California Legislature—2015–16 Regular Session

Assembly BillNo. 851


Introduced by Assembly Member Mayes

February 26, 2015


An act to amend Sections 56658, 56885.5, and 57405 of, to add Sections 56653.1, 56770, 56804, 56813, 56814, 56815, and 57426 to, and to repeal Sections 57401, 57402, 57404, 57409, 57410, 57416, 57417, 57423, and 57424 of, the Government Code, and to amend Section 99 of the Revenue and Taxation Code, relating to local government.

LEGISLATIVE COUNSEL’S DIGEST

AB 851, as introduced, Mayes. Local government: organization: disincorporations.

(1)  Existing law, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, provides the authority and procedures for the initiation, conduct, and completion of changes of organization and reorganization of cities and districts. The act requires a local agency or school district that initiates proceedings for a change of local government organization or reorganization, by submitting a resolution of application to a local agency formation commission, to also submit a plan for providing services within the affected territory, as specified.

This bill would, in the case of a disincorporation or reorganization that includes a disincorporation, require the plan for services to include specific provisions, including, among others, an enumeration and description of the services currently provided by the city proposed for disincorporation and an outline of current retirement obligations, as specified.

(2) The act requires a petitioner or legislative body desiring to initiate proceedings to submit an application to the executive officer of the local agency formation commission, and requires the local agency formation commission, with regard to an application that includes an incorporation, to immediately notify all affected local agencies and any applicable state agency, as specified.

This bill would extend that requirement to an application that includes a disincorporation.

(3) Existing law prohibits the commission from approving or conditionally approving a proposal for an incorporation unless the commission finds, among other things, that the proposal is consistent with the intent of the act, the incorporation is consistent with the spheres of influence of affected local agencies, and the proposed city is expected to receive revenues sufficient to provide public services and facilities and a reasonable reserve during the three fiscal years following incorporation.

This bill would additionally prohibit the commission from approving or conditionally approving a proposal that includes a disincorporation unless the commission finds, among other things, that the disincorporation is consistent with the intent of the act, the disincorporation will address necessary changes to spheres of influence of affected agencies, and the service responsibilities of the city proposed for disincorporation have been assigned, as specified.

(4) Existing law requires the executive officer of the commission to prepare a comprehensive fiscal analysis for any proposal that includes an incorporation, as specified.

This bill would additionally require the executive officer to prepare a comprehensive fiscal analysis for any proposal that includes a disincorporation, as specified.

(5) Existing law requires the commission to determine the amount of property tax revenue to be exchanged by the affected local agency for a proposal that includes the incorporation of a city, and sets forth the procedures to be followed in making that determination.

This bill would additionally require the commission to determine the amount of property tax revenue to be exchanged by the affected city and any successor agency or affected local agency for a proposal that includes a disincorporation of a city, and would set forth the procedures to be followed in making that determination.

The bill would additionally require the commission to determine, where the proposal includes the disincorporation of a city with the assignment of property tax revenues to a successor agency, the increase of the appropriations limit for the successor agency or agencies, if the successor agency or agencies are existing entities, or the appropriations limit for a new special district, as specified.

The bill would state the intent of the Legislature that a proposal that includes a disincorporation of a city result in a determination that the debt or contractual obligations and responsibilities of the city being disincorporated be the responsibility of the same territory for repayment. The bill would require, prior to issuance of a certificate for filing for a proposal that includes a disincorporation, specified information relating to the debts and contractual obligations of the city being disincorporated.

(6) Existing law authorizes the commission, in approving a disincorporation of a city, the dissolution of a district, or the reorganization or consolidation of agencies that result in the dissolution of one or more districts or disincorporation of one or more cities, to make the approval conditional upon the agency being dissolved not approving any increase in compensation or benefits for specified officers of the agency, or appropriating, encumbering, expending, or otherwise obligating any revenue of the agency beyond that provided in the current budget at the time the dissolution is approved by the commission, unless it first finds that an emergency exists.

This bill would modify this provision to authorize the commission to make the approval conditional upon a condition prohibiting the district that is being dissolved or the city that is being disincorporated from approving any increase in compensation or benefits for specified officers of the agency, or appropriating, encumbering, expending, or otherwise obligating any revenue of the agency beyond that provided in the current budget at the time the dissolution is approved by the commission, unless it first finds that an emergency exists.

The act also authorizes the commission to require a single question appearing on the ballot upon issues of annexation and reorganization in any election at which the questions of annexation and district reorganization or incorporation and district reorganization are to be considered at the same time.

This bill would additionally apply these provisions to a disincorporation and district reorganization.

(7) Existing law requires every public officer of a city being disincorporated, prior to the effective date of the disincorporation, to turn the public property in his or her possession over to the board of supervisors.

This bill would repeal this provision.

(8) The act requires the commission, after ascertaining that the disincorporation has carried, to determine and certify in a written statement to the board of supervisors the indebtedness of the city, the amount of money in its treasury, and the amount of any tax levy or other obligation due the city that is unpaid or has not been collected.

This bill would repeal this provision.

(9) Existing law requires the board of supervisors to make specified determinations if the commission does not provide the board with a statement of those determinations.

This bill would repeal this provision.

(10)  Existing law requires the tax collector to collect any tax that has been levied by a disincorporated city that remains uncollected when due and pay it into the county treasury.

This bill would provide that the tax collected and paid into the county treasury is on behalf of the designated successor agency or county to wind up affairs of the disincorporated city.

(11) Existing law requires the board of supervisors of a county to cause taxes to be levied and collected from within the territory formerly included within a disincorporated city, if there is not sufficient money in the treasury of a disincorporated city to the credit of the special fund to pay any city indebtedness as it becomes due. Existing law provides that any taxes levied pursuant to this provision are to be assessed, levied, and collected in the same manner and at the same time as other county taxes, and are additional taxes upon the property included within the territory of the disincorporated city.

This bill would repeal these provisions.

(12) Existing law requires the board of supervisors to levy a special tax upon all property within the disincorporated city if the revenues from specified public utilities are not sufficient for the administration, conduct, or improvement of the public utility. Existing law requires all sums collected to be placed in a separate fund in the county treasury for the administration, conduct, and improvement of the public utility for which the tax is levied.

This bill would repeal these provisions.

(13) Existing law requires the board of supervisors to annually, at the time other county taxes are levied and collected, to levy and collect a special tax on the remainder of the territory of a disincorporated city sufficient to pay the balance of the debt, and pay that sum to the city treasurer. Existing law requires the city treasurer to pay the bonded indebtedness as it becomes due with the proceeds of those taxes.

This bill would repeal these provisions.

(14) Existing law provides that on and after the effective date of a disincorporation, the territory of the disincorporated city, all inhabitants within the territory, and all persons formerly entitled to vote by reason of residing within the territory cease to be subject to the jurisdiction of the disincorporated city and have none of the rights or duties of inhabitants or voters of a city.

This bill would additionally provide that as of the effective date of a disincorporation, the general plan of the general plan of the disincorporated city that was in effect immediately prior to the effective date of the disincorporation constitutes the community plan of the county for the territory of the disincorporated city, the zoning ordinances of the disincorporation that were in effect immediately prior to the effective date of the disincorporation constitute the zoning ordinances of the county for that territory, and any conditional use permit or legal nonconforming use that was in place immediately prior to the effective date of the disincorporation remains in force pursuant to the community plan and zoning ordinances. The bill would provide that any use of land that was authorized under the general plan and zoning ordinances immediately prior to the effective date of the disincorporation continues to be authorized, consistent with the requirements of that community plan and those zoning ordinances, for at least 10 years following the effective date of the disincorporation, as specified. The bill would additionally require the board of supervisors of the affected county to, within 90 days of the effective date of the disincorporation, adopt an expedited permit process relating to business, development, and health and safety permits for the territory of the disincorporated city, as specified.

(15) Existing law requires a county auditor to adjust the allocation of property tax revenues for local agencies whose service area or service responsibility may be altered by specified jurisdictional changes.

This bill would include a city disincorporation and dissolved district in those jurisdictional changes. By increasing the duties of the county auditor, this bill would impose a state-mandated local program.

(16) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that, if the Commission on State Mandates determines that the bill contains costs mandated by the state, reimbursement for those costs shall be made pursuant to these statutory provisions.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

P6    1

SECTION 1.  

Section 56653.1 is added to the Government
2Code
, to read:

3

56653.1.  

In the case of a disincorporation or reorganization
4that includes a disincorporation, the plan for services required by
5subdivision (a) of Section 56653 shall include the following:

6(a) An enumeration and description of the services currently
7provided by the city proposed for disincorporation and an
8identification of the entity or entities proposed to assume
9responsibility for the services following completion of
10disincorporation.

11(b) An enumeration and description of each service proposed
12to be discontinued, the current financing of the service or services,
13and any method of financing proposed by the successor agency or
14agencies.

15(c) A delineation of any existing financing of services currently
16provided to include, but not be limited to, bonds, assessments,
17community facility district governance, general taxes, special taxes,
18other charges, and joint powers authorities or agreements.

19(d) An indication of any current bankruptcy proceeding,
20including, but not limited to, status and exit plan.

21(e) An indication of any current order by any agency,
22department, office, or other division of the state, including but not
23limited to, a cease and desist order or water prohibition order.

24(f) An outline of current retirement obligations, actuarially
25determined unfunded liability, and any documentation related to
26termination of public retirement contract provisions.

27(g) A written acknowledgment from each affected local agency
28proposed to assume services from the city proposed for
29disincorporation.

30(h) Any other information that the executive officer may deem
31necessary to fully consider the disincorporation proposal.

P7    1

SEC. 2.  

Section 56658 of the Government Code is amended
2to read:

3

56658.  

(a) Any petitioner or legislative body desiring to initiate
4proceedings shall submit an application to the executive officer of
5the principal county.

6(b) (1) Immediately after receiving an application and before
7issuing a certificate of filing, the executive officer shall give mailed
8notice that the application has been received to each affected
9agency, the county committee on school district organization, and
10each school superintendent whose school district overlies the
11affected territory. The notice shall generally describe the proposal
12and the affected territory. The executive officer shall not be
13required to give notice pursuant to this subdivision if a local agency
14has already given notice pursuant to subdivision (c) of Section
1556654.

16(2) It is the intent of the Legislature thatbegin delete anend deletebegin insert a proposal forend insert
17 incorporationbegin delete proposalend deletebegin insert or disincorporationend insert shall be processed in
18a timely manner. With regard to an application that includes an
19incorporationbegin insert or disincorporationend insert, the executive officer shall
20immediately notify all affected local agencies and any applicable
21state agencies by mail and request the affected agencies to submit
22the required data to the commission within a reasonable timeframe
23established by the executive officer. Each affected agency shall
24respond to the executive officer within 15 days acknowledging
25receipt of the request. Each affected local agency and the officers
26and departments thereof shall submit the required data to the
27executive officer within the timelines established by the executive
28officer. Each affected state agency and the officers and departments
29thereof shall submit the required data to the executive officer within
30the timelines agreed upon by the executive officer and the affected
31state departments.

32(3) If a special district is, or as a result of a proposal will be,
33located in more than one county, the executive officer of the
34principal county shall immediately give the executive officer of
35each other affected county mailed notice that the application has
36been received. The notice shall generally describe the proposal
37and the affected territory.

38(c) Except when a commission is the lead agency pursuant to
39Section 21067 of the Public Resources Code, the executive officer
40shall determine within 30 days of receiving an application whether
P8    1the application is complete and acceptable for filing or whether
2the application is incomplete.

3(d) The executive officer shall not accept an application for
4filing and issue a certificate of filing for at least 20 days after giving
5the mailed notice required by subdivision (b). The executive officer
6shall not be required to comply with this subdivision in the case
7of an application which meets the requirements of Section 56662
8or in the case of an application for which a local agency has already
9given notice pursuant to subdivision (c) of Section 56654.

10(e) If the appropriate fees have been paid, an application shall
11be deemed accepted for filing if no determination has been made
12by the executive officer within the 30-day period. An executive
13officer shall accept for filing, and file, any application submitted
14in the form prescribed by the commission and containing all of
15the information and data required pursuant to Section 56652.

16(f) When an application is accepted for filing, the executive
17officer shall immediately issue a certificate of filing to the
18applicant. A certificate of filing shall be in the form prescribed by
19the executive officer and shall specify the date upon which the
20proposal shall be heard by the commission. From the date of
21issuance of a certificate of filing, or the date upon which an
22application is deemed to have been accepted, whichever is earlier,
23an application shall be deemed filed pursuant to this division.

24(g) If an application is determined not to be complete, the
25executive officer shall immediately transmit that determination to
26the applicant specifying those parts of the application which are
27incomplete and the manner in which they can be made complete.

28(h) Following the issuance of the certificate of filing, the
29executive officer shall proceed to set the proposal for hearing and
30give published notice thereof as provided in this part. The date of
31the hearing shall be not more than 90 days after issuance of the
32certificate of filing or after the application is deemed to have been
33accepted, whichever is earlier. Notwithstanding Section 56106,
34the date for conducting the hearing, as determined pursuant to this
35subdivision, is mandatory.

36

SEC. 3.  

Section 56770 is added to the Government Code, to
37read:

38

56770.  

The commission shall not approve or conditionally
39approve any proposal that includes a disincorporation, unless,
P9    1based on the entire record, the commission makes all of the
2following determinations:

3(a) The proposed disincorporation is consistent with the intent
4of this division, including, but not limited to, the policies of
5Sections 56001, 56300, 56301, and 56377 to provide for a
6sustainable system for the delivery of services.

7(b) The proposal has reviewed the municipal service reviews
8and spheres of influence of the affected local agencies, and the
9disincorporation will address the necessary changes to those
10spheres of influence.

11(c) It has reviewed the comprehensive fiscal analysis prepared
12pursuant to Section 56804.

13(d) It has reviewed the executive officer’s report and
14recommendation prepared pursuant to Section 56665, and the oral
15or written testimony presented at its public hearing.

16(e) The service responsibilities of the city proposed for
17disincorporation have been assigned through terms and conditions
18authorized by Sections 56885.5, 56886, and 57300, and Chapter
195 (commencing with Section 57400) of Part 5.

20

SEC. 4.  

Section 56804 is added to the Government Code, to
21read:

22

56804.  

For any proposal that includes a disincorporation, the
23executive officer shall prepare, or cause to be prepared by contract,
24a comprehensive fiscal analysis. This analysis shall become part
25of the report required pursuant to Section 56665. Data used for the
26analysis shall be from the most recent fiscal year for which data
27is available, preceding the issuances of the certificate of filing.
28When data requested by the executive officer in the notice to
29affected agencies, pursuant to paragraph (2) of subdivision (b) of
30Section 56658, is unavailable, the analysis shall document the
31source and methodology of the data used. The analysis shall review
32and document each of the following:

33(a) The direct and indirect costs incurred by the city proposed
34for disincorporation for providing public services and facilities
35during the three fiscal years immediately preceding the submittal
36of the proposal for disincorporation.

37(b) The ability of the entities proposed to assume the obligations
38of the city being disincorporated and the related costs, including
39all actual direct and indirect costs, in provision of existing services.

P10   1(c) When determining costs, the executive officer shall also
2include all direct and indirect costs of any public services that are
3proposed to be transferred to state agencies for delivery.

4(d) The revenues of the city being disincorporated during the
5three fiscal years immediately preceding the initiation of the
6disincorporation proposal.

7(e) Any other information and analysis needed to make the
8findings required by Section 56770.

9

SEC. 5.  

Section 56813 is added to the Government Code, to
10read:

11

56813.  

(a) If the proposal includes the disincorporation of a
12city, as defined in Section 56034, the commission shall determine
13the amount of property tax revenue to be exchanged by the affected
14city and any successor agency or affected local agency pursuant
15to this section.

16(b) The commission shall notify the county auditor of the
17proposal, the affected local agencies to be extinguished, and the
18services proposed to be transferred to new jurisdictions, and
19identify for the auditor the changes to occur.

20(c) If the proposal would not transfer all of the service
21responsibilities of the disincorporating city to the affected county
22or to a single affected agency, the commission and the county
23 auditor shall do all of the following:

24(1) The county auditor shall determine the proportion that the
25amount of property tax revenue derived by the city being
26disincorporated pursuant to subdivision (b) of Section 93 of the
27Revenue and Taxation Code bears to the total amount of revenue
28from all sources, available for general purposes, received by the
29city being disincorporated in the prior fiscal year and provide their
30response in compliance with paragraph (2) of subdivision (b) of
31Section 56658. For purposes of making this determination and the
32determination required by paragraph (3), “total amount of revenue
33from all sources available for general purposes” means the total
34amount of revenue which the city being disincorporating may use
35on a discretionary basis for any purpose and does not include any
36of the following:

37(A) Revenue that, by statute, is required to be used for a specific
38purpose.

P11   1(B) Revenue from fees, charges, or assessments that are levied
2to specifically offset the cost of particular services and that do not
3exceed the cost reasonably borne in providing these services.

4(C) Revenue received from the federal government that is
5required to be used for a specific purpose.

6(2) The commission shall determine, based on information
7submitted by the city being disincorporated, an amount equal to
8the total net cost to that city during the prior fiscal year of providing
9those services that an affected agency will assume within the area
10subject to the proposal. For purposes of this paragraph, “total net
11cost” means the total direct and indirect costs that were funded by
12general purpose revenues of the city being disincorporated and
13excludes any portion of the total cost that was funded by any
14revenues of that agency that are specified in subparagraphs (A),
15(B), and (C) of paragraph (1).

16(3) For the services to be transferred to each affected local
17agency, the commission shall multiply the amount determined
18pursuant to paragraph (2) by the proportion determined pursuant
19to paragraph (1) to derive the amount of property tax revenue used
20to provide services by the city being disincorporated during the
21prior fiscal year within the area subject to the proposal. The county
22auditor shall adjust the amount so determined by the annual tax
23increment pursuant to the procedures set forth in Chapter 6
24(commencing with Section 95) of Part 0.5 of Division 1 of the
25Revenue and Taxation Code, to the fiscal year in which the affected
26agency receives its next allocation of property taxes.

27(d) If the proposal for disincorporation would transfer all of the
28service responsibilities of the city proposed for disincorporation,
29other than those that are proposed to be discontinued, to a single
30successor agency, the commission shall request the auditor to
31determine the property tax revenue allocated to the city being
32disincorporated by tax rate area, or portion thereof, and transmit
33that information to the commission.

34(e) The executive officer shall notify the auditor of the amount
35determined pursuant to subdivision (c) or (d), as the case may be,
36and, where applicable, the period of time within which and the
37procedure by which the transfer of property tax revenues will be
38effected pursuant to this section, at the time the executive officer
39records a certificate of completion pursuant to Section 57203 for
40any proposal described in subdivision (a), and the auditor shall
P12   1transfer that amount to the affected agency or agencies that will
2assume the services as determined by the commission. Any
3property tax not transferred to an affected agency pursuant to
4subdivision (c) shall be transferred to the affected county.

5(f) For purposes of this section, “prior fiscal year” means the
6most recent fiscal year preceding the issuance of the certificate of
7filing for which data is available on actual direct and indirect costs
8and revenues needed to perform the calculations required by this
9section.

10(g) Any action brought by a city or district to contest any of the
11determinations of the county auditor or the commission with regard
12to the amount of property tax revenue to be exchanged by the
13affected local agencies pursuant to this section shall be commenced
14within three years of the effective date of the disincorporation.

15

SEC. 6.  

Section 56814 is added to the Government Code, to
16read:

17

56814.  

If the proposal includes the disincorporation of a city,
18as defined in Section 56034, with the assignment of property tax
19revenues to a successor agency the commission shall make the
20following determinations, as appropriate:

21(a) The increase of the appropriations limit for the successor
22agency, or agencies, if the successor agency or agencies is an
23existing entity.

24(b) The appropriations limit for a new special district through
25a formation process as defined by Section 56810.

26

SEC. 7.  

Section 56815 is added to the Government Code, to
27read:

28

56815.  

(a) It is the intent of the Legislature that any proposal
29that includes the disincorporation of a city result in a determination
30that the debt or contractual obligations and responsibilities of the
31city being disincorporated shall be the responsibility of that same
32territory for repayment. To ascertain this information, the following
33shall be provided to the commission prior to the issuance of a
34certificate of filing for a disincorporation proposal, pursuant to
35Sections 56651 and 56658:

36(1) The city shall provide a written statement that determines
37and certifies all of the following:

38(A) The indebtedness of the city.

39(B) The amount of money in the city’s treasury.

P13   1(C) The amount of any tax levy or other obligation due the city
2that is unpaid or has not been collected.

3(D) The amount of unfunded pension liability of all classes in
4a public retirement system, and the liability for other
5postemployment benefits.

6(2) The county treasurer shall identify all taxes levied and
7uncollected.

8(3) A written statement of all redevelopment successor agency
9designations and current balances and obligations.

10(b) The commission shall not approve a proposal that includes
11a disincorporation unless it makes the determinations required by
12Section 56770.

13

SEC. 8.  

Section 56885.5 of the Government Code is amended
14to read:

15

56885.5.  

(a) In any commission order giving approval to any
16change of organization or reorganization, the commission may
17make that approval conditional upon any of the following factors:

18(1) Any of the conditions set forth in Section 56886.

19(2) The initiation, conduct, or completion of proceedings for
20another change of organization or a reorganization.

21(3) The approval or disapproval, with or without election, as
22may be provided by this division, of any resolution or ordinance
23ordering that change of organization or reorganization.

24(4) With respect to any commission determination to approve
25the disincorporation of a city, the dissolution of a district, or the
26reorganization or consolidation of agenciesbegin delete whichend deletebegin insert thatend insert results in
27the dissolution of one or more districts or the disincorporation of
28one or more cities, a conditionbegin delete prohibiting an agencyend deletebegin insert that prohibits
29a district that isend insert
being dissolved from taking any of the following
30actions, unless it first finds that an emergency situation exists as
31defined in Section 54956.5begin insert, or if the governing body of the
32successor agency or agencies, as designated by the commission,
33approvesend insert
:

34(A) Approving any increase in compensation or benefits for
35members of the governing board, its officers, or the executive
36officer of the agency.

37(B) Appropriating, encumbering, expending, or otherwise
38obligating, any revenue of the agency beyond that provided in the
39current budget at the time thebegin insert commission approves theend insert dissolution
40begin delete is approved by the commission.end deletebegin insert or disincorporation.end insert

P14   1(b) If the commission so conditions its approval, the commission
2may order that any further action pursuant to this division be
3continued and held in abeyance for the period of time designated
4by the commission, not to exceed six months from the date of that
5conditional approval.

6(c) The commission order may also provide that any election
7called upon any change of organization or reorganization shall be
8called, held, and conducted before, upon the same date as, or after
9the date of any election to be called, held, and conducted upon any
10other change of organization or reorganization.

11(d) The commission order may also provide that in any election
12at which the questions of annexation and district reorganization
13begin delete orend deletebegin insert or,end insert incorporation and district reorganizationbegin insert, or disincorporation
14and district reorganizationend insert
are to be considered at the same time,
15there shall be a single question appearing on the ballot upon the
16issues of annexation and district reorganization or incorporation
17and district reorganization.

18

SEC. 9.  

Section 57401 of the Government Code is repealed.

begin delete
19

57401.  

Prior to the effective date of the disincorporation, every
20public officer of the city shall turn over to the board of supervisors
21the public property in his or her possession.

end delete
22

SEC. 10.  

Section 57402 of the Government Code is repealed.

begin delete
23

57402.  

After ascertaining that disincorporation has carried, the
24commission shall determine and certify in a written statement to
25the board of supervisors the indebtedness of the city, the amount
26of money in its treasury, and the amount of any tax levy or other
27obligation due the city which is unpaid or has not been collected.

end delete
28

SEC. 11.  

Section 57404 of the Government Code is repealed.

begin delete
29

57404.  

If the commission does not provide the board of
30supervisors with the certified statement required by Section 57402,
31the board shall make the determinations provided for in that
32section.

end delete
33

SEC. 12.  

Section 57405 of the Government Code is amended
34to read:

35

57405.  

If a tax has been levied by the disincorporated city and
36remains uncollected, the county tax collector shall collect it when
37due and pay it into the county treasurybegin insert on behalf of the designated
38successor agency or county to wind up the affairs of the
39disincorporated cityend insert
.

40

SEC. 13.  

Section 57409 of the Government Code is repealed.

begin delete
P15   1

57409.  

If there is not sufficient money in the treasury to the
2credit of the special fund to pay any city indebtedness, the board
3of supervisors shall cause to be levied, and there shall be collected
4from the territory formerly included within the city, taxes sufficient
5to pay the indebtedness as it becomes due.

end delete
6

SEC. 14.  

Section 57410 of the Government Code is repealed.

begin delete
7

57410.  

Any taxes levied pursuant to Section 57409 shall be
8assessed, levied, and collected in the same manner and at the same
9time as other county taxes, and are additional taxes upon the
10property included within the territory of the disincorporated city.

end delete
11

SEC. 15.  

Section 57416 of the Government Code is repealed.

begin delete
12

57416.  

If the revenues from any public utility referred to in
13Section 57415 are not sufficient for its administration, conduct, or
14improvement, the board of supervisors shall levy a special tax
15upon all property within the disincorporated city. The special tax
16shall be levied upon the assessed value of the property as shown
17by the equalized assessment roll in effect on the first day of March
18of that year, and collected in the same manner and form of other
19county taxes.

end delete
20

SEC. 16.  

Section 57417 of the Government Code is repealed.

begin delete
21

57417.  

All sums collected shall be placed in a separate fund
22in the county treasury for the administration, conduct, and
23improvement of the public utility for which the tax is levied.

end delete
24

SEC. 17.  

Section 57423 of the Government Code is repealed.

begin delete
25

57423.  

Annually, at the time other county taxes are levied and
26collected, the board of supervisors shall levy and collect a special
27tax on the remainder of the territory sufficient to pay the balance
28of the debt, and pay this sum to the city treasurer.

end delete
29

SEC. 18.  

Section 57424 of the Government Code is repealed.

begin delete
30

57424.  

With the proceeds of those taxes, the city treasurer shall
31pay the bonded indebtedness as it becomes due.

end delete
32

SEC. 19.  

Section 57426 is added to the Government Code, to
33read:

34

57426.  

(a) As of the effective date of the disincorporation, all
35of the following apply:

36(1) The general plan of the disincorporated city that was in effect
37immediately prior to the effective date of the disincorporation shall
38constitute the community plan of the county for the territory of
39the disincorporated city.

P16   1(2) The zoning ordinances of the disincorporated city that were
2in effect immediately prior to the effective date of the
3disincorporation shall constitute the zoning ordinances of the
4county for that territory.

5(3) Any conditional use permit or legal nonconforming use that
6was in place immediately prior to the effective date of the
7disincorporation shall remain in force pursuant to the community
8plan and zoning ordinances.

9(4) Any use of land that was authorized under the general plan
10and zoning ordinances immediately prior to the effective date of
11the disincorporation shall continue to be authorized, consistent
12with the requirements of that community plan and those zoning
13ordinances, for at least 10 years following the effective date of the
14disincorporation, any longer period required by the California
15Constitution or United States Constitution, or any longer period
16to the extent permitted by the general plan and zoning ordinances
17of the county applicable to that territory following that 10-year
18period.

19(b) The board of supervisors of the affected county shall, within
2090 days of the effective date of disincorporation, adopt an expedited
21permit process relating to business, development, and health and
22safety permits for the territory of the disincorporated city that is
23comparable to the permit process that existing in that city
24immediately preceding disincorporation.

25

SEC. 20.  

Section 99 of the Revenue and Taxation Code is
26amended to read:

27

99.  

(a) For the purposes of the computations required by this
28chapter:

29(1) In the case of a jurisdictional change, other than a city
30incorporationbegin insert, city disincorporation,end insert or a formation of a district as
31defined in Section 2215, the auditor shall adjust the allocation of
32property tax revenue determined pursuant to Section 96 or 96.1,
33or the annual tax increment determined pursuant to Section 96.5,
34for local agencies whose service area or service responsibility
35would be altered by the jurisdictional change, as determined
36pursuant to subdivision (b) or (c).

37(2) In the case of a city incorporationbegin insert or disincorporationend insert, the
38auditor shall assign the allocation of property tax revenues
39determined pursuant to Section 56810 of the Government Code
40and the adjustments in tax revenues that may occur pursuant to
P17   1Section 56815 of the Government Code to the newly formed city
2or district and shall make the adjustment as determined by Section
356810 in the allocation of property tax revenue determined pursuant
4to Section 96 or 96.1 for each local agency whose service area or
5service responsibilities would be altered by the incorporation.

6(3) In the case of a formation of a district as defined in Section
72215, the auditor shall assign the allocation of property tax
8revenues determined pursuant to Section 56810 of the Government
9Code to the district and shall make the adjustment as determined
10by Section 56810begin insert, or for the disincorporated city or dissolved
11district as determined by Section 56813,end insert
in the allocation of
12property tax revenue determined pursuant to Section 96 or 96.1
13for each local agency whose service area or service responsibilities
14would be altered by thebegin delete formation.end deletebegin insert change of organization.end insert

15(b) Upon the filing of an application or a resolution pursuant to
16the Cortese-Knox-Hertzberg Local Government Reorganization
17Act of 2000 (Division 3 (commencing with Section 56000) of Title
185 of the Government Code), but prior to the issuance of a certificate
19of filing, the executive officer shall give notice of the filing to the
20assessor and auditor of each county within which the territory
21subject to the jurisdictional change is located. This notice shall
22specify each local agency whose service area or responsibility will
23be altered by the jurisdictional change.

24(1) (A) The county assessor shall provide to the county auditor,
25within 30 days of the notice of filing, a report which identifies the
26assessed valuations for the territory subject to the jurisdictional
27change and the tax rate area or areas in which the territory exists.

28(B) The auditor shall estimate the amount of property tax
29revenue generated within the territory that is the subject of the
30jurisdictional change during the current fiscal year.

31(2) The auditor shall estimate what proportion of the property
32tax revenue determined pursuant to paragraph (1) is attributable
33to each local agency pursuant to Sections 96.1 and 96.5.

34(3) Within 45 days of notice of the filing of an application or
35resolution, the auditor shall notify the governing body of each local
36agency whose service area or service responsibility will be altered
37by the jurisdictional change of the amount of, and allocation factors
38with respect to, property tax revenue estimated pursuant to
39paragraph (2) that is subject to a negotiated exchange.

P18   1(4) Upon receipt of the estimates pursuant to paragraph (3), the
2local agencies shall commence negotiations to determine the
3amount of property tax revenues to be exchanged between and
4among the local agencies. Except as otherwise provided, this
5negotiation period shall not exceed 60 days. If a local agency
6involved in these negotiations notifies the other local agencies, the
7county auditor, and the local agency formation commission in
8writing of its desire to extend the negotiating period, the negotiating
9 period shall be 90 days.

10The exchange may be limited to an exchange of property tax
11revenues from the annual tax increment generated in the area
12subject to the jurisdictional change and attributable to the local
13agencies whose service area or service responsibilities will be
14altered by the proposed jurisdictional change. The final exchange
15resolution shall specify how the annual tax increment shall be
16allocated in future years.

17(5) In the event that a jurisdictional change would affect the
18service area or service responsibility of one or more special
19districts, the board of supervisors of the county or counties in which
20the districts are located shall, on behalf of the district or districts,
21negotiate any exchange of property tax revenues. Prior to entering
22into negotiation on behalf of a district for the exchange of property
23tax revenue, the board shall consult with the affected district. The
24 consultation shall include, at a minimum, notification to each
25member and executive officer of the district board of the pending
26consultation and provision of adequate opportunity to comment
27on the negotiation.

28(6) Notwithstanding any other provision of law, the executive
29officer shall not issue a certificate of filing pursuant to Section
3056658 of the Government Code until the local agencies included
31in the property tax revenue exchange negotiation, within the
32negotiation period, present resolutions adopted by each such county
33and city whereby each county and city agrees to accept the
34exchange of property tax revenues.

35(7) In the event that the commission modifies the proposal or
36its resolution of determination, any local agency whose service
37area or service responsibility would be altered by the proposed
38jurisdictional change may request, and the executive officer shall
39grant, 30 days for the affected agencies, pursuant to paragraph (4),
40to renegotiate an exchange of property tax revenues.
P19   1Notwithstanding the time period specified in paragraph (4), if the
2resolutions required pursuant to paragraph (6) are not presented
3to the executive officer within the 30-day period, all proceedings
4of the jurisdictional change shall automatically be terminated.

5(8) In the case of a jurisdictional change that consists of a city’s
6qualified annexation of unincorporated territory, an exchange of
7property tax revenues between the city and the county shall be
8determined in accordance with subdivision (e) if that exchange of
9revenues is not otherwise determined pursuant to either of the
10following:

11(A) Negotiations completed within the applicable period or
12periods as prescribed by this subdivision.

13(B) A master property tax exchange agreement among those
14local agencies, as described in subdivision (d).

15For purposes of this paragraph, a qualified annexation of
16unincorporated territory means an annexation, as so described, for
17which an application or a resolution was filed on or after January
181, 1998, and on or before January 1, 2015.

19(9) No later than the date on which the certificate of completion
20of the jurisdictional change is recorded with the county recorder,
21the executive officer shall notify the auditor or auditors of the
22exchange of property tax revenues and the auditor or auditors shall
23make the appropriate adjustments as provided in subdivision (a).

24(c) Whenever a jurisdictional change is not required to be
25reviewed and approved by a local agency formation commission,
26the local agencies whose service area or service responsibilities
27 would be altered by the proposed change, shall give notice to the
28State Board of Equalization and the assessor and auditor of each
29county within which the territory subject to the jurisdictional
30change is located. This notice shall specify each local agency
31whose service area or responsibility will be altered by the
32jurisdictional change and request the auditor and assessor to make
33the determinations required pursuant to paragraphs (1) and (2) of
34subdivision (b). Upon notification by the auditor of the amount
35of, and allocation factors with respect to, property tax subject to
36exchange, the local agencies, pursuant to the provisions of
37paragraphs (4) and (6) of subdivision (b), shall determine the
38amount of property tax revenues to be exchanged between and
39among the local agencies. Notwithstanding any other provision of
40law, no such jurisdictional change shall become effective until
P20   1each county and city included in these negotiations agrees, by
2resolution, to accept the negotiated exchange of property tax
3 revenues. The exchange may be limited to an exchange of property
4tax revenue from the annual tax increment generated in the area
5subject to the jurisdictional change and attributable to the local
6agencies whose service area or service responsibilities will be
7altered by the proposed jurisdictional change. The final exchange
8resolution shall specify how the annual tax increment shall be
9allocated in future years. Upon the adoption of the resolutions
10required pursuant to this section, the adopting agencies shall notify
11the auditor who shall make the appropriate adjustments as provided
12in subdivision (a). Adjustments in property tax allocations made
13as the result of a city or library district withdrawing from a county
14free library system pursuant to Section 19116 of the Education
15Code shall be made pursuant to Section 19116 of the Education
16Code, and this subdivision shall not apply.

17(d) With respect to adjustments in the allocation of property
18 taxes pursuant to this section, a county and any local agency or
19agencies within the county may develop and adopt a master
20property tax transfer agreement. The agreement may be revised
21from time to time by the parties subject to the agreement.

22(e) (1) An exchange of property tax revenues that is required
23by paragraph (8) of subdivision (b) to be determined pursuant to
24this subdivision shall be determined in accordance with all of the
25following:

26(A) The city and the county shall mutually select a third-party
27consultant to perform a comprehensive, independent fiscal analysis,
28funded in equal portions by the city and the county, that specifies
29estimates of all tax revenues that will be derived from the annexed
30territory and the costs of city and county services with respect to
31the annexed territory. The analysis shall be completed within a
32period not to exceed 30 days, and shall be based upon the general
33plan or adopted plans and policies of the annexing city and the
34intended uses for the annexed territory. If, upon the completion of
35the analysis period, no exchange of property tax revenues is agreed
36upon by the city and the county, subparagraph (B) shall apply.

37(B) The city and the county shall mutually select a mediator,
38funded in equal portions by those agencies, to perform mediation
39for a period not to exceed 30 days. If, upon the completion of the
P21   1mediation period, no exchange of property tax revenues is agreed
2upon by the city and the county, subparagraph (C) shall apply.

3(C) The city and the county shall mutually select an arbitrator,
4funded in equal portions by those agencies, to conduct an advisory
5arbitration with the city and the county for a period not to exceed
630 days. At the conclusion of this arbitration period, the city and
7the county shall each present to the arbitrator its last and best offer
8with respect to the exchange of property tax revenues. The
9arbitrator shall select one of the offers and recommend that offer
10to the governing bodies of the city and the county. If the governing
11body of the city or the county rejects the recommended offer, it
12shall do so during a public hearing, and shall, at the conclusion of
13that hearing, make written findings of fact as to why the
14recommended offer was not accepted.

15(2) Proceedings under this subdivision shall be concluded no
16more than 150 days after the auditor provides the notification
17pursuant to paragraph (3) of subdivision (b), unless one of the
18periods specified in this subdivision is extended by the mutual
19agreement of the city and the county. Notwithstanding any other
20provision of law, except for those conditions that are necessary to
21implement an exchange of property tax revenues determined
22pursuant to this subdivision, the local agency formation
23commission shall not impose any fiscal conditions upon a city’s
24qualified annexation of unincorporated territory that is subject to
25this subdivision.

26(f) Except as otherwise provided in subdivision (g), for the
27purpose of determining the amount of property tax to be allocated
28in the 1979-80 fiscal year and each fiscal year thereafter for those
29local agencies that were affected by a jurisdictional change which
30was filed with the State Board of Equalization after January 1,
311978, but on or before January 1, 1979. The local agencies shall
32determine by resolution the amount of property tax revenues to be
33exchanged between and among the affected agencies and notify
34the auditor of the determination.

35(g) For the purpose of determining the amount of property tax
36to be allocated in the 1979-80 fiscal year and each fiscal year
37thereafter, for a city incorporation that was filed pursuant to
38Sections 54900 to 54904 after January 1, 1978, but on or before
39January 1, 1979, the amount of property tax revenue considered
40to have been received by the jurisdiction for the 1978-79 fiscal
P22   1year shall be equal to two-thirds of the amount of property tax
2revenue projected in the final local agency formation commission
3staff report pertaining to the incorporation multiplied by the
4proportion that the total amount of property tax revenue received
5by all jurisdictions within the county for the 1978-79 fiscal year
6bears to the total amount of property tax revenue received by all
7jurisdictions within the county for the 1977-78 fiscal year. Except,
8however, in the event that the final commission report did not
9specify the amount of property tax revenue projected for that
10incorporation, the commission shall by October 10 determine
11pursuant to Section 54790.3 of the Government Code the amount
12of property tax to be transferred to the city.

13The provisions of this subdivision shall also apply to the
14allocation of property taxes for the 1980-81 fiscal year and each
15fiscal year thereafter for incorporations approved by the voters in
16June 1979.

17(h) For the purpose of the computations made pursuant to this
18section, in the case of a district formation that was filed pursuant
19to Sections 54900 to 54904, inclusive, of the Government Code
20after January 1, 1978, but before January 1, 1979, the amount of
21property tax to be allocated to the district for the 1979-80 fiscal
22year and each fiscal year thereafter shall be determined pursuant
23to Section 54790.3 of the Government Code.

24(i) For the purposes of the computations required by this chapter,
25in the case of a jurisdictional change, other than a change requiring
26an adjustment by the auditor pursuant to subdivision (a), the auditor
27shall adjust the allocation of property tax revenue determined
28pursuant to Section 96 or 96.1 or its predecessor section, or the
29annual tax increment determined pursuant to Section 96.5 or its
30predecessor section, for each local school district, community
31college district, or county superintendent of schools whose service
32area or service responsibility would be altered by the jurisdictional
33change, as determined as follows:

34(1) The governing body of each district, county superintendent
35of schools, or county whose service areas or service responsibilities
36would be altered by the change shall determine the amount of
37property tax revenues to be exchanged between and among the
38affected jurisdictions. This determination shall be adopted by each
39affected jurisdiction by resolution. For the purpose of negotiation,
40the county auditor shall furnish the parties and the county board
P23   1of education with an estimate of the property tax revenue subject
2to negotiation.

3(2) In the event that the affected jurisdictions are unable to agree,
4within 60 days after the effective date of the jurisdictional change,
5and if all the jurisdictions are wholly within one county, the county
6board of education shall, by resolution, determine the amount of
7property tax revenue to be exchanged. If the jurisdictions are in
8more than one county, the State Board of Education shall, by
9resolution, within 60 days after the effective date of the
10jurisdictional change, determine the amount of property tax to be
11exchanged.

12(3) Upon adoption of any resolution pursuant to this subdivision,
13the adopting jurisdictions or State Board of Education shall notify
14the county auditor who shall make the appropriate adjustments as
15provided in subdivision (a).

16(j) For purposes of subdivision (i), the annexation by a
17community college district of territory within a county not
18previously served by a community college district is an alteration
19of service area. The community college district and the county
20shall negotiate the amount, if any, of property tax revenues to be
21exchanged. In these negotiations, there shall be taken into
22consideration the amount of revenue received from the timber
23yield tax and forest reserve receipts by the community college
24district in the area not previously served. In no event shall the
25property tax revenue to be exchanged exceed the amount of
26property tax revenue collected prior to the annexation for the
27purposes of paying tuition expenses of residents enrolled in the
28community college district, adjusted each year by the percentage
29change in population and the percentage change in the cost of
30living, or per capita personal income, whichever is lower, less the
31amount of revenue received by the community college district in
32the annexed area from the timber yield tax and forest reserve
33receipts.

34(k) At any time after a jurisdictional change is effective, any of
35the local agencies party to the agreement to exchange property tax
36revenue may renegotiate the agreement with respect to the current
37fiscal year or subsequent fiscal years, subject to approval by all
38local agencies affected by the renegotiation.

39

SEC. 21.  

If the Commission on State Mandates determines
40that this act contains costs mandated by the state, reimbursement
P24   1to local agencies and school districts for those costs shall be made
2pursuant to Part 7 (commencing with Section 17500) of Division
34 of Title 2 of the Government Code.



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