Chapter 2 LAFCO and MSRs

AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY 2 . L A FCO A N D M U N I C I PA L SERVICE REVIEWS This report is prepared pursuant to legislation enacted in 2000 that requires LAFCO to conduct a comprehensive review of municipal service delivery and update the spheres of influence (SOIs) of all agencies under LAFCO’s jurisdiction. This chapter provides an overview of LAFCO’s history, powers and responsibilities. It discusses the origins and legal requirements for preparation of the municipal services review (MSR). Finally, the chapter reviews the process for MSR review, MSR approval and SOI updates. LAFCO OVERVIEW After World War II, California experienced dramatic growth in population and economic development. With this boom came a demand for housing, jobs and public services. To accommodate this demand, many new local government agencies were formed, often with little forethought as to the ultimate governance structures in a given region, and existing agencies often competed for expansion areas. The lack of coordination and adequate planning led to a multitude of overlapping, inefficient jurisdictional and service boundaries, and the premature conversion of California’s agricultural and open-space lands. Recognizing this problem, in 1959, Governor Edmund G. Brown, Sr. appointed the Commission on Metropolitan Area Problems. The Commission's charge was to study and make recommendations on the "misuse of land resources" and the growing complexity of local governmental jurisdictions. The Commission's recommendations on local governmental reorganization were introduced in the Legislature in 1963, resulting in the creation of a Local Agency Formation Commission, or "LAFCO," operating in every county. LAFCO was formed by the legislature as a countywide agency to discourage urban sprawl and encourage the orderly formation and development of local government agencies. LAFCO is responsible for coordinating logical and timely changes in local governmental boundaries, including annexations and detachments of territory, incorporations of cities, formations of special districts, and consolidations, mergers and dissolutions of districts, as well as reviewing ways to reorganize, simplify, and streamline governmental structure. The Commission's efforts are focused on ensuring that services are provided efficiently and economically while agricultural and open-space lands are protected. To better inform itself and the community as it seeks to exercise its charge, LAFCO conducts service reviews to evaluate the provision of municipal services within the County. LAFCO regulates, through approval, denial, conditions and modification, boundary changes proposed by public agencies or individuals. It also regulates the extension of public services by cities and special districts outside their jurisdictional boundaries. LAFCO is empowered to initiate updates to the SOIs and proposals involving the dissolution or consolidation of special districts, mergers, establishment of subsidiary districts, and any reorganization including such actions. Otherwise, LAFCO actions must originate as petitions or resolutions from affected voters, landowners, cities or districts. LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 15 AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY Amador LAFCO consists of five regular members: two members from the Amador County Board of Supervisors, two city council members, and one public member who is appointed by the other members of the Commission. There is an alternate in each category. All Commissioners are appointed to four-year terms. Any member appointed on behalf of local government shall represent the interests of the public as a whole and not solely the interest of the appointing authority Government Code Section 56325.1 Figure 2-1: Commission Members, 2014 Appointing Agency Members Alternate Members Two members from the Louis Boitano Brian Oneto Board of Supervisors Theodore Novelli appointed by the Board of Supervisors Two member representing Pat Crew Tim Murphy the cities in the County. Tim Knox Must be city officer and appointed by the City Selection Committee One member from the Jim Vinciguerra Byron Damiani general public appointed by the other four commissioners MUNICIPAL SERVICES REVIEW ORIGINS The MSR requirement was enacted by the Legislature months after the release of two studies recommending that LAFCOs conduct reviews of local agencies. The “Little Hoover Commission” focused on the need for oversight and consolidation of special districts, whereas the “Commission on Local Governance for the 21st Century” focused on the need for regional planning to ensure adequate and efficient local governmental services as the California population continues to grow. Little Hoover Commission In May 2000, the Little Hoover Commission released a report entitled Special Districts: Relics of the Past or Resources for the Future? This report focused on governance and financial challenges among special districts, and the barriers to LAFCO’s pursuit of district consolidation and dissolution. The report raised the concern that “the underlying patchwork of special district governments has become unnecessarily redundant, inefficient and unaccountable.” In particular, the report raised concern about a lack of visibility and accountability among some independent special districts. The report indicated that many special districts hold excessive reserve funds and some receive questionable property tax revenue. The report expressed concern about the lack of financial oversight of the districts. It asserted that financial reporting by special districts is inadequate, that districts are not required to submit financial information to local elected officials, and concluded that district financial LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 16 AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY information is “largely meaningless as a tool to evaluate the effectiveness and efficiency of services provided by districts, or to make comparisons with neighboring districts or services provided through a city or county.”1 The report questioned the accountability and relevance of certain special districts with uncontested elections and without adequate notice of public meetings. In addition to concerns about the accountability and visibility of special districts, the report raised concerns about special districts with outdated boundaries and outdated missions. The report questioned the public benefit provided by healthcare districts that have sold, leased or closed their hospitals, and asserted that LAFCOs consistently fail to examine whether they should be eliminated. The report pointed to service improvements and cost reductions associated with special district consolidations, but asserted that LAFCOs have generally failed to pursue special district reorganizations. The report called on the Legislature to increase the oversight of special districts by mandating that LAFCOs identify service duplications and study reorganization alternatives when service duplications are identified, when a district appears insolvent, when district reserves are excessive, when rate inequities surface, when a district’s mission changes, when a new city incorporates and when service levels are unsatisfactory. To accomplish this, the report recommended that the State strengthen the independence and funding of LAFCOs, require districts to report to their respective LAFCOs, and require LAFCOs to study service duplications. Commission on Local Governance for the 21st Century The Legislature formed the Commission on Local Governance for the 21st Century (“21st Century Commission”) in 1997 to review statutes on the policies, criteria, procedures and precedents for city, county and special district boundary changes. After conducting extensive research and holding 25 days of public hearings throughout the State at which it heard from over 160 organizations and individuals, the 21st Century Commission released its final report, Growth Within Bounds: Planning California Governance for the 21st Century, in January 2000.2 The report examines the way that government is organized and operates, and establishes a vision of how the State will grow by “making better use of the often invisible LAFCOs in each county.” The report points to the expectation that California’s population will double over the first four decades of the 21st Century, and raises concern that our government institutions were designed when our population was much smaller and our society was less complex. The report warns that without a strategy open spaces will be swallowed up, expensive freeway extensions will be needed, job centers will become farther removed from housing, and this will lead to longer commutes, increased pollution and more stressful lives. Growth Within Bounds acknowledges that local governments face unprecedented challenges in their ability to finance service delivery since voters cut property tax revenues in 1978 and the Legislature shifted property tax revenues from local government to schools in 1993. 1 Little Hoover Commission, 2000, page 24. 2 The Commission on Local Governance for the 21st Century ceased to exist on July 1, 2000, pursuant to a statutory sunset provision. LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 17 AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY The report asserts that these financial strains have created governmental entrepreneurism in which agencies compete for sales tax revenue and market share. The 21st Century Commission recommended that effective, efficient and easily understandable government be encouraged. In accomplishing this, the 21st Century Commission recommended consolidation of small, inefficient or overlapping providers, transparency of municipal service delivery to the people, and accountability of municipal service providers. The sheer number of special districts, the report asserts, “has provoked controversy, including several legislative attempts to initiate district consolidations,”3 but cautions LAFCOs that decisions to consolidate districts should focus on the adequacy of services, not on the number of districts. Growth Within Bounds stated that LAFCOs cannot achieve their fundamental purposes without a comprehensive knowledge of the services available within its county, the current efficiency of providing service within various areas of the county, future needs for each service, and expansion capacity of each service provider. Comprehensive knowledge of water and sanitary providers, the report argued, would promote consolidations of water and sanitary districts, reduce water costs and promote a more comprehensive approach to the use of water resources. Further, the report asserted that many LAFCOs lack such knowledge and should be required to conduct such a review to ensure that municipal services are logically extended to meet California’s future growth and development. MSRs would require LAFCOs to look broadly at all agencies within a geographic region that provide a particular municipal service and to examine consolidation or reorganization of service providers. The 21st Century Commission recommended that the review include water, wastewater, and other municipal services that LAFCO judges to be important to future growth. The Commission recommended that the service review be followed by consolidation studies and be performed in conjunction with updates of SOIs. The recommendation was that service reviews be designed to make nine determinations, each of which was incorporated verbatim in the subsequently adopted legislation. The legislature since consolidated the determinations into six, and most recently seven required findings. MUNICIPAL SERVICES REVIEW LEGISLATION The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 requires LAFCO review and update SOIs not less than every five years and to review municipal services before updating SOIs. The requirement for service reviews arises from the identified need for a more coordinated and efficient public service structure to support California’s anticipated growth. The service review provides LAFCO with a tool to study existing and future public service conditions comprehensively and to evaluate organizational options for accommodating growth, preventing urban sprawl, and ensuring that critical services are provided efficiently. Effective January 1, 2008, Government Code §56430 requires LAFCO to conduct a review of municipal services provided in the county by region, sub-region or other designated geographic area, as appropriate, for the service or services to be reviewed, and prepare a written statement of determination with respect to each of the following topics: 3 Commission on Local Governance for the 21st Century, 2000, page 70. LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 18 AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY  Growth and population projections for the affected area;  Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies;  Financial ability of agencies to provide services;  Status of, and opportunities for shared facilities;  Accountability for community service needs, including governmental structure and operational efficiencies; and  Any other matter related to effective or efficient service delivery, as required by commission policy. As of July 1st, 2012, SB 244 signed by the governor on October 7, 2011 requires an additional written statement of determination to be included in a municipal service review regarding:  The Location and Characteristics of Disadvantaged Unincorporated Communities Within or Contiguous to the Agency’s SOI. In addition, for those agencies that provide water wastewater and/or structural fire protection the new law mandates the determination on the present and planned capacity of public facilities, adequacy of public services and infrastructure needs or deficiencies to include needs or deficiencies related to sewers, municipal and industrial water, and structural fire protection in any disadvantaged unincorporated community within or contiguous to the sphere of influence. MUNICIPAL SERVICES REVIEW PROCESS For local agencies, the MSR process involves the following steps:  Outreach: LAFCO outreach and explanation of the project  Data Discovery: provide documents and respond to LAFCO questions  Map Review: research, review and verification of LAFCO draft map of the agency’s boundary and sphere of influence  Profile Review: internal review and comment on LAFCO draft profile of the agency  Public Review Draft MSR: review and comment on LAFCO draft MSR  LAFCO Hearing: attend and provide public comments on MSR MSRs are usually considered exempt from California Environmental Quality Act (CEQA) pursuant to §15262 (feasibility or planning studies) or §15306 (information collection) of the CEQA Guidelines. LAFCO’s actions to adopt MSR determinations are not considered “projects” subject to CEQA. The MSR process does not require LAFCO to initiate changes of organization based on service review findings, only that LAFCO identify potential government structure options. However, LAFCO, other local agencies, and the public may subsequently use the determinations to analyze prospective changes of organization or reorganization or to establish or amend SOIs. Within its legal authorization, LAFCO may act with respect to a recommended change of organization or reorganization on its own initiative (e.g., certain LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 19 AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY types of consolidations), or in response to a proposal (i.e., initiated by resolution or petition by landowners or registered voters). Once LAFCO has adopted the MSR determinations, LAFCO determines and adopts the spheres of influence for each agency. A CEQA determination is made by LAFCO on a case- by-case basis for each sphere of influence action and each change of organization, once the proposed project characteristics are sufficiently identified to assess environmental impacts. SPHERE OF INFLUENCE UPDATES The Commission is charged with developing and updating the Sphere of Influence (SOI) for each city and special district within the county.4 An SOI is a LAFCO-approved plan for the probable physical boundaries and service area of a local agency5. Spheres are planning tools used to provide guidance for individual boundary change proposals and to encourage efficient provision of organized community services and to prevent duplication of service delivery. Territory cannot be annexed by LAFCO to a city or district unless it is within that agency's sphere. The purposes of the SOI include the following: to ensure the efficient provision of services, discourage urban sprawl and premature conversion of agricultural and open space lands, and prevent overlapping jurisdictions and duplication of services. LAFCO cannot directly regulate land use, dictate internal operations or administration of any local agency, or set rates. LAFCO is empowered to enact policies that indirectly affect land use decisions. On a regional level, LAFCO promotes logical and orderly development of communities as it considers and decides individual proposals. LAFCO has a role in reconciling differences between agency plans so that the most efficient urban service arrangements are created for the benefit of current and future area residents and property owners. The Cortese-Knox-Hertzberg (CKH) Act requires to develop and determine the SOI of each local governmental agency within the county and to review and update the SOI every five years. LAFCOs are empowered to adopt, update and amend the SOI. They may do so with or without an application although any interested person may submit an application proposing an SOI amendment. While SOIs are required to be updated every five years, as necessary, this does not necessarily define the planning horizon of the SOI. The term or horizon of the SOI is determined by each LAFCO. LAFCO may recommend government reorganizations to particular agencies in the county, using the SOIs as the basis for those recommendations. In determining the SOI, LAFCO is required to complete an MSR and adopt the six determinations previously discussed. In addition, in adopting or amending a SOI, LAFCO must make the following determinations: 4 The initial statutory mandate, in 1971, imposed no deadline for completing sphere designations. When most LAFCOs failed to act, 1984 legislation required all LAFCOs to establish spheres of influence by 1985. 5 Government Code Section 56076 LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 20 AMADOR LAFCO MUNICIPAL SERVICE REVIEW FOR AMADOR COUNTY  Present and planned land uses in the area, including agricultural and open-space lands;  Present and probable need for public facilities and services in the area;  Present capacity of public facilities and adequacy of public service that the agency provides or is authorized to provide;  Existence of any social or economic communities of interest in the area if the Commission determines these are relevant to the agency; and  Present and probable need for public facilities and services of any disadvantaged unincorporated communities within the existing Sphere of Influence for those agencies that provide water, wastewater and/or structural fire protection. The CKH Act stipulates several procedural requirements in updating SOIs. It requires that special districts file written statements on the class of services provided and that LAFCO clearly establish the location, nature and extent of services provided by special districts. By statute, LAFCO must notify affected agencies 21 days before holding the public hearing to consider the SOI and may not update the SOI until after that hearing. The LAFCO Executive Officer must issue a report including recommendations on the SOI amendments and updates under consideration at least five days before the public hearing. LAFCO & MSRS cÉÄ|vç VÉÇáâÄà|Çz TááÉv|tàxá? __V 21