executive Officer must mail The Executive Officer has 30 days in which to determine if the Fees charged to the applicant notice to interested agencies application is complete. If appropriate fees have been paid, are based on the LAFCO’s at least 20 days prior to issuing it is deemed accepted. Within 90 days of this approval, adopted schedule of fees, which certification of application. LAFCO must conduct a public hearing. varies from county to county.

The executive officer must prepare a comprehensive fiscal analysis. The analysis must review and determine the following: Funding for the CFA is also dependent on • Costs to the proposed city for providing public services and schedule of fees, but facilities during the 3 years following incorporation. usually this cost is borne • Revenues of the proposed city during the 3 years following incorporation. by the applicant. • Effects of the costs and revenues on any affected agency during those years.

After the CFA is completed LAFCO must hold a public hearing and An interested party may must also determine: LAFCO may also provide request the State Controller that the incorporation is to review the CFA. LAFCO • The amount of property tax revenue to be exchanged. subject to one or more may charge the interested • The appropriations limit for the new city. terms and conditions. party for the review. • If the proposal would be revenue neutral. • Environmental impact analysis.

If LAFCO denies the proposal the proceedings are terminated If LAFCO approves the proposal the conducting authority and no similar proposal may be made within one year. (designated by LAFCO) must then hold a public hearing.

If a majority of the voters protest the proposal, it is terminated. Election Costs However, if less than 50% protest, the conducting authority In the case of an incorporation, election costs must call an election on the proposal. must be paid by the newly incorporated city, or by the county if the proposal fails.

FOR INCORPORATIONS FOR SPECIAL REORGANIZATIONS

If a majority of the voters in the area to be incorporated If a majority of the voters in the area to be detached and approve, the incorporation is deemed adopted. incorporated and a majority of the voters in the entirety of the existing city approve, the special reorganization is deemed adopted.

SOURCE: California State Assembly, Committee on Local Government, Guide to Cortese-Knox Local Government Reorganization Act of 1985, November 1998 (with Commission modifications). Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 63

August 1999) include the following: crisis and desperation. The time has come • Requires the county to provide fiscal data to revisit this issue and develop a balanced to the LAFCO within 120 days after an solution.” incorporation application is filed. • DeAnn Baker, Legislative Coordinator, • Requires the LAFCO executive officer to CSAC: “The revenue neutrality law is key specify the most recent fiscal year to be to survival and assurance that counties are used as a basis for the fiscal analysis. able to continue to provide countywide • Reduces allowed time periods for LAFCO services by reducing revenue losses to new to act during the incorporation process. cities. In the annexation process it is • Allows proponents to address LAFCO on important to ensure that counties receive a Any solution to the any potential impacts or hardships on the share of revenue from future growth. It is incorporation effort that may result from a also important for fiscal stability and in revenue neutrality proposed delay in a LAFCO hearing on a order to promote efficient growth pat- dilemma must be proposal. terns.” • Requires the Office of Planning and agreed upon by the Research (OPR) to convene a task force to The Commission had lengthy discussions major parties. create statewide guidelines for the regarding revenue neutrality and heard many incorporation process. recommendations from various entities. • Provides that a new city may request that Included among these recommendations was the California Highway Patrol continue to making revenue neutrality binding on a new provide services for five years after city council, requiring a time limit on revenue incorporation. neutrality payments, and designating LAFCO Revenue neutrality is often viewed as a as the final arbitrator of these agreements. city versus county issue. As the following The Commission agrees that revenue testimony presented to the Commission neutrality provisions need to be reformed, but indicates, it is a fundamental, and at times it also recognizes that the League of Cities, emotional, issue for cities and counties. Both CSAC, and CALAFCO have been in negotiation cities and counties and their advocacy over this matter for over two years and appear associations believe that reform efforts will to be making progress. These on-going unquestionably continue to be contentious: negotiations are being conducted as part of the legislative hearing process for AB 1495 • Dan Carrigg, Legislative Representative, and AB 1526. The Commission believes that League of California Cities: “Any new city any solution to the revenue neutrality created after the passage of revenue dilemma must be agreed upon by the major neutrality law is automatically at a parties and that introducing a third party disadvantage compared to all other solution is not likely to be productive at this existing city and county governments. time. Saddled with revenue neutrality payments to the county, the new community is faced Comprehensive Fiscal Analysis with providing lower levels of service than it otherwise could to its residents. On a per The comprehensive fiscal analysis (CFA) is capita basis, the residents of a new city a requirement of any incorporation. As noted making revenue neutrality payments above, LAFCO must prepare an analysis on the could potentially pay a higher proportion fiscal viability of the new city. A major of their revenues toward the cost of concern of incorporation proponents has been countywide services than residents of the funding of the CFA. Under existing law, other incorporated areas . . . Revenue LAFCO may charge proponents for any costs neutrality law . . . is a one-sided solution to prepare a CFA. Therefore, the proponents that benefits counties and discourages must raise the money necessary to pay for future incorporations. The law is not the petition verification, the CFA itself, possibly a product of thoughtful, balanced, legislative CEQA analysis, and a revenue neutrality deliberation. It is a law passed at a time of analysis. This can translate into significant 64 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

Status of Comprehensive Fiscal Filing Fee EIR Incorporation Effort Analysis

Figure 4-5 Sacramento County Selected Citrus Heights LAFCO agreed to pay Cost between $50,000 Unknown; initially Incorporation (According to Incorporated in 1997 for the cost of the –$60,000 filed in 1986 Costs Proponents) fiscal study (paid by proponents)

SOURCE: Commission on Elk Grove LAFCO agreed to pay CFA and proposal $6,000 – paid when Local (According to for the cost of the Estimated at $81,000 currently before petitions were filed Governance staff, from Proponents and fiscal study estimated (paid by proponents) LAFCO for approval (paid by proponents) various sources newspaper articles) at $25,000

Preliminary CFA cost $6,000 – to be paid Projected to cost $10,000; Rancho Cordova when petitions are between $50,000 and Signature drive began Comprehensive CFA (According to filed $100,000 in April, 1999 projected to cost Proponents) (to be paid by (to be paid by $15,000 proponents) proponents) (paid by proponents)

Orange County

Leisure World/Laguna Not requested – Incorporated in March, $7,000 $25,000 – $30,000 Woods (According to negative declaration 1999 (paid by proponents) (paid by proponents) Proponents and on incorporation LAFCO)

Rancho Santa LAFCO working on $57,000 – cost for two Margarita $7,000 Not expected to be CFA to be completed runs of CFA (According to LAFCO (paid by proponents) any charge by late May (paid by proponents) staff)

Los Angeles County

Calabasas Raised $6,000 for No charge to (According to Incorporated in 1991 application fees Unknown proponents newspaper articles) (paid by proponents)

$18,500 charged by Filing fees were Malibu LAFCO to hire nominal – estimated No charge to (According to Incorporated in 1991 consultant to prepare at $200 (paid by proponents Proponents) EIR proponents) (paid by proponents)

costs which some proponents find difficult to on the preparation of the comprehensive fiscal absorb and often leads to suspending an analysis. Because the Cortese-Knox Act does incorporation movement. not provide detail with regard to any specific Figure 4-5 indicates the cost to organizers requirements for the CFA, LAFCOs, cities, and of several recent incorporation attempts. counties have requested that an outside body, Generally, the cost is between $70,000 and in concert with those entities affected, prepare $120,000 depending on the requirements of guidelines for all LAFCOs to follow. Under the LAFCO. With regard to the San Fernando current law, each LAFCO may employ different Valley secession study, the funding require- standards and methodologies in its CFA. By ment is staggering. Preliminary estimates by requiring OPR to prepare these guidelines, the the Los Angeles LAFCO indicated that Commission believes that some consistency between one and two million dollars will be among LAFCOs could be achieved. needed to complete the study. As discussed previously, two bills were RECOMMENDATION 4-11 introduced in 1999 that dealt with incorpora- The Commission recommends that the tion issues - AB 1495 and AB 1526. Among Office of Planning and Research, in the provisions in these bills is the requirement consultation with the State Controller, that the OPR prepare guidelines for LAFCOs prepare guidelines for the preparation of a Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 65 comprehensive fiscal analysis, to ensure between the League of Cities and CSAC, does consistent methods and criteria. not propose specific dispute resolution language. Any resolution agreeable to both The statutory requirements for the CFA parties will likely be acceptable to the require that the data used for the analysis Commission, since mutual approval by the must be from the most recent fiscal year. The affected parties is the objective of any analysis must review and document each of negotiation. Two proposals, which are not the following: mutually exclusive, have been put forth to • The costs to the proposed city of providing resolve two types of CFA data disputes. The public services and facilities during the first concerns the data used by LAFCO to three fiscal years following incorporation. determine the fiscal viability of the proposed • The revenues of the proposed city during new city. The second is a provision included the three fiscal years following incorpora- in AB 1495 regarding resolution of a dispute tion. over a revenue neutrality mitigation decision. • The effects of the costs and revenues of any affected local agency during the three (1) Revise Section 56833.1 as follows: fiscal years of incorporation. 56833.1. For any proposal which includes • Any other information needed to make the an incorporation, the executive officer findings. shall prepare, or cause to be prepared by contract, a comprehensive fiscal analysis. One of the more technical issues regarding This analysis shall become part of the preparation of the CFA is the availability of report required pursuant to Section 56833. fiscal data to LAFCOs. At Commission Data used for the analysis shall be from meetings, some incorporation proponents the most recent fiscal year for which data stated that by the time the CFA is complete are available preceding the issuance of the and a proposal is placed on the ballot, the data certificate of filing. When the data is outdated, which may lead to fiscal uncer- requested by the executive officer in the tainty and problems for the new city. A CFA notice to affected agencies are unavailable, may be delayed for a number of reasons, and the executive officer may request supple- currently there is no deadline by which the mental data the analysis shall document CFA must be completed. Often this is an issue the source and methodology of the data of funding, staff time, or problems receiving used. The analysis shall review and data from the affected agencies. The Commis- document each of the following: . . . . sion believes that LAFCOs should have access (2) Adopt fiscal data dispute resolution to the most recent data, and that if significant language, such as that included in AB 1495 time has lapsed, LAFCO should be allowed to ( proposed new GC §56845.1), pertaining request supplemental data. to fiscal mitigation for revenue neutrality determinations for a new city incorpora- RECOMMENDATION 4-12 tion. The Commission recommends that if the fiscal data submitted to LAFCO for the Environmental Analysis comprehensive fiscal analysis is more than one year old or is otherwise disputed, the The Act does not include a specific executive officer may request supplemen- requirement for an environmental analysis of tal data or, in the case of the incorporation an incorporation proposal. However, under of a new city, initiate a dispute resolution the California Environmental Quality Act process. (CEQA) a public agency proposing to undertake a project or approve a discretionary The Commission believes that the action is required to consider the potential accuracy of the data used for the comprehen- environmental impacts of that action. If the sive fiscal analysis is critical, but, recognizing lead agency determines that there is no that this is a matter of continuing negotiation substantial evidence that the project would 66 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

have a significant impact, a negative declara- require an EIR in order to comply with the tion may be prepared. Projects that may result intent of CEQA. in a significant impact on the environment require the more costly and time-consuming RECOMMENDATION 4-13 preparation of an Environmental Impact The Commission recommends that a Report (EIR). statutory CEQA exemption be provided for LAFCOs differ in their treatment of the a new incorporation. This recognizes that need to prepare an EIR for incorporations. an act of incorporation constitutes only a While some LAFCOs have required an EIR, political reorganization. Nevertheless, A new incorporation is other LAFCOs have simply filed a negative when the newly incorporated city adopts a declaration. The cost implications for general plan and zoning ordinances, these simply a political incorporation proponents are substantial. acts would not be exempt from CEQA. change and does not Many incorporation proponents see the preparation of an EIR as a delaying tactic Funding Incorporation Studies commit the area to which can cost several thousand dollars. Orange County LAFCO noted that it always On March 22, 1999, the Commission was any specific changes files a negative declaration for incorporations. asked by Assemblymembers Hertzberg and in land-use. Dana Smith, Executive Officer of Orange McClintock to make recommendations for the County LAFCO testified that, “the cost of funding of the CFA for the San Fernando preparing an EIR and the relative lack of value Valley secession. The Commission held two of an EIR to the incorporation process should hearings on the issue. After considerable be evaluated. CEQA should be amended to deliberation, it recommended that the allow for a categorical exemption of incorpo- Legislature appropriate an amount sufficient rations — provided the new city adopts the to establish a revolving loan fund, which could existing general plan designations of the also help fund other incorporation proposals, County.” for a portion of the cost of the fiscal study by Riverside LAFCO Chairman John Los Angeles County LAFCO. McFadden went a step further, stating, “. . . we In June, 1999, Governor Gray Davis signed also have a proposal to reduce the burden on the 1999 Budget Act, which included an incorporation proponents . . . A change of appropriation of $1.8 million to the Los representation should not be a project [under Angeles LAFCO to study the secession. CEQA]. To assume a range of land use Subsequently, the Governor signed AB 1630, decisions that might be taken by a future city which appropriated $320,000 to the Los council, as suggested by the court, is so Angeles LAFCO to study the secession of the speculative it is ridiculous. The range of Harbor communities from the City of Los potential actions is no different than that Angeles. Neither measure required repayment which might be taken by a future board of of the funds. supervisors. We propose a new CEQA exemp- The Commission believes that all jurisdiction for incorporations. This could save tions should be treated in a consistent incorporation proponents $50,000 to manner. While it agrees that the State should $150,000.” help fund LAFCO costs of reviewing the The Commission concurs with the impacts of an incorporation, commissioners conclusion that a new incorporation is simply have also indicated that the availability of a political change and does not commit the funding should not be so easy to obtain that it area to any specific changes in land-use. The encourages incorporations when such a new city must initially adopt the existing proposal is not economically viable or county general plan land use designations. provides for illogical formation of govern- While the new city, if formed, could subse- ment. A threshold or some other minimum quently change plan categories, its actions test might therefore be warranted. The would at that time be subject to CEQA and the Commission believes that the State should public hearing process. The Commission consider making funds available on an agrees that an incorporation should not ongoing basis so that incorporation propo- Forming New Cities and Changing Boundaries Growth Within Bounds: Planning California Governance for the 21st Century 67 nents could apply for funds if needed and if procedural difference between forming a new costs cannot be waived by LAFCO, as permit- city through a special reorganization and an ted under current law. Such funds, if pro- incorporation of county territory into a new vided, should be repaid if the new city city is that the former requires a “dual incorporation is successful. majority” vote – approval in both the detach- ing area and the entire city — while the latter RECOMMENDATION 4-14 requires a majority only in the proposed new The Commission recommends that if city. proponents of a new incorporation or Only three sections in the Cortese-Knox special reorganization have successfully Act reference the term “special reorganiza- Pronounced interest gathered the requisite number of petition tion,” and none of these describes a unique signatures and are unable to fund the cost process for this type of action. Many other in special of required LAFCO studies, they may apply code sections refer to “any proposal which reorganizations to LAFCO for a fee waiver. LAFCO may includes an incorporation” and are presumed reject the waiver request, approve the to apply to a “special reorganization.” There- indicates that the request and fund the study itself, or it may fore, the procedures noted in the previous procedures need to be ask for State funds to cover the cost of the section regarding revenue neutrality, compre- studies. State funds, if provided, shall be in hensive fiscal analysis, and environmental clarified, not only for the form of a loan, to be repaid by the new analysis also apply to a “special reorganiza- city if the incorporation attempt is tion.” Los Angeles, but successful. If the incorporation is not On December 9, 1998, Valley VOTE possibly for other successful, the loan must be forgiven. submitted 205,000 petition signatures calling for a special reorganization study. On March LAFCOs in the future. 15, 1999, a sufficient number of these Special Reorganization signatures were validated to authorize preparation of a comprehensive fiscal analysis Since 1977 there have been movements in (CFA), the statutorily-required financial study several areas to secede from the City of Los that must divide assets and liabilities and Angeles and form new, smaller cities. Most analyze whether the new city will be viable prominent among these is the current and the remaining city unharmed. Another proposal involving the 1.2 million residents of secession movement was also proceeding the San Fernando Valley. All of the past during the same time period. The communi- attempts to secede have failed, due, in part, to ties of Wilmington and San Pedro joined the statutory power of the City of Los Angeles forces to create Harbor VOTE, which turned in (or any other city) to unilaterally veto a city approximately 13,000 signatures in July 1999. detachment. These were validated on July 30, 1999 by the The equation was altered in 1997, when Los Angeles LAFCO. Therefore, both the San the Legislature passed and Governor Wilson Fernando Valley and the harbor area special signed AB 62 (McClintock & Hertzberg), reorganization proposals will be considered which limited the ability of a city to veto a during the same period by Los Angeles secession. The legislation was backed by LAFCO. Another petition movement is Valley VOTE, which was created in 1996 in currently underway in Hollywood. (Figure 8-5 order to promote these legislative changes. indicates all of the areas that have been The bill coined a new term, “special reorgani- involved in recent secession attempts in Los zation,” which is defined as a reorganization Angeles.) This pronounced interest in special that includes the detachment of territory from reorganizations indicates that the procedures a city or city and county and the simultaneous need to be clarified, not only for use by Los incorporation of that entire detached territory Angeles LAFCO, but possibly by other LAFCOs as a city. It eliminated the authority of a city in the future. to veto such an action, but left in place the power to veto a detachment not involving a new incorporation. Consequently, the major 68 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 4

RECOMMENDATION 4-15 law does not specifically reference “special The Commission recommends that reorganization” nor precisely define whether procedures be clearly specified for special the “petition” is the instrument signed by the reorganizations, generally establishing the registered voters or the subsequent detailed incorporation procedure as applicable. proposal placed on the ballot by LAFCO. Thus, the ability of proponents to expand the Other issues have been raised as a result of council may be subject to challenge if the current special reorganization actions. statute is not clarified. Currently, when a new city incorporates, it The Commission agrees that a new city Many people who initially becomes a general law city with a should be afforded the opportunity to have an five-member council. If the newly-incorpo- increased number of city council members. want to change the rated city subsequently desires to adopt a This will help ensure that all the communities way they are governed charter, its city council may form a special and residents within the proposed new city commission to draft a charter or citizens may have more adequate representation. If the are prevented from petition for creation of a charter commission. incorporation attempt is successful, the city doing so either by lack Among other things, the charter may propose could subsequently adopt a charter and increasing the size of the council. Valley VOTE expand its council size further. of funding or because proposed to the Commission that State law be amended to allow a charter to be placed on RECOMMENDATION 4-16 the process is too the same ballot with an incorporation The Commission recommends that the lengthy and proposal. While commissioners generally Government Code be clarified to permit a sympathize with this idea, they believe that proposed new city pursuant to a special complicated. this could in fact complicate the incorporation reorganization to become a general law process further and confuse voters. The city with 5, 7, or 9 council members, elected Commission believes that a charter should be by district. carefully contemplated and subjected to full consideration by residents. It should not, therefore, be undertaken simultaneously with Conclusion the proceedings to form the city. Based upon public statements, however, it Procedures for annexations and incorpo- appears that the major interest of Valley VOTE rations are overly complicated under the in a charter is to allow election of a council Cortese-Knox Act. There are many unresolved comprised of more than five members. Jeff controversies within these processes, includ- Brain, President of Valley VOTE, testified: “In ing the requirement for revenue neutrality the case of special reorganizations, new cities findings, the difficulty in reaching a property could contain significant amounts of residents tax exchange agreement, and proponents’ as is the case in the San Fernando Valley with dismay at having to cover the entire cost of 1.4 million residents. The proponents should incorporation studies. Many people who want have flexibility of deciding on the number of to change the way they are governed are council members they wish to have. It’s prevented from doing so either by lack of subject to a vote of the public anyway so [it] funding or because the process is too lengthy must be approved by the voters.” and complicated to understand and complete. The Commission believes that this could The Commission urges reforms to annexation be accomplished through a minor amend- and incorporation procedures through ment in the Government Code. Currently, a cooperative negotiations among affected proposed new city may increase the number parties and adoption of the recommendations of city council members to 7 or 9 if specified in this report. in the incorporation petition. However, the Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 69

CHAPTER FIVE Growth Within Special Districts: Bounds Tailor-Made Government for Californians

The Birth of Special Districts bureaucracies. They were a perfect fit for the dominant, low-density suburban lifestyle that ntil late in the 19th Century, cities and characterized California almost from the counties were the sole providers of beginning. Ulocal governmental services (exclud- Special districts are formed to meet ing education) in California and throughout incremental needs rather than to provide a the nation. This meant that citizens desiring a full range of government services. They have Special districts were different type or higher level of services than proved particularly useful in providing popular because they the city or county could provide were faced limited municipal services to rural areas just either with forming a city or petitioning beginning to urbanize, when growth has out- could provide those county supervisors to provide additional stripped the ability of individuals to provide specific services in attention to one particular realm of their for themselves, but before there is a clear need jurisdiction. or desire for a general purpose city govern- greatest need without Initially, interest in establishing specialized ment. Californians seem partial to these saddling citizens with forms of government came from farmers districts. Even after urbanization is complete seeking assistance with agricultural needs, and cities are formed, the special districts complex especially irrigation, land reclamation, and often do not go away. The result is intertwined levee maintenance. The essential need was government boundaries in many California bureaucracies. usually for technical and engineering skills, urban areas. not traditional municipal services. Because cities were not needed in these rural areas and Special District Functions and the farmers likely did not regard county Numbers government as sufficiently responsive or well- versed in the types of technical expertise There is no consistent definition of a desired, a new form of government was California special district, except that it is devised in California. In the 1870s and 1880s uniformly interpreted to exclude school and legislation was enacted to authorize formation community college districts. Therefore, as of single purpose local government agencies explained in Chapter 2, the various sources to construct and maintain levees and oversee may differ in their tallies of the number of drainage, reclamation, and irrigation projects. districts. For purposes of this report, we will This new form of government quickly took generally use data compiled annually by the hold and, by the early 1900s, had spread to Office of the State Controller. The Controller’s urban functions, including drinking water financial data is the most comprehensive and delivery systems, storm water drainage, and the most consistently maintained over an sanitation. Special district popularity extended period of time. mushroomed during California’s period of Currently, the Controller classifies districts rapid growth and urbanization in the three into 54 functional categories. The services decades following World War II. Districts most frequently provided by districts are: were popular because they could be put in water supply, storage, conservation, & place quickly, had flexible boundaries, and replenishment; fire protection; maintenance; could efficiently provide those specific cemeteries; sanitary and sanitation; reclama- services in greatest need without saddling tion; highway lighting; recreation and parks; citizens with creation of complex municipal and resource conservation. Although most 70 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

individual districts provide only one or two jointly the powers possessed by any of the classes of services, the single most prevalent members (see text box), types of districts are multi-functional — • non-profit corporations, which are community services districts (CSD) with established as private entities by one or independent governing boards and county more local governments for a specific service areas (CSA) governed by county purpose, usually to finance or operate a boards of supervisors. Each CSD and CSA particular public service; may exercise a broad array of powers, • dependent financing districts, such as including water supply, police and fire street lighting and maintenance and The focus of the public protection, recreation, libraries, waste and Mello-Roos districts, which are governed sewage disposal, street lighting and mainte- by city councils or county boards of policy debate should nance, transportation services, some electric supervisors and are formed solely for the be on the adequacy of and communication facilities, pest and animal purpose of financing capital improve- control, and graffiti abatement. ments or limited specific services for provision of services to The Controller counted a total of 4,816 inhabitants of the district, generally citizens, not on the districts in 1995-96. The sheer number has through a special assessment; and provoked controversy, including several • county service areas, which, unlike CSDs, number of districts. legislative attempts to initiate district are governed by county boards of consolidations. In fact, the number of supervisors rather than independent districts has declined markedly in recent boards. They are funded through special years, with the Controller’s total having assessments to the benefiting residents peaked in 1983-84 at 5,244. This raw statistic for the purpose of providing a higher may not tell the whole story, however. level of service in an unincorporated area. The Controller includes among the number of special districts several entities The increase in the numbers of these that have experienced rapid growth in recent entities may, in reality, be a positive sign. JPAs years but are not true independent governing are formed as a means of developing coopera- authorities. These include: tive relationships among government entities. • joint powers authorities (JPA), which are Their growth might be viewed as a sign of agencies formed by two or more govern- improved coordination and cooperation ments and are authorized to exercise rather than simply a proliferation of govern-

Fig. 5-1 600 Growth Trend in Special –6% District Types 500 1974-75 1974-75 Through 1995-96 –15% 1995-96 400 SOURCE: State Controller, Annual Reports of Special Districts, with adjustments by Stephen P. Morgan in +59% 300 Special District Consolidations –3%

200

Number of Districts –3% –6% –23% –23% 100

Fire

Water** Services Cemetary Sanitary/ & Flood Resource Protection and Parks Recreation Sanitation Community Reclamation Conservation

** Includes the following types of districts: California Water, County Water, Metropolitan Water, Municipal Water, Water Agency or Authority, and Irrigation Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 71 ment. Nonprofit corporations are often Joint Powers Authorities and Agreements formed as an innovative means of financing a public service or meeting a public need Joint Powers Authorities or Joint Powers Agreements (both abbrevi- without creating a new government bureau- ated JPA) are formal cooperative arrangements between two or more in- cracy. Financing districts, CSAs, and CSDs are dependent government entities. A Joint Powers Authority is an agency created in response to the Byzantine financing formed to carry out the purposes benefiting all of the members. A Joint Powers Agreement is a contract that authorizes an existing agency to do restrictions faced by local governments in the work of the JPA member agencies. The agency only has the powers California, which must draw artificial lines that are given it by the member agencies, which cannot grant powers to and create special assessment areas to finance the JPA that they themselves do not possess. what once could be covered by property taxes. There is no reliable accounting of the number of JPAs in California. The When these types of entities are excluded, the Secretary of State has received notifications of formation of over 1,400 number of districts has actually declined in JPAs, but some of these may no longer be active. The State Controller recent years, as indicated in Figure 5-1. received reports from 652 in 1995-96, but not all JPAs must file with the Even among the fast-growing district State Controller. One thing is certain: the number has been increasing. types, the instances of new district creation The State Controller, for example, reported only 205 JPAs in 1974-75. are quite circumscribed. Just seven counties According to the Senate Local Government Committee, JPA activities — Del Norte, El Dorado, Humboldt, Inyo, fall into five basic categories: Plumas, Riverside, and Tulare — accounted 1. Financial. The most common type of JPAs are those formed to finance public projects under bond pooling arrangements, especially un- for nearly half of new CSD formations der the Revenue Bond Act of 1941 and the Marks-Roos Local Bond Pool- between 1974-75 and 1995-96. Nearly 90 ing Act of 1985, which require the formation of a JPA. JPAs also are formed percent of the increase in the number of CSAs between cities and their redevelopment agencies, both of which are usu- is traceable to ten counties, none of which is ally governed by the city council, in an unusual arrangement where a city, among the seven having the greatest CSD in effect, has a contract with itself. gains. A possible explanation for the increase 2. Insurance Pooling and Purchasing. These arrangements allow sev- in the number of CSDs and CSAs is rapid eral agencies to save money by pooling funds to reduce risks and create suburbanization of rural areas, coupled with a market power that none enjoys individually. declining ability of counties to provide 3. Services. Several agencies may combine to provide common ser- services in the post-Proposition 13 era. This vices more effectively or at a lower cost. For example, JPAs may be used to latter conclusion is supported by a study jointly provide ambulance or animal control services over a wide area, or conducted for the Association of California to fulfill federal and state mandates for solid waste management, special education, or regional transportation planning. Water Agencies by Stephen P. Morgan, which 4. Planning. This type of JPA is generally used to address regional prob- shows that the most rapid growth of these lems jointly. They are often used to develop strategies for public health, types of districts occurred after passage of education, law enforcement, transportation, and wildlife conservation. One Proposition 13 in 1978. of the most visible types of regional planning JPA is a council of govern- The Commission finds that the focus of ment. the public policy debate should be on the 5. Regulatory. This type of JPA enforces regulations as an agency inadequacy of provision of services to citizens, dependent of its individual members. Some air quality management dis- not on the number of districts. The commis- tricts are examples of regulatory JPAs, although most are created by stat- sioners believe that there clearly needs to be ute. an ongoing examination of the efficiency of The rapid growth of JPAs in recent years does not necessarily indicate governmental services, and that LAFCO is the increasing fragmentation in governance. Rather, it may signal the oppo- appropriate agency to oversee this review. site. Although some JPAs are formed solely to take advantage of a financing mechanism not otherwise available, most are true collaborations of Where district consolidations or absorption of governments that promote greater cooperation and coordination of ser- district functions into general purpose local vices, even if only for specific purposes. While noting that there are also governments will improve efficiency or difficulties involved with cooperative arrangements, the Senate Local Gov- transparency of service delivery, they should ernment Committee lists six advantages available to local governments be aggressively pursued. Consolidating by forming JPAs: (1) efficiencies may be attained in providing services; (2) districts solely for the sake of reducing their public improvements may be financed more easily; (3) grants may be more easily captured; (4) organizational flexibility is enhanced; (5) regional problems may be addressed; and (6) local power is retained, since forming a JPA does not require assistance from LAFCO or the State Legislature. 72 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

numbers, however, is a disservice to the 100,000 population, and the gap is widening. citizens who desire the services provided. Moreover, local government fragmentation within California has changed little over the past two decades, despite rapid population Special Districts and Government growth. PPIC offers proof through a “political Fragmentation fragmentation index,” or PFI, which it devised to measure the degree to which spending The contention that California has too activity is divided among local governments. many special districts has recently been Technically speaking, the PFI estimates brought into question in a study on govern- fractionalization in government by measuring ment “fragmentation” published by the Public the probability that two randomly selected Policy Institute of California (PPIC). PPIC dollars of local expenditure are spent by notes that the number of independent special different local governments. From 1972 to districts has not been increasing and the 1992, the statewide PFI and the PFI for relative share of local government spending by counties, both on average and weighted for special districts, as compared to cities and population, were virtually identical through- counties, changed little from 1972 to 1992. out the period, indicating that there had been The report asserts that “. . . there is no almost no additional fragmentation in the supportable theory for the right-sized budget local political structure. PPIC attributes this or jurisdictional boundary.” It goes on to state, governmental stability, in part, to the creation however, that “. . . ‘excessive’ governmental of LAFCOs in each county. fragmentation may complicate the coordina- The Commission believes that one role for tion of services and the planning of land and LAFCO should be to determine the most infrastructure development.” appropriate form of government to provide a Does California have “excessive” govern- particular service to citizens in an efficient mental fragmentation? Compared to other and responsive manner and that will enjoy the Fig. 5-2 states and trends within California, the answer support of those governed. Inevitably, this Local Governments per appears to be “no.” According to the PPIC, will mean balancing cost with the ability to 100,000 Population California’s local government structure is less meet the needs and desires of the taxpaying California and complex than the national average. Figure 5-2 customers and with overall coordination of the United States indicates that California is far below the government services. In some instances, the 1992 and 1977 national average in local governments per most logical entity to provide a particular function will be a general purpose local government that can judge the cost and Special School Counties Cities service trade-offs that are most acceptable to Districts Districts citizens. In other cases, it may be a special 1992 district, especially if service area boundaries do not logically coincide with city limit lines. California 09.19 15.4 99.0 3.4 The Commission finds that there should be no a priori presumption that one particular level of local government is better able to provide Other 49 states 19.33 83.3 152.8 5.9 services than another, and that this finding should be stated in statute. 1997 RECOMMENDATION 5-1 California 05.26 16.8 96.9 4.9 The Commission recommends that GC §56001 be amended to declare that single purpose agencies have a legitimate role in Other 49 states 15.51 92.3 122.0 7.1 local governance, while recognizing that multi-purpose agencies may be a better

SOURCE: Paul G. Lewis, Public Policy Institute of California, Deep Roots: Local Government Structure in mechanism for establishing service California, from Census of Governments (1992, 1977) priorities and that services should be Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 73 provided by the local agencies which can functions that are funded mostly from taxes, best accommodate and provide necessary but often augmented with user fees. Examples services. of non-enterprise activities are fire protection, parks, libraries, and road maintenance. This recommendation can be imple- Enterprises are operated more like a mented by revising the wording in GC §56001, private entity or a public utility than a which states the overall legislative statutory government agency, because the services lend intent of the Cortese-Knox Act. The Commis- themselves to customer charges. The Control- sion proposes that the latter portion of this ler recognizes seven classes of enterprise section be amended to read as follows: activities: airport, electric, harbor and port, transit, waste disposal, water utility, and “. . . The Legislature finds and declares that hospital. With the exception of transit and a single multi-purpose governmental hospital districts, which receive sizeable agency rather than several limited purpose amounts of tax and intergovernmental agencies, is in many cases better able to transfer revenues, enterprise districts are assess and be accountable for a wide range almost entirely reliant upon user charges. of community service needs and financial Statewide, enterprise activity revenues are resources and, therefore, is may be the best about three times as much as non-enterprise mechanism for establishing community revenues. Figure 5-3 summarizes non- service priorities, especially in urban enterprise and enterprise special district areas. Notwithstanding, the Legislature funding. recognizes the critical role of many limited In testimony before the Commission, purpose agencies, especially in rural representatives of non-enterprise special communities. The Legislature also finds

that, whether governmental services are 5000 proposed to be provided by a single Fig. 5-3 purpose agency, several agencies, or a Special District Revenues by multi-purpose agency, responsibility Other Activity Type 1995-96 should be given to the agency or agencies Fees & Sales that can best provide government ser- 4000 SOURCE: State Controller’s Office, Special Districts Annual Report, 1995-96 vices.” Intergov't

Taxes Financing Special Districts 3000 As explained in Chapter 2, most special district revenues derive from three broad sources: taxes, intergovernmental transfers, and user charges. Special district activities (as distinguished from the districts them- 2000 selves) are broadly grouped, based upon their MILLIONS OF DOLLARS financial traits, into two categories: non- enterprise and enterprise. In most cases, all of the activities of a particular special district fall into just one of these activity groupings. 1000 Some districts, however, exercise both types of functions and consequently must account for them separately. While the technical distinction has to do 0 with accounting methods, there is a practical l rt sit sa n tility aspect to this differentiation. Non-enterprise r/Po ispo Airport Electric Tra r U D Hospital rbo a te s activities are traditional governmental H Wate Non-Enterprise Wa 74 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

property tax revenues currently accruing to enterprise districts (e.g., airport, electric utility, harbor and port, waste disposal, water utility) that have access to fee revenues. These types of districts currently receive over $300 million in property taxes statewide. It should be noted, however, that some of these districts provide traditional property tax supported services in addition to enterprise activities.

Laws Governing Special District Reorganization

Principal Acts

Fig. 5-4 districts described financial hardships Special district governance is anything but Like many rural fire depart- experienced by their districts due to property simplistic. Formation, reorganization, and ments, this one in Mendocino tax reductions resulting from Proposition 13 operations for a particular type of district are is staffed by volunteers. Some and, more recently, the shifts of property tax governed by numerous statutes enacted over funds are raised through revenues into the Educational Revenue more than a century. These statutes, known as sale of merchandise to Augmentation Fund (ERAF), as described in the “principal acts” for the districts to which tourists. Chapter 2. The number of fire protection they apply, were enacted incrementally in Staff Photo districts, which are funded almost entirely response to the desire of citizens for new from property taxes, has been reduced classes of districts and to unique circum- through consolidations from 450 in 1978 to stances that existed in specific areas calling 384 today. Many of these, especially in rural for exceptions to general rules of district areas, are “volunteer” departments, largely formation or organization. dependent upon unpaid firefighters. The Principal acts may pertain to a large state’s 47 mosquito abatement districts report number of like districts or may be enacted that it is more difficult to deal with new especially for a specific district. Water strains of pests and to serve expanding functions alone are covered by 39 “general populations in infested areas. Park and acts” and 116 “special acts.” A general act is a recreation districts are forced to charge higher generic statute that applies to all districts of a admission fees and to close facilities. Small, particular type. Examples include the independent library districts struggle to keep “Community Services District Law,” the their doors open. “Municipal Water District Law of 1911,” and While the commissioners are sympathetic the “Fire Protection District Law of 1987.” to the difficulties faced by these districts, they Special acts have been adopted to authorize recognize that there is no simple solution. individual districts having a unique need that Implementation of area-wide service reviews is not covered by a general act. Examples by LAFCOs, as recommended in Chapter 6, include the “Castaic Lake Water Agency Law,” and comprehensive reform of local finance, as the “Humboldt County Flood Control District suggested in Chapter 7, will help strengthen Act,” and the “San Francisco Bay Area Rapid the ability of local governments to provide Transit District Act.” these important public services. In some Principal acts may establish such features cases, district consolidations or integration of of the district as its purposes, powers, voting the functions into general purpose local requirements, governing board selection and governments may be necessary, and should be composition, financing options, and dissolu- studied by LAFCOs on an ongoing basis. In tion procedures. The acts also may define the addition, future government reformers may territory or establish criteria for determining wish to consider reallocating a portion of the territory of covered districts. Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 75

Generally speaking, most proposals for its own to protect its interests. If the reorgani- reorganization of special districts, including zation involves an exchange of services, the annexations, consolidations, and dissolutions, county auditor prepares an estimate of the now fall under the jurisdiction of the Cortese- cost of services so transferred and allocates a Knox Act and LAFCOs, pursuant to the share of the property taxes to the receiving directive of GC §56100. Four types of districts entity from the entity giving up the services — schools, special assessment, improvement, accordingly. If, however, a district assumes and Mello-Roos — are completely exempted responsibility for delivery of services not from Cortese-Knox pursuant to GC §56029(a), previously provided by any local agency, the however, and special procedures apply to district may negotiate with other property tax Revenues should several other types of districts in accordance recipients for a share of the property tax, or it with GC §56029(b) and §56029(c). Moreover, may request the county board of supervisors always be available many new district formations are not subject to act on its behalf. If the district negotiates before service is to LAFCO involvement. Many, if not most, for itself and fails to reach an agreement with principal acts specify that petitions are to be the other property tax recipients, the board of provided; if there are presented to the board of supervisors, not supervisors for the county which includes the no revenues, there LAFCO. area affected by the jurisdictional change shall The Commission feels that this creates a negotiate the property tax exchange for the should be no services. hodge-podge of procedures and contributes to district. the confusion that often surrounds govern- The Commission agrees with the Califor- ment organization. It would be more orderly nia Special Districts Association that this and efficient to adopt greater consistency in arrangement does not serve the interest of formation and reorganization procedures for good government. It believes that the district all special districts by making them subject to should continue to negotiate for itself until LAFCO proceedings wherever possible. The agreement can be reached, or if no agreement criteria and requirements for district forma- can be reached, the proposal to provide the tion should, nevertheless, continue to be additional service should be terminated. The governed by the district principal acts because Commission believes that revenues should of the wide variety of district purposes. always be available before service is provided; if there are no revenues, there should be no RECOMMENDATION 5-2 services. The Commission recommends that the Cortese-Knox Act be reinforced as the sole RECOMMENDATION 5-3 authority for special district reorganiza- The Commission recommends that, if no tion and that LAFCO rather than the master property tax exchange agreement is county board of supervisors be designated in place, the county board of supervisors as the conducting authority for proceed- must consult with all affected independent ings for the formation of a special district, special districts prior to conducting in accordance with the relevant principal negotiations on their behalf regarding act. property tax exchange. Such consultation shall include, at a minimum, provision of Implementation of this recommendation written notification and an opportunity to will require an amendment to GC §56100 to comment. ensure adherence to LAFCO proceedings for district reorganization, and additional statutory provisions in Parts 2 and 3 of the Latent Powers Cortese-Knox Act and possibly in the principal acts to require that petitions for district Each type of district is authorized by its formation are submitted to LAFCO rather principal act to exercise certain powers, such than the board of supervisors. as water delivery, fire protection, or park When a reorganization involving a special maintenance. Whereas some principal acts district occurs, the district is not entirely on narrowly define the functions that may be 76 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

performed by a district, others are quite Commission feels that it is appropriate for broad. Public utilities districts, for example, LAFCO to review the provision of public may provide over a dozen types of services. services by all agencies within their jurisdic- Community services districts, possibly the tions. This review of the exercise of powers broadest classification of special district, may could be part of the periodic review of spheres supply water for domestic, agricultural, and of influence authorized under GC §56425 or most other purposes; collect, treat, or dispose the comprehensive service review proposed in of sewage, storm water, or garbage; and Chapter 6. A special district considering provide police and fire protection, recreation, exercise of an additional latent power could street lighting, mosquito abatement, library, notify LAFCO through a request for amend- street repair, ambulance, transportation, and ment to its sphere of influence. graffiti abatement services, among other things. The reach of these districts is so broad RECOMMENDATION 5-4 and their visibility to citizens so great that The Commission recommends that special some are referred to as the “town halls” of district representation on LAFCO under many rural areas. §56332 and §56450 not be contingent upon Most districts do not exercise all of the the districts giving up their right to powers authorized them. Those powers which exercise latent powers. Those LAFCOs are authorized in statute but are not actually which already regulate their special exercised by a district are known as its “latent” districts’ latent powers as a condition of powers. Absent restrictions to the contrary, a membership should be required to repeal special district board of directors could the relevant regulations, upon request of theoretically vote to begin offering new the Independent Special District Selection services within its boundaries, even if they are Committee. In addition, the Commission in competition with services already offered recommends moving the language in in the territory by another public agency. To §56450 regarding review by LAFCO of the preclude such duplication, many LAFCOs have activation of a new power by an existing required as a condition of representation on district to spheres of influence (§56425). the commission, as authorized by GC §56332, that special districts obtain LAFCO approval This recommendation requires that special before exercising any additional latent powers. district spheres of influence be amended to As discussed below, the Commission specify the services provided by the district believes that special districts should be seated and that any expansion of services or service on LAFCOs unconditionally. Nevertheless, the area be preceded by amendment to the sphere.

Fig. 5-5 The headquarters of the Truckee-Donner Public Utilities District is literally the town hall for Truckee, incorporated in 1993 Staff photo Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 77

This could be implemented through addition currently have special district members and of a new paragraph (d) to GC §56425, which require by regulation the surrender of regarding spheres of influence. This new the ability to exercise latent powers in section would require, as part of a regular exchange for membership should repeal the update to special district spheres of influence relevant part of those regulations. or as a component of the review of a request to expand the sphere to include an additional RECOMMENDATION 5-5 area or a new service function, that the The Commission recommends that special LAFCO do all of the following: districts be given the automatic option to 1. Require the district to file a written select 2 LAFCO members, if requested by Special districts statement with the commission specifying the special districts selection committee or the functions or classes of service pro- a majority of the independent special should not be required vided by the district. districts in the county. to surrender powers or 2. Establish the nature, location, and extent of any functions or classes of service authority as the price provided or proposed to be provided by District Consolidation of LAFCO the district. 3. Determine that the new or different The 1993 amendments to the Cortese- representation. function or class of service is not currently Knox Act also gave LAFCOs the authority to provided by another local agency and that initiate the consolidation, dissolution, and the district is an appropriate provider of reorganization of special districts. This power the service. is potentially a very important tool for use by LAFCOs to rationalize the structure of local governance within their counties. To date, Special Districts and LAFCO however, it has been used very sparingly. During the first three years after adoption of In 1993, the Cortese-Knox Act was this amendment, in fact, only one LAFCO- amended to permit the expansion of LAFCO initiated consolidation had occurred, in San in any county by the addition of two members Diego. According to the California Association representing special districts, if requested by a of Local Agency Formation Commissions majority of the special districts in the county (CALAFCO), however, the rarity of LAFCO and approved through adoption of LAFCO initiated consolidations is deceiving. regulations “affecting the functions and CALAFCO asserts that the threat of LAFCO services of special districts.” The procedure action is by itself an inducement to districts to for adding special district members is detailed voluntarily merge and that voluntary consoli- and somewhat onerous. Of California’s 57 dations are much more likely to be successful. LAFCOs, 33 have to date added special district Many individual LAFCOs and other members; 24 do not have special district associations agree with this assessment, while representation. nevertheless believing that voluntary consoli- If LAFCO is to comprehensively study dations are much more desirable and more public service needs and availability and to easily implemented. San Diego LAFCO has determine the most efficient agencies for overseen a dozen non-hostile special district providing government services within a consolidations since 1992 and finds that the county, it should have the benefit of regular willingness of districts to negotiate is input from all segments of local government. probably enhanced by the threat of LAFCO Consequently, the Commission recommends intervention. Orange County officials believe that special district representation be made an that water district consolidations that were integral part of all LAFCOs and that such voluntarily accepted in 1998 and 1999 were participation should come without strings. successful largely because of the introduction Special districts should not be required to of legislation in 1995 which would have forced surrender powers or authority as the price of consolidation of all county water and sewer LAFCO representation. Those LAFCOs which districts into a single “mega-district.” Al- 78 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

though the legislation did not pass, the threat RECOMMENDATION 5-6 prompted more serious negotiations. The Commission recommends that, where District consolidations rarely are easy, and LAFCO approves a consolidation or hostile mergers are always difficult. The dissolution of an agency and the action is recent agreement to voluntarily merge the two not supported by the district or districts largest fire districts in the Sacramento region involved, that LAFCO may impose condi- came after several years of negotiation over tions which provide that the outgoing such diverse issues as levels and areas of board may not take the following actions: service, employee agreements, the name for 1. Approve increases in compensation or The current LAFCO the new district, and composition of the new benefits for the Board of Directors or board of directors. In early 1999, the Butte officers. authority to initiate County LAFCO voted to dissolve a water 2. Appropriate or obligate any funds consolidations can be district that had sold its water system several beyond the current year’s revenues years earlier but continued to receive property without making a finding of an emer- very powerful, tax allocations. Although seemingly logical, gency. especially when this action was nevertheless very controversial, occupying several LAFCO hearings prior available to an to the final action. Another LAFCO was Multi-County Special Districts independent LAFCO criticized in a county grand jury report for failing to dissolve a hospital district that sold Although most special districts are and used in its facilities two years earlier but continued to confined to a single county, this is not always receive property taxes, which it uses to operate the case. Unlike cities, special district combination with a health care grants program. The tax- boundaries may extend beyond the county other tools. supported grants program is popular among line resulting, occasionally, in controversy the agencies which are eligible for the when boundary changes are proposed (see subventions and see it as one of their few text box for an interesting example). opportunities to obtain funding for special The Cortese-Knox Act envisions the projects. existence of multi-county districts and makes The Commission believes that the current provision for decision-making precedence. LAFCO authority to initiate consolidations Each special district has a designated can be very powerful, especially when “principal county” of service. The principal available to an independent LAFCO and used county is defined in GC §56066 as the county in combination with other tools like service having all or the greater portion of the entire reviews, clearer policy guidance, and stream- assessed value of all taxable property within lined processes. So equipped, LAFCO will the district. Moreover, the LAFCO for the have significant capacity to restructure the principal county has exclusive jurisdiction institutions of local governance to be more over any proposed change of organization or responsive to citizen desires for efficiency and reorganization involving the district, even if responsiveness. Nevertheless, some additional the change affects only the portion of the capabilities may be needed. Testimony district located in another county. Jurisdic- presented to the Commission indicated that tion may be transferred to the LAFCO of once a hostile merger is approved, there is risk another affected county only with the that the “lame duck” directors may take approval of the principal county LAFCO and actions that are not in the best interests of acceptance by the LAFCO of the affected taxpayers. In these instances, restrictions county. should be imposed upon the ability of LAFCOs in two regions have recognized directors to take actions that are not in the the need for orderly response to multi-county best interests of the public or that impose special district organizational changes. financial obligations beyond their terms of Alameda and Contra Costa LAFCOs and the office. Nevada and Placer LAFCOs have entered into agreements to govern proceedings involving multi-county districts. These agreements Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 79 allow an expedited determination of which LAFCO will assume jurisdiction over a proposal and may thereby avert unnecessary LAFCO and Utility Deregulation hearings or delays. Perhaps as important, they In an era in which public sector entrepreneurism is assuming facilitate dialog among adjoining LAFCOs, growing importance, cross-county issues sometimes take on an thereby providing more comprehensive unusual flavor. The question of LAFCO jurisdiction has arisen in a guidance to applicants, ensuring consistency matter intertwined with the complex deregulation occurring in the in the decision-making process of the electric power industry. The Modesto Irrigation District (MID), head- participating LAFCOs, and developing a quartered in Stanislaus County, has proposed providing electric power regional perspective on issues. Finding this services to areas in San Joaquin County which are currently served by first agreement a success, both Alameda and PG&E, a private, investor-owned utility company. To do so, MID Contra Costa LAFCOs have proposed similar proposes to construct parallel power lines into the areas it wants to agreements with San Joaquin LAFCO. serve. LAFCOs are not prohibited from entering PG&E has filed suit, claiming that MID cannot expand its service into such agreements. The fact that there are area without LAFCO approval, citing the Cortese-Knox Act. MID contends that its principal act, the Water Code, specifically authorizes only two in place may, nevertheless, indicate it to provide electric services outside its boundaries. Stanislaus that greater encouragement is needed, and County LAFCO, which has principal county jurisdiction, agrees with perhaps clarification of the authority of MID. San Joaquin LAFCO, on the other hand, believes that the Cortese- LAFCOs to enter into joint powers agree- Knox provisions should prevail, but, under GC §§56123-56124, it does ments. Adding statutory language to the not have jurisdiction without the approval of Stanislaus LAFCO. powers of LAFCO would clarify existing law Other publicly owned utility districts have indicated interest in and might encourage development of more entering the newly-competitive electric power industry. The Merced regional cooperative relationships among Irrigation District advertises its low rates and interest in expanding its LAFCOs. service area and the City of Pittsburg has entered into a joint venture with an investor-owned utility to provide power outside its bound- RECOMMENDATION 5-7 aries. In some ways, the widespread offers of cheaper power from The Commission recommends that non-profit, tax exempt utility districts is similar to the use of Owens Valley water as bait for annexation to the City of Los Angeles in the LAFCOs be authorized to enter into early part of the 20th Century. Although expansion of utility districts agreements with the LAFCOs of adjoining has not been widely viewed as a LAFCO issue, the perception may counties for the purpose of determining change in the future. procedures for consideration of matters concerning multi-county districts.

At a minimum, the LAFCO and other local government jurisdictions in an affected RECOMMENDATION 5-8 county should be notified when the LAFCO of The Commission recommends that notice a principal county contemplates a decision, be provided to all affected jurisdictions of the effects of which may cross the county line. multi-county proposals for changes of Currently, the Cortese-Knox Act requires the organization or reorganization under GC LAFCO of an affected county that has been §56123. granted jurisdiction by the LAFCO of the principal county to provide the various notices required by law. However, there is no requirement that notice be given by the principal county LAFCO to an affected county LAFCO if jurisdiction is not transferred. The Commission believes that this is an oversight that should be remedied. 80 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

California’s Complex System of companies, like the operators of the huge Water Governance North Bloomfield Mine in Nevada County, built hundreds of miles of ditches, flumes, and James Marshall’s discovery of gold in 1848 canals to divert rivers to their hydraulic instantly made California a destination for excavation sites. Ironically, the lasting wealth-seekers throughout the world. The contribution of these enormous engineering fortunes made by prospectors, however, works was the cadre of professional engineers proved short-lived. In the years to follow, they brought to California and who were later California’s most valuable natural resource freed to apply their new-found expertise to California’s most was not gold, but the water that was often other water projects, such as irrigation canals, valuable natural fouled and wasted in the quest to extract the levees, and municipal water systems. metal. In Southern California, early water resource was not gold, The need for water to support develop- development was the province of mutual but the water that was ment in California was apparent even to the water companies, owned by the shareholder- early commentators. Overlooking the Los customers that they served. This form of often fouled and Angeles Basin as he made this entry in his service provider was very popular at the turn wasted in the quest to journal in 1860, William H. Brewer, member of the last century (see text box) and remains of the First Geologic Survey of California, a significant provider of water in many parts extract the metal. wrote: of California today. There are 426 mutual water companies still operating in California, “As we stand on a hill over the town, which with the bulk of them in Southern California lies at our feet, one of the loveliest views I (184 are located in five counties). ever saw is spread out. . . . a most lovely The water supply activities of mutual locality; all that is wanted naturally to water companies are regulated only by the make it a paradise is water, more water.” Department of Health Services, which oversees the State’s public drinking water Initially, water was tamed by private program. Until recently, they were not subject companies for their own purposes. Mining to any form of control by LAFCO. However,

Fig. 5-6 Hydraulic mining operation at the North Bloomfield Mine in Nevada County, circa 1870 Courtesy, California Department of Parks & Recreation Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 81 under 1997 amendments to the Corporations Code, mutual water companies formed after Mutual Water Companies January 1998 must contact the Public Utilities Commission and the county LAFCO to Some of California’s first water delivery systems both for agricultural determine if the proposed area will overlap an and community needs were developed by mutual water cooperatives, existing water service area or if an existing like the Anaheim Water Company, established by German settlers in water service area could more appropriately 1857 to supply water to irrigate newly-planted vineyards and for com- serve the subdivision. Also, the company’s munity consumption. The company was created to capitalize on two source of water for distribution and fire key strengths: (1) the ability to capture and hold water rights and (2) protection systems must be sufficient to the availability of pooled capital from shareholders to build needed satisfy expected demands for water from the dams and other infrastructure. Residents owned and controlled the subdivision. company through possession of stock which entitled each settler to Even many of the early city water systems water for farming and a town lot. Shareholders were required to main- were privately owned. In the 1860s, most of tain the system and could vote on company policies. Within four years of the company’s creation, the original 50 shareholders had increased San Francisco’s water was supplied by the to 300 and the venture continued to grow. The Anaheim Water Com- Spring Valley Water Company. In 1868, Los pany inspired imitators throughout Southern California. Several sub- Angeles leased its entire local water supply to urban communities were formed in San Bernardino County on the a private company. Despite misgivings about strength of mutual water company water rights. government ownership of complex systems, it Here are some examples of mutual water companies that have re- soon became evident that the needs of urban cently operated or continue to operate in California: growth would require a stable, publicly-owned supply of water and a significant investment • The Palo Alto Park Mutual Water Company was formed by farmers in facilities. Early in the 20th Century, in 1924. It continued to serve over 600 residential users after the therefore, San Francisco obtained rights to land was subdivided in 1983. Each property owner is a shareholder Tuolumne River water and constructed a dam with voting rights based on the size of his or her property. in the Hetch Hetchy Valley in Yosemite • The Valley Water Company in La Canada Flintridge, founded by farmers in 1910, currently serves 3,500 suburban customers who are National Park. At about the same time, shareholders and part owners. William Mulholland was acquiring water • The Garden Grove Acres Mutual Water Company was formed in 1927, rights in the Owens Valley and laying plans for when it installed a system of pumps and pipes to recover water from a massive system of aqueducts to ship the a mini-lake below ground. In return for building and helping to water to the City of Los Angeles. maintain the system, each landowner was given one voting share In smaller communities, development of in the company for each one-half acre owned. In 1990, after con- water systems under public ownership was taminants were found in one of the wells, Garden Grove and two made possible by the creation of special other mutual water companies were sold to City of Garden Grove in purpose districts. The earliest districts an effort to bring drinking water up to state standards. The reorga- supervised land reclamation and levee nization was done through negotiation with the shareholders of the maintenance in the 1860s. As agriculture companies, since these private corporations are not subject to reor- developed, especially in the Central Valley, ganization by LAFCO. irrigation districts were organized under the Wright Act of 1887. The first of these, the Turlock Irrigation District, continues to deliver water and power to Valley residents of 1951, that liberalized the powers and today. service options for many water districts. The State Legislature recognized the In all, the Legislature has enacted 39 growing importance of municipal water general laws for establishing various catego- supplies through enactment of the Municipal ries of water utility districts and 116 special Water District Act of 1911 and the County acts authorizing individual districts. The Water District Law of 1913. The surge in complexity of this legal scheme recognizes municipal water district growth began in the the critical importance of water development 1950s and 1960s, spurred by rapid suburban to California’s communities and the need for growth and the enactment of new laws, most many options to deal with it. On the other notably the Community Services District Law hand, it can lead to confusion and compli- 82 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

Fig. 5-7 Canal and power generating facility operated by the Turlock Irrigation District Courtesy, Turlock Irrigation District

The linchpins of cates reorganization procedures, thereby Porter Act of 1960, operates 32 storage indirectly encouraging proliferation of water facilities, reservoirs and lakes; 17 pumping California’s water functions among various limited purpose plants; 3 pumping-generating plants; 5 delivery systems are districts and making consolidations less likely. hydroelectric power plants; and about 660 It has also created a situation where the public miles of open canals and pipelines from the massive federal finds it almost impossible to understand Oroville to Riverside County. It delivers about Central Valley Project water governance. 3 million acre-feet of water, 70% of which is A better understanding of water gover- destined for urban uses, primarily in South- (CVP) and the State nance could be promoted if each LAFCO, as ern California. Both the federal and state Water Project (SWP). part of its studies of spheres of influence, projects route their water deliveries through periodic service reviews, and other gover- the San Francisco Bay-Delta Estuary system. nance issues, were to consider potential The most visible component of California’s functional consolidations of districts provid- water governance system to the average ing water utility services, such as combining citizen, with the possible exception of the water and sanitary districts where feasible. federal and state water projects, is the retail The purpose should be not only to reduce water supplier who mails the monthly bill. costs, but, more importantly, to promote a Most often, these retailers are counties, cities, more comprehensive approach to the use of or special districts. In some locales, however, water resources. Nevertheless, consolidations they are mutual water cooperatives or private should not be initiated solely for the purpose companies. of reducing the number of districts. There are many other layers of water The linchpins of California’s water delivery governance, however, that are less visible to systems are the massive federal Central Valley the public and which handle the water both Project (CVP) and the State Water Project before and after it is delivered to consumers. (SWP). The CVP, which began operations in These include agencies involved in wholesal- 1958, transports water 450 miles from Lake ing, recycling, and otherwise managing water Shasta to Bakersfield, mostly for use by supplies. The largest of these, the Metropoli- farmers in the San Joaquin Valley. In a year tan Water District of Southern California with normal precipitation, it stores and (MWD), is a wholesaler of water mostly from distributes about 20 percent of the State’s the SWP and the Colorado River. MWD developed water, or about 7 million acre-feet, serves 27 member agencies, several of which and generates over 5 billion kilowatt hours of are themselves water wholesalers. The San energy. The SWP, authorized by the Burns- Diego County Water Authority, for example, is Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 83 a MWD member agency that, in turn, groundwater supplies by purchasing water distributes water to 23 water retailers, and spreading it in holding basins where it supplying 90 percent of San Diego County’s seeps back into the ground. The largest of water. these, serving 43 cities in southern Los Special districts have been established to Angeles County, was sued by several member serve numerous water related functions other agencies which claimed that it had established than the delivery of drinking water. As unreasonably high rates, exceeded its legal previously mentioned, irrigation districts were authority, initiated unnecessary and duplica- established initially to divert water to farmers tive projects, and provided campaign assis- for crop use, although many today deliver tance to its board members. The critics more water for urban than for agricultural implied that the district may no longer be uses. Sanitary and county sanitation districts necessary for its established purposes. and some reclamation districts treat waste Another type of public institution has water and often recycle it for subsequent been established in “adjudicated” groundwater beneficial uses. Water storage and water basins that is not officially counted as a conservation districts operate reservoirs, government agency by the State Controller. In spreading basins, and similar facilities to 16 groundwater basins, legal disputes have preserve and expand water supplies. Two arisen over how much groundwater can water replenishment districts recharge rightfully be extracted by each land owner.

Fig. 5- 8

Clair Engle Water Project Facilities Lake (FWP) Shasta Lake in California (FWP)

State Water Project Facilities Federal Water Project Facilities

Tehama-Colusa Lake Local Water Project Facilities Canal Oroville (SWP)

Folsom Lake Folsom (FWP) North Bay South Aqueduct Canal Mokelumne Aqueduct

Hetch Hetchy Aqueduct Delta- South Bay Mendota Madera Canal Canal Aqueduct Millerton Lake San Felipe San Luis Unit California Reservoir (SWP) Friant- Coalinga Kern Canal Los Angeles Canal Aqueduct Aq u e d u ct

Coastal Branch

West East Branch Branch

Colorado River Aqueduct

SOURCE: Department of Water Resources, California Water Plan Update, Bulletin 160- Coachella San Diego Canal 93, October 1994 Aqueducts

All American Canal 84 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

Fig. 5- 9 The Wind Gap Pumping Plant transports State water over the Tehachapis to Southern California Courtesy: Department of Water Resources

These disputes have been resolved by the assure efficient and responsive services to courts directing or approving a settlement taxpayers and ratepayers. This commission and appointing a watermaster to oversee the should not be comprised solely of practitio- judgement. The watermaster is answerable ners, however. It should include representa- directly to the court, not to the Legislature, tives of general purpose local governments, and is authorized to assess fees to cover the community organizations, business leaders, cost of his or her office. Courts have granted and involved citizens. watermasters the authority to determine water allocations to each party and to regulate RECOMMENDATION 5-9 water quality. The Commission recommends that the There has not been a comprehensive study State appoint a special blue ribbon of California Water governance in many years commission to undertake a study of water and it has become far too complex in many governance in California. The purpose of regions to be adequately addressed by such a commission is not to duplicate the LAFCOs. An examination of the less visible, work of existing agencies, but to examine non-retail layers of the water bureaucracy may the local governance structure for water be particularly important. The Commission delivery and to make specific recommen- believes that now may be an opportune time dations for any necessary reform. to convene a task force to study the current state of water governance and consider Among the objectives of the commission options that may better prepare California for should be the following: its 21st Century water needs. Technical 1. Identify opportunities to coordinate the knowledge of engineering and hydrological activities of water and waste-water sciences, as well as experts in water gover- agencies to enhance the supply and use of nance systems, are essential to determining recycled water. the appropriate governance structure to 2. Find a way to deal with the problems Special Districts Growth Within Bounds: Planning California Governance for the 21st Century 85

created by undercapitalized mutual water The Challenge of Water in the companies and the proliferation of small 21st Century providers without the capital or governance structure to cope with contempo- California’s growing population, the pre- rary water quality regulations or to eminence of its agricultural sector, and the maintain adequate fire flows. continued expansion of urban areas will be 3. Investigate the need to rebuild the post- particularly taxing on available water supplies World War II infrastructure that predomi- in the next millennium. The Department of nates in Southern California and options Water Resources (DWR) and a host of other for raising the required capital, probably parties interested in water development without state or federal assistance. policies in the state have sought solutions to 4. Review organizational issues, such as meet the needs of the three basic water district functions, expenditures, potential claimants: urban interests, agriculture, and duplication of activities, director compen- the environment. The most notable effort has sation, etc. been the Cal-Fed consortium of State and federal agencies that has sought long-term

Filed in Final Fig. 5-10 Court Name Court Decision Basin Location/County Adjudicated California Water Basins Scott River Stream System 10970 1y98 Siskiyou Count SOURCE: Department of Water Resources, “Adjudicated Groundwater Basins in Santa Paula Basin 16991 1y99 Ventura Count California,” Water Facts, No. 3, January 1996.

Central Basin 15962 1y96 Coastal plain, Los Angeles Count

West Coast Basin 11946 1y96 Coastal plain, Los Angeles Count

Upper Los Angeles River Area 19955 1s97 San Fernando Valley, Los Angele

Raymond Basin 14937 1s94 San Gabriel Valley, Los Angele

Main San Gabriel Basin 13968 1s97 San Gabriel Valley, Los Angele

Puenta 15985 1s98 San Gabriel Valley, Los Angele

Cummings Basin 12972 1y97 Cummings Valley, Kern Count

Tehachapi Basin 13973 1y97 Tehachapi Valley, Kern Count

Mojave River Valley, San Mojave Water Agency 16990 199 Bernardino

Warren Valley Basin 17976 1o97 Warren Valley, San Bernardin

Santa Ana Valley, San Bernardino Chino Basin 18978 197 and Riverside counties

Cucamonga Basin **Santa Ana Valley, San Bernardin o

Santa Ana Valley, San Bernardino San Bernardino Basin Area 19963 196 and Riverside counties

Santa Margarita River Watershed 16951 1s96 San Diego and Riverside countie

* Watermaster not yet appointed; currently operated as part of Chino Basin 86 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 5

Average Drought

Other 0.3 DEFICIT 6.7 Environmental 29.3 Dedicated Other 0.3 The figures in Natural Flow DEFICIT Environmental 27.5 the bars 9.8 17.3 represent millions of acre-feet of Dedicated water Natural Flow 15.4 Agricultural Agricultural 30.4 28.8 Ground Water 7.3 Ground Water Reclaimed 12.3 0.9 SWP 4.0 Reclaimed CVP & other 0.9 SWP 3.0 federal 9.0 CVP & other federal 6.0 Colorado River 4.4 Colorado River 4.4 Urban Urban Local 13.2 11.3 12.7 Local 9.4

Supply Demand Supply Demand

Fig. 5-11 solutions to protect the vital Bay-Delta ranging conservation measures. California Water Budget, ecological system while meeting demands for Although no one expects LAFCO to resolve 2020 water supply reliability, protection from the evolving water crisis, LAFCO decisions natural disasters, and maintenance of water should recognize the critical role of water to SOURCE: Department of Water Resources, ”California Water Plan Update,” quality. Similar efforts to negotiate truces in California’s future. Low density suburban Bulletin 160-93, October 1994 other water wars throughout the state are also development, continued urban sprawl, and underway. intense development in regions not having The central problem is the growing adequate water supplies will contribute to the demand placed upon a supply of water that is impending water shortage. LAFCOs should be essentially fixed in years of normal precipita- required to consider these factors when tion and is subject to severe decline during reviewing annexation or sphere of influence periods of drought. Figure 5-11 depicts a requests. “water budget” based upon DWR projections for the year 2020 under normal and drought RECOMMENDATION 5-10 conditions. The supply and demand estimates The Commission recommends that water include application of all currently known and supply considerations be integrated into available water supply enhancements, LAFCO decision-making regarding environmental limitations, land fallowing and boundary changes (annexations and crop shifts, and other conservation measures. spheres of influence). The resultant gap between supply and demand — representing approximately 10 Water supply is clearly an Achilles Heel for percent of available supplies — must be future California growth. If not adequately closed through additional, more drastic, addressed, water shortages could limit urban measures that may include additional off- growth, threaten California’s pre-eminent stream storage facilities, a long-term Delta agricultural industry, and harm the environ- solution, additional groundwater storage, ment. The link between water supply and greater use of reclaimed water, increased land use needs to be strengthened, and agricultural land fallowing, and more wide- LAFCO decisions should be part of the effort. LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 87

Growth CHAPTER SIX Within LAFCO and the Prevention of Sprawl Bounds

ocal elected officials run for public office members visited the State Capitol. Today, the believing that they can make policies greater Los Angeles metropolitan area L and take actions that will benefit the stretches over an unbroken urban expanse people who elected them. Indeed, if they fail that is 100 miles from north to south and to respond to their constituents, they may find extends over 75 miles inland from the ocean. their careers shortened. In some cases, The Bay Area has nearly as large a reach and however, responding to issues from a local San Jose and Sacramento seem to be following LAFCOs are currently perspective may not be in the best interests of the example. Author and urban planner the only bodies the wider populace, or even the long-range William Fulton, in The Reluctant Metropolis interests of local denizens. A slogan that is (Solano Press Books, 1997), described a three- empowered by the gaining in popularity in planning circles is hour journey in 1990 from his home in State to consider increasingly good advice: “think locally, but Ventura to Moreno Valley, in Riverside County: act regionally.” “I traveled through suburb after suburb, general governance Polling indicates that Californians are past shopping center after shopping center powers beyond an most interested in the issues that are closest to and tract after tract. Camarillo. Calabasas. their homes and their lives — schools, crime, Woodland Hills. Sherman Oaks. Studio individual local jobs, traffic, housing costs, health care. These City. Glendale. Pasadena. Duarte. San and other issues, however, often cannot be Dimas. Pomona. Corona. The suburban government managed by individual local governments monotony was so continuous that it was jurisdiction. acting alone. Regional or sub-regional numbing. Then, after a hundred and approaches may therefore be needed. Except thirty miles, I stopped and saw a meadow. for transportation and a few specific environ- Rich and green from the spring rains, hard mental areas, California does not have up against the San Jacinto Mountains, this regional government. LAFCOs are currently was obviously the edge of town. . . . It had the only bodies empowered by the State to taken almost half a day, and I had covered consider general governance powers beyond a distance that would have taken me an individual local government jurisdiction, through three or four Northeastern states, and LAFCO powers are of an indirect nature. but I had finally found the other end of This can present a problem, because not all Los Angeles.” planning and growth matters are neatly contained within the boundaries of a single Sprawl of this type may occur for many city, special district, or county. reasons, but the most significant are availability of cheap land that is easy to develop; easy access to major transportation arteries, When Urban Growth especially freeways; a desire to flee the Becomes Sprawl problems of congested inner cities and older suburbs; and Westerners’ general attachment In 1950, the most productive agricultural to large, uncrowded housing lots. The area in the United States was Los Angeles difficulty in reversing the tendency to sprawl County. At the same time, San Jose was mostly was reflected in a 1999 survey conducted by orchards and Sacramento was a sleepy farm the National Association of Home Builders, town that was besieged for a short period each which targeted mostly homeowners and year as 120 part-time Senate and Assembly concluded that “Americans overwhelmingly 88 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

Fig. 6-1 High density housing, like this complex in Davis, need not feel congested

Staff photo

“Americans prefer a single-family detached home on a Gore, through his “Livability Agenda,” has large lot in the suburbs to any other type of made the war against sprawl a cornerstone of overwhelmingly prefer home.” A Los Angeles Times poll reached his presidential aspirations. Reports have a single-family essentially the same conclusion in a survey of begun to proliferate, including a federal land suburbanites in metropolitan Los Angeles, use survey showing that the rate of sprawl has detached home on a finding that “. . . most people who live in these doubled in the last decade and a ranking by large lot in the communities wouldn’t think of leaving, and the Sierra Club of the states’ relative standing they want their children to live there when in the war against sprawl. (California ranks suburbs to any other they grow up, too.” somewhere near the middle.) The latest type of home.” The preference of many people for a catchphrase in growth planning circles is suburban lifestyle cannot be ignored. In “smart growth,” roughly defined as targeting — National response to the question, “what’s wrong with public infrastructure investment and other Association of California,” one participant in a focus group incentives toward support of actions that will session organized by California 2000, a limit sprawl, preserve agricultural land and Homebuilders survey coalition of public interest organizations open-space, and reduce environmental finding interested in governance issues, replied impacts in general. Smart growth advocates “People being pushed too close to where we often downplay the option of using regulatory are.” To reverse the trend toward sprawl, the measures to achieve these goals, except to image and amenities of living in denser suggest that permit approvals should be housing in mixed-use neighborhoods must be facilitated for central city and in-fill projects. improved. The common perception of Smart growth inevitably calls for regional housing density as apartments stacked upon decision making, perhaps its most controver- apartments must be changed. sial feature. It is exemplified by several Although it has no uniform definition, frequently-cited experiments throughout the sprawl seems to be universally understood as nation: land uses that spread development over a • Maryland has enacted a statewide smart large expanse and that consume more space growth plan that targets state capital than “necessary.” In recent years, it has gained investments to encourage location of considerable attention nationally and it is now development in existing urban areas and acknowledged that sprawl is not a phenom- preservation of agricultural land. enon unique to California. Vice President •Tennessee requires counties to define LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 89

growth boundaries for all their munici- •Chicago created an independent nonprofit palities. agency, the Metropolitan Planning Council, •New Jersey established a State Planning which promotes regional cooperation on Commission to prepare a statewide planning decisions and is pursuing an development and redevelopment plan. incentive-based strategy to encourage The plan includes a statewide map, which compact development. is advisory to local governments, that designates development, redevelopment, and conservation areas. The Effects of Sprawl • Minneapolis/St. Paul formed a Metro- politan Council in 1967 to plan regional As sprawl consumes more land, it also infrastructure development and establish creates other environmental and livability a metropolitan urban services area, which problems. Citing a variety of discrete limited the point to which infrastructure information sources in its testimony before could be extended in the metropolitan the Commission, the California Futures region. Network, an Oakland-based coalition of more •Portland, Oregon established a Metro- than fifty organizations representing social, politan Planning Commission in 1957, a economic, environmental, and community multi-purpose Metropolitan Service interests, itemized the following impacts of District in 1975, and an urban growth leapfrog suburbanization and low-density boundary in 1979. Combined, these development: actions have resulted in comprehensive • Thirty-two percent of California’s native Fig. 6-2 policies for development densities and plant species are “at risk” from develop- Comparative sprawl in the transportation standards for the three- ment (Nature Conservancy). Bay Area and Central Valley, county region. All city plans in the region • Over the past two centuries, 95 percent of 1954 and 1990 must comply with the policies. California’s original wetlands have been Courtesy: Bay Area Greenbelt Alliance 90 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

destroyed (Bank of America, et al, Beyond Fig. 6-3 Sprawl: New Patterns of Growth to fit the Agricultural Production of New California). California Counties • About 16 percent of the oak woodlands in the Western foothills of the Sierra Nevada Market Value Rank of Agricultural Among have been lost in the past 40 years, Products Sold U.S. endangering several other species (Sierra County (1997) Counties Nevada Ecosystem Project, Institute for Ecological Health). Fresno $12,772,785,000 Eight of the nine • Five to 10 percent of California’s urban areas, some 250,000 to 520,000 acres, are Kern $21,968,513,000 leading agricultural “brownfields” suffering from toxic counties in the United contamination (Beyond Sprawl). Tulare $31,921,381,000 • All of California’s major metropolitan States are in regions are classified as non-attainment Monterey $41,749,747,000 California. areas for air pollutants, exposing more than 80 percent of the population to Merced $61,273,475,000 unhealthy air. • Due to declining water quality and water Stanislaus $71,208,524,000 availability, 42 percent of freshwater fish species have been identified as “at risk” San Joaquin $81,179,706,000 (Nature Conservancy). • In Southern California in 1997, there were Riverside $91,047,525,000 more than 750 beach closings due to the inability of sewage treatment facilities to SOURCE: U.S. Department of Agriculture, National Agricultural process adequately the region’s waste Statistics Service, 1997 Census of Agriculture, May 1999. (Natural Resources Defense Council). industry, including production and related Other problems have been cited, as well. economic activity, exceeds $100 billion, or These include the wide physical separation of nearly 10% of the State’s economy. Eight of affordable housing from major job centers, the nine leading agricultural counties in the increased expense in provision of infrastruc- United States are in California. ture to far-flung areas, increased consumption This underscores what is perhaps the most of water for suburban uses such as landscape far-reaching effect of suburban sprawl, the maintenance, the loss of open-space, and permanent loss of productive agricultural infringement upon agricultural lands. This lands. The other effects of sprawl — air latter issue has received wide-spread attention pollution, traffic, housing costs — can in California because of the importance of conceivably be remedied through investment agriculture to California’s economy and its in infrastructure and technological break- historic place in California’s culture. throughs. Paving over farmland, however, results in an irreversible loss. And it has been occurring at a steady pace, as illustrated in Loss of Agricultural Lands Figure 6-6. The loss of farmland has been a special Although several others could justify a concern in California’s Central Valley. A lack claim, the title of “California’s leading indus- of housing availability in the Bay Area and try” has traditionally been conferred upon Silicon Valley and the relatively low cost of agriculture. The 1997 Census of Agriculture agricultural land has contributed to expansion lists the direct value of California’s agricul- of suburban growth into the heart of tural production as $23 billion. The California California’s most productive farming region. Department of Food and Agriculture esti- Growth pressure is also being felt in Fresno, mates that the total value of the agriculture Bakersfield, and throughout the southern San LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 91

Fig. 6-4 Projected Urban Sprawl in the Central Valley in 2040

SOURCE: American Farmland Trust, Alternatives for Future Urban Growth in California’s Central Valley: the Bottom Line for Agriculture and Taxpayers, 1995. 92 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

Fig. 6-5 Alternative Compact Growth Model for the Central Valley in 2040

SOURCE: American Farmland Trust, Alternatives for Future Urban Growth in California’s Central Valley: the Bottom Line for Agriculture and Taxpayers, 1995. LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 93

Fig. 6-6 in the Department of Conservation, are California Farmland designed to provide information or technical assistance that will indirectly benefit preser- Percent of vation of the resources. At least three major Acres in Farms Total Land State programs, however, directly support Year & Ranches Area preservation. These are: 1964 3%7,012,000 36.9 1. The Williamson Act, passed in 1965 as the California Land Conservation Act, 1969 3%5,328,000 35.3 provides subventions to local governments that enter into voluntary contracts with Many California land owners to restrict such property to 1974 3%3,386,000 33.4 agricultural or open-space uses by LAFCOs are placing a reducing the owner’s property tax burden. 1978 3%2,727,000 32.7 high value on 2. Several Fish and Game Code provisions promote cooperation with developers to preserving prime 1982 3%2,157,000 32.1 protect wildlife habitat and significant agricultural lands and natural areas by allowing exchanges of 1987 3%0,598,000 30.6 development rights. For example, under open space, often with the Natural Community Conservation controversial results. 1992 2%8,979,000 29.0 Planning Act, a conservation plan is prepared for an area that sets aside land SOURCE: U.S. Department of Commerce, Bureau of the Census, Census of Agriculture, various years. for habitat purposes and permits appropriate development on the remainder of the property. Joaquin Valley. The American Farmland Trust 3. Conservation easements, authorized under (AFT), a national, nonprofit organization various sections of State code, are a means working to stop the loss of productive of restricting use of open-space or farmland, has devised urban growth models agricultural lands. The easements for the Central Valley in 2040, based upon generally take the form of a deed limita- probable future land use patterns under tion and are purchased by the government various assumptions, for comparison with entity from the property owner. The current urban development. This comparative purpose of such an easement, which model indicates, in Figure 6-4, farmlands typically is recorded and is binding upon likely to be lost to urban sprawl if current successive owners, is to retain land development patterns continue, and includes predominantly in its natural, scenic, delineation of a potential “zone of conflict” historical, agricultural, forested, or open- where agricultural productivity suffers space condition. The last State program because of conflicts with suburban develop- that provided significant funding for the ment. This is compared to a “compact growth” purchase of agricultural easements was scenario in Figure 6-5. The AFT estimates financed through Proposition 70, the $776 that by 2040, current development patterns million California Wildlife, Coastal and will result in the loss of 1 million acres of Park Land Conservation Bond Act farmland in the Central Valley and another 2.5 approved by the voters in 1988. A small million acres that would fall into zones of portion of the funds were available to local conflict. More compact growth patterns, on governments for purchasing conservation the other hand, could reduce the farmland easements. loss to less than 500,000 acres and cut the zones of conflict by 38%. Today, many California LAFCOs are Several State programs have been enacted placing a high value on preserving prime in an effort to preserve agricultural and open- agricultural lands and open space, often with space lands. Most of the programs, like the controversial results. The Commission’s Farmland Mapping and Monitoring Program survey of LAFCOs found that most have 94 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

agricultural or open-space policies, though classification and provide an “escalator” the nature and rigor of the policies vary provision, and should provide for designation greatly. Napa LAFCO prohibits inclusion of by LAFCO of agricultural land of local agricultural land in a sphere of influence economic significance based upon the record unless a city makes a compelling argument and after a public hearing. This will allow and discourages any urban development implementation of stronger measures to outside designated urban areas. The protect local agricultural industries, such as Monterey LAFCO has convened a City grazing or low margin crops, even if they do Centered Growth Task Force of cities and the not meet a strict statewide definition. To avert The commission county to develop a joint plan for preserving unwarranted banking of land that might farmland by channeling growth to cities and otherwise be appropriate for suburban encourages all guiding the direction of city expansion. expansion, findings should be required at a Ventura LAFCO has established a similar public hearing to support such designation. LAFCOs to adopt agricultural policy working group of “stake- These provisions will not only improve the strong policies holders” in long-term survival of the agricul- ability to protect key resources, but will also tural industry. In one of the most interesting create greater certainty as to the classification regarding conversion innovations, Yolo County LAFCO has devel- of lands for agricultural purposes. of agricultural and oped a Land Evaluation and Site Assessment With a clearer definition of prime agricul- Model, which scores boundary change tural lands, the Commission believes that open-space lands. proposals to provide quantitative assistance to LAFCOs should strengthen their resolve to decision making. protect this important resource. Similar to the The Commission finds these efforts approach taken by some individual LAFCOs, commendable and encourages all LAFCOs to all LAFCOs in California should have agricul- adopt strong policies regarding conversion of tural land protection policies and should not agricultural and open-space lands. To approve proposals that could lead to develop- emphasize the importance of preserving ment of prime lands if alternatives are agricultural and open-space lands, the available. Commission previously recommended (in Chapter 3), that the statutory admonitions be RECOMMENDATION 6-2 more clearly stated in the overall legislative The Commission recommends that an and LAFCO intent sections, GC §56001 and additional policy and priority be included §56301. In addition, the Commission believes in GC §56377, providing that LAFCOs shall that the definition of prime agricultural land, not approve a project that might lead to which receives deferential attention by LAFCO development of prime agricultural lands under various provisions of the Cortese-Knox or open-space lands if there are other Act, should be revised and clarified. feasible alternatives to the proposal.

RECOMMENDATION 6-1 Inevitably, this will mean that LAFCOs The Commission recommends that the must request information on in-fill prospects definition in GC §56064 of “prime agricul- and density options when cities or special tural land” be amended to add clarity and districts submit applications for annexations. permit the designation of lands of local LAFCOs should also develop inventories of economic significance. lands and potential development patterns to make informed decisions, and will need to The revised definition, described in detail define the location of prime agricultural lands in Appendix C, should include a qualification within their jurisdictions. that the land meets the prime agricultural standard if irrigation is reasonably feasible and it is rated as class I or class II in the Natural Resource Service land use capability classification. The definition should also update the economic criteria required for such LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 95

Popular Response to Sprawl tions have adopted or are considering Fig. 6-7 ordinances to regulate development. Some 95 Artichokes thrive in the micro- Sprawl is becoming a visible and jurisdictions have adopted urban limit lines or climate and soils unique to contentious issue throughout California. urban growth boundaries, either by ordinance California’s coastal agricultural Dozens of California communities have or voter initiative; 49 cities and 6 counties region considered slow-growth initiatives in recent have included a growth management element Staff photo years. The most common type of measure, in their general plans; 75 cities and counties adopted by voters in numerous communities, have adopted “sustainable development” has been enactment of an “urban limit line” or policies. Many people are looking to LAFCO “urban growth boundary.” This is an artificial to help control sprawl. In Contra Costa border drawn within the jurisdiction to limit County, where an urban limit line was urban growth only to those areas within the established by county voters in 1990, LAFCO confines. More extreme measures in has adopted a policy not to approve any Livermore, Pleasanton, and San Ramon were annexations outside the line. Ventura LAFCO defeated in November 1999, albeit by narrow has similarly vowed to honor voter approved margins in some areas. These measures urban limit lines in that county, while noting would have required submittal to voter that the voter-adopted lines would actually approval of even moderately-sized new allow more urban development than the development proposals. existing LAFCO spheres of influence. Urban limit lines are understandably A locally adopted urban limit line, the controversial. Properly drawn, they can be meaning of which the Commission believes very useful for protecting irreplaceable should be defined in State statute, is not resources. Inappropriately implemented, binding upon LAFCO, even if implemented by however, they may sometimes lead to exclu- the voters. This is because LAFCO authority is sionary policies that simply push development established by State law, which takes prece- elsewhere and may actually hinder efforts to dence over a local ordinance. While the promote more compact growth. The Commis- Commission neither supports nor opposes sion has not taken a blanket position on any urban limit lines and similar measures, it feels specific local growth policies. It is appropriate that each LAFCO should recognize the for local governments to consider and plan for existence of any such measures and consider the effects of growth, but this planning should them at the time that it takes action on an be done in concert with other jurisdictions application that is affected by the growth within the region. policy. Other regional growth goals or policies In response to their voters, many jurisdic- that have been established by a collaboration 96 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

of elected officials formally representing their 5. extensions of backbone infrastructure local jurisdictions should be similarly (proposed). recognized by LAFCO. Such acknowledge- The Commission does not propose that ment will help to encourage local officials to LAFCO assume a direct role in land use consider regional approaches to complex planning. This clearly is not the intent of the planning and growth issues. Legislature, nor is it appropriate for any local jurisdiction except cities and counties. It RECOMMENDATION 6-3 should nevertheless be recognized that The Commission recommends that a new decisions regarding boundaries and provision The central purposes definition be added to the Cortese-Knox of urban services clearly have land use Act for the term “urban limit line.” implications. The central purposes for for establishing establishing LAFCOs — prevention of sprawl LAFCOs — prevention RECOMMENDATION 6-4 and preservation of agricultural and open- The Commission recommends adding space lands — require consideration of of sprawl and additional factors to be considered by potential land uses when decisions are made. preservation of LAFCO in GC §56841 to include the existence of an established urban limit Annexations and Incorporations agricultural and open- line, alternative locations which could space lands — require accommodate a proposal, and regional LAFCO responsibilities in the important growth goals and policies already estab- areas of annexations and new incorporations consideration of lished by elected officials. are discussed in Chapter 4. As recommended by the Commission, annexation procedures potential land uses should be clarified and made more consistent. when decisions are LAFCO As an Agent for In addition, LAFCOs should consider various Supporting Change factors, including urban limit lines, existence made. of prime agricultural lands, and open-space The Commission has recommended needs, when considering annexations and measures in Chapter 3 to strengthen LAFCO new incorporations. Traditionally, city powers and make the commissions more boundaries defined the limits of urban independent and representative of the full development, and expanding those bound- range of local government service providers in aries indicated an extension of urbanization. the region. Following these reforms, LAFCOs LAFCOs can best support this notion, and will be in a better position to credibly address thereby regulate the directions of growth, by issues concerning growth and sprawl. This is confining city annexations and new incorpo- an appropriate role for LAFCO, as the only rations to those areas that logically should body established at an intermediate level become urbanized within a reasonable between the State and individual local timeframe. Generally speaking, these would governments that is empowered by the State not include prime agricultural areas or open to look at broad future planning concerns. spaces needed as permanent buffers or for LAFCO’s vantage point derives from its protection of resources, public health and general oversight over establishing boundaries safety, outdoor recreation, or other recognized and approving extensions of government regional purposes. services. LAFCO currently exercises this authority through review and approval of Spheres of Influence actions in three areas, and the Commission proposes a fourth and fifth: Spheres of influence are LAFCO designa- 1. incorporations and annexations; tions of the probable future physical bound- 2. spheres of influence; ary and service area of a city or special 3. extensions of service outside existing district. A sphere should designate the area boundaries; that the agency will annex in the foreseeable 4. periodic service reviews (proposed); and future. Many LAFCOs use the time horizon in LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 97

a city’s general plan, often 15 to 25 years, for comprehensive studies and they incorporate the sphere designations. The Local Govern- actual and projected information on trends in ment Reorganization Act requires LAFCOs to growth and development, service capacities, prepare a written statement of determinations and public preferences. on the following factors when determining spheres of influence: RECOMMENDATION 6-5 • The area’s present and planned land uses; The Commission recommends that LAFCO • The area’s present and probable future be required to update spheres of influence need for public facilities and services; at least every five years. Procedures for • The agency’s present capacity of public updating spheres should be the same as Up-to-date spheres facilities and adequacy of public services those for adopting spheres, with regard to provided; and public notice and hearing requirements. of influence • The existence of any social or economic determinations are communities of interest in the area. Sphere updates should follow adequate The Legislature first required LAFCOs to notification to the public and to affected critical to LAFCO’s adopt spheres in response to criticism that agencies, and should consider all views responsibility to LAFCOs were making boundary decisions expressed at a public hearing, as well as without the guidance of long-range goals. The information obtained through detailed assure orderly growth initial statutory mandate, in 1971, imposed no analytical studies. LAFCOs should initiate and development and deadline for completing initial sphere their own sphere studies, in addition to designations. When most LAFCOs failed to reacting to requests from local agencies for prevent sprawl. act, legislation was enacted in 1984 requiring reconsideration of sphere boundaries. all LAFCOs to establish spheres of influence by 1985, a deadline which was met. However, Extensions of Service Outside many of the sphere boundaries were set with Existing Boundaries little analytical basis and only 30 LAFCOs have since completed comprehensive studies Another power available to LAFCOs to to update their spheres. guide growth within their regions is the The Commission believes that carefully review of requests by cities or special districts considered, up-to-date spheres of influence to provide new or extended services outside determinations are critical to LAFCO’s their jurisdictional boundaries. Under responsibility to assure orderly growth and authority of GC §56133, any contract or development and prevent sprawl within their agreement to provide service outside jurisdic- jurisdictions. As stated in testimony to the tional bounds is subject to approval of LAFCO. Commission by Holly A. King of the Great There are three exceptions to this requirement Valley Center, to obtain LAFCO approval for such a service “. . . Boundary and sphere of influence extension: designations are the local government 1. LAFCO approval is not required if the issues that have the most potential to allow service extension solely involves two or us to realize the vision of successfully more public agencies. accommodating growth without sacrific- 2. LAFCO approval is not required for ing valuable resources or community contracts to transfer nonpotable or character.” nontreated water. The Commission agrees that local agencies 3. LAFCO approval is not required if the and communities should be able to rely upon project solely involves the provision of spheres of influence as a dependable guide to surplus water to agricultural lands for future growth. Spheres should not be projects that serve conservation purposes routinely updated as a component of a or that directly support agricultural previously unforeseen annexation request industries. from a local agency, as is often the case today. Requests to extend service are usually Meaningful spheres will not be possible non-controversial and often involve only unless they are regularly updated based upon provision of nonpotable water to an isolated 98 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

field or facility that otherwise would have no Although in this case the land donation was service. Consequently, the Commission from a private individual who sought no gain, believes that the second and third enumerated anecdotal evidence suggests that developers, exemptions in GC §56133 generally do not knowing that school districts are exempt from pose a threat of promoting sprawl, since they land use controls, will sometimes donate land do not contemplate transfer of drinking water. to school districts to induce development of However, the Commission is concerned about land that is zoned for agricultural or open the first exemption — that applying to space uses. projects involving only public agencies — and A service review would recommends that this exemption be removed. RECOMMENDATION 6-6 Public agency projects, especially those The Commission recommends that any encompass a involving institutional facilities, often have extension of services for a public agency comprehensive study growth implications that should be consid- proposal (including service to a new ered by LAFCO. One instance in which a school site) outside a city or special of each identifiable service extension may involve only public district be subject to LAFCO review under public service agencies, but may nevertheless be growth- GC §56133, in the same manner as an inducing and may impact the orderly exten- extension of services under contract to a provided by counties, sion of public services generally, occurs when private party would be subject to LAFCO special districts, and a new school site is proposed on agricultural review. lands or open-space lands. Generally cities in the region. speaking, a city or special district must extend service to the site to enable development of Periodic Service Reviews the school. Currently, LAFCO has no authority to review such extension. Among the most fundamental purposes of Bill Engels, Chairman of San Luis Obispo LAFCO iterated in GC §56001, §56300, and LAFCO, recounted for the Commission a §56301 are to “encourage orderly growth”, specific instance regarding a school district’s provide “. . . planned, well-ordered, efficient advocacy of an application to LAFCO to annex urban development patterns . . .”, and “. . . a non-contiguous, agriculturally-zoned parcel advantageously provide for the present and to a special district for water and sewer future needs of each county and its communi- service. The ultimate beneficiary of the ties.” These directives imply that each LAFCO annexation was to be a new school site. has comprehensive knowledge of the services “LAFCO denied the proposal, but the school available within its county, the current district built the school anyway with the efficiency of providing service within various approval of the State Architect’s Office and an areas of the county, future needs for each outside user agreement. Two public agencies service, and expansion capacity of each do not need LAFCO approval to contract and service provider. Although some LAFCOs may provide services.” have access to such essentials, many do not, A similarly complicated situation exists in and the Cortese-Knox Act offers no mecha- Santa Clara County, where the Morgan Hill nism for assisting and encouraging them to School District received a donation of land to gather the basic necessary information. The build a new high school. The site, however, is Commission believes that such provision located within a permanently dedicated should be added to the statute. greenbelt area within the adjoining City of San Information on public service capacity Jose. To take advantage of existing proximate could be gathered as part of the implementa- facilities and capacity, water and sewer tion of a new requirement for periodic service services would have to come from the City of reviews. LAFCOs could conduct such reviews Morgan Hill, which by law cannot provide prior to or in conjunction with amendments services without San Jose’s approval. LAFCO to spheres of influence. A service review is not involved because the interested party is would encompass a comprehensive study of a school district and the service extension, if each identifiable public service provided by agreed to, would be between public agencies. counties, special districts, and cities in the LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 99 region. The review would not focus exclu- • Government structure options sively on an individual jurisdiction to • Evaluation of management efficiencies determine its future boundary or service • Local accountability and governance areas. Rather, it would require LAFCO to look The information obtained would be broadly at all agencies within a geographic applicable to spheres of influence studies and region that provide a service. The review to consolidation studies. The addition of this would also include a component that exam- new requirement to the Act, along with other ines the benefits or disadvantages of consoli- new duties and expenses for LAFCOs, may dation or reorganization of service providers. ultimately result in a determination that such LAFCOs should be provided flexibility in provisions impose state mandated costs. The Not all new designating the geographic area to be Commission believes that, in light of the analyzed, the timing of conducting particular State’s responsibility to meet the demands of development in reviews, and the scope of the reviews. California’s inevitable future growth, the California occurs in investment in establishing a rational system RECOMMENDATION 6-7 for ensuring service provision is a reasonable cities or existing built- The Commission recommends that one. Consequently, the State should provide up communities LAFCOs be required to periodically funds to LAFCOs sufficient to conduct the initiate service reviews of services pro- recommended service reviews and other vided within the county. A service review special studies affecting regional governance. is defined as an independent county-wide or sub-regional, as appropriate to the Extensions of “Backbone” service, review by LAFCO of public Infrastructure services offered by various local governments. The review should be done in Not all new development in California conjunction with any update of spheres of occurs in cities or existing built-up communi- influence. A service review should not ties within the unincorporated areas of a replace designations and updates of county. A controversial issue among advo- spheres of influence, but should be cates for planned growth is the occasional conducted in the establishment or amend- appearance of a proposal for an entirely new ment of any spheres. It is the intent of the community to spring up in unincorporated Commission that this function be consid- territory separated from any existing devel- ered a state mandate because of the oped areas. “New community” developments benefits for achieving a logical extension may sometimes be very appropriate and well- of local services to meet California’s future planned, leading growth in a direction growth and development. desirable for the region. Sometimes, however, they have less beneficial results. Besides These reviews would examine, on a consuming agricultural or open-space land, regional or sub-regional basis, the adequacy these developments often prove to be a and future needs for various “municipal tentacle that ultimately results in suburban services.” Services studied would include, but development filling the entire gap between not be limited to, water supply, sewers, and existing urban areas and the new subdivision. wastewater treatment services, sanitary waste Because such developments frequently do not collection (garbage), and other services the require boundary changes, they do not come LAFCO judges to be important to future before LAFCO for a broad regional governance growth. Service reviews should be designed review. to determine the following: The Commission believes that more • Infrastructure needs/deficiencies coordinated, better decision making would • Growth and population projections result if more thorough review is initiated • Financing constraints and opportunities before any extension of major public works •• Cost avoidance opportunities “backbone” infrastructure (e.g., water, sewer, • Opportunities for rate restructuring or roads) is approved. Any proposal to extend • Opportunities for shared facilities such infrastructure, or a decision that will 100 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 6

allow another party to extend such infrastruc- with the city’s general plan, similar to the ture, or a decision to approve development finding that would be made for a zoning which will require an extension of such change. This finding could be subject to infrastructure, should be subject to LAFCO LAFCO review and concurrence. review. The intent is to identify proposals 2. For a special district, a new or amended which have the potential for causing signifi- sphere of influence could be proposed cant effects on the orderly extension of under current law, or a “community governmental services or for inducing sprawl. growth plan,” described below, if the Consequently, a minimum size threshold proposed extension is already within should be imposed to avoid referring minor A proposal to extend existing service boundaries and is not projects unlikely to have such effects to subject to a county action. infrastructure should LAFCO. In addition, a provision must be 3. For a county unincorporated area, the made for cumulative projects that, combined, be subject to LAFCO county could propose a “community would exceed the threshold. As an initial growth plan” for the affected area, using review to identify proposal for defining the threshold, the criteria similar to those used for LAFCO Commission has modified existing criteria proposals which have review of spheres of influence in GC which identify a project of statewide, regional, §56425. The community growth plan the potential for or areawide significance in Section 15206 of should be subject to LAFCO hearings, the CEQA Guidelines. The Commission’s review, and approval. inducing sprawl proposed criteria are as follows: 1. A proposed residential development of RECOMMENDATION 6-8 more than 500 dwelling units. The Commission recommends that LAFCO 2. A proposed shopping center or business approval be required for extension of establishment employing more than 1,000 major “backbone” (i.e., water, sewer, persons or encompassing more than wastewater, or roads) infrastructure to 500,000 square feet of floor space. previously undeveloped or underdevel- 3. A proposed commercial office building or oped areas, either in an incorporated or an buildings employing more than 1,000 unincorporated area. LAFCO should persons or encompassing more than review and approve a finding of general 250,000 square feet of floor space. plan consistency for such a proposal in a 4. A proposed hotel/motel development of city. In an unincorporated area, it should more than 500 rooms. approve a special district sphere of 5. A proposed industrial, manufacturing, or influence amendment or a newly-defined processing plant, or industrial park “community growth plan” if the area is an planned to house more than 1,000 unincorporated community. Specific persons, occupying more than 40 acres of criteria should be established to define an land, or encompassing more than 650,000 area requiring such approval. square feet of floor space. 6. A proposed institutional use for public or The “community growth plan” is a new private purposes which would satisfy the concept, so many details must be worked out. equivalent of any of the above numerical Proposed statutory language to be added to criteria. the Cortese-Knox Act is included in Appendix 7. A proposed mixed use development for C, and amendments may also be needed to public or private purposes which would State planning and zoning law. Presumably, satisfy the equivalent of any of the above LAFCO will view growth within an existing numerical criteria. defined unincorporated community, which is Three types of actions could comprise the primary source of new cities in California, LAFCO approval of a proposal meeting these more favorably than creation of an entirely criteria, depending upon the level of govern- new suburban enclave. This proposal could, ment proposing the service extension: on the other hand, help stem the speculative 1. For a city, the legislative body could be tendency for developers to buy cheap farm or required to make a finding of consistency grazing land for the purpose of subdividing it LAFCO and the Prevention of Sprawl Growth Within Bounds: Planning California Governance for the 21st Century 101 into ranchettes or far-flung suburbs. Ulti- believes that this must change. LAFCOs mately, the cost of such development is borne should work with councils of government, by the taxpayers who are unable to enjoy the transportation authorities, regional environ- benefits of the suburb, through the cost of mental agencies, school districts, public- improving or extending roads and other private sector planning coalitions, individual infrastructure to the new development and cities and counties, and others having a role in through the loss of unencumbered open determining the vision for the future of space. California’s counties and regions. Because of the unique role of LAFCO as the State’s only Conclusion true regional growth agent, it should be an integral participant in all regional growth and LAFCOs presently have a very limited role planning forums. With the new powers and in planning for the growth that California will responsibilities recommended by the Com- face in the 21st Century and constrained mission, local and regional planners will find ability to curb sprawl. The Commission it is desirable to have LAFCO at the table.

Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 103

Growth CHAPTER SEVEN Within Reform of Local Government Bounds

hen Californians demand a investment programs in directions that solution to a government problem, promote “smart growth.” W the response is often to create a • Local Finance Forum of the Senate study commission. Judging by the number of Budget & Fiscal Review Committee – task groups created recently, local government The purpose of the Committee forum is to must, indeed, be in a state of crisis. No fewer develop a consensus proposal for reform of than 10 commissions, task forces, and project local finance and infrastructure funding. Judging by the teams have been formed since 1998 to make • Commission on Building for the 21st number of task groups recommendations for solving a myriad of Century – Appointed by Governor Davis, public policy problems relating to the the mission is to identify critical infra- created recently, local purposes, structure, and objectives of state structure needs and develop a comprehen- government must be and local government. Among these are the sive long-term capital investment plan. following: • Working Group on Transportation in a state of crisis. • Commission on Local Governance for Investment – Initially formed by the the 21st Century – Heading the only President Pro-tem of the Senate, the group project established by legislation, this is tasked to develop a major legislative commission is charged with recommend- proposal on infrastructure and transporta- ing revisions to laws regulating local tion financing, which may include government boundaries, and other related changing the voting requirements on local governance issues. taxes. • Speaker’s Commission on State-Local • State Housing Task Force – Appointed by Government Finance – Established by Governor Davis, this group is charged with Assembly Speaker Antonio Villaraigosa, developing plans for improving housing the mission is to recommend changes that affordability. will enhance community power over the • California 2000 Project – Sponsored by financing and delivery of local services, the James Irvine and William and Flora including schools. Hewlett Foundations, this collaboration • California Governance Consensus was established to support policy research Project – Formed as a broad based and public education on fiscal, governance coalition representing government, higher and land use issues in California. education, businesses, and public interest groups, this independent consortium is In addition, numerous government, interested in state/local fiscal reform. business, and non-profit public interest • State Controller’s State Municipal organizations have joined the governance Advisory Reform Team (SMART) – The bandwagon. While there may be a perception Team was formed to collaborate on that this is duplicative and overly-zealous, in rational land use policies to stimulate local fact, it is a sign that public policy is awakening revenues and structural changes to to the reality of growth and the long-standing improve resource delivery to local problems of state-local relations. Like governments. hurricanes, public policy shifts rarely appear • State Treasurer’s Smart Investments without warning. They are preceded by Initiative – This effort was initiated for debate and attempts to focus widespread the purpose of targeting state capital attention on an issue. The change occurs 104 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 7

when the problem attains meaning to the This should not be an academic study. It everyday lives of citizens and leaders are should comprehensively look at public service convinced that there is public support and needs and capacities, areas where duplication interest in change. may be present, opportunities for improved It is apparent that the opinion leaders coordination, and the effects of projected involved with the various government reform growth. It should recommend specific efforts are convinced that change is needed. restructuring, which might include consolida- But have they succeeded in persuading the tions, elimination of some agencies, or public? Surveys by public opinion pollsters possibly entirely new organizational struc- The Commission like PPIC seem to indicate that the populace tures that would clearly delineate tiers of has not reached the point of demanding responsibility and accountability at the state, believes that there is change. In fact, in light of the strong economy, regional, and local levels. an immediate and people seem pretty content with their current governmental structures. Governance and Growth in urgent need to The Commission is convinced that there California examine the structure are fundamental flaws in California governance that do not lend themselves to simple Problems with governance and coordina- of governance in fixes. They are at the heart of many of the tion of services are heightened by growth California. frustrations felt by people who try to deal with pressures. As awareness of future growth their government. Responsibilities of the projections increases, government leaders and State, cities, counties, and special districts are the public at large will demand more compre- often blurred and no one is singularly hensive solutions and may look more seri- accountable. Many cities, counties, and ously at government structural reform. Unlike special districts are “wrong-sized”— too in many other states, growth is clearly an issue large, too small, too remote, or too confined in California’s future. — to deal with the issues they are expected to West Virginia, for example, does not have a resolve. Governments often do not communi- growth problem, at least not by Western States’ cate. School districts, in particular, may view standards. The Census Bureau projects that their role apart from the objectives of general its population will increase by less than one purpose local governments. The Commission percent between 1995 and 2025. It is unlikely, believes that there is an immediate and urgent therefore, that its cities will face pressure to need to examine the structure of governance sprawl into the countryside, or that its schools in California and to recommend changes. The will be overcrowded, or that air pollution will Commission had hoped to undertake such an rise to intolerable levels. There is, of course, evaluation as part of its charge, but, with 16 an opposing problem. West Virginia faces the months of hearings and deliberations to fully challenge of avoiding stagnation, both examine local government reorganization law, economically and culturally. Its tax base is it simply ran out of time to expand its efforts. likely to shrink as the population ages, making it more difficult to replace aging infrastruc- RECOMMENDATION 7-1 ture and housing stock. Fewer social and The Commission recommends that the entertainment opportunities may open for its Legislature establish a task force to residents because of insufficient demand to identify needed or recommended struc- support the investments. And it is unlikely tural changes in California state and local that vast new employment centers will open in governance to improve government a region that faces a declining number of accountability, representativeness, effi- employable residents. In short, instead of ciency, and effectiveness in delivering facing growth, change, diversity, and opportu- public services and responding to broad- nity, West Virginia’s future may be quite scale public needs, and to recommend constrained. statutory and constitutional changes, as California’s future is much different, and appropriate. most would agree more enticing. Its population is growing rapidly and the state is Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 105 continually diversifying, creating a synergy how this population should be accommodated that could lead to an ongoing economic boom. and where population expansion should not But California is at a critical juncture. The occur. And only the State can establish a difference between a future of unbounded system of incentives to guide these directions. opportunity and expanding options and one Without such leadership, the population will marked by alienation and despair will be arrive nevertheless, but the cost of growth will California’s ability in the next few years to be a permanent loss of open space, air quality, make substantial progress in dealing with and the other amenities that have made several interrelated governance issues. These California synonymous with excellence in include protection of agricultural land and quality of life. One of the most open space; controlling urban sprawl; In Chapter 6, approaches were discussed balancing jobs and housing within sub- for dealing with urban sprawl, managing challenging demands regions (and taking steps to make housing development, and preserving agricultural and will be bringing more affordable); relieving traffic snarls; open space lands, largely through the inter- renovating and expanding public infrastruc- vention of LAFCOs. Acting alone, LAFCOs do together all levels of ture; meeting the varying demands for water not have the ability to resolve all of California’s government, including delivery and quality; reducing air pollution; growth issues. Nevertheless, as the State’s only and adequately and equitably financing local direct agents for steering growth at the school districts, in the public services. One of the most challenging regional or sub-regional level, their decisions preparation of demands will be bringing together all levels of should support overall state policies. LAFCO government, including school districts, in the policies should consider various options for integrated approaches preparation of integrated approaches to guide dealing with emergent planning issues that, California into the 21st Century. If California according to public opinion polls, are growing to guide California into fails to show the resolve to tackle these issues, concerns of California residents. the 21st Century. many employers and the state’s most produc- Recently, the PPIC surveyed Central Valley tive citizens will abandon it in search of new residents regarding their views and outlook horizons. for the future of the region likely to experience Confronting these issues will require the most dramatic changes in the coming comprehensive growth planning and smart decades. Figure 7-1 (next page) indicates public investment decisions. To avoid responses to the question: “What do you think Balkanization of plans, this effort must be is the most important public policy issue initiated and the goals and general param- facing the Central Valley today?” The re- eters set by the State. Ultimately, however, sponses favored environmental and quality of local governments, which determine land use life issues faced daily by general purpose local and are closest to the people, must be the governments, although a substantial number leaders in implementing the necessary of respondents were seemingly satisfied and reforms. Additionally, an intermediate level of did not identify a concern. This contrasts authority between the state bureaucracy in with statewide surveys asking a broader Sacramento and individual local jurisdictions, question regarding the most important issue is probably needed. Armed with clearer facing the Governor and Legislature. The policies and new powers recommended by the most frequent responses to the latter are Commission, LAFCO can play an important education, crime, and immigration. contributing role at this intermediate level. Local governments and LAFCOs must A comprehensive approach to California’s respond to citizen needs in these important future will simultaneously consider all of the policy areas that will become even more intertwined problem areas enumerated above. critical in light of future growth. Some of the Attempting to address one or two in a vacuum issues of particular importance to residents, will not contribute to a lasting solution and and possible LAFCO responses, are the may, in fact, prove self-defeating. California following: must house 28 million additional residents in the next 40 years. Only the State can establish Traffic and transportation. Public opinion broad parameters to determine where and polls rate traffic and transportation among 106 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 7

Fig. 7-1 LAFCOs might consider the effects of a Public Policy Issues of Greatest Concern to proposal on traffic and transportation when Central Valley Residents considering annexations and other potentially growth-inducing actions. Water Jobs/housing balance and affordability. To Don't know 13% an increasing extent, California is dividing Environment 26% and pollution into “jobs sub-regions” and “housing sub- 10% regions” as housing prices in job-rich areas like the Silicon Valley and Orange County push their workers to distant locations — the 8% Population growth Central Valley and the Inland Empire, for 10% Other example — to live. The National Association 8% of Homebuilders rates 7 California metropoli- 5% 8% Loss of tan areas among the 10 least affordable 6% farmlands Jobs and 6% housing areas in the nation, and 15 among the economy Crime top 25. No California community, on the other Schools and Traffic and gangs hand, is listed among the 25 most affordable transportation areas. What’s more, homebuilding is not

SOURCE: Mark Baldassare, Special Survey of the Central Valley, Public Policy keeping pace with job and population growth, Institute of California, 1999 especially in the most job rich regions, like the Silicon Valley. Figure 7-2 indicates the lag in the top growth issues on the minds of the housing production, compared to the level of public. Two hour commute days are now construction needed, as estimated by the common. As the population grows, this California Department of Finance, to keep up situation is likely to get worse. A wide range with housing demand. Although individual of ideas have been put forth to deal with the LAFCOs might help by considering the effects growing transportation crisis. These include of jobs/housing balance in their decisions, a new freeway construction, greater investment better solution is for multiple LAFCOs and in transit, tying transit to development local agencies to address this issue regionally. clusters, and new modes of commute vehicles.

Fig. 7-2 300,000 California Housing Production Compared to Housing Need 250,000 HOUSING NEED

SOURCE: California Building Industry

Association website, www.cbia.org, siting 256,000 Construction Industry Research Board, 200,000 253,000 1999 238,000

150000

PRODUCTION 164,000 145,000 HOUSING PRODUCTION 100,000 126,000 112,000 106,000 97,000 97,000 50,000 94,000 85,000 85,000

0 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 107

Public infrastructure. The California Business Roundtable estimates public infrastructure needs to be $90 billion over the next 10 years. Although LAFCOs cannot directly authorize infrastructure construction, they should not permit annexations or other growth-inducing actions unless a plan is in place to ensure that infrastructure is available and maintained.

Water supply and quality. LAFCO actions, either individually or regionally, cannot produce additional water supplies and can have only limited effect on water quality. Therefore, LAFCOs should base their decisions on the assumption that a fixed supply of water is available from existing agencies, unless clear evidence is presented that additional supplies can be made available. regional planning mechanism has encouraged Fig. 7-3 business, government, and community leaders The Great Valley Center Air pollution. The primary capacity of in several areas to form coalitions to look at recently held a design LAFCOs to deal with air pollution problems is future governance and growth needs. The competition to promote ideas through examining the effects of proposals on Joint Venture Silicon Valley Network has for housing future population traffic and transportation. devised a Silicon Valley 2010 plan to serve as a growth in the Central Valley framework for resolving some of the problems Courtesy, The Great Valley Center, Dennis Dealing with faced by the region. The Great Valley Center Hinrichs of San Rafael, Architect Larger-Than-Local Issues and Valley Vision are actively promoting “regional thinking” for the Central Valley and All of the above problems are larger-than- Sacramento region, respectively. The Los local in nature. For the most part, no single Angeles Metropolitan Forum Project (MFP) is jurisdiction can solve them. This raises the an independent, non-partisan effort to controversial question of the need for some promote a government that is responsive to sort of regional planning. Currently, LAFCOs, civic engagement, accountable, and encourag- which have limited reach and powers and are ing of citizen participation. All of these specifically prohibited in GC §56375 from organizations are engaged in the daily task of directly regulating land use, are the most seeking consensus on critical regional empowered direct agents of State government planning issues. for implementing growth planning directives. While these regional coalitions have By clarifying mandatory and permissive proved very effective in raising public LAFCO policies, the Legislature has a poten- awareness and interest in governance, they tially effective means of influencing the have no authority to implement their visions. spread of urbanization into undeveloped areas Implementation falls uniquely into the realm while still permitting local discretion over the of government. At least four options have ultimate land use and development decisions. been discussed for improving California’s Other existing regional mechanisms — ability to deal with planning and governance councils of government (COGs) and regional problems regionally: transportation or environmental agencies — •Regional Government are less suitable to implementing broad state- • City-county consolidation directed land use policies. COGs have little • Regional alliances formal authority while regional agencies are • Enhanced coordination among existing established for limited purposes. agencies The absence of a formal comprehensive All of these options evoke some degree of 108 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 7

controversy. Californians have an inherent Speaker Brown was not sufficient to garner distaste for any semblance of big government. significant legislative support and eventually To the extent that people perceive governance it died. Currently, Senator Steve Peace is changes to mean more government or more considering legislation that would establish a layers rather than greater efficiency and San Diego Regional Infrastructure and accountability, they will likely oppose them. Transportation Agency to take over many Devising a balanced approach to regional major regional planning and infrastructure planning that will fit each region individually functions in San Diego County. is a task best left to another entity formed Perhaps the most exclusively for that purpose, possibly the City-County Consolidation governance task group recommended by the acceptable and Commission. The Commission does not In an effort to improve coordination or feasible regional propose any single specific solution for efficiency, city and county governments have managing future growth. Nevertheless, a been combined in several parts of the country. option at the present discussion of the options is in order. While most of the early consolidations — time is to facilitate including the 1856 merger of the City and the Regional Government County of San Francisco — were initiated by cooperation and state legislatures, the more recent practice has planning consistency California already has significant regional been through popular vote. While consolida- government, albeit of a specialized nature. Air tion movements were most popular between among local agencies and water quality, transportation planning, 1960 and 1970, there has been a recent solid waste management, and many other resurgence in these types of reorganizations, reinforced through functions are formally charged to state- especially in the South (see Figure 7-4). LAFCO policies. sanctioned regional authorities. However, City-county consolidations generally comprehensive regional government — follow calls to eliminate service duplication, allowing a single agency to control several reduce costs, or simplify government. Most region-wide planning and land use functions, city-county consolidations comprise only which might include transportation, water partial reorganizations. In these instances, quality and supply, air quality, major facility some existing services are excluded from the siting, and possibly even broad land use reorganization and continue to be performed determinations — has frequently been by another unit of government. As with discussed by academics, but has never been regional government, academics find the implemented in California. consolidation of responsibilities for a wide The two examples of this governance area attractive. Voters, however, have not option most frequently cited are the Twin usually found this form of government Cities Metropolitan Council in Minneapolis- enticing. Nationwide since 1990, only 4 out of St. Paul and the Portland, Oregon Tri-County 17 attempts at consolidation have passed. Metropolitan Council. Although both are Consolidation measures in Sacramento have relatively weak as governing bodies, they have been defeated twice, and proposals in San successfully coordinated many growth-related Diego and Stanislaus counties never reached functions, such as sewers, transportation, the ballot. airports, housing, parks, and open space. The most recent proposal to enact regional Regional Alliances government throughout California came in 1990, when then-Speaker of the Assembly Creation of regional alliances, essentially Willie Brown introduced legislation that expanding upon the public-private coalitions would have created seven regional governing that have been formed in several regions by bodies in the State to handle land use encouraging local governments to formalize planning, infrastructure planning, and them through joint powers agreements, has development and siting of locally undesirable generated little interest in California, possibly facilities. Although the bill received some because of the lack of incentive to engage in notoriety, even the considerable clout of such cooperation. Councils of government Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 109 could form the nucleus of these alliances. Fig. 7-4 Absent very strong public leadership to push Successful City-County Consolidations local governments into an alliance, however, their viability seems suspect. Moreover, there City/County Government Type Date is no assurance that local agencies would be Neew Orleans-Orleans County, Louisiana L5egislativ 180 willing to voluntarily cede any planning or land use powers to such entities, at least not Beoston-Suffolk County, Massachusetts L1egislativ 182 without strong state incentives. Neantucket Town, Nantucket County, Massachusetts L1egislativ 182 Pehiladelphia-Philadelphia County, Pennsylvania L4egislativ 185 Coordination of Existing Local Neew York-New York County, New York L4egislativ 185 Agencies Sean Francisco-San Francisco County, California L6egislativ 185 New York and Brooklyn-Queens and Richmond Counties, L8egislative 189 Perhaps the most acceptable and feasible New York regional option at the present time is to Deenver-Denver County, Colorado L2egislativ 190 facilitate cooperation and planning consis- Heonolulu-Honolulu County, Hawaii L7egislativ 190 tency among local agencies. This would Bmaton Rouge-East Baton Rouge Parish, Louisiana R7eferendu 194 require establishing state goals and priorities Hmampton-Elizabeth City County, Virginia R2eferendu 195 that could be reinforced through LAFCO Nmewport News-Warwick County, Virginia R7eferendu 195 policies. A productive first step could be a Nashville-Davidson County, Tennessee R2eferendum 196 State-initiated forum to discuss future (Previously defeated in 1958) planning and governance needs with repre- Vmirginia Beach-Princess Anne County, Virginia R2eferendu 196 sentatives of local governments and to Smouth Norfolk-Norfolk County, Virginia R2eferendu 196 develop a program of incentives and induce- Jacksonville-Duvall County, Florida R7eferendum 196 ments for cooperative planning. (Previously defeated in 1935) Notably absent from many regional Iendianapolis-Marion County, Indiana L9egislativ 196 governance forums are public school officials. Juneau-Greater Juneau Borough, Alaska R9eferendum 196 School districts often view their mission apart Cmarson City-Ormsby County, Nevada R9eferendu 196 from that of the general governance structure Columbus-Muscogee County, Georgia R0eferendum 197 of a community. School districts are exempt (Previously defeated in 1962) from local planning ordinances and LAFCO Smitka-Greater Sitka Borough, Alaska R1eferendu 197 procedures. Yet, the decisions of school Lmexington-Fayette County, Kentucky R2eferendu 197 boards and administrators may have a considerable effect on the ability of local Smuffolk-Nansemond County, Virginia R2eferendu 197 government officials to exercise planning Smavannah-Chatham County, Georgia R3eferendu 197 controls and to meet the needs of their Amnchorage-Greater Anchorage County, Alaska R5eferendu 197 residents. Greater cooperation and closer Amnaconda-Deer Lodge County, Montana R6eferendu 197 communication among local governments Bmutte-Silver Bow County, Montana (Defeated in 1924) R6eferendu 197 and schools is essential to successful gover- Hmouma-Terrebonne Parish, Louisiana R4eferendu 198 nance in the 21st Century. The current efforts Lmynchburg City-Moore County, Tennessee R8eferendu 198 of the CCS Partnership of cities, counties, and Amthens-Clarke County, Georgia (Defeated in 1969) R0eferendu 199 schools is an important first step, but addi- Lmafayette-Lafayette Parish, Louisiana R2eferendu 199 tional incentives are needed to promote Augusta-Richmond County, Georgia R5eferendum 199 greater cooperation between local govern- (Previously defeated in 1974 and 1976) ments of all types on a regional basis. Kmansas City-Wyandotte County, Kansas R7eferendu 199

Sources: Peggy Beardslee, Questions and Answers on Consolidation, National Association of Counties, July 1998; RECOMMENDATION 7-2 Daniel R. Grant and H.C. Nixon, State and Local Government in America, 1975. The Commission recommends that the State develop incentives to encourage to public service delivery and improve compatibility and coordination of plans overall governance. State infrastructure and actions of all local agencies, including financing programs should create incen- school districts, within each region as a tives that further State growth planning way to encourage an integrated approach goals and priorities, and all State policies, 110 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 7

The primary mission regulations, and programs should be services that California’s growing populace implemented in a manner consistent with will require. In recent years, California has of LAFCOs is to these goals. LAFCO policies should be been moving in the opposite direction, a trend rationalize revised, as necessary, to support growth that must be reversed. planning goals. Chapter 2 documents the erosion of local government service government self-determination since the delivery systems, not The primary mission of LAFCOs is to passage of Proposition 13 in 1978. As local rationalize government service delivery governments have become more dependent to manage future systems, not to manage future growth. upon external sources — predominantly the However, these concepts cannot be fully State and payers of service charges — for growth. However, segregated. The ability of government revenues, they have lost much of the flexibility these concepts cannot agencies to effectively and efficiently provide to establish priorities and meet the most services is interlinked with the spread of the pressing demands of their constituents. be fully segregated. service area and the individual and commu- Moreover, much of the discretionary revenue nal needs of the people served. To make left to local governments has tended to realistic decisions about the need for public promote a “fiscalization of land use,” whereby services, LAFCO must therefore be part of an planning decisions are heavily influenced by integrated planning network that includes the the revenue potential of a proposed project. State, cities, counties, special districts, school Some examples are sales taxes, which favor districts, and the private and non-profit retail over other uses; redevelopment projects, sectors. which increase a city’s share of property tax revenues but may encourage designating an The Need for area that would not be a high priority for Local Fiscal Reform revitalization if not for the tax subsidy; and developer fees, which shift a portion of Serving California’s inevitable growth will planning and infrastructure costs onto a new require viable local governments that are development, sometimes exceeding the true fiscally sound and are empowered to meet the direct impact of the development. service demands of their citizens. Local fiscal reform is one of the most critical components Sales Taxes of the broader movement to prepare Califor- nia for the demands of the 21st Century and Taken individually, basing a land use to enable local governments to provide the decision on its fiscal implications is probably

Fig. 7-5 Due to extraordinary sales tax receipts, the City of Com- merce in Los Angeles County has per capita general revenues more than 4 times the state average for cities without having to impose hotel occupancy or utility user taxes

Staff photo Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 111

Fig. 7-6 Santa Monica’s downtown redevelopment project has helped revitalize the city’s central business district

Staff photo

the correct choice for a city council. Cumula- been some questionable redevelopment tively, however, these decisions may not only practices in the past, however, and this produce the wrong land use verdict, but may financing tool has steadily eaten into local Taken individually, even be counterproductive in terms of long- property tax allocations that could otherwise term revenues. Land use decisions favoring be used for general governmental services, basing a land use retailers have long been the subject of such as police and fire protection and parks. decision on its fiscal criticism by government reformers, but Redevelopment “tax increment,” the increase recently have also gained the attention of in property taxes in a redevelopment area that implications is fiscal experts. Sales taxes, as noted previously, comprises the central funding source of probably the correct have failed to keep pace with general eco- redevelopment agencies, accounted for a nomic growth for several years, and will in the relatively small share of total statewide choice for a city future be subject to further downward property taxes before passage of Proposition council. However, pressure from the growth in non-taxable 13. Today, however, these agencies lay claim to services and Internet sales. What’s more, to over eight percent ($1.5 billion) of annual these decisions may obtain or hold on to sales tax revenues, many statewide property tax proceeds. The number produce the wrong jurisdictions have engaged in such tactics as of agencies has increased from 197 in 1980 to offering tax rebates to large retailers or 403 in 1998. The total acreage included in land use verdict. covering a portion of their infrastructure redevelopment project areas nearly doubled costs. Besides the questionable public policy during the decade from 1988 and 1998. implications of such transactions, a munici- The interest by cities in redevelopment is pality is ever vulnerable to future attempts by understandable, both because of the improve- other jurisdictions to employ similar tactics to ments that can be made to a city’s infrastruc- lure the businesses away. ture and appearance and because of the additional revenues it can produce. On Redevelopment average, cities receive only about 11% of local property tax revenues, making property taxes Redevelopment agencies, 97% of which are an important but not decisive source of controlled by cities, can tout a long and proven funding for the typical city. By way of record of public improvements that have comparison, sales taxes produce somewhat benefited not only the sponsoring jurisdiction higher revenues for cities, other taxes are but also an entire region. There have also nearly double property tax proceeds, and fees 112 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 7

1,000,000 topic. Much of this fiscalization could be diminished if property-related services were supported to a greater extent by the property 800,000 tax and if a broader base of discretionary taxes were available to localities. The over- reliance upon any single source of taxation leaves local governments at the jeopardy of economic downturns and runs the risk of the TOTAL ACREAGE TOTAL 600,000 unintended consequences of tax sources being too attractive or not attractive enough to promote balanced governmental decisions. Although there are many problems with the 400,000 local system of taxes, the Commission finds that the most pressing issues concern the 1987-88 1988-89 1989-90 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98 FISCAL YEAR allocation of sales taxes according to the point-of-sale and the inadequacy of property Fig. 7-7 and service charges produce over six times as tax revenues relative to the cost of providing Total Acreage in much city revenue as property taxes. Within a property-related services. Redevelopment redevelopment project area, however, the city’s 1987-88 Through 1997-98 share increases from its average base of about RECOMMENDATION 7-3

SOURCE: California State Controller, 11% to over half of the incremental property The Commission recommends that the Community Redevelopment Agencies Annual tax proceeds. Even though redevelopment point-of-sale allocation of the sales tax be Report, various years revenues are dedicated to repaying bonds revised to mitigate its effect as an incentive issued for capital expenditures within the for “fiscalization of land use” and that the project area and cannot be used for general allocation of property taxes be increased city services, this higher funding allocation is to more completely fund property-related nevertheless an attractive prospect. Broader services. Any changes to existing tax implications should be taken into account allocations should be phased-in over a when approving a redevelopment project. limited period of time and all units of local Besides reducing funds available to other local government should be held harmless by agencies and for other governmental pur- the initial reallocation plan. poses, the length of a redevelopment project, typically 30 to 40 years, results in a long-term Others have made similar recommenda- land use commitment. tions and have offered various ways to approach this sort of reallocation. The State Developer Fees Municipal Advisory Reform Team (“SMART”) appointed by State Controller Kathleen Fees imposed upon new construction have Connell proposed reducing by 10% and long been a source of friction between capping the point-of-sale (“situs”) portion of developers and local governments. Under local sales tax revenues, reallocating this 10% current fiscal circumstances, however, they are and any future increment among local a necessary antecedent to local government governments proportional to statewide approval of major new developments. population, and returning a portion of the Unquestionably, they contribute to the high “ERAF shift” of property taxes. While this cost of housing in California. The Building recommendation offers an important Industry Association of San Diego sponsored contribution to the debate, the Commission a study that indicates that the total cost of feels that the individual tax reallocations “regulation” on the cost of a new home can be among local jurisdictions under the proposal up to 33% of the home’s value. While this may not be equitable or realistic. Additionally, represents more than just the impact fees, it the tax allocation mechanism offers little in indicates the degree of controversy over the the way of reforming property tax incentives. Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 113

By basing revenue growth largely on popula- and permanent local revenue source to tion, it may reduce the incentive to promote provide local services. job-generating industrial or commercial land uses. Accountability for Local Services An alternative approach that seems to satisfy the principles expressed in the Taxpayers have a right to hold their Commission recommendation has been government accountable. They should be able proposed by the Speaker’s Commission on to understand how their tax dollars are spent State and Local Government Finance. The and, if expected services are not provided in a Speaker’s Commission has proposed a “swap” satisfactory manner, they should be able to The Commission urges of a portion of the locally levied sales tax for understand what higher priorities consumed an equal amount of property tax, shifted from the available funds. Today, this degree of the Legislature and either school or community college district accountability is impossible for several the Administration to allocations. The State would back-fill the reasons, including the following: education institutions’ losses and, in compen- • In most cases, there is a lack of a nexus seriously address sation, would retain the “swapped” sales tax between taxes levied and services deliv- state-local fiscal share. The result would be to hold all parties ered. For example, most taxpayers believe harmless initially and to protect the existing that their property taxes support schools, reform as a 21st investment by many communities in retail public safety, roads, parks, libraries, and Century initiative. establishments, but to reduce the incentive to other property-related municipal services. approve new retail applications at the expense In fact, property taxes are insufficient to of other types of land uses and to make other cover all of these costs and the allocation land use choices, especially housing, more of those property taxes that are available is attractive by increasing the property tax not under local control. proceeds from those uses. • Unified responsibility is absent for many The Commission urges the Legislature and types of services and governmental the Administration to seriously address state- functions. For example, responsibility for local fiscal reform as a 21st Century initiative. homeless assistance falls upon many The recent decision by the Sonoma County agencies, including cities and many county Superior Court (County of Sonoma v. Commis- departments, all of which may operate sion on State Mandates) determining that the with little recognition of one another’s shift of ERAF funds away from local govern- activities. ment constitutes a new program that requires • The State imposes mandates upon local State reimbursement under Article XIIIB of governments which often are not funded, the California Constitution, should provide despite the Constitutional decree to do so. further incentive to all parties to reach an As a result, scarce local revenues must be equitable agreement on the realignment of used to cover the costs. State and local revenues and responsibilities. The current separation of taxation from If and when such an agreement is reached, it services rendered has not always been the should be placed in the State Constitution so practice. In simpler times, when government that local governments can truly be held responsibilities were admittedly less complex, accountable for providing the services taxes were closely related to the services expected of them by the taxpayers. rendered and, if officials failed to satisfy the electorate, they were voted out of office. If RECOMMENDATION 7-4 government is to regain its credibility among The Commission recommends that fiscal those governed, some way must be found to reform negotiations between the State and restore this level of accountability. Doing so representatives of local governments begin will mean better aligning the responsibility immediately and that provision for a for providing services with the responsibility comprehensive State-local fiscal realign- for raising revenues and making the activities ment be amended into the California of government more understandable to the Constitution, guaranteeing an adequate people governed. For a start, promoting a 114 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 7

better understanding of government finance level of service on any local government, would be helpful. the State shall provide a subvention of funds to reimburse such local government RECOMMENDATION 7-5 for the costs of such program or increased The Commission recommends that county level of service, except that the Legislature tax collectors be required to itemize in may, but need not, provide such subven- each property tax bill the agency which tion of funds for the following mandates: receives funds, including the county-wide 1 (a) Legislative mandates requested by the percent allocation, and the responsible local agency affected; (b) Legislation One of the most taxing authority for imposition of the tax. defining a new crime or changing an existing definition of a crime; or (c) insidious This would primarily affect county Legislative mandates enacted prior to accountability property tax billings, though other local tax or January 1, 1975, or executive orders or fee assessments should include similar regulations initially implementing problems occurs when information. Typically, a county’s property tax legislation enacted prior to January 1, costs are shifted from bill itemizes all special assessments and 1975.” bonded debt payments, but does not itemize Despite this clear requirement for the State one government to allocation of the “countywide 1%” general tax to reimburse all local mandates, legislation another, as when the levy, nor explain how the allocation is enacted regularly includes a disclaimer of determined. In an appearance before the mandated cost, thereby delegating determina- State mandates Commission, the City of Chino Hills presented tion of a local government’s claim to the information that it provides to all of its Commission on State Mandates. Many local service requirements taxpayers, explaining in detail where their governments believe that the Mandates upon local property taxes go and who is responsible for Commission is generally unfavorable toward determining allocations. Similar information reimbursement of local cost claims. Even if governments. should be provided to all taxpayers through- the Mandates Commission approves a claim, out the state. the resulting delay in payment due to the Accountability also entails assigning clear lengthy appeals process and the expense of responsibilities. Although consolidating many making the claim result in a financial burden related functions into a single level of for the local appellant. government or a single agency would best improve accountability, this is not always RECOMMENDATION 7-6 possible and may involve trade-offs in other The Commission recommends that any areas, such as accessibility. Where consolida- proposal for modification of State and tion is not possible, agencies offering similar local government financing must include a services should collaboratively establish one- legally adequate commitment by the State stop intake and information centers, so that to continually and adequately fund its clients are not continually referred from one obligation to local government for State bureaucracy to another. mandated costs. In furtherance of this One of the most insidious accountability recommendation, the Commission finds as problems occurs when costs or responsibili- follows: ties are simply shifted from one level of a. Meaningful State and local government government to another, as frequently occurs financing modifications to ensure when the State mandates service require- adequate financing availability for local ments upon local governments but does not government can only be assured if the provide the funding. State imposition of State acknowledges and legally con- mandates on local governments has long been firms its constitutional obligation to a source of contention. Article XIIIB, Section reimburse local government for the full 6, of the California Constitution declares as costs associated with State mandates follows: that have been imposed on local “Whenever the Legislature or any state government. agency mandates a new program or higher b. For over 20 years, the State has consis- Reform of Local Government Growth Within Bounds: Planning California Governance for the 21st Century 115

tently avoided any on-going, periodic strained than ever before, so collaborative and legally binding commitment to programs that can take advantage of all provide funds for reimbursement for available governmental resources will benefit State mandated costs imposed on local all parties. government. Any reallocation of The Commission has recommended a revenue sources for local government to thorough examination of the fundamental ensure the stability of local government structure of local government in California, financing as well as the extent of its including school districts. Government availability must include a legally structure should be modified as necessary to binding commitment by the State to meet people’s needs and service expectations The state and local tax reimburse local government for State in the 21st Century, while recognizing fiscal mandated costs. constraints and the need for greater efficien- structure should cies. Wherever possible, fragmentation should support good In her SMART Task Force Report, State be discouraged and consolidation should be Controller Connell addresses this issue. She facilitated by State and local policy. Govern- government decisions acknowledges that the State frequently ment service delivery systems should be and preservation of violates the Constitutional directive “. . . by transparent to the people so that an individual imposing expensive mandates on localities seeking services or assistance can quickly and resources. and then routinely proclaiming them to be logically determine the appropriate provider. neither mandates nor expensive.” She Government will need to reach out to the recommends that every bill mandating an people as never before, making full use of action by local governments include an advanced technologies, as well as continuing appropriation adequate to cover the cost of the to employ traditional means of communica- mandate, subject to approval of test claims tion. Large jurisdictions will need to find filed with the Commission on State Mandates. ways to reduce their scale, so that individuals This effectively puts the State rather than local can achieve better access to decision making. governments at risk for the “carrying cost” of This means empowering neighborhoods to mandate claims. Additionally, she recom- determine their own destinies and decentral- mends that, whenever a local government izing bureaucracies. agrees to administer a State program, a Finally, the state and local tax structure bilateral compact be formed to specify should support good government decisions expectations and obligations of both parties and preservation of resources. Local elected and to ensure adequate funding for the officials must have the authority to raise responsibilities transferred. revenues and must then be accountable to the taxpayers for their expenditure decisions. Pulling It All Together: Land use decisions should not be made by the Local Governance in the municipal treasurer. State mandated services 21st Century should be financed on a “pay-as-you-go” basis, with funding available whenever services are California can be assured of four certain- required. ties in the new millennium: growth, change, If the people are assured that their elected diversity, and opportunity. The State’s ability officials will be provided the tools to act and to respond to the challenges posed will are expected to be fully accountable for their depend, to a large measure, on its willingness decisions, the trends in voter and citizen to approach growth in a smart way by apathy will begin to change. People will not enhancing the adequacy of its local govern- respond to the call for public participation ment infrastructure. Local governments — and community service if their efforts are counties, cities, special districts, and school ignored, either intentionally or because of lack districts — must work together cooperatively of empowerment. They will respond, however, as they have not done before to accommodate if they believe that their opinions matter. That the needs of the vast numbers of additional is the true challenge to maintaining the residents. Funds will probably be more relevance of government in the 21st Century.

Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 117

CHAPTER EIGHT Growth Within Government Of the People, By the Bounds People, and For the People

he legislation which created the and public affairs has dropped sharply since Political observers are Commission on Local Governance for 1998, a gubernatorial election year. In T the 21st Century (AB 1484, Hertzberg) September 1999, 28% say they follow govern- concerned about asked it to investigate ways to increase public ment and public affairs “most of the time,” public attitudes participation in government. This chapter compared to 39% a year earlier (See Figure 8- provides background on the level of public 2, next page), and comparison with national toward government participation in government, descriptions of polls indicate that apathy appears to be more and public affairs. current programs in use by local governments pronounced in California than in the rest of to increase participation, and ideas for further the United States. Moreover, in testimony improving public involvement in policies and before the Commission, Mark Baldassare, decisions. PPIC’s project director for Californians and their Government, noted that surveys conducted 20 years or more ago indicated a Public Interest and much higher level of public interest in politics Involvement in Government and government. The PPIC survey also found that Califor- Many political observers are understand- nians feel that their taxes are too high, and a ably concerned about public attitudes toward majority believe that state and local govern- government and public affairs. Voter turn-out ment are wasting some or all of their tax Fig. 8-1 in California elections has declined fairly dollars. When Californians were polled on the California General Election steadily over the past 40 years. For example, performance of their local governments, Voter Participation in the November 1998 gubernatorial election, however, most were satisfied with the way 1960-1998 the turnout of registered voters was 58%, crime, jobs, parks, open space, water quality, SOURCE: Secretary of State compared to over 60% four years earlier. In the November 1996 presidential election it 100% was 66%. By comparison, presidential Presidential elections election turn-outs were 75% in 1992 and 88% Gubernatorial elections in 1960. The Public Policy Institute of California 90% (PPIC) has been conducting a series of comprehensive statewide surveys on the theme of “Californians and Their Govern- 80% ment.” A recent poll sampling 2,013 California residents between August 26 and September 3, 1999 found that most Californians are 70% apathetic toward government, with only 12% of the general public indicating that they follow political news “very closely,” and nearly 60% half saying they follow it “not too closely” (36%) or “not at all closely” (11%). The PPIC notes that the number of Californians who report a high level of interest in government 50% 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 118 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 8

Fig. 8-2 citizens believed to be representative of Citizen Interest in Government generally held attitudes, who are asked to discuss as a group their feelings about some “Would you say you follow what’s going on in govern- of the issues raised by public opinion polls. ment and public affairs most of the time, some of the This allows pollsters to probe more deeply the time, only now and then, or hardly ever?” attitudes behind the yes-or-no survey responses. While voter apathy and cynicism Sept Sept June Nov about government were affirmed in the focus 1999 1998 1998 1997 groups, the group discussions also suggest CA CA US US that participants want responsive government Most of the time 2%8% 3%9 3%6 41 with representatives who are honest, accountable and accessible. Group members indi- Some of the time 4%2% 3%7 3%4 36 cated an interest in community participation and believed that if citizens get involved, Only now and then 2%2% 1%7 2%1 16 problems can be solved. However, most of the groups’ participants felt that their elected Hardly ever 6%% 5%9%7 officials fail to represent the views of the public. Never 2%% 2--

Source: California Figures are excerpted from the PPIC Statewide Surveys of Enhancing Public Involvement September 1999 and September 1998; the United States figures are excerpted from the Pew Research Center’s surveys from June 1998 and November 1997. in Local Government

Many local governments do not accept the and other local issues are handled. Respon- status quo on public involvement. Several dents nevertheless indicated dissatisfaction methods have been employed by various local focus group members with the way local government handles agencies to encourage public participation. believe that if citizens affordable housing, local traffic, and public Some of the strategies utilized include schools. Between 30 and 40 percent of educational programs, creation of neighbor- get involved, problems respondents considered local government hood or community councils, traditional can be solved. treatment of these matters to be somewhat communication tools, and the use of the satisfactory or not at all satisfactory. Internet. Ironically, it appears that much of the citizen apathy can be attributed to the buoyant Educational Programs mood of the state and optimism about the economy. A solid majority (72%) believe that The League of Women Voters (LWV) is one the next 12 months will bring good times of the state’s and the nation’s foremost financially in the state. In addition, 61% of advocates for educating the public on those polled believe that the state is going in government policies and the need for citizen the right direction. These responses signal a involvement. This organization encourages general level of satisfaction that may subdue the informed participation of citizens in involvement in local and state politics. government through impartial analysis of California 2000, a consortium sponsored public policy measures, including ballot by the William and Flora Hewlett and James initiatives. The League of Women Voters Irvine Foundations to promote policy Education Fund was established in 1957 and research and public education on fiscal, its Vision 2000 program is focused on citizen governance and land use issues in California, empowerment. As part of this program, the has made its own contribution to understand- LWV is planning a Center for Community ing public attitudes. In May 1999, eight focus Dialogue which will offer training worldwide groups (2 in each city) were conducted in in citizen skills like advocacy, consensus Sacramento, San Jose, San Diego, and Los building, and conflict management to Angeles. A focus group is a gathering of encourage citizen participation in govern- Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 119 ment. In testimony before the Commission, ongoing bodies that routinely review planning representatives of the LWV explained the proposals, while others are assembled around organization of its local chapters and high- a particular major community development lighted a Bay Area effort to increase involve- project, then are disbanded. ment in LAFCO proceedings. In California, neighborhood councils have Another example of educating the public been formed in a number of cities, including on government is the “Our Cities, Our Future” the following: program conducted by the Georgia Municipal • Anaheim. The Neighborhood Services Association. This program is a new initiative Division was created in 1993 to allow created in August, 1999, to educate Georgians residents to organize into neighborhood on the role and functions of cities. The public advisory councils in order to identify and education program encourages cities to adopt discuss an area’s problems. Currently, an ethics ordinance, provide outreach to there are 17 councils in the city of 300,000 schools, and conduct a city government week residents. in the spring of 2000 to educate citizens about • Oakland. Neighborhood Crime Preven- the services that cities provide. tion Councils are organized and report to In California, the League of California the Oakland Police Department on Cities, California State Association of Coun- concerns regarding crime in their areas. ties, and the California School Boards • Simi Valley. Since its incorporation in Association created a program entitled the 1969, the city has relied heavily on its four CCS (Cities, Counties, Schools) Partnership. It neighborhood councils for feedback and was created in 1997 to “promote the develop- recommendations on important issues. ment of public policies which build and The councils are strictly advisory in nature preserve communities by encouraging and have no formal power. successful local collaborative efforts between • Los Angeles. In June 1999, the voters in cities, counties, schools, community-based the City of Los Angeles adopted a new city nonprofit organizations and business and charter, replacing the 74-year old charter Fig. 8-3 civic leaders.” adopted in 1925. The new charter called Community planning work- One of the programs that the CCS Partner- for the creation of a Department of shop for conversion of Naval ship is emphasizing is to encourage city, Neighborhood Empowerment, which will Training Center, San Diego county and school leaders to participate in K- produce a detailed plan for the creation of Courtesy, City of San Diego 12 programs to increase education on local government. In order to achieve this goal, the Partnership is partnered with the Citizenship and Law Education Center (CLRE), and Capitol Focus.

Neighborhood or Community Councils

Neighborhood councils are generally formed by a local government or a group of citizens to facilitate citizen input or feedback on issues of concern. The idea of forming neighborhood councils has been embraced throughout the United States, and many have existed for over 15 years. As of 1996, citizen boards and neighborhood councils were identified in approximately 60 different cities nationwide. Some citizen boards are able to influence policy on a broad spectrum; others are created specifically for one issue. Some are 120 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 8

neighborhood councils within one year. presidential candidates Senator John F. Guided by public input, the Department Kennedy and Vice President Richard Nixon must determine how many councils will was the first such event and marked the be created and draw their boundaries. beginning of a new era in political communications. Neighborhood councils throughout the While national broadcasting companies United States have generally been considered would cover national campaigns and local successful. The ability of each neighborhood stations might cover local races, there was still council or advisory board to increase citizen no way for local or regional governments to The ability of each participation often depends on the local proactively communicate with their constitu- government’s ability to convince citizens that encies via this medium. But cable television neighborhood council their opinions matter. If a local government is (television signals transmitted by cable to or advisory board to responsive and listens to its citizens, the paying subscribers) changed all that in the councils feel empowered and citizen partici- 1980s. While the federal government regu- increase citizen pation should increase. lates other forms of broadcasting almost participation often exclusively, cable television involves the Traditional Communication Tools negotiation of franchise agreements between depends on the local cable operators and the entity, most often government’s ability While radio, television, cable television local governments, owning the rights to utility and the Internet provide news coverage of placement. For the first time, local govern- to convince citizens governmental events, the latest of these ments could and did require channels of their technologies have offered new opportunities own. that their opinions for local and regional governments to Today, a wide variety of local government matter. dialogue with their constituencies. meetings can be broadcast live or tape delayed Radio broadcasting reached the height of to virtually every home in California. In its influence and prestige during World War II, between these meeting broadcasts, communi- carrying war news directly into the homes of ties use these governmental access channels to millions of listeners. Recognizing the power advertise meeting dates, available programs of this communications tool, President and services. Operators of cable franchises Franklin Delano Roosevelt often used radio to also offer programming aimed at keeping directly address the American people with his viewers on top of current political events and so-called fireside chats. the public has opportunities to air their Radio’s success spurred technology comments via public access stations. Yet, this companies to develop a new form of broad- method of dialogue is constrained by the casting, called television. Immediately singular direction of its communication. A following World War II companies stood ready brief experiment with two-way cable in Ohio to initiate network television broadcasting in was never widely replicated. But the late- the United States. Network broadcasting takes 1990s have changed all of that. place when local stations covering different regions agree to simultaneously transmit the The Internet same signal. By the early 1960s more than 600 televi- One of the most exciting innovations ever sion stations were on the air, broadcasting on for involving citizens in public affairs is the a daily basis to about 90 percent of homes in Internet, an interactive medium of communi- the United States. Broadcasting dramatically cations. The World Wide Web is becoming a changed life in the United States, as the rapidly expanding tool for governments, not networks brought the performances of only to increase public participation but to talented artists to large numbers of people create easier access to services and increase otherwise isolated from venues such as the public awareness of government. The recent concert hall and the theater. It also brought PPIC poll found that 63% of all California national political races right to their doorstep. adults have a personal computer in their The nationally televised debate between homes and 60% access the Internet to send or Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 121 receive electronic mail (“e-mail”). Currently, 43% get news and information on the Internet (51% of those who have no political party affiliation) and 30% use it to purchase goods or services. All indications are that these numbers are increasing. Many states are using this tool to make government more accessible. According to the Progress and Freedom Foundation, which conducts an annual survey of state government on the Internet, Washington is the highest ranked state, having the most internet tools. This ranking is based on eight categories: digital democracy, higher education, elementary and secondary education, business regulation, taxation, social services, law enforcement and the courts, and other initiatives. While California ranked 16th overall, it did receive high marks for its work in bringing digital technologies to higher education (ranked 3rd). The Progress and Freedom Foundation was founded in 1993 to study the digital revolution and its implications for public policy. In California, the State and most cities and counties have websites. Special districts appear to be somewhat less likely to be on- line. Some local governments have used the Internet to solicit citizen opinions on proposals, provide general governmental informa- • In Sunnyvale, the city government website Fig. 8-4 tion, make it easier to obtain permits, and includes a guide with links to all services The City of Santa Monica notify residents about upcoming meetings provided by city government, contact encouraged residents to and events. Following are a few examples of names for more information, descriptions make budget suggestions the use of the Internet: of services, and addresses of departments. over the Internet and received • The City of Citrus Heights’ website allows The website also allows citizens to directly over 100 responses citizens to identify by name their local contact a department regarding a question Courtesy, City of Santa Monica police officer, apply for business licenses, or comment. Businesses and citizens may find their neighborhood associations, and apply for and receive permits on-line. access planning and zoning information. Sunnyvale has indicated that the use of the This website received an award from the internet has increased public participation American Planning Association for its and attendance at council meetings. outstanding planning information. • The City of Santa Monica has used the State and local government in California Internet to allow residents to comment on have not even scratched the surface of budget proposals. In 1998, Santa Monica potential uses for Internet technology. As solicited budget comments and offered citizens become more accustomed to using separate web pages with forms to allow the Internet for purchases and routine citizens to enter budget alternatives. The information searches, they will demand more city received more than 100 responses. In from government websites. It will become addition, through the website residents ever more important for government agencies, can watch and listen to city council including LAFCOs, to establish and rigorously meetings live via the Internet. maintain up-to-date and accurate websites. 122 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 8

Moreover, websites for all levels of government offices during normal business hours and are should be linked and easily searchable. sparsely attended. From testimony presented While a single, Ideally, a business interested in opening a to the Commission by several LAFCOs, it is one-stop location for facility in a particular city should have, at one clear that the extent of public participation site, all necessary information and applica- often depends on the nature of the proposal all government tions from the city, the county, special and possible citizen concern over its effects. districts, the state, regional environmental In 1999, four LAFCOs reported very different services may be agencies, and the federal government. A reactions from the public on matters brought impractical in a citizen seeking government assistance should before them. be able to enter a search query and receive all physical sense, it is relevant information from all applicable Los Angeles entirely possible in agencies. While a single, one-stop location for all government services may be impractical in The Los Angeles LAFCO has begun cyberspace a physical sense, it is entirely possible in proceedings on one of the most complex and cyberspace. controversial applications ever placed before any LAFCO – the proposed secession of the San Fernando Valley and the Harbor areas Public Awareness of LAFCO from the City of Los Angeles. Both of these Fig. 8-5 secession proposals have generated fierce The LAFCO experience with regard to opinions, and occasionally near violence, both Los Angeles Secession Areas public participation has been mixed. Most from supporters and opponents. An unprec- citizens have never heard of LAFCO and are edented number of petition signatures were SOURCE: County of Los Angeles, Urban Research, Chief Administra- indifferent to its absence in their lives. obtained in support of studying secession in tive Office Typically, LAFCO hearings are held at county both communities (state law requires signatures from 25% of registered voters to advance a secession proposal, or “special reorganization” to LAFCO). In the San Fernando Valley, 135,000 valid signatures, and over 200,000 total signatures were obtained and in the Harbor communities of Wilmington and San Pedro, 13,470 signatures were obtained. A petition movement in Eagle Rock failed to get the requisite number of signatures and an effort is currently underway in Hollywood. At the first LAFCO public hearing on the San Fernando Valley secession proposal in July 1999, however, only a handful of people from the public were in attendance, and The Los Angeles Times reported that most of these were consultants or leaders of the secession movement. As a result, LAFCO is considering holding public hearings throughout the city including the San Fernando Valley and Harbor areas, and holding the meetings at night, when it is expected more residents will be able to attend. In addition, the LAFCO is also discussing whether it needs to launch a public relations campaign to increase citizen participation. In October, 1999 the Los Angeles LAFCO initiated a web page with information on upcoming meetings, agendas, Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 123 and information on the secession movements in the area.

Orange County

The Orange County LAFCO has held a number of hearings to review proposals for incorporation from the communities of Rancho Santa Margarita and Cota De Caza. The Rancho Santa Margarita incorporation proposal was approved in the November 1999 election. During one of the first meetings on the incorporation, the proponents sent notices of the meeting to more than 8,000 residents. Over 200 residents attended the hearing, which was held to receive citizen input on the proposal. Throughout the incorporation process, meetings which discussed the proposal drew an average of about 200 opportunities…. It is crucial to our quality of Fig. 8-6 citizens. life that LAFCO and other agencies re-evaluate The first public meeting of Los their policies in the area of annexation. For Angeles LAFCO on the San Santa Cruz County LAFCO to cast the issue in terms of destroyed Fernando Valley secession wetlands and paved-over prime agricultural petition drew few participants An issue before the Santa Cruz LAFCO land does a great disservice to Watsonville Photo: Boris Yaro, The Los Angeles Times illustrates how controversial and divisive and the Latino population.” LAFCO decisions can be. The City of When the proposal was scheduled for Watsonville presented LAFCO with one of its hearing by the LAFCO, the Mayor of most difficult proposals ever when it applied Watsonville urged the public to attend. Two to annex land along Riverside Drive and hearings were held on the proposal, scheduled Highway 101, which has been determined by at night for the convenience of the public. LAFCO to be prime farmland. In 1997, the Over 40 speakers and 200 residents were in LAFCO approved a proposal for an updated attendance. The LAFCO rejected the proposal sphere of influence to include 94 acres under on a 4-3 vote; but the hearing demonstrated certain conditions, and held up approval of nevertheless that active citizen participation the actual annexation until those conditions can be garnered when feelings are strong and were met. Those conditions included a report the public is accommodated. by Watsonville on the amount of land available for development within the city, and Kern County an agreement between the City, the County and the Coastal Commission on the environ- The Commission received testimony from mental review policies. The City completed residents of two communities in Kern County those requirements and in 1999 it officially re- regarding the annexation of their neighbor- submitted the annexation proposal, scaling it hoods by the City of Bakersfield. The resi- back to the 94 acres suggested by LAFCO, for dents testified that they did not receive proper the development of an industrial park. notification of the annexation proposal and Opinions regarding the proposal run very when calls were placed to the City regarding strong. The City regards the proposed the matter, there were no materials available annexation as critical to its long-range plans to explain the annexation process. The for civic improvement. As Elias Alonzo, a citizens responded by forming the Citizens Watsonville resident, testified to the Commis- Advisory Committee on Annexation in August sion, “we are in desperate need of more 1998 (“Advisory Committee”) and filing a housing, more jobs, and better employment lawsuit against the City. The Advisory 124 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 8

Committee was formed to identify issues and provisions regarding notice and public formulate recommendations to improve the hearing which do not seem consistent or annexation process. easily comprehensible. The lawsuit was eventually settled out-of- The Cortese-Knox Act includes an entire court in exchange for a referendum on the section on notice requirements. The Act annexation, to be held in March 2000. The requires mailed notice for LAFCO hearings on city has since changed its procedures for proposals. Some specific actions have annexation. As Mayor Bob Price stated after different noticing requirements, but most the settlement, “Could we have done things actions are covered by GC §56835, which The Commission better? Sure we could have and we’ve changed provides that LAFCO shall give mailed notice some things in the process since then.” It of any hearing to all of the following persons strongly supports the should be noted that the judge presiding over or entities: ability of citizens to the lawsuit stated that the annexation •Each affected local agency procedures followed by the City were carried • Chief Petitioners, if any obtain accurate out legally. The problem, therefore, appears to • Each person who has filed a written information and have been more with the law than with the request for special notice City. • If the proposal is for any annexation or access to government The Advisory Committee presented a detachment, to each city within three decisions. comprehensive response and recommenda- miles of the exterior boundaries of the tions for statutory changes to the annexation territory proposed to be annexed or process to the Commission. The testimony detached provided by the Advisory Committee indi- • If the proposal is to incorporate a new city cated that the public at times found it difficult or for the formation of a district, to the to receive complete information form the City. affected county The Commission strongly supports the ability • If the proposal includes the formation or of citizens to obtain accurate information and annexation of a territory to a fire protec- access to government decisions, and believes tion district and the territory has been that LAFCOs and local governments should classified as a state responsibility, to the make extraordinary efforts to ensure such Director of Forestry and Fire Protection access. • If the proposal would result in the annexation to a city of land subject to the Williamson Act, to the Director of Conser- Public Notice and Hearing vation

As noted in the Kern County example, Generally speaking, notice of a hearing receipt of public notice is one of the most must also be published in a newspaper of important and fundamental expectations of a general circulation. citizen. Even if they do not agree with the The testimony by the Kern County outcome of a government process, people at Citizens’ Advisory Committee raises a concern least should know what is going on. The over the adequacy of notification to property Commission believes, therefore, that adequate owners. The Commission is greatly concerned public notice of all proposals before LAFCO that those affected by a LAFCO action – be it must be guaranteed. an annexation or an incorporation – be Existing law includes several requirements notified of the existence of such an action. For regarding public notice and hearing under the most county or city land-use actions, notice is Brown Act, CEQA, and Cortese-Knox. LAFCOs required to all property owners within 300 are required to comply with the Brown Act feet of the exterior boundary. The Commis- with regard to open meetings, and the sion believes that notice to property owners Cortese-Knox Act provides for additional and registered voters is crucial in order to clarification of the procedures that LAFCOs ensure that all affected parties are aware of a must follow. However, after a review of the proposal to change boundaries. While statutes it was clear that there are numerous recognizing the importance of providing Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 125 adequate notice, the Commission recognizes (f) If the proposal includes the formation that notification can be very burdensome for of, or annexation of territory to a fire large proposals. Consequently, it proposes protection district formed pursuant to the that limitations be placed on the number of Fire Protection District Law of 1987, Part 3 notices that must be mailed, consistent with (commencing with Section 13800) of other laws. Division 12 of the Health and Safety Code, The Cortese-Knox Act specifies that notice and all or part of the affected territory has of a hearing be sent at least 15 days in advance been classified as a state responsibility of the hearing. This may not allow sufficient area, to the Director of Forestry and Fire time for an interested party to prepare a Protection. response. The Commission believes that this (g) If the proposal would result in the notice period should be extended, but annexation to a city of land that is subject recognizes that balance is needed to avoid to a contract executed pursuant to the delaying actions. Williamson Act (Chapter 7 (commencing with Section 51200) of Division 1), to the RECOMMENDATION 8-1 Director of Conservation. The Commission recommends that public (h) To all registered voters and owners of notice requirements within the Cortese- property, as shown on the latest equalized Knox Act be strengthened. assessment roll, within 300 feet of the exterior boundary of the property that is Following is draft language to implement the subject of the hearing at least 20 days this proposal: prior to the hearing. In lieu of the assessment roll, the agency may use the 56835. To the extent that the commission records of the county assessor or tax maintains an Internet web site, notice of collector or any other more current record. all public hearings shall be made available Notice must also either be posted or in electronic format on that site. The published in one newspaper 20 days prior executive officer shall also give mailed to the hearing. If this section would notice of any hearing by the commission, require more than 1,000 notices to be as provided in section 56155 to 56157, mailed, then notice may instead be inclusive, by mailing notice of the hearing provided pursuant to Government Code or transmitting via electronic mail if Section 65954.6(b)(1). available to the recipient, to all of the following entities: 56150. Unless the provision or context (a) Each affected local agency, by giving otherwise requires, whenever this division notice to each elected local official, each requires notice to be published, posted, or member of the governing body, and the mailed, the notice shall be published, executive officer of the agency. posted or mailed as provided in this (b) To the chief petitioners, if any. chapter. Unless the provision or context (c) Each person that has filed a written otherwise requires, whenever this division request for notice with the executive requires notice to be given that notice shall officer. also be given in electronic format on a web (d) If the proposal is for any annexation or site provided by the commission, to the detachment, or for a reorganization extent that the commission maintains providing for the formation of a new such a web site. district, to each city within three miles of the exterior boundaries of the territory 56154. If the published notice is a notice proposed to be annexed, detached or of a hearing, publication of the notice shall formed into a new district. be commenced at least 15 20 days prior to (e) If the proposal is to incorporate a new the date specified in the notice of the city or for the formation of a district, to the hearing. affected county. 126 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 8

56156. If the mailed notice is notice of a reforms to provide citizens with evidence of hearing, the notice shall be mailed at least increased productivity and reliability. 15 20 days prior to the date specified in the notice for hearing. Benchmarking

LAFCO Websites Benchmarks allow governments to establish targets for performance improve- As noted previously, the Internet is a tool ment and track the progress through perfor- used increasingly by local governments to mance statistics. One of the first examples of Taxpayers expect their enhance citizen participation and provide government benchmarking was implemented information and access to decision making. by the State of Oregon. In 1989, the State government to be While most cities and counties in California appointed the Oregon Progress Board to help accountable. have websites, most California LAFCOs do not. define a strategic vision for the state and to Only 19 LAFCOs have websites, as enumerated monitor progress toward achieving the in Figure 8-7. While some of these LAFCO statewide goals. The board established websites offer details of LAFCO activities, benchmarks or targets for affordable housing, current hearings, and applications, most offer air quality, and teen pregnancy. Many local only limited general information. governments in Oregon have also set bench- The Commission believes that information marks, following the state’s lead. regarding LAFCOs should be readily available While Oregon’s program received praise to the public and that posting this informa- nationwide, including from President Clinton, tion on a website would help to facilitate in 1995 the Oregon legislature threatened to increased public awareness. Although some terminate it before relenting to the Governor. commissioners were concerned that the rural Critics believed that many constituencies or low activity LAFCOs could not afford to demanded impractical goals, the benchmarks maintain their own websites, the Commission were too numerous and confusing, and they believes that options are available to all fail to measure customer satisfaction. The LAFCOs and that providing critical informa- revised program has been pared from 250 to tion to the public is imperative. One option 100 benchmarks. available to these LAFCOs is to utilize CALAFCO’s services and technical assistance Reinventing Government in order to accomplish this goal. In 1992, David Osborne and Ted Gaebler RECOMMENDATION 8-2 published a book entitled, “Reinventing The Commission recommends that all Government: How the Entrepreneurial Spirit Is local agency formation commissions Transforming the Public Sector.” The authors establish and maintain an Internet website believe that government employees need not later than January 1, 2002. increased flexibility to allow innovative programs to flourish. These will, in turn, increase government accountability. This Performance Measures book brought to the forefront many innovative and Reforms tools for measuring government performance. While the book focused on local govern- Public opinion surveys and focus groups ment examples, there have been attempts to have overwhelmingly concluded that taxpay- transfer these reforms to the federal govern- ers expect their government to be accountable. ment. In 1993, President Clinton initiated the Absent accountability, citizen participation National Performance Review (NPR), with will remain elusive. An important component Vice President Al Gore as its leader. NPR’s of accountability is maintaining measurable mission is to reinvent government to “work performance standards. Many local govern- better, cost less and get results Americans care ments have used some form of performance about.” NPR was later re-named the National measures, benchmarks, or management Partnership for Reinventing Government and Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 127

Fig. 8- 7 California LAFCO Websites December 1999

LAFCO Internet Address Information Available

• Agendas dated back to November, 1997 • History and El Dorado www.co.el-dorado.ca.us/lafco purpose of LAFCO • Inventory of local agencies • Meeting schedule

• Agenda and minutes dated back to December 1997 • Imperial www.imperialcounty.net/lafco Instructions for applications • LAFCO background • Meeting schedule • Projects and news

Inyo www.sdsc.edu/Inyo/lafco.html • Composition • LAFCO actions • Members

• Agenda and Minutes dated back to April 1999 • Los Angeles lalafco.co.la.ca.us/lafco_home Commissioners and staff • Current topics • LAFCO background • Meeting schedule • Publications and forms

Marin www.marin.org/bos/mcbds/lafco.cfm Agency description and contact information

library.monterey.edu/ Monterey Agency description and contact information mcflcip/agencies/311.html

www.co.napa.ca.us/depart Napa Agency description and contact information ments/lafco.htm

• Agenda dating back to September 1998 • Commissioners • History and Purpose • Minutes dating back to February Orange www.oclafco.ca.gov 1999 • Special reports and publications • Staff assignments • Staff reports dating back to November 1998

• Agendas and minutes dating back to April 1997 • LAFCO Riverside www.co.riverside.ca.us/lafco members • History • Public involvement • Staff reports dating back to July 1997

www.co.sacramento.ca.us/ • Commission members • LAFCO staffing • Powers and Sacramento slafco/index.html duties

• Agenda, minutes and staff reports dated back to July 1999 www.co.san-bernardino.ca.us/ • Background and history • Commissioner and staff profiles San Bernardino lafco/default.htm • LAFCO applications, procedures and feesss • LAFCO mapping of spheres

• About LAFCO • Fire Protections Service Funding • Publications • Meeting schedule • Monthly agendas San Diego www.co.san-diego.ca.us/ sdlafco (current) • On line forms • Processing, procedures and fees • Public hearing notices (current)

www.co.san-joaquin.ca.us/ San Joaquin About LAFCO lafco/index.htm

• Agendas and minutes back to January 1997 • Application requirements • Fee and meeting schedule • Membership San Luis Obispo www.slonet.org/~lafco and staff • Sphere of influence policy and criteria • Standards for evaluation of proposals

Santa Barbara wnww.elga.com/lafco Site currently dow

Siskiyou 209.232.195.206/planning/lafco.htm • Agency and contact information • Membership

• Agency budget • Agenda (current) • History of agency www.co.solano.ca.us/em/ Solano • Meeting schedule • Minutes back to January 1999 boards/lafco.htm • Membership

www.sonoma-county.org/perl/ Sonoma Agency and contact information frame.cgi?path=/main/admin/ lafco

www.co.stanislaus.ca.us/ Stanislaus • Agenda from latest meeting • LAFCO forms planning/lafco.htm

Source: California Association of Local Agency Formation Commission (CALAFCO) Website, Individual websites as of 12/23/99. 128 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 8

has produced several reports on performance objectives and are broken down into 1,500 management in America. tasks. Managers can receive bonuses for A comparable program has been initiated meeting performance goals or pay in California by Governor Gray Davis’ penalties if they do not reach the objec- administration. The “Innovation in Govern- tives. ment” program seeks to redirect state • Coral Springs, Florida, has developed government to a greater customer service performance measurements that indicate orientation, thereby indirectly enhancing the city’s“stock price.” The index, which is public participation in government. Initially, periodically updated, includes 10 perfor- Local governments this program does not have a local compo- mance measurements that are critical to nent. city customers. could increase public The movement to reinvent government • Phoenix, Arizona, has a master set of confidence and incorporates several different strategies, performance measures for the city. Each including competitive government, results- department is allowed to determine which participation by oriented government, customer-driven are most useful for its particular needs, so implementing some government, and market-driven government. long as the final set includes both cus- Because each local government is unique, tomer and employee related items. form of performance performance measurements should be measurement system. tailored to fit the special local needs. Several State legislators have affirmed support for examples illustrate unique approaches. greater local government accountability. In • Redondo Beach, California, initiated 1999, Assemblyman Robert Hertzberg benchmarks for managers and supervisors introduced a measure (AB 185) which would in 1990. Results are reviewed on a create an advisory board to develop perfor- quarterly basis by the city manager. It also mance measures for local government created the Suggestion Award Plan and programs. This legislation was introduced in Board which solicits ideas for the possible response to a 1998 Legislative Analyst report reduction, elimination, or avoidance of on county performance, which noted that expenditures of public money. there is little information available regarding • Riverside County, California, developed the results or outcomes of county programs. a strategic vision for the county which The bill did not pass the Assembly in 1999 includes measuring tools for accountabil- because of concerns over costs. ity of its public officials. The plan outlines Performance measures provide additional the county’s goals, dollars spent, and assurances that government is responding to strategies employed. the needs of the people through focusing on • San Diego, California, created the goals and auditing its performance. Testi- Competition Program in 1994 to ensure mony received by the Commission indicated that city services are competitive and that that many local governments could increase taxpayer resources are used effectively and public confidence and participation by efficiently. The program has an advisory implementing some form of performance panel made up of business and commu- measurement system. nity leaders who help identify services that will be considered for competition, then to review goals and provide guidance to the Government Responsiveness and competition team. The program compares Transparency city programs and services to external service providers, and based on those The Commission received testimony results, a decision is made on whether the clearly indicating that citizens often have service should remain with the city or be problems identifying the appropriate local contracted out. government to assist them. This uncertainty • Sunnyvale, California, has a long- is directly correlated with the increasing standing performance review budgeting concern over accountability in government. system, built upon 300 performance While many local governments have adopted Government of the People, By the People, For the People Growth Within Bounds: Planning California Governance for the 21st Century 129 performance measures in an attempt to to simplify and streamline lines of authority become more accountable, there is still so we know whom to hold responsible for confusion on the part of the public. In what happens or what doesn’t happen…. we California, this concern can sometimes be continue to move in the direction of more traced to the existence of overlapping local overlapping complication.” government jurisdictions or responsibilities. If state and local government fail to Many local governments have tried to address fundamental problems of account- address these shortcomings in accountability ability and lack of responsiveness, Califor- by holding public hearings in the evenings nians will continue to be suspicious of and in neighborhood locations, creating one- government, will insist upon submitting ever stop centers for permits, televising public more issues to popular vote, and will remain hearings, and improving access through the apathetic towards public affairs in general. If, Internet. This has not stopped government on the other hand, government can be from becoming more complex and duplicative reformed sufficiently to restore the people’s in our growing society. In his Sacramento Bee faith in their leaders’ ability to solve the column, Dan Walters wrote, “Given the crisis problems that are most important to them, in accountability that infects California California will continue to thrive in the 21st government at all levels, we desperately need Century just as it did in the 20th.

Implementing the Commission’s Vision Growth Within Bounds: Planning California Governance for the 21st Century 131

Growth CHAPTER NINE Within Implementing the Commission’s Vision Bounds

he release of the report of the Com- taken in the current session of the State mission on Local Governance for the Legislature, especially those involving T 21st Century marks the first attempt revisions to the Local Government Reorgani- in over 35 years to comprehensively overhaul zation Act, and those that may have to follow the laws that regulate the reorganization of at a later time. This does not imply a lower local government in California. The Commis- priority. In fact, some of the subsequent steps sion implores the Legislature to enact the may be judged more important by many This report marks the necessary statutory revisions, as described in members of the Commission. However, many first attempt in over detail in this report. Enacting these changes actions will require additional time for will not complete the job, however. As the negotiation, public education, and constitu- 35 years to Commission has noted, more fundamental ency building. comprehensively changes are needed both in state statute and in the California Constitution to revitalize Immediate Actions overhaul the laws that local governance in California and redefine regulate the the relationship between the State and its local The Commission believes that immediate partners. steps must be taken to implement the reorganization of Implementing these reforms will require recommendations in this report, especially the assistance and support of those most those involving revisions to the Local Govern- local government in directly affected by and responsible for their ment Reorganization Act. Delay will only risk California. success — the Governor, the Legislature, loss of momentum. individual local governments and the The Commission has met and will associations that represent them, and public continue to meet with representatives of the interest organizations involved in governance associations enumerated previously, key issues. For this reason, the Commission calls legislators, and representatives of Governor upon the California Association of Local Davis’ Administration. In addition, individual Agency Formation Commissions (CALAFCO), Commission members will brief various other the California State Association of Counties constituencies and be available to explain (CSAC), the League of California Cities publicly the report’s recommendations. (“League”), the California Special Districts Summaries of the recommendations will be Association (CSDA), the Association of available to all interested parties. California Water Agencies (ACWA), and other The most pressing immediate step will be representative organizations to unite in an to assist legislators who may be interested in effort to enact all of the necessary changes to sponsoring bills to implement the make California government more responsive Commission’s actions. Ideally, the Commis- to the needs of the people. sion would like all of these recommended Although the Commission would like to changes, or at least all of the changes to the see all actions necessary to implement its Local Government Reorganization Act, to be recommendations taken immediately, the placed in a single bill. The Commission’s members recognize that, realistically, some recommendations are the result of compro- changes must be phased-in. Consequently, the mises by the members and the affected specific implementing actions, described in entities. Spreading them over numerous the sections which follow, have been divided individual bills risks allowing the mutually into those which most definitely should be dependent compromises to be sabotaged as 132 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 9

each item must pass or fail on its own. The January 31 – Last day for each house to pass Commission views its recommended reforms bills introduced in 1999 in their house. as a package that must stay together to July 7 – Last day for policy committees to succeed. meet and report bills. Two options are available for gaining August 18 – Last day for fiscal committees to passage of a comprehensive bill to implement meet and report bills to floor. the key local government reorganization August 31 – Last day for each house to pass reforms. These options are described in the bills. following sections, which provide timelines September 30 – Last day for Governor to sign that the Legislature must follow according to or veto bills passed by the Legislature current Assembly and Senate rules. However, before September 1 and in his possession it should be noted that the legislative dead- on or after September 1st. lines indicated are tentative and are subject to change. Even if all of the major recommenda- Based upon the above schedule, a two-year tions of the Commission are placed in a single bill carried on behalf of the Commission bill, it may nevertheless be necessary to seek would have to pass its house of origin by additional bills to enact portions of the January 31, would have to complete all Commission recommendations that deal with committee hearings and pass the second other subjects or that would require hearings house in sufficient time to be heard by the before other policy committees (such as the policy committee of the house of origin by education committees). Those bills would July 7, and would have to pass both houses in follow timelines similar to those described the same form by August 31. below. Option 2 – Introduce A New Bill Option 1 – Use Existing Two-year Bill Alternatively, the Commission could The Commission may be able to locate an request that a member of the Legislature existing bill in a germane subject area that has introduce a new bill to include all of the previously passed its first policy committee in recommendations from the report. A new bill 1999. This type of bill, known as a “two-year would have more time to proceed through the bill,” must be moved through its “house of committee process in the house of origin, but origin” quickly, so most of the substantive the same final deadlines would apply. changes must be made in the second house. If However, the first hearing could not be it passes the second house, it must then return scheduled until the bill had been in print for to its house of origin for policy committee 31 days. hearings. In each house, the bill must pass a policy committee (the local government January 21 – Last day to submit bill requests committee in each house) and a fiscal to the Legislative Counsel. committee (the appropriations committee in February 25 – Last day for bills to be intro- each house). The schedule for adoption of a duced. two-year bill is as follows, with all dates April 28 – Last day for policy committees to referring to the last day that the indicated hear and report fiscal bills introduced in action may occur in 2000: their houses to fiscal committees. May 12 – Last day for policy committees to January 14 – Last day for policy committee of hear and report non-fiscal bills introduced the house of origin to hear and report bills in their houses to the floor. introduced in 1999, prior to referral to May 26 – Last day for fiscal committees to fiscal committees. hear and report to the floor any bills January 21 – Last day for any committee introduced in their houses. (including a fiscal committee) to hear and June 2 – Last day for bills to be passed out of report to the floor bills introduced in their house of origin. house in 1999. Implementing the Commission’s Vision Growth Within Bounds: Planning California Governance for the 21st Century 133

July 7 – Last day for policy committees to • Comprehensively revise the State-local meet and report bills. fiscal relationship, including provisions to August 18 – Last day for fiscal committees to protect local governments regarding State- meet and report bills to floor. mandated costs. August 31 – Last day for each house to pass • Create State incentives to support and bills. encourage coordination and compatibility September 30 – Last day for Governor to sign of growth planning goals and priorities, or veto bills passed by the Legislature which presumably would be articulated by before September 1 and in his possession the State. on or after September 1st. • Allow a proposed new city to elect up to The Commission urges nine council members by district as part Under either option, the proposed of its initial proposal. the Legislature to legislation will probably be referred to the • Improve coordination and communication consider in the current local government committee of each house between school districts and general (Assembly and Senate) for policy review. If purpose local governments. session the creation of the committee passes the bill it will either • Revise the hearing processes of county two task groups. proceed to the floor or could be referred to school district reorganization committees. another committee depending on the contents • Revise the format and explanations of the bill. If there are any provisions which included on county property tax bills. would have an impact on the State budget or • Establish a blue ribbon commission to impose a State-mandated local program, the undertake a study of California water bill would be referred to fiscal committees governance. (Assembly or Senate appropriations). The bill • Establish a task group to study and carrying the Commission’s recommendations recommend comprehensive revisions to will almost certainly be referred to fiscal the structures of state and local gover- committees. nance in California. Rather than immediately introducing a bill with all of the Commission’s recommenda- Necessary action on some of these tions included, a potential author may wish to recommendations may extend beyond the introduce a “pre-print” bill. In the past, when current legislative session. In addition, at least a major reform has been proposed for certain one of the Commission’s recommendations sections of statute, the author often provides should include submittal of a proposed all the proposed amendments in pre-print Constitutional amendment to the voters. form as an advance version, so that all Measures requiring State legislation would interested parties may view the changes in follow a similar timeline to those described context prior to the first policy committee previously, but some may not be introduced hearing. For example, when the major until the 2001 session of the State Legislature. revision of the Knox-Nisbet Act was proposed Nevertheless, the Commission urges the in 1985, a pre-print version of AB 115 (which Legislature to consider in the current session later became the Cortese-Knox Act) was the creation of the two task groups, so that provided to all interested parties. The pre- their recommendations may be considered in print does not commit the author to introduce the 2001 or 2002 legislative sessions. the bill. The Commission’s endorsement of reforms to local government finance will, in the view of the Commission, require amending the Subsequent Actions California Constitution. Any actions that require a Constitutional amendment will The Commission has recommended proceed on a somewhat different schedule several actions in addition to the reorganiza- than those requiring only legislative action, tion and revision of the Local Government although many of the initial legislative steps Reorganization Act. These actions include the are the same. Legislative action on a constitu- following: tional amendment may take longer than 134 Growth Within Bounds: Planning California Governance for the 21st Century Chapter 9

regular legislation because it would probably Conclusion be referred to the constitutional amendments committees in both houses. If a State-local We can no longer afford for State and local fiscal reform measure is to be considered in government to view themselves as enemies, as the coming year, as recommended by the so often seems to be the case today. Both Speaker’s Commission on State-Local serve the people of California, and neither, Government Finance, the schedule for acting alone, can propel the State into the next adoption would therefore be as follows: century. State and local government have successfully combined to support California’s We can no longer January 21 – Last day to submit bill requests progress throughout the last century. They to the Legislative Counsel. have done so because they have recognized afford for State and February 25 – Last day for bills to be intro- that it is not government that has made local government to duced California great, it is the people, the industries, April 28 – Last day for policy committees and the cultural and social institutions. The view themselves as (including Constitutional Amendments Golden State will face challenges in the 21st enemies. committees) to hear and report to fiscal Century such as it has never before encoun- committees fiscal bills introduced in their tered. California governance must be houses. equipped to rise to the occasion. State and May 12 – Last day for policy committees local elected officials must accept the respon- (including Constitutional Amendments sibility and assume the leadership to see that committees) to hear and report non-fiscal this happens. Enacting the recommendations bills introduced in their houses to the of the California Commission on Local floor. Governance for the 21st Century will help May 26 – Last day for fiscal committees to them in that effort. hear and report to the floor bills introduced in their houses. June 2 – Last day for bills to be passed out of house of origin. June 29 – Last day for a legislative measure to qualify for the general election (November 7th) ballot. November 7– General election. Growth Within Bounds: California Governance in the 21st Century 135

Photograph and Graphic Reproduction Credits

Figure 2-1: Permission granted by Kaweah Delta Health Care District; Visalia, California; Photography by Dave Thurber

Figure 3-1: Permission granted by Diversity Alliance for a Sustainable America

Figure 4-2: Permission granted by Flying Leatherneck Aviation Museum, MCAS Miramar

Figure 4-3: Permission granted by the Santa Clara County Planning Office

Figure 5-6: Permission granted by California Department of Parks and Recreation

Figure 5-7: Permission granted by Turlock Irrigation District

Figure 5-8: Permission granted by California Department of Water Resources

Figure 5-9: Permission granted by California Department of Water Resources

Figure 6-2: Permission granted by Bay Area Greenbelt Alliance

Figure 6-5: Permission granted by American Farmland Trust

Figure 6-6: Permission granted by American Farmland Trust

Figure 7-3: Permission granted by Great Valley Center, Dennis Hinrichs of San Rafael, California (architect)

Figure 8-3: Permission granted by City of San Diego

Figure 8-4: Reproduced from City of Santa Monica website, www.ci.santa-monica.ca.us

Figure 8-5: Permission granted by County of Los Angeles, Chief Administrative Office

Figure 8-6: Boris Yaro Photographer, Permission granted by The Los Angeles Times 136 Growth Within Bounds: California Governance in the 21st Century

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Chapter 1 Chapter 2

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Commissioner Biographies Growth Within Bounds: Planning California Governance for the 21st Century 141

APPENDIX A Growth Within Commission on Local Governance for the 21st Century Bounds COMMISSIONER BIOGRAPHIES

Commission Chair: Commission Members:

Susan Golding of San Diego, has been mayor of the City of Jacqueline “Jacki” Bacharach of Rancho Palos Verdes, San Diego since 1992. She was named one of the nation’s 25 “most has owned and operated her own consulting firm of Jacki dynamic mayors” by Newsweek Magazine, which described her as Bacharach and Associates since 1993. She has also served as Mayor a progressive mayor who is “resurrecting urban America.” and council member for the City of Rancho Palos Verdes and on Mayor Golding served as a member and chaired Governor Pete the Los Angeles County Transportation Commission. Mrs. Wilson’s Military Base Reuse Task Force from 1993 to 1994. Prior Bacharach is currently the Coordinator for the South Bay Cities to running for Mayor, Golding served for eight years on the San Council of Governments and the Administrator for the Southern Diego County Board of Supervisors. She also served as Deputy Sec- California Intercity Rail Group. She is the founding chair of the retary of the Business, Transportation and Housing Agency for the Southern California Rideshare program and serves as a member State of California under Governor George Deukmejian and as a of the Senate Advisory Commission on Cost Control in State Gov- member of the San Diego City Council. Before entering public ser- ernment. vice, she was a community newspaper publisher and college in- Previously, Bacharach was Commissioner for the National structor. Commission on Intermodal Transportation, Chair of the Southern Mayor Golding earned a bachelor’s degree in government and California Regional Rail Authority, a member of the Alameda Cor- international relations from Carleton College, a master’s degree ridor Transportation Authority, a member of the Cal Trans Advi- from Columbia University and taught as a Ph.D. fellow at Emory sory Committee on California High-Speed Rail, chair of the League University. She was awarded an honorary doctor of laws degree of California Cities Transportation and Public Works Committee, from the California Western School of Law. Mayor Golding was President of the South Bay Cities Association, and President of the appointed to the Commission by Governor Pete Wilson. League of Women Voters for the Palos Verdes Peninsula. Bacharach earned a bachelor’s degree in political science from Vice-Chair: the University of California, Los Angeles in 1966. Bacharach was appointed to the Commission by the Senate Rules Committee. Ruben Barrales of Redwood City, is president of Joint Ven- ture Silicon Valley, a position he has held since 1998. Prior to that, Marian Bergeson of Newport Beach, is a member of the he served as San Mateo County Supervisor since 1992. He was also State Board of Education, having been appointed by Governor Pete the Republican nominee for California State Controller in 1998. Wilson in 1998 and confirmed by the Senate in 1999. She served Barrales was recognized for his leadership in forming a unique as Secretary of Child Development and Education for Governor Pete coalition for local jurisdiction that brought about an 80% reduc- Wilson from 1996-1999. tion in violent crime in East Palo Alto, which in 1992 had been Previously, she served on the Orange County Board of Super- named the Murder Capitol of the United States. He has also served visors from 1994 to 1996, and was a state Senator from 1984 to as a leader in developing the Garfield Charter School in the pre- 1994 where she chaired the Senate Local Government Committee. dominantly Latino neighborhood of East Redwood City. Barrales She also served as a state Assemblywoman from 1978 to 1984 and has served as the County’s representative on the Local Agency For- on the Orange County Transportation Authority as well as the Or- mation Commission and the Bay Conservation and Development ange County Fire Authority. Bergeson began her career in public Commission. He is a member of the board of directors of the Red- service as an elementary school teacher in Santa Monica in the wood City Chamber of Commerce, and in 1996 was named “One of 1950s. She was elected to the Newport Mesa Unified School Board the 100 Most Influential Hispanics in the United States.” in 1965 and was elected president of the California School Boards He earned a joint bachelor’s degree in political science and Association in 1975. administrative studies from the University of California, Riverside Bergeson earned a bachelor’s degree in education from in 1984. Barrales was appointed to the Commission by Governor Brigham Young University in 1949 and was awarded an honorary Pete Wilson. doctor of laws degree from Pepperdine University in 1993. Bergeson was appointed to the Commission by Governor Pete Wilson. 142 Growth Within Bounds: Planning California Governance for the 21st Century Appendix A

Herbert “Bert” Boeckmann, II of Northridge, is the Cluff earned a bachelor’s degree in business administration owner and president of Galpin Motors, Inc., an organization with from the California State University, Los Angeles in 1984. He has which he has been affiliated since 1953. He is currently a member been a certified public accountant since 1986. Cluff was appointed of the Los Angeles Police Commission, and previously served on to the Commission by Governor Pete Wilson. Mayor Richard Riordan’s Select Blue Ribbon Committee on Bud- get and Finance, the Los Angeles County Local Agency Formation Michael G. Colantuono of Los Angeles, is a partner in Commission, and the Municipal Improvement Corporation of Los Richards, Watson & Gershon, a municipal law firm with offices in Angeles. San Francisco, Los Angeles, and Orange County which serves 31 Boeckmann was also recognized by the Horatio Alger Asso- cities, more than 20 redevelopment agencies and many other pub- ciation as one of the 10 most outstanding individuals in the nation lic agencies throughout California. in personifying the principles and values of hard work, honesty, Colantuono is a City Attorney for the Cities of Barstow, and selflessness. He attended the University of Southern Califor- Monrovia and La Habra Heights and serves as General Counsel to nia. He was honored with an honorary juris doctorate from the Big Bear City Community Services District, an independent Pepperdine University in 1987. Boeckmann was appointed to the special district serving the unincorporated areas of the East Big Commission by Governor Pete Wilson. He resigned from the Com- Bear Valley in the San Bernardino Mountains. He is among the mission in August 1999 due to other personal commitments. state’s experts on municipal finance and has played a leading role in the local government response to Propositions 62 and 218. Patricia “Trish” Clarke of Anderson, has been a Shasta Colantuono graduated magna cum laude from Harvard Col- County Supervisor since 1991, currently serving her third term. lege in 1983 with a degree in government and received his law de- She served as Chair of the Board in 1998 and 1991. She is the past gree from the Boalt Hall School of Law of the University of Califor- chair and current board member of the Executive Board of the nia in 1988. Colantuono was appointed to the Commission by the California Association of Local Area Formation Commissions Assembly Rules Committee. (CALAFCo) and is the current chair of Shasta County LAFCo. From 1985 to 1990, she was a planning commissioner, city Robert Francis Hunt of Los Angeles, is the General Coun- council member, and served as mayor of the City of Anderson for sel with the Service Employees International Union (SEIU), Local one year. She also served as the chair of the Anderson Fire Protec- 347. He served as a business representative and organizer for Lo- tion District. Clarke is a member of many civic and non-profit or- cal 347 from 1978-1992. ganizations, including California Women in Timber, Shasta County Previously, he was an organizer for the Citizen’s Action League Cattlewomen, Soroptimist International, and the Anderson from 1976-1978. Hunt has been a member of the California State Women’s Improvement Club. Bar Association since 1991, and is a member of both the Los Ange- Clarke is also a current member and past president of the les County Bar Association and the AFL-CIO Lawyers Coordinat- Anderson Chamber of Commerce and serves on the Shasta Alli- ing Committee. ance for Resources & Environment (SHARE) Steering Committee. Hunt earned his bachelor’s degree in political science from Clarke was appointed to the Commission by Governor Pete Wil- Rutgers University in 1974, attended graduate school at Duke Uni- son. versity from 1974 to 1975, and earned a Juris Doctorate from Loyola Law School in 1991. Hunt was appointed to the Commission by the Cody Cluff of Covina, is president of the Entertainment In- Senate Rules Committee. dustry Development Corporation, a self-sustaining, public-private partnership between the City and County of Los Angeles, four contract cities, and the entertainment industry. Nicholas C. Petris of Oakland, is a retired legislator and a Cluff served as Governor Pete Wilson’s appointee on the South retired attorney. He was a self-employed attorney from 1950 to 1993. Coast Air Quality Management District Board. He also serves as He served in the State Assembly from 1959 to 1966 and the State Mayor Richard Riordan’s liaison to the entertainment industry and Senate 1967-1996. Petris was a member of the Alameda County director of business retention for the Economic Development Cor- and California State Bar Associations from 1950 to 1998. He is also poration of Los Angeles County. Cluff currently serves on the boards a member of the Hellenic American Professional Association. of the San Gabriel Valley Commerce and Cities Consortium, Holly- Petris earned a bachelor’s degree from the University of Cali- wood Chamber of Commerce, Southern California Council on En- fornia, Berkeley in 1943 and an LLB from Stanford University in vironment and Development, Los Angeles Sports and Entertain- 1949. Petris was appointed to the Commission by the Senate Rules ment Commission, Boy Scouts of America and University of Committee. Southern California’s Entertainment Technology Center. Commissioner Biographies Growth Within Bounds: Planning California Governance for the 21st Century 143

C. Timothy Raney of Citrus Heights, currently serves as Ross earned a bachelor’s degree in history from Stanford Uni- Mayor for the City of Citrus Heights, incorporated in 1997. He is versity in 1970 and a Juris Doctorate from the University of Santa also the owner of Raney Planning & Management (RP&M), a con- Clara in 1974. Ross was appointed to the Commission by the As- sulting firm he founded in 1999. sembly Rules Committee. As a councilmember, Raney has been actively involved in the formation of the new city government and in the revenue neutral- John J. Schatz of Laguna Niguel, has been General Man- ity negotiations with the County of Sacramento. Previously, he ager/General Counsel of the Santa Margarita Water District since served as a planner for the City of Sacramento and has worked for 1994. He was General Manager for the Jurupa Community Services a local development company. Raney is a member of the Citrus District between 1984 and 1994. Schatz has been a member of the Heights Chamber of Commerce and the American Institute of Cer- State Bar since 1989. tified Planners. He has served on the Local Agency Formation Commission of Raney earned a bachelor’s degree in agricultural and mana- Orange County-Special District Advisory Committee since 1996. gerial economics from the University of California, Davis in 1988. He is a member of the Board of Directors for both the San Juan Raney was appointed to the Commission by Governor Pete Wil- Basin Authority and the South East Regional Reclamation Author- son. ity. He has been a member of the Association of California Water Agencies since 1985. Carolyn Ratto of Turlock, has been a Turlock City council- Schatz earned a bachelor’s degree in business administration woman since 1990 and Mayor Pro Tem since 1996. She serves as from the University of Redlands and a Juris Doctorate from West- Immediate Past President of the League of California Cities. Dur- ern State University College of Law in 1987. Schatz was appointed ing her tenure with the League of California Cities, she has served to the Commission by the Assembly Rules Committee. on and chaired various committees dealing with legislation, revenue and taxation, and strategic planning. Larry Zarian of Glendale, served as a Glendale city coun- Additionally, she serves on the National League of Cities Ad- cilman from 1983 to 1999. Since 1984, Zarian has hosted a radio visory Council and chairs the California City, County, and School talk show in Los Angeles. He also serves as a member and former Board Partnership. She recently received an appointment from chairman of the Metropolitan Transportation Authority since 1995. Delaine Eastin to the Carl D. Perkins Vocational and Technical Edu- Prior to that, Zarian served as Mayor of Glendale for four one- cation State Plan Field Review Committee. She is a former elemen- year terms. He has served as Governor Pete Wilson’s appointee to tary school teacher and currently serves as an office manager for the California Water Commission since 1997, and served on the her husband’s dental practice. Los Angeles Regional Water Quality Control Board from 1987 to Ratto earned a bachelor’s degree in english from Holy Names 1997. He was appointed by President Ronald Reagan to and served College in Oakland in 1972. Ratto was appointed to the Commis- as vice-chairman of the National Highway Safety Commission. sion by Governor Pete Wilson. Zarian has also served as president of the Public Service Commis- sion, and is a former member and vice president of the California William D. Ross of Palo Alto, has been President of the Law Junior Chamber of Commerce. Has been appointed to several Offices of William D. Ross since 1996. He formerly shared the role boards and commissions by Governor’s Reagan, Deukmejian, and of President and attorney at Ross & Scott, from 1984-1995. Before Wilson. Zarian also serves on the Governing Board of the Glen- that, he worked as an attorney at the Law Offices of Rogers & Wells. dale Adventist Medical Center. Ross also chaired the Legislative Drafting Sub Committee for the Zarian is a former chairman of the Glendale Housing Author- Commission. ity, Glendale Development Agency, and Los Angeles Economic De- He was a Deputy for the Office of the County Counsel in Los velopment Authority. He is also a former member of the Glendale Angeles from 1976-1981. Ross was a member of the City of Pasa- Coordinating Council, the Boy Scouts of America, the Glendale dena Planning Commission from 1981-1989, serving as Chairman Chamber of Commerce and the Glendale Kiwanis. Zarian was ap- from 1986-1988. He has served on advisory committees to the Sen- pointed to the Commission by Governor Pete Wilson. ate Local Government Committee on revisions to the Subdivision Map Act (1986) and the Fire Protection District Law 1987. He has been a member of several local government and land use sections of the Los Angeles County and American Bar Association, while consistently representing local government (cities, counties, and special districts) and real estate development entitlements on matters of governmental organization and land use.

Meeting Locations and Presenters Growth Within Bounds: Planning California Governance for the 21st Century 145

APPENDIX B Growth Within Public Hearings of the Commission on Bounds Local Governance for the 21st Century

(Presenters listed in order of Wayne Dernetz Autumn Arias Dr. Alvin D. Sokolow, PhD. appearance at each meeting) City Attorney Executive Officer Public Policy Specialist City of Vista Santa Clara County LAFCO U.C. Davis Cooperative Extension SACRAMENTO Martin Moser Dr. Jeffrey I. Chapman, PhD. August 12, 1998 Kent Edens President USC Public Affairs Institute Deputy Director of Planning The Honorable Robert Hertzberg La Jolla Town Council City of San Jose James Connor Member Dan Wilkins Executive Director California State Assembly Martha Davis Senior Director California Governance Consensus Director Mike Gotch Port of San Diego Project Californians and the Land Executive Director Harry Ehrlich Doug Latimer California Association of LAFCOs Dr. Stephen Levy, PhD. President County Administrative Officer Director Don Benninghoven California Special Districts County of Shasta Center for the Continuing Study Executive Director Association of the California Economy Michael Warren League of California Cities Robert Reeb City Manager Rusty Selix DeAnn Baker Legislative Director City of Redding Executive Director Legislative Representative Association of California Water California Association of Councils Patricia Leary California State Association of Agencies of Governments Legislative Representative Counties Maureen Stapleton California State Association of Sharon Huntsman The Honorable Pete Wilson General Manager Counties Policy Analyst Governor San Diego County Water Joint Venture Silicon Valley Baxter Culver State of California Authority Legislative Representative Guy Kay Gordon Tinker County of Sacramento Chair General Manager SAN DIEGO Napa County LAFCO Dan Carrigg Fallbrook Public Utility District October 21, 1998 Legislative Representative Charles Wilson The Honorable Bud Lewis League of California Cities Dr. Lillian Childs Executive Officer Mayor Chair Napa County LAFCO Dave Roberts City of Carlsbad San Diego LAFCO Rancho Cordova Incorporation Lowell Hurst Committee Michael Ott Member Executive Officer SAN JOSE Santa Cruz County LAFCO Walter Kieser San Diego LAFCO December 2, 1998 Principal Economic and Planning Systems Harry Mathis The Honorable Margie REDDING Councilmember Fernandes Casey Sparks Kaneko January 20, 1999 San Diego City Council and Vice-Mayor Executive Director, Urban LAFCO member City of San Jose The Honorable Irwin Fust Counties Caucus Vice-Chair California State Association of Michael Magee Fred Silva Shasta County Board of Counties Senior Vice President for Public Visiting Policy Analyst Supervisors Policy Public Policy Institute of Jim Stretch Greater San Diego Chamber of California The Honorable Robert Anderson Regional Council of Rural Commerce Mayor Counties Dr. Paul G. Lewis City of Redding Kenneth Sulzer Policy Analyst January 21, 1999 Executive Director Public Policy Institute of Peter Detwiler San Diego Association of California Consultant Ed Murphy Governments Senate Local Government Inventory Systems Analyst The Honorable Blanca Alvarado Committee Sierra Pacific Industries Supervisor Santa Clara County

Appendix B 146 Growth Within Bounds: Planning California Governance for the 21st Century Appendix B

John Benoit David Abel Jeff Brain The Honorable Audie Elizabeth Executive Officer Project Director President Bock Glenn County LAFCO Los Angeles Metropolitan Forum Valley VOTE Member California State Assembly Julie Howard Lee Harrington John Isen Executive Officer President and CEO Chairman, Legal Committee Annamaria Perrella Shasta County LAFCO Los Angeles Economic Valley VOTE Executive Officer Development Corporation Contra Costa County LAFCO The Honorable Irwin Fust Robert Scott County Member John Perez Co-Chair The Honorable Millie Greenberg Shasta County LAFCO Executive Director Valley Industr y and Commerce Vice Mayor United Food & Commercial Association Tow n of Danv ille The Honorable Denny Bungarz Workers Union Supervisor Irene Tovar Anne Henderson County of Glenn David Stein President Legislative Director Manager, Performance Latin American Civic Association League of Women Voters Erik Vink Assessment California Field Director Xavier Flores Eva Bansner Southern California Association American Farmland Trust President League of Women Voters of Governments San Fernando Valley Mexican Larry Forero Marianne O’Malley Alexander Pope American Political Association Farm Advisor Principal Fiscal & Policy Analyst Executive Director County of Shasta Office of the Legislative Analyst California Citizen’s Budget The Honorable Kerry Merwin Commission MONTEREY David Jones Mayor Pro Tem March 25-26, 1999 Legislative Representative Judy Rambeau City of Alturas League of California Cities Communication Coordinator The Honorable Dan Albert Duane Fry City of Santa Monica Mayor Patricia Leary Fire Warden City of Monterey Legislative Representative Mike Dennis Shasta County California State Association of Finance Director The Honorable Edith Johnsen Counties Donald Eliason City of Santa Monica Member Executive Director Monterey County LAFCO Sunne Wright McPeak David Jansen Mosquito and Vector Control and Chair, Monterey County President and CEO Chief Administrative Officer Association of California Board of Supervisors Bay Area Council County of Los Angeles William Hazeleur Roger Anderson Paul Ogden The Honorable Peter Herzog District Manager Public Member City Manager Mayor Shasta Mosquito & Vector Control Santa Cruz County LAFCO City of Auburn City of Lake Forest District Rob Mendiola Anthony Lettieri Jeff Stava Dr. Stephen Morgan, PhD. Executive Officer President Counsel President San Benito County LAFCO American Planning Association California Special Districts’ San Ramon Valley Fire Protection Association The Honorable Anna Caballero David Booher District Mayor Consultant The Honorable Richard Riordan Robert Heald City of Salinas California Council for Mayor Chief Environmental and Economic City of Los Angeles Gary Patton San Ramon Valley Fire Protection Balance Executive Director District Jackie DuPont-Walker LandWatch Monterey County Sandra Spellicsy Commissioner Randy Graham General Counsel Elected Charter Reform Jerry Busch Chief Planning and Conservation Commission President San Ramon Valley Fire Protection League Wetlands Watch District George Kieffer Tim Coyle Chair Jim Conklin Governmental Affairs Appointed Charter Reform Executive Director California Building Industry VAN NUYS Commission Santa Cruz Business Council Association March 5, 1999 Henri Pellisier Amy Courtney Steve Sanders The Honorable Cathie Wright Public Member United Farm Workers Executive Director Member Los Angeles County LAFCO California Futures Network California State Senate Larry Calemine OAKLAND Vicki Moore The Honorable Robert Hertzberg Executive Officer April 30, 1999 Policy Director Member Los Angeles County LAFCO Greenbelt Alliance California State Assembly

Appendix B Meeting Locations and Presenters Growth Within Bounds: Planning California Governance for the 21st Century 147

LOS ANGELES Carol Williams DeAnn Baker Dana Smith May 10, 1999 Executive Officer Legislative Representative Executive Officer Main San Gabriel Basin California State Association of Orange County LAFCO Andrew Mardesich Watermaster Counties Chief Petitioner San Pedro-Wilmington Special William F. Kruse Dan Carrigg SACRAMENTO Reorganization Study Attorney-at-Law Legislative Representative October 27, 1999 Coalition League of California Cities Dr. Robert J. Waste, Ph.D. Kelly M. Martin SANTA BARBARA Director Chief of Staff July 9, 1999 FRESNO Graduate Program in Public Office of Mayor Richard Riordan July 23, 1999 Policy and Administration, William Fulton William Violante California State University, Journalist and City Planner Holly A. King Deputy Mayor Sacramento Agricultural Programs Manager City of Los Angeles Thomas Berg The Great Valley Center S.R. Jones Director The Honorable Zev Yaroslavsky Executive Officer Ventura County Resource Jeff Tweedie Member California Association of Local Management Agency Executive Officer Los Angeles County Board of Agency Formation Fresno County LAFCO Supervisors The Honorable Kathy Long Commissions Member Bob Braitman Jeff Brain Catherine Smith Ventura County Board of Management Consultant President Executive Director Supervisors Bob Braitman and Associates Valley VOTE California Special Districts Tom Umenhofer John R. Gamper Association Rob Glushon Chairman Legislative Advocate Counsel Dan Carrigg Santa Barbara County LAFCO California Farm Bureau Valley VOTE Legislative Advocate Federation Bill Engels League of California Cities Chairman Steve Oliva Patricia Leary ONTARIO San Luis Obispo County LAFCO Legal Counsel Legislative Advocate June 4, 1999 Department of Conservation Paul Hood California State Association of The Honorable John T. Knox Executive Officer Michael Dillon Counties Retired Legislator San Luis Obispo County LAFCO Executive Director The Honorable Barbara Patrick California Association of Murray O. Kane Harry Erlich Supervisor Sanitation Agencies Counsel President Kern County Board of Kane, Ballmer and Berkman California Special Districts Thomas Wehri Supervisors Association Executive Director The Honorable Gwenn Norton- The Honorable Kathleen Connell California Association of Perry Carey Rogers State Controller Resource Conservation Councilmember President State of California Agencies City of Chino Hills Santa Barbara County Special Districts Association Pedro Reyes SAN DIEGO Principal Program Budget Charles Hamilton SANTA ANA November 18-19, 1999 Analyst Local Government Committee September 17, 1999 Department of Finance Member Robert Reeb Mark Baldassare Association of California Water Legislative Director The Honorable Diane Williams Senior Fellow Agencies Association of California Water Chair Public Policy Institute of Agencies San Bernardino County LAFCO William Silverthorn California and Mayor pro Tem, City of Petition Director and Board Nancy Lyons Steve Kroes Rancho Cucamonga Member Deputy Executive Director Vice President HarborVote, Inc. Little Hoover Commission The Honorable John Tavaglione California Taxpayers Association Vice-Chair Ron Wootton Carol Hoffman Riverside County LAFCO and Vice-Chair Vice President, Entitlement and LOS ANGELES Member, Board of Supervisors California Association of Local Community Relations December 2-3, 1999 Agency Formation George Spiliotis The Irvine Company Commissions David Abel Executive Officer The Honorable Randal Bressette Chairman Riverside County LAFCO Ted James Councilmember Speaker’s Commission on State- Planning Director James L. Cox City of Laguna Hills Local Fiscal Reform Kern County City Manager City of Victorville

Appendix B Appendix B Recommendations and Draft Statutory Changes Growth Within Bounds: Planning California Governance for the 21st Century 149

APPENDIX C Growth Within Detailed Recommendations and Bounds Draft Statutory Changes

Chapter 3 school district proposing proceedings for the change of organization or reorganization described in the request or statement of intention. RECOMMENDATION 3-1 The Commission recommends that school districts and LAFCOs be 56653. (a) Whenever a local agency or a school district submits a required to mutually notify one another of pending annexations, resolution of application for a change of organization or reorganiza- new formations, or other boundary changes, and that each be af- tion pursuant to this part… forded the opportunity to comment. Notification shall mean transmittal of notice to the members and executive officers of each affected jurisdiction. RECOMMENDATION 3-3 The Commission recommends that county committees on school Draft Language: district reorganization be required to consider, to the extent feasible (as defined in new GC §56038.5), making school district boundary Government Code (Cortese-Knox Act) New Section 56150.5: changes respect city and special district boundaries. Before initiating proceedings to consider any proposed reorganization which may affect school attendance for a district, whether it does Draft Language: so on its own motion or in response to a request, the commission shall provide written notice of the proposed action to the chair and each Propose changes to the Education Code both for local consideration member of the countywide school committee, and each school super- (county committee or school superintendent) of proposed school dis- intendent whose district would be affected by the proposal. The com- trict boundary changes (Education Code Section 35750 et seq.) and mission shall also provide at least a 45-day period in which to receive for State Board of Education consideration of proposed school dis- comments from the countywide school committee or a school super- trict boundary changes (Education Code Section 4200 et seq.). The intendent, before the commission acts to approve or disapprove the State Board of Education may consider handling changes approved proposed reorganization. by a county committee or school superintendent, as applicable, and boundary change disapprovals which are appealed to the Board. Education Code (section not currently identified): Before initiating any reorganization plan which may affect school attendance for a district, the countywide school committee shall pro- RECOMMENDATION 3-4 vide written notice of the proposed action to the local agency forma- The Commission recommends that procedures similar to those for tion commission for the affected area and shall provide at least a 45- LAFCO proceedings (i.e. notice, public hearing, opportunity for pub- day comment period in which to receive comments from the com- lic comment, and written statement of determinations as in GC mission, before the committee acts to approve or to disapprove the §56851 and §56852) be required for local county committee review proposed plan. of a proposed school district reorganization under the Education Code.

RECOMMENDATION 3-2 Draft Language: The Commission recommends that cities, counties, and LAFCOs be permitted to propose changes in school district boundaries to the Statutory language is not currently available. Drafting of specific pro- county superintendent and/or county committee on school district visions will comprise a follow-up action of the Commission. reorganization, in a manner similar to the existing petition process in the Education Code, and that similar authority be accorded to school districts with regard to local government boundaries. RECOMMENDATION 3-5 The Commission recommends that all existing general legislative Draft Language: intent provisions (promoting orderly development, discouraging urban sprawl, preservation of open space and prime agricultural 56059. “Proposal” means a request or statement of intention made by lands, efficient extension of government services) be consolidated petition or by resolution of application of a legislative body or of a in GC §56001 and additional legislative intent provisions relating 150 Growth Within Bounds: Planning California Governance for the 21st Century Appendix C

specifically to LAFCO be incorporated into §56301 and a new, cor- bly provide the needed service or services in a more efficient and ac- responding section on LAFCO determinations. countable manner. If a new single-purpose agency is deemed necessary, the commission shall consider reorganization with other single- Draft Language: purpose agencies that provide related services.

56001. The Legislature finds and declares that it is the policy of the 56842.7 (NEW SECTION) state to encourage orderly growth and development which are essen- If a proposal includes the formation of a new government, the com- tial to the social, fiscal, and economic well-being of the state. The Leg- mission shall determine whether existing agencies can feasibly pro- islature recognizes that the logical formation and determination of vide the needed service or services in a more efficient and account- local agency boundaries is an important factor in promoting orderly able manner. If a new single-purpose agency is deemed necessary, development and in balancing such development with sometimes the commission shall consider reorganization with other single-pur- competing state interests of discouraging urban sprawl, preserving pose agencies that provide related services. open space and prime agricultural lands, and the efficient extension of government services. The Legislature further finds and declares that this policy should be effected by the logical formation and modi- RECOMMENDATION 3-6 fication of the boundaries of local agencies, with a preference granted The Commission recommends that, when considering any bound- to accommodating additional growth within, or through the expan- ary change, LAFCO be required to consider the ability of the new or sion of, the boundaries of those local agencies which can best accom- expanding entity to deliver the services which are the subject of the modate and provide necessary governmental services in the most com- application and the adequacy of available revenues for funding such pact form. services. The Legislature recognizes that urban population densities and in- tensive residential, commercial, and industrial development necessi- Draft Language: tate a broad spectrum and high level of community services and controls. The Legislature also recognizes that when areas become urban- 56841. Factors to be considered: ized to the extent that they need the full range of community services, (j) The ability of the newly formed or receiving entity to provide the priorities are required to be established regarding the type and levels services which are the subject of the application to the area, including of services that the residents of an urban community need and de- the sufficiency of revenues for such services following the proposed sire; that community service priorities be established by weighing the boundary change. total community service needs against the total financial resources available for securing community services; and that those community service priorities are required to reflect local circumstances, con- RECOMMENDATION 3-7 ditions, and limited financial resources. The Legislature finds and The Commission recommends that LAFCOs be required to adopt declares that a single multi-purpose governmental agency rather than and maintain written policies, procedures, and guidelines. several limited purpose agencies, is in many cases better able to assess and be accountable for a wide range of community service needs Draft Language: and financial resources and, therefore, is may be the best mechanism for establishing community service priorities, especially in urban ar- 56375. The commission shall have all of the following powers and du- eas. Notwithstanding, the Legislature recognizes the critical role of ties subject to any limitations upon its jurisdiction set forth in this part: many limited purpose agencies, especially in rural communities. The (e) To review and approve or disapprove with or without amendment, Legislature also finds that, whether governmental services are pro- wholly, partially, or conditionally, proposals for changes of organiza- posed to be provided by a single purpose agency, several agencies, or tion or reorganization, based upon consistent with written policies, a multi-purpose agency, responsibility should be given to the agency procedures, and guidelines adopted by the commission. If, not later or agencies that can best provide government services. than July 1, 2001, a commission has not adopted written policies and procedures, any actions taken by that commission may be voidable. 56301. Among the purposes of a commission are the discouragement of discouraging urban sprawl, preserving open space and prime agricultural lands, efficiently providing government services, and the en- RECOMMENDATION 3-8 couragement of encouraging the orderly formation and development The Commission recommends that the LAFCO intent language of of local agencies based upon local conditions and circumstances. One §56300 include a provision that LAFCO policies and procedures be of the objects of the commission is to make studies and to obtain and in writing. furnish information which will contribute to the logical and reasonable development of local agencies in each county and to shape the Draft Language: development of local agencies so as to advantageously provide for the present and future needs of each county and its communities. When 56300. It is the intent of the Legislature that each commission shall the formation of a new government entity is proposed, a commission establish written policies and procedures and exercise its powers pur- shall make a determination as to whether existing agencies can feasi- suant to this part in a manner consistent with those policies and proce- Recommendations and Draft Statutory Changes Growth Within Bounds: Planning California Governance for the 21st Century 151

dures and that encourages and provides planned, well-ordered, effi- Proceedings) will require complete revision. Some specific provisions cient urban development patterns with appropriate consideration of that must be revised are the following: preserving open-space lands within those patterns. If, not later than July 1, 2001, a commission has not adopted written policies and proce- 57002. Within 35 days of adoption of a commission resolution mak- dures, any actions taken by that commission may be voidable. ing a decision, the conducting authority commission will provide notice and hold a public hearing within the affected jurisdiction(s), unless a hearing is waived by resolution of the commission. RECOMMENDATION 3-9 The Commission recommends that the written guidelines, which 57052. The conducting authority commission shall receive and de- must be adopted by every LAFCO, should include specific criteria termine value of written protests and proceed according to law. for all proposals before LAFCO, including examples of the forms required in order to protest LAFCO proceedings and hearings. 57075-57081. The conducting authority commission shall, in accordance with law, order a change of organization or a reorganization, Draft Language: order a change subject to an election, terminate proceedings pursuant to a majority protest, or terminate proceedings at the request of Add a new paragraph to Section 56300. the affected jurisdiction (if authorized by law). The written policies and procedures adopted by the commission shall include forms to be used for various submittals to the commission 57082. A conducting authority commission resolution ordering a including at a minimum a form for any protests to be filed with the change of organization or a reorganization shall be prepared as pre- commission concerning any proposed organization change. scribed, with input from the affected jurisdiction.

NEW SECTION. If warranted, a commission may make a determina- RECOMMENDATION 3-10 tion that an election is required, and if it does so, it shall refer the The Commission recommends that a comprehensive reorganization matter to the governing body for the affected jurisdiction, which in and re-drafting of the Cortese-Knox Act be enacted. As part of the turn shall refer the matter to the appropriate local election official, re-drafting, all obsolete provisions in the Cortese-Knox Act should who shall call and conduct an election, as prescribed. be identified and repealed. 57100-57104. REVISE LANGUAGE TO REFLECT THE COMMISSION Draft Concept: RATHER THAN THE CONDUCTING AUTHORITY.

An initial outline of such a reorganization is included as Appendix D 57175-57179. The conducting authority commission shall adopt a of this report. The outline and specific language will be further devel- resolution, as appropriate, regarding the results of the election. oped with the cooperation of the California Association of Local Agency Formation Commissions, the California State Association of 57200. This provision (resolution sent to executive officer for review Counties, the League of California Cities, the California Special Dis- and verification of conformity with LAFCO approval) would be un- tricts Association, the Association of California Water Agencies, and necessary, as LAFCO would be the “conducting authority.” other interested organizations and individuals. 57201-57204. The certificate of completion and statement of boundary change would be issued, as specified in current law. RECOMMENDATION 3-11 The Commission recommends that LAFCO be assigned the responsibilities of the conducting authority and be authorized to make the RECOMMENDATION 3-12 findings that would require the appropriate local agency to call an The Commission recommends that the LAFCO approval expiration election, if warranted. date refer to completion of the entire annexation process instead of just the conducting authority proceeding and, where a final map is Draft Language: required as an annexation condition, the approval life be the same as that of the tentative tract map. In addition to language cited below, numerous other sections must be amended and the language must be revised as necessary to account Draft Language: for the conduct of elections by entities other than LAFCO. The concept approved is for LAFCO to assume all current responsibilities of 57001. If the conducting authority all parties to a change of organiza- the conducting authority, thereby eliminating, in many cases, an en- tion or reorganization does do not complete a proceeding within one tire series of actions and procedures. Some of the major changes in year after the commission approves a proposal for that proceeding, responsibilities are described below, with section numbers indicated. the proceeding shall be deemed abandoned unless prior to the expiration of that year the commission authorizes an extension of time for To implement this recommendation, Part 4 (Conducting Authority that completion. Such extension may be for any period deemed rea- 152 Growth Within Bounds: Planning California Governance for the 21st Century Appendix C

sonable to the commission for completion of necessary prerequisite (1) Disapprove the proposed annexation. actions by any party. The inability of the conducting authority any (2) Terminate the proceedings as provided in Section 57075 or 57076. party to complete a proceeding because of the order or decree of a (3) Order the annexation as provided in Section 57075 or 57076. court of competent jurisdiction temporarily enjoining or restraining (4) Order the proposed annexation subject to an election. the proceedings shall not be deemed a failure of completion and the one-year period shall be tolled for the time that order or decree is in effect. RECOMMENDATION 3-14 The Commission recommends that a LAFCO be permitted to establish criteria for filing a request for reconsideration. RECOMMENDATION 3-13 The Commission recommends that the two current exceptions Draft Language: allowing unilateral termination of proceedings by cities (for detachments) and special districts (for annexations) be deleted, 56857. (a) When a commission has adopted a resolution making de- but that great weight be given to any objections by an affected city terminations, any Any person or affected agency may file a written or district. request with the executive officer requesting amendments to or reconsideration of the any resolution adopted by the commission mak- Draft Language: ing determinations. The request shall state the specific modification to the resolution being requested and shall state what new or different 57079. (a) Notwithstanding Sections 57075 and 57078, if the pro- facts which could not have been presented previously, or applicable posed change of organization is a city detachment, the conducting new law, are claimed to warrant the reconsideration. authority, not more than 30 days after the conclusion of the hearing, (b) Notwithstanding Section 56106, the deadlines set by this section may by resolution terminate the detachment proceedings. are mandatory. The person or agency shall file the written request (b) Notwithstanding Sections 57075, 57077, and 57078, if a proposed within 30 days of the adoption of the initial or superseding resolution reorganization includes the detachment of territory from any city, the by the commission making determinations or prior to the adoption conducting authority, not more than 30 days after conclusion of the of a resolution by the conducting authority pursuant to Chapter 4 hearing, shall terminate the proceeding if a resolution or written pro- (commencing with Section 57075), whichever is earlier. If no person test against the reorganization is filed prior to the conclusion of the or agency files a timely request, the commission shall not take any hearing by any city from which any portion of the territory of the city action pursuant to this section. would be detached or removed pursuant to the reorganization. (c) This section shall not apply to a special reorganization. RECOMMENDATION 3-15 The Commission recommends adding a new definition of “feasible,” 57079.5. (a) Notwithstanding Sections 57075 and 57076, iIf the pro- consistent with the definition used in the CEQA Guidelines. This word posed change of organization is a city detachment or district annex- is used in several places in Cortese-Knox, but is currently not de- ation, factors to be considered by the conducting authority commis- fined. The Commission’s intent is that this recommended language sion shall include all of the following: be construed consistent with existing CEQA case law. (1) Whether the proposed annexation will be for the interest of landowners or present or future inhabitants within the district and within Draft Language: the territory proposed to be annexed to the district. (2) The commission’s resolution making determinations. 56038.5. “Feasible” means capable of being accomplished in a suc- (3) Any factors which may be considered by the commission as pro- cessful manner within a reasonable period of time, taking into ac- vided in Section 56841. count economic, legal, social, and technological factors. (4) Any resolution objecting to the action which may be filed by an affected agency. (4) (5) Any other matters which the conducting authority commis- RECOMMENDATION 3-16 sion deems material. The Commission recommends that prejudicial abuse of discretion, (b) The commission must give great weight to any resolution ob- as referenced in §56107, be amended to provide clarification, in light jecting to the action which is filed by a city or a district. The of recent court rulings on this subject, that in any action or proceed- commission’s consideration shall be based only on financial or related ing to attack, review, set aside, void, or annul a determination by a concerns expressed in the protest. Except for findings regarding the public agency on grounds of noncompliance with the Cortese-Knox value of written protests, the conducting authority commission is not Act, the inquiry shall extend only to whether there was a prejudicial required to make any express findings concerning any of the factors abuse of discretion. considered by the conducting authority commission. (b) The conducting authority for a district annexation, not more than Draft Language: 30 days after the conclusion of the hearing, shall adopt a resolution and take one of the following actions: Recommendations and Draft Statutory Changes Growth Within Bounds: Planning California Governance for the 21st Century 153

56107. (a) This division shall be liberally construed to effectuate its counties having special statutory arrangements (Los Angeles, San purposes. No change of organization or reorganization ordered under Diego, Sacramento, and Santa Clara), which should remain un- this division and no resolution adopted by the commission making changed. The procedure should be as follows: 2 selected by the determinations upon a proposal shall be invalidated because of any county, 2 selected by the cities (except in counties having no cities), defect, error, irregularity, or omission in any act, determination, or 2 selected by special districts (if requested), and 1 public member procedure which does not adversely and substantially affect the rights selected by the others. The selection of the public member should of any person, city, county, district, the state, or any agency or subdivi- be subject to the affirmative vote of at least one of the representa- sion of the state. tives selected by each of the three appointing authorities. (b) All determinations made by a commission under, and pursuant to, this division shall be final and conclusive in the absence of fraud or Draft Language: prejudicial abuse of discretion. (c) In any action or proceeding to attack, review, set aside, void or an- 56325. There is hereby continued in existence in each county a local nul a determination by a public agency on grounds of noncompliance agency formation commission. Except as otherwise provided in this with this division, the inquiry shall extend only to whether there was chapter, the commission shall consist of five members selected as fol- a prejudicial abuse of discretion. Prejudicial abuse of discretion is lows: established if the court finds that the agency has not proceeded in a manner required by law or if the any determination or decision of a (f) Two representing the county, appointed by the board of supervi- commission or a legislative body was is not supported by substantial sors from their own membership. The board of supervisors shall ap- evidence in light of the whole record. point a third supervisor who shall be an alternate member of the commission. The alternate member may serve and vote in place of any supervisor on the commission who is absent or who disqualifies him- RECOMMENDATION 3-17 self or herself from participating in a meeting of the commission. If The Commission recommends that a technical change be made to the office of a regular county member becomes vacant, the alternate §56334 to give local flexibility to the effective date of member ap- member may serve and vote in place of the former regular county pointments. The provision should allow that the length of the term member until the appointment and qualification of a regular county of office would not be extended more than once for any individual member to fill the vacancy. member. (g) Two representing selected by the cities in the county, each of whom shall be a city officer mayor or council member, appointed by the city Draft Language: selection committee. The city selection committee shall also designate one alternate member who shall be appointed and serve pursu- 56334. The term of office of each member shall be four years and ant to Section 56335. The alternate shall also be a mayor or council until the appointment and qualification of his or her successor. Upon member. The city selection committee is encouraged to select mem- enlargement of the commission by two members, as provided in Sec- bers to fairly represent the diversity of the cities in the county, with re- tion 56332, the new members first appointed to represent indepen- spect to population and geography. dent special districts shall classify themselves by lot so that the expi- (h) Two presiding officers or members of legislative bodies of indepen- ration date of the term of office of one new member coincides with dent special districts selected by the independent special district selec- the existing member who holds the office represented by the original tion committee pursuant to Section 56332. The independent special two-year term on the commission and of the other new member co- district selection committee shall also designate a presiding officer or incides with the existing member who holds the office represented by member of the legislative body of an independent special district as an the original four-year term on the commission. The body which origi- alternative member who shall be appointed and serve pursuant to Sec- nally appointed a member whose term has expired shall appoint his tion 56332. The independent special district selection committee is or her successor for a full term of four years. Any member may be encouraged to make selections that fairly represent the diversity of the removed at any time and without cause by the body appointing that independent special districts in the county, with respect to population member. The expiration date of the term of office of each member and geography. shall be the first Monday in May in the year in which the term of the (i) One representing the general public appointed by the other four member expires,unless procedures adopted by the commission specify members of the commission. The other four members of the com- an alternate date to apply uniformly to all members; provided, however, mission may also designate one alternate member who shall be ap- that the length of a term of office shall not be extended more than once. pointed and serve pursuant to Section 56331. Selection of the public Any vacancy in the membership of the commission shall be filled for member and alternate public member shall be subject to the affirma- the unexpired term by appointment by the body, which originally ap- tive vote of at least one of the members selected by each of the other pointed the member whose office has become vacant. appointing authorities.

56330. If there is only one city in the county, the commission shall RECOMMENDATION 3-18 consist of five members, selected as follows: The Commission recommends that a uniform LAFCO member se- (a) Two representing the county, appointed by the board of supervi- lection procedure be adopted, to apply in all counties except the four sors from their own membership. The board of supervisors shall ap- 154 Growth Within Bounds: Planning California Governance for the 21st Century Appendix C

point a third supervisor who is an alternate member of the commis- mission. If the executive officer is subject to a conflict of interest on a sion. The alternate member may serve and vote in place of any matter before the commission, the commission shall appoint an alter- supervisor on the commission who is absent or who disqualifies him- nate executive officer. The commission may recover its costs by charg- self or herself from participating in a meeting of the commission. ing fees pursuant to Section 56383. (b) The commission may shall appoint legal counsel to advise it. If If the office of the regular county member becomes vacant, the al- the legal counsel for the commission is subject to a conflict of interest ternate member may serve and vote in place of the former regular on a matter before the commission, the commission shall appoint al- county member until the appointment and qualification of a regular ternate legal counsel to advise it. The commission may recover its county member to fill the vacancy. costs by charging fees pursuant to Section 56383. (b) One representing the city, who is a city officer, appointed by the (c) The commission may appoint such staff as it deems appropriate. legislative body of the city. The legislative body of the city shall also If staff for the commission is subject to a conflict of interest on a mat- designate one alternate member who shall serve and vote in the ab- ter before the commission, the commission shall appoint alternate staff sence or disqualification of the regular appointed city representative. to assist it. The commission may recover its costs by charging fees If the office of the regular city member becomes vacant, the alternate pursuant to Section 56383. city member may serve and vote in place of the former regular city (d) For purposes of this section the term“conflict of interest” shall be member until the appointment and qualification of a regular city defined as it is for the purpose of the Political ReformAct of 1974 and member to fill the vacancy. shall also include matters proscribed by the provisions of Government (c) Two representing the general public appointed by the other three Code section 1090 et seq. members of the commission.

RECOMMENDATION 3-21 RECOMMENDATION 3-19 The Commission recommends revisions to the definition of “Execu- The Commission recommends that a provision be added to the tive Officer” in conformance with subsequent recommendations on Cortese-Knox Act emphasizing that the role of LAFCO commission- LAFCO staff independence. ers is to act in the best interest of the public as a whole and not solely in the interests of their respective appointing authority. Draft Language:

Draft Language: 56038. “Executive officer” means the executive officer appointed by a commission, or if none has been appointed, then the county official 56325.1. While serving on the commission, all members shall exer- acting as the executive officer for the commission in accordance with cise their independent judgment on behalf of the interests of the resi- Section 56384. dents and property owners of the entire county in furthering the purposes of this division. Any member appointed on behalf of local governments shall represent the interests of the public as a whole and not RECOMMENDATION 3-22 solely the interests of the appointing authority. The Commission recommends that proponents of reorganization actions be required to report campaign contributions in the same manner that local initiative proponents are required to report. RECOMMENDATION 3-20 The Commission recommends that LAFCO select its own executive Draft Language: officer and counsel. It may nevertheless opt to use staff provided by the county or another public or private entity. The Commission fur- 56700.1. [NEW] Expenditures for political purposes related to an ther recommends that conflict of interest provisions be specified organization or reorganization proposal which has been submitted to for LAFCO staff. a commission, and contributions in support of or in opposition to such measures, shall be disclosed and reported to the same extent and sub- Draft Language: ject to the same requirements as provided for local initiative measures to be presented to the electorate. Section 56380 of the Government Code is repealed.

Section 56380 is added to the Government Code, to read: RECOMMENDATION 3-23 56380. The commission shall make its own provision for necessary The Commission recommends that disclosure requirements be quarters, equipment, and supplies, as well as personnel. The commis- adopted regarding efforts to lobby LAFCO or influence a LAFCO sion may choose to contract with any local public agency or private decision or decisions, consistent with requirements for State ap- party for personnel and facilities. pointed boards.

56384. (a) The commission may shall appoint an executive officer Draft Language: who shall conduct and perform the day-to-day business of the com- Recommendations and Draft Statutory Changes Growth Within Bounds: Planning California Governance for the 21st Century 155

Add a new paragraph to Section 56300: by mail for a copy. The written policies and procedures adopted by the commission shall (b) After a public hearing, consideration of comments, and adoption include lobbying disclosure and reporting requirements which are of a final budget by the commission pursuant to subdivision (a), the consistent with the provisions of the Political ReformAct of 1974; pro- auditor shall apportion the net operating expenses of a commission vided, however, that nothing herein shall preclude the commission in the following manner: from adopting such additional requirements for disclosure and report- (1) In counties in which there is special district representation on the ing of lobbying as it finds are appropriate for the jurisdiction. commission, the county, cities, and special districts shall each provide a one-third share of the commission’s operational costs. The cities’ share shall be apportioned in proportion to each city’s total opera- RECOMMENDATION 3-24 tional budget, as reported in the most recent edition of the Cities An- The Commission recommends that LAFCO costs be apportioned nual Report published by the Controller, as a percentage of the com- among all the entities selecting members to the commission. bined city operational budgets within a county, or by an alternative method approved by a majority of cities representing the majority of Draft Language: the combined cities’ populations. The special districts’ share shall be apportioned in a similar manner according to each district’s opera- Section 56381 of the Government Code is amended, to read: tional budget, as reported in the most recent edition of the “Financial 56381. On or before the 10th day of June May, the commission shall Transactions Concerning Special Districts” published by the Control- prepare and transmit to the board of supervisors, to the city selection ler, or by an alternative method approved by a majority of the agen- committee established in each county pursuant to Article 11 (com- cies, representing a majority of their combined populations. For the mencing with Section 50270) of Chapter 1 of Part 1of Division 1, to purposes of fulfilling the requirement of this section, a multi-county the independent special district selection committee established pur- special district shall be required to pay its apportionment in its prin- suant to Section 56332, and to all affected local agencies, and to the cipal county. It is the intent of the Legislature that no single district or members and executive officers of each board represented on the se- class or type of district shall bear a disproportionate amount of the lection committees an estimate of the amount of money needed for district share of costs. the purposes prescribed by Section 56380 during the following fiscal (2) In counties in which there is no special district representation on year. The board of supervisors, the city selection committee, and the the commission, the county and its cities shall each provide a one- independent special district selection committee shall provide for the half share of the commission’s operational costs. The cities’ share shall use of the commission during that fiscal year not less than the amount be apportioned in the manner described in paragraph (1). of money equal to any one of the following: (3) Instead of determining apportionment pursuant to paragraph (1) (a) The amount fixed by the commission. or (2), any alternative method of apportionment of the net operating (b) The amount appropriated received by the commission from the expenses of the commission may be used if approved by a majority county, cities, and special districts in the prior fiscal year increased by vote of each of the following: the board of supervisors; a majority of the same percentage as the appropriations limit of the county for that the cities representing a majority of the total population of cities in fiscal year will be increased from the prior fiscal year. the county; and the special districts representing a majority of the (c) The amount determined in subdivision (b) plus any additional total population of special districts in the county. amount the board of supervisors, the cities, and the special districts (c) After apportioning the costs as required in subdivision (b), the deems necessary. auditor shall request payment from the board of supervisors and from The county auditor shall audit and allow or reject all claims for ex- each city and independent special district no later than July 1 of each penditures for county commission charges incurred pursuant to this year for the amount that entity owes and the actual administrative chapter in lieu of, and with the same effect as, allowance or rejection costs incurred by the auditor in apportioning costs and requesting of claims by the board of supervisors. payment from each entity. If the county, a city, or an independent special district does not remit its required payment within 60 days, the Section 56381.5 is added to the Government Code, to read: auditor may collect an equivalent amount from any tax, benefit , as- 56381.5. (a) The commission shall adopt annually, following a no- sessment, or fee revenue owed to the city or district, provided that the ticed public hearing, a proposed budget by May 1 and a final budget revenue stream is not pledged to debt repayment. The auditor shall by June 15. The commission shall transmit its proposed and final bud- provide written notice to the county, city, or district to explain any gets to the board of supervisors, to the city selection committee es- collection action, including the source of revenue taken. Any expenses tablished in each county pursuant to Article 11 (commencing with incurred by the commission or the auditor in collecting late payments Section 50270) of Chapter 1 of Part 1of Division 1, and to the inde- or successfully challenging nonpayment shall be added to the pay- pendent special district selection committee established pursuant to ment owed to the commission. Between the beginning of the fiscal Section 56332. If the independent special district selection commit- year and the time the auditor receives payment from each affected tee conducts its business by mail pursuant to subdivision (d) of Sec- city and district, the board of supervisors shall transmit funds to the tion 56332, the commission shall notify by mail each independent commission sufficient to cover the first two months of the commission’s special district in the county that the proposed or final budget, as the operating expenses as specified by the commission. When the city and case may be, is available. The commission shall mail a copy of the pro- district payments are received by the commission, the county’s por- posed or final budget to any city or special district making a request tion of the commission’s annual operating expenses shall be credited 156 Growth Within Bounds: Planning California Governance for the 21st Century Appendix C

with funds already received from the county. If at the end of the fiscal to ______. The reasons for the proposal are: year the commission has funds in excess of what it needs, the com- (b) After the filing required pursuant to subdivision (a), the petition mission may retain those funds and calculate them into the following may be circulated for signatures. fiscal year’s budget. If during the fiscal year the commission is with- (c) Upon receiving such notice, the executive officer shall notify any out adequate funds to operate, the board of supervisors may loan the affected jurisdictions. commission funds and recover those funds in the commission’s budget for the following fiscal year. RECOMMENDATION 4-3 The Commission recommends that the cost of verifying petition sig- Chapter 4 natures for a citizen-initiated incorporation, special reorganization, or other change of organization be considered a governmental cost RECOMMENDATION 4-1 in the same manner as a local initiative petition covered under the The Commission recommends that uniform requirements be estab- provisions of the Elections Code. lished for petitions to initiate a change in organization or reorganization. Currently, the percentages of voter or landowner signatures Draft Language: required for types of proposed actions varies. It is recommended that the percentage of signatures required for incorporations, de- Amend Government Code Section 56706 and add a new subsection tachments, and disincorporations, be uniformly established at 25%, (d) to Section 56383: that the percentage required for dissolutions be uniformly established at 10%, and that the percentage required for annexations, con- 56706. (a) Within 30 days after the date of receiving a petition, the solidations, and mergers be uniformly established at 5%. When a executive officer shall, if any processing fee established pursuant to proposal includes one or more changes of organization, the higher Section 56383 has been paid, cause the petition to be examined by the petition threshold should apply. Broadly speaking, the higher per- county elections official, in accordance with sections 9113-9115 of the centage would be for actions that increase governmental fragmen- Elections Code and shall prepare a certificate of sufficiency indicat- tation while the lower percentage would be for actions that reduce ing whether the petition is signed by the requisite number of signers. fragmentation. (b) (1) Except as provided in paragraph (2), if the certificate of the executive officer shows the petition to be insufficient, the executive Draft Concept: officer shall immediately give notice by certified mail of the insufficiency to the chief petitioners, if any. That mailed notice shall state in Figure C-1 is a listing of affected section numbers and proposed what amount the petition is insufficient. Within 15 days after the date changes of percentages required for voter/landowner initiated actions. of the notice of insufficiency, a supplemental petition bearing additional signatures may be filed with the executive officer. (2) Notwithstanding paragraph (1), the proponents of the petition RECOMMENDATION 4-2 may, at their option, collect signatures for an additional 15 days im- The Commission recommends that proponents of a change in orga- mediately following the statutory period allowed for collecting signa- nization (e.g., incorporation or annexation) be required to file a tures without waiting for notice of insufficiency. Any proponent choos- notice with LAFCO of their intention to circulate a petition. Under ing to exercise this option may not file a supplemental petition as pro- current law, the first required notice to LAFCO is the actual filing of vided in paragraph (1). all petition signatures, which initiates LAFCO’s certification of sig- (c) Within 10 days after the date of filing a supplemental petition, the natures and commencement of procedures. A provision similar to executive officer shall examine the supplemental petition and certify this proposal already exists for large cities in Los Angeles County in writing the results of his or her examination. (§56700.5). (d) A certificate of sufficiency shall be signed by the executive officer and dated. That certificate shall also state the minimum signa- Draft Language: ture requirements for a sufficient petition and show the results of the executive officer’s examination. The executive officer shall mail a copy 56700.3. [NEW] (a) Before circulating any petition for change of or- of the certificate of sufficiency to the chief petitioners, if any. ganization, the proponent shall file with the executive officer a notice of intention which shall include the name and mailing address of the 56383 (d). The signatures on a petition submitted to the commission proponent and a written statement, not to exceed 500 words in length, shall be verified by the election officials for the jurisdiction in which setting forth the reasons for the proposal. The notice shall be signed the petition seeks action and the costs of verification shall be pro- by a representative of the proponent, and shall be in substantially the vided for in the same manner and by the same agencies which bear following form: the costs of verifying signatures for an initiative petition in the same Notice of Intent to Circulate Petition jurisdiction.

Notice is hereby given of the intention to circulate a petition pro- The relevant provision of the Elections Code is as follows: posing 9113. The petition shall be filed by the proponents, or by any person Recommendations and Draft Statutory Changes Growth Within Bounds: Planning California Governance for the 21st Century 157

or persons authorized in writing by the proponents. All sections of number of signatures, prima facie, equals or is in excess of the mini- the petition shall be filed at one time. Any sections of the petition not mum number of signatures required, the county elections official shall so filed shall be void for all purposes. Once filed, no petition section examine the petition in accordance with Section 9114or 9115. If, from shall be amended except by order of a court of competent jurisdic- this examination, the county elections official determines that the tion. When the petition is filed, the county elections official shall de- number of signatures, prima facie, does not equal or exceed the mini- termine the total number of signatures affixed to the petition. If, from mum number of signatures required, no further action shall be taken. this examination, the county elections official determines that the

Fig. C-1 Recommended Voter/Land Owner Petition Requirements to Initiate Organization or Reorganization Proposals

Current Requirement

Gov Code Registered Number of A. V. Proposed Description of Petition Sec No Voters Owners of Land Change

56750 I%ncorporation of a city 2%5 2%5 2e5 No chang

56751 D%isincorporation of a city 2e5 No chang