Amended in Assembly April 13, 2015

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,begin delete 56815,end deletebegin insert 56816,end insert and 57426 to, and to repeal Sections 57401, 57402, 57404, 57409, 57410, 57416,begin delete 57417,end delete 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 amended, 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 forbegin delete disincorporation and an outline of current retirement obligations, as specified.end deletebegin insert disincorporation.end insert

(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 thebegin delete threeend deletebegin insert 3end insert 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 wouldbegin delete require,end deletebegin insert require the city being disincorporated to provide a written statement,end insert prior to issuance of a certificate for filing for a proposal that includes a disincorporation,begin insert that includesend insert specified information relating tobegin delete theend deletebegin insert itsend insert debts and contractualbegin delete obligations of the city being disincorporated.end deletebegin insert obligations.end insert

(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.begin delete 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.end delete

This bill would repealbegin delete these provisionsend deletebegin insert this provisionend insert.

(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 bebegin delete 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.end deletebegin insert authorized for as long a period as may be required by the California Constitution or the United States Constitution.end insert

(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 bebegin delete discontinued,end deletebegin insert discontinued or transferred,end insert the current
13financing of the service or services, and any method of financing
14proposed by the successor agency or agencies.

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 orderbegin insert relating to services
22provided by the city proposed for disincorporationend insert
by any agency,
23department, office, or other division of the state,begin delete includingend delete
24begin insert including,end insert but not limited to, a cease and desist order or water
25prohibition order.

begin delete

26(f) An outline of current retirement obligations, actuarially
27determined unfunded liability, and any documentation related to
28termination of public retirement contract provisions.

P7    1(g)

end delete

2begin insert(f)end insert A writtenbegin delete acknowledgmentend deletebegin insert statementend insert from eachbegin delete affected
3local agency proposed to assume services from the city proposed
4for disincorporation.end delete
begin insert entity identified pursuant to subdivision (a)
5that it has received a copy of the plan for services submitted
6pursuant to this section.end insert

begin delete

7(h)

end delete

8begin insert(g)end insert Any other information that the executive officer may deem
9necessary tobegin delete fully consider the disincorporation proposal. end deletebegin insert evaluate
10the plan for services submitted.end insert

11

SEC. 2.  

Section 56658 of the Government Code is amended
12to read:

13

56658.  

(a) Any petitioner or legislative body desiring to initiate
14proceedings shall submit an application to the executive officer of
15the principal county.

16(b) (1) Immediately after receiving an application and before
17issuing a certificate of filing, the executive officer shall give mailed
18notice that the application has been received to each affected
19agency, the county committee on school district organization, and
20each school superintendent whose school district overlies the
21affected territory. The notice shall generally describe the proposal
22and the affected territory. The executive officer shall not be
23required to give notice pursuant to this subdivision if a local agency
24has already given notice pursuant to subdivision (c) of Section
2556654.

26(2) It is the intent of the Legislature that a proposal for
27incorporation or disincorporation shall be processed in a timely
28manner. With regard to an application that includes an
29incorporation or disincorporation, the executive officer shall
30immediately notify all affected local agencies and any applicable
31state agencies by mail and request the affected agencies to submit
32the required data to the commission within a reasonable timeframe
33established by the executive officer. Each affected agency shall
34respond to the executive officer within 15 days acknowledging
35receipt of the request. Each affected local agency and the officers
36and departments thereof shall submit the required data to the
37executive officer within the timelines established by the executive
38officer. Each affected state agency and the officers and departments
39thereof shall submit the required data to the executive officer within
P8    1the timelines agreed upon by the executive officer and the affected
2state departments.

3(3) If a special district is, or as a result of a proposal will be,
4located in more than one county, the executive officer of the
5principal county shall immediately give the executive officer of
6each other affected county mailed notice that the application has
7been received. The notice shall generally describe the proposal
8and the affected territory.

9(c) Except when a commission is the lead agency pursuant to
10Section 21067 of the Public Resources Code, the executive officer
11shall determine within 30 days of receiving an application whether
12the application is complete and acceptable for filing or whether
13the application is incomplete.

14(d) The executive officer shall not accept an application for
15filing and issue a certificate of filing for at least 20 days after giving
16the mailed notice required by subdivision (b). The executive officer
17shall not be required to comply with this subdivision in the case
18of an application which meets the requirements of Section 56662
19or in the case of an application for which a local agency has already
20given notice pursuant to subdivision (c) of Section 56654.

21(e) If the appropriate fees have been paid, an application shall
22be deemed accepted for filing if no determination has been made
23by the executive officer within the 30-day period. An executive
24officer shall accept for filing, and file, any application submitted
25in the form prescribed by the commission and containing all of
26the information and data required pursuant to Section 56652.

27(f) When an application is accepted for filing, the executive
28officer shall immediately issue a certificate of filing to the
29applicant. A certificate of filing shall be in the form prescribed by
30the executive officer and shall specify the date upon which the
31proposal shall be heard by the commission. From the date of
32issuance of a certificate of filing, or the date upon which an
33application is deemed to have been accepted, whichever is earlier,
34an application shall be deemed filed pursuant to this division.

35(g) If an application is determined not to be complete, the
36executive officer shall immediately transmit that determination to
37the applicant specifying those parts of the application which are
38incomplete and the manner in which they can be made complete.

39(h) Following the issuance of the certificate of filing, the
40executive officer shall proceed to set the proposal for hearing and
P9    1give published notice thereof as provided in this part. The date of
2the hearing shall be not more than 90 days after issuance of the
3certificate of filing or after the application is deemed to have been
4accepted, whichever is earlier. Notwithstanding Section 56106,
5the date for conducting the hearing, as determined pursuant to this
6subdivision, is mandatory.

7

SEC. 3.  

Section 56770 is added to the Government Code, to
8read:

9

56770.  

The commission shall not approve or conditionally
10approve any proposal that includes a disincorporation, unless,
11based on the entire record, the commission makes all of the
12following determinations:

13(a) The proposed disincorporation is consistent with the intent
14of thisbegin delete division, including, but not limited to, the policies of
15Sections 56001, 56300, 56301, and 56377end delete
begin insert divisionend insert to provide for
16a sustainable system for the delivery of services.

17(b) Thebegin delete proposal has reviewed the municipalend deletebegin insert commission has
18considered theend insert
service reviewsbegin insert of municipal servicesend insert and spheres
19of influence of the affected local agencies, and the disincorporation
20will address the necessary changes to those spheres ofbegin delete influence.end delete
21begin insert influence, if any.end insert

22(c) It has reviewed the comprehensive fiscal analysis prepared
23pursuant to Section 56804.

24(d) It has reviewed the executive officer’s report and
25recommendation prepared pursuant to Section 56665, and the oral
26or written testimony presented at its public hearing.

27(e) The service responsibilities of the city proposed for
28disincorporation have been assigned through terms and conditions
29authorized by Sections 56885.5, 56886, andbegin delete 57300,end deletebegin insert 57302,end insert and
30Chapter 5 (commencing with Section 57400) of Partbegin delete 5.end deletebegin insert 5 and the
31commission has approved a transition plan to provide those
32services, if one was requested by the executive officer.end insert

33

SEC. 4.  

Section 56804 is added to the Government Code, to
34read:

35

56804.  

For any proposal that includes a disincorporation, the
36executive officer shall prepare, or cause to be prepared by contract,
37a comprehensive fiscal analysis. This analysis shall become part
38of the report required pursuant to Section 56665. Data used for the
39analysis shall be from the most recent fiscal year for which data
40is available, preceding the issuances of the certificate of filing.
P10   1When data requested by the executive officer in the notice to
2affected agencies, pursuant to paragraph (2) of subdivision (b) of
3Section 56658, is unavailable, the analysis shall document the
4source and methodology of the data used. The analysis shall review
5and document each of the following:

6(a) The direct and indirect costs incurred by the city proposed
7for disincorporation for providing public services and facilities
8during the three fiscal years immediately preceding the submittal
9of the proposal for disincorporation.

10(b) Thebegin delete ability ofend deletebegin insert sources of funding, if any, available toend insert the
11entities proposed to assume the obligations of the city being
12disincorporated and the related costs, including all actual direct
13and indirect costs, in provision of existing services.

14(c) When determining costs, the executive officer shall also
15include all direct and indirect costs of any public services that are
16proposed to be transferred to state agencies for delivery.

17(d) The revenues of the city being disincorporated during the
18three fiscal years immediately preceding the initiation of the
19disincorporation proposal.

20(e) Any other information and analysis needed to make the
21findings required by Section 56770.

22

SEC. 5.  

Section 56813 is added to the Government Code, to
23read:

24

56813.  

(a) If the proposal includes the disincorporation of a
25city, as defined in Section 56034, the commission shall determine
26the amount of property tax revenue to be exchanged by the affected
27city and any successor agency or affected local agency pursuant
28to this section.

29(b) The commission shall notify the county auditor of the
30proposal, the affected local agencies to be extinguished, and the
31services proposed to be transferred to new jurisdictions, and
32identify for the auditor the changes to occur.

33(c) If the proposal would not transfer all of the service
34responsibilities of the disincorporating city to the affected county
35or to a single affected agency, the commission and the county
36 auditor shall do all of the following:

37(1) The county auditor shall determine the proportion that the
38amount of property tax revenue derived by the city being
39disincorporated pursuant to subdivision (b) of Section 93 of the
40Revenue and Taxation Code bears to the total amount of revenue
P11   1from all sources, available for general purposes, received by the
2city being disincorporated in the prior fiscal year and provide their
3responsebegin delete in compliance with paragraph (2) of subdivision (b) of
4Section 56658.end delete
begin insert within 15 days of receiving notification from the
5commission pursuant to subdivision (b).end insert
For purposes of making
6this determination and the determination required by paragraph
7(3), “total amount of revenue from all sources available for general
8purposes” means the total amount of revenue which the city being
9begin delete disincorporatingend deletebegin insert disincorporatedend insert may use on a discretionary basis
10for any purpose and does not include any of the following:

11(A) Revenue that, bybegin delete statute,end deletebegin insert statute or ordinance,end insert is required
12to be used for a specific purpose.

13(B) Revenue from fees, charges, or assessments that are levied
14to specifically offset the cost of particular services and that do not
15exceed the cost reasonably borne in providing these services.

16(C) Revenue received from the federal government that is
17required to be used for a specific purpose.

18(2) The commission shall determine, based on information
19submitted by the city being disincorporated, an amount equal to
20the total net cost to that city during the prior fiscal year of providing
21those services that an affected agency will assume within the area
22subject to the proposal. For purposes of this paragraph, “total net
23cost” means the total direct and indirect costs that were funded by
24general purpose revenues of the city being disincorporated and
25excludes any portion of the total cost that was funded by any
26revenues of that agency that are specified in subparagraphs (A),
27(B), and (C) of paragraph (1).

28(3) For the services to be transferred to each affected local
29agency, the commission shall multiply the amount determined
30pursuant to paragraph (2) by the proportion determined pursuant
31to paragraph (1) to derive the amount of property tax revenue used
32to provide services by the city being disincorporated during the
33prior fiscal year within the area subject to the proposal. The county
34auditor shall adjust the amount so determined by the annual tax
35increment pursuant to the procedures set forth in Chapter 6
36(commencing with Section 95) of Part 0.5 of Division 1 of the
37Revenue and Taxation Code, to the fiscal year in which the affected
38agency receives its next allocation of property taxes.

39(d) If the proposal for disincorporation would transfer all of the
40service responsibilities of the city proposed for disincorporation,
P12   1other than those that are proposed to be discontinued, to a single
2successor agency, the commission shall request the auditor to
3determine the property tax revenue allocated to the city being
4disincorporated by tax rate area, or portion thereof, and transmit
5that information to the commission.

6(e) The executive officer shall notify the auditor of the amount
7determined pursuant to subdivision (c) or (d), as the case may be,
8and, where applicable, the period of time within which and the
9procedure by which the transfer of property tax revenues will be
10effected pursuant to this section, at the time the executive officer
11records a certificate of completion pursuant to Section 57203 for
12any proposal described in subdivision (a), and the auditor shall
13transfer that amount to the affected agency or agencies that will
14assume the services as determined by the commission. Any
15property tax not transferred to an affected agency pursuant to
16subdivision (c) shall be transferred to the affected county.

17(f) For purposes of this section, “prior fiscal year” means the
18most recent fiscal year preceding the issuance of the certificate of
19filing for which data is available on actual direct and indirect costs
20and revenues needed to perform the calculations required by this
21section.

22(g) Any action brought by a city or district to contest any of the
23determinations of the county auditor or the commission with regard
24to the amount of property tax revenue to be exchanged by the
25affected local agencies pursuant to this section shall be commenced
26within three years of the effective date of the disincorporation.

27

SEC. 6.  

Section 56814 is added to the Government Code, to
28read:

29

56814.  

If the proposal includes the disincorporation of a city,
30as defined in Section 56034, with the assignment of property tax
31revenues to a successor agency the commission shall make the
32following determinations, as appropriate:

33(a) The increase of the appropriations limit for the successor
34agency, or agencies, if the successor agency or agencies is an
35existing entity.

36(b) The appropriations limit for a new special district through
37a formation process as defined by Section 56810.

38

SEC. 7.  

Sectionbegin delete 56815end deletebegin insert 56816end insert is added to the Government
39Code
, to read:

P13   1

begin delete56815.end delete
2begin insert56816.end insert  

(a) It is the intent of the Legislature that any proposal
3that includes the disincorporation of a city result in a determination
4that the debt or contractual obligations and responsibilities of the
5city being disincorporated shall be the responsibility of that same
6territory for repayment. To ascertain this information,begin insert the city shall
7provide a written statement that determines and certifies all ofend insert
the
8followingbegin delete shall be providedend delete to the commission prior to the issuance
9of a certificate of filing for a disincorporation proposal, pursuant
10to Sections 56651 and 56658:

begin delete

11(1) The city shall provide a written statement that determines
12and certifies all of the following:

end delete
begin delete

13(A)

end delete

14begin insert(1)end insert The indebtedness of the city.

begin delete

15(B)

end delete

16begin insert(2)end insert The amount of money in the city’s treasury.

begin delete

17(C)

end delete

18begin insert(3)end insert The amount of any tax levy or other obligation due the city
19that is unpaid or has not been collected.

begin delete

20(D) The amount of unfunded pension liability of all classes in
21a public retirement system, and the liability for other
22postemployment benefits.

23(2) The county treasurer shall identify all taxes levied and
24uncollected.

25(3) A written statement of all redevelopment successor agency
26designations and current balances and obligations.

27(b) The commission shall not approve a proposal that includes
28a disincorporation unless it makes the determinations required by
29Section 56770.

end delete
begin insert

30(4) The amount of current and future liabilities, both internal
31debt owed to other special or restricted funds or enterprise funds
32within the agency and external debt owed to other public agencies
33or outside lenders or that results from contractual obligations,
34which may include contracts for goods or services, retirement
35obligations, actuarially determined unfunded pension liability of
36all classes in a public retirement system, including any
37documentation related to the termination of public retirement
38contract provisions, and the liability for other postemployment
39benefits. The information required by this paragraph shall include
P14   1any associated revenue stream for financing that may be or has
2been committed to that liability, including employee contributions.

end insert
begin insert

3(b) The city shall provide a written statement identifying the
4successor agency to the city’s former redevelopment agency, if
5any, pursuant to Section 34173 of the Health and Safety Code.

end insert
6

SEC. 8.  

Section 56885.5 of the Government Code is amended
7to read:

8

56885.5.  

(a) In any commission order giving approval to any
9change of organization or reorganization, the commission may
10make that approval conditional upon any of the following factors:

11(1) Any of the conditions set forth in Section 56886.

12(2) The initiation, conduct, or completion of proceedings for
13another change of organization or a reorganization.

14(3) The approval or disapproval, with or without election, as
15may be provided by this division, of any resolution or ordinance
16ordering that change of organization or reorganization.

17(4) With respect to any commission determination to approve
18the disincorporation of a city, the dissolution of a district, or the
19reorganization or consolidation of agencies that results in the
20dissolution of one or more districts or the disincorporation of one
21or more cities, a condition that prohibits a district that is being
22dissolvedbegin insert or a city that is being disincorporatedend insert from taking any
23of the following actions, unless it first finds thatbegin insert eitherend insert an
24emergency situation exists as defined in Section 54956.5, orbegin delete if the
25governingend delete
begin insert the legislativeend insert body of the successor agency or agencies,
26as designated by thebegin delete commission, approves:end deletebegin insert commission has taken
27action approving one or more of the following actions:end insert

28(A) Approving any increase in compensation or benefits for
29members of the governing board, its officers, or the executive
30officer of the agency.

31(B) Appropriating, encumbering, expending, or otherwise
32obligating, any revenue of the agency beyond that provided in the
33current budget at the time the commission approves the dissolution
34or disincorporation.

35(b) If the commission so conditions its approval, the commission
36may order that any further action pursuant to this division be
37continued and held in abeyance for the period of time designated
38by the commission, not to exceed six months from the date of that
39conditional approval.

P15   1(c) The commission order may also provide that any election
2called upon any change of organization or reorganization shall be
3called, held, and conducted before, upon the same date as, or after
4the date of any election to be called, held, and conducted upon any
5other change of organization or reorganization.

6(d) The commission order may also provide that in any election
7at which the questions of annexation and district reorganization
8or, incorporation and district reorganization, or disincorporation
9and district reorganization are to be considered at the same time,
10there shall be a single question appearing on the ballot upon the
11issues of annexation and district reorganization or incorporation
12and district reorganization.

13

SEC. 9.  

Section 57401 of the Government Code is repealed.

14

SEC. 10.  

Section 57402 of the Government Code is repealed.

15

SEC. 11.  

Section 57404 of the Government Code is repealed.

16

SEC. 12.  

Section 57405 of the Government Code is amended
17to read:

18

57405.  

If a tax has been levied by the disincorporated city and
19remains uncollected, the county tax collector shall collect it when
20due and pay it into the county treasury on behalf of the designated
21successor agency or county to wind up the affairs of the
22disincorporated city.

23

SEC. 13.  

Section 57409 of the Government Code is repealed.

24

SEC. 14.  

Section 57410 of the Government Code is repealed.

25

SEC. 15.  

Section 57416 of the Government Code is repealed.

begin delete26

SEC. 16.  

Section 57417 of the Government Code is repealed.

end delete
27

begin deleteSEC. 17.end delete
28begin insertSEC. 16.end insert  

Section 57423 of the Government Code is repealed.

29

begin deleteSEC. 18.end delete
30begin insertSEC. 17.end insert  

Section 57424 of the Government Code is repealed.

31

begin deleteSEC. 19.end delete
32begin insertSEC. 18.end insert  

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

34

57426.  

begin delete(a)end deletebegin deleteend deleteAs of the effective date of the disincorporation, all
35of the following apply:

begin delete

36(1)

end delete

37begin insert(a)end insert The general plan of the disincorporated city that was in effect
38immediately prior to the effective date of the disincorporation shall
39constitute the community plan of the county for the territory of
P16   1the disincorporatedbegin delete city.end deletebegin insert city until the county updates the
2community plan.end insert

begin delete

3(2)

end delete

4begin insert(b)end insert The zoning ordinances of the disincorporated city that were
5in effect immediately prior to the effective date of the
6disincorporation shall constitute the zoning ordinances of the
7county for thatbegin delete territory.end deletebegin insert territory until the county updates the
8zoning ordinances applicable to that territory.end insert

begin delete

9(3)

end delete

10begin insert(c)end insert Any conditional use permit or legal nonconforming use that
11was in place immediately prior to the effective date of the
12disincorporation shall remain in force pursuant to the community
13plan and zoning ordinances.

begin delete

14(4) Any

end delete

15begin insert(d)end insertbegin insertend insertbegin insertNotwithstanding subdivisions (a), (b), or (c), any end insertuse of land
16that was authorized under the general plan and zoning ordinances
17immediately prior to the effective date of the disincorporation shall
18continue to be authorized, begin deleteconsistent with the requirements of that
19community plan and those zoning ordinances, for at least 10 years
20following the effective date of the disincorporation, any longer
21periodend delete
begin insert for as long a period as may beend insert required by the California
22Constitution or United Statesbegin delete Constitution, or any longer period
23to the extent permitted by the general plan and zoning ordinances
24of the county applicable to that territory following that 10-year
25period.end delete
begin insert Constitution.end insert

begin delete

26(b) The board of supervisors of the affected county shall, within
2790 days of the effective date of disincorporation, adopt an expedited
28permit process relating to business, development, and health and
29safety permits for the territory of the disincorporated city that is
30comparable to the permit process that existing in that city
31immediately preceding disincorporation.

end delete
32

begin deleteSEC. 20.end delete
33begin insertSEC. 19.end insert  

Section 99 of the Revenue and Taxation Code is
34amended to read:

35

99.  

(a) For the purposes of the computations required by this
36chapter:

37(1) In the case of a jurisdictional change, other than a city
38incorporation, city disincorporation, or a formation of a district as
39defined in Section 2215, the auditor shall adjust the allocation of
40property tax revenue determined pursuant to Section 96 or 96.1,
P17   1or the annual tax increment determined pursuant to Section 96.5,
2for local agencies whose service area or service responsibility
3would be altered by the jurisdictional change, as determined
4pursuant to subdivision (b) or (c).

5(2) In the case of a city incorporation or disincorporation, the
6auditor shall assign the allocation of property tax revenues
7determined pursuant to Section 56810 of the Government Code
8and the adjustments in tax revenues that may occur pursuant to
9Section 56815 of the Government Code to the newly formed city
10or district and shall make the adjustment as determined by Section
1156810begin insert or 56813end insert in the allocation of property tax revenue
12determined pursuant to Section 96 or 96.1 for each local agency
13whose service area or service responsibilities would be altered by
14the incorporation.

15(3) In the case of a formation of a district as defined in Section
162215, the auditor shall assign the allocation of property tax
17revenues determined pursuant to Section 56810 of the Government
18Code to the district and shall make the adjustment as determined
19by Section 56810, or for the disincorporated city or dissolved
20district as determined by Section 56813, in the allocation of
21property tax revenue determined pursuant to Section 96 or 96.1
22for each local agency whose service area or service responsibilities
23would be altered by the change of organization.

24(b) Upon the filing of an application or a resolution pursuant to
25the Cortese-Knox-Hertzberg Local Government Reorganization
26Act of 2000 (Division 3 (commencing with Section 56000) of Title
275 of the Government Code), but prior to the issuance of a certificate
28of filing, the executive officer shall give notice of the filing to the
29assessor and auditor of each county within which the territory
30subject to the jurisdictional change is located. This notice shall
31specify each local agency whose service area or responsibility will
32be altered by the jurisdictional change.

33(1) (A) The county assessor shall provide to the county auditor,
34within 30 days of the notice of filing, a report which identifies the
35assessed valuations for the territory subject to the jurisdictional
36change and the tax rate area or areas in which the territory exists.

37(B) The auditor shall estimate the amount of property tax
38revenue generated within the territory that is the subject of the
39jurisdictional change during the current fiscal year.

P18   1(2) The auditor shall estimate what proportion of the property
2tax revenue determined pursuant to paragraph (1) is attributable
3to each local agency pursuant to Sections 96.1 and 96.5.

4(3) Within 45 days of notice of the filing of an application or
5resolution, the auditor shall notify the governing body of each local
6agency whose service area or service responsibility will be altered
7by the jurisdictional change of the amount of, and allocation factors
8with respect to, property tax revenue estimated pursuant to
9paragraph (2) that is subject to a negotiated exchange.

10(4) Upon receipt of the estimates pursuant to paragraph (3), the
11local agencies shall commence negotiations to determine the
12amount of property tax revenues to be exchanged between and
13among the local agencies. Except as otherwise provided, this
14negotiation period shall not exceed 60 days. If a local agency
15involved in these negotiations notifies the other local agencies, the
16county auditor, and the local agency formation commission in
17writing of its desire to extend the negotiating period, the negotiating
18 period shall be 90 days.

19The exchange may be limited to an exchange of property tax
20revenues from the annual tax increment generated in the area
21subject to the jurisdictional change and attributable to the local
22agencies whose service area or service responsibilities will be
23altered by the proposed jurisdictional change. The final exchange
24resolution shall specify how the annual tax increment shall be
25allocated in future years.

26(5) In the event that a jurisdictional change would affect the
27service area or service responsibility of one or more special
28districts, the board of supervisors of the county or counties in which
29the districts are located shall, on behalf of the district or districts,
30negotiate any exchange of property tax revenues. Prior to entering
31into negotiation on behalf of a district for the exchange of property
32tax revenue, the board shall consult with the affected district. The
33 consultation shall include, at a minimum, notification to each
34member and executive officer of the district board of the pending
35consultation and provision of adequate opportunity to comment
36on the negotiation.

37(6) Notwithstanding any other provision of law, the executive
38officer shall not issue a certificate of filing pursuant to Section
3956658 of the Government Code until the local agencies included
40in the property tax revenue exchange negotiation, within the
P19   1negotiation period, present resolutions adopted by each such county
2and city whereby each county and city agrees to accept the
3exchange of property tax revenues.

4(7) In the event that the commission modifies the proposal or
5its resolution of determination, any local agency whose service
6area or service responsibility would be altered by the proposed
7jurisdictional change may request, and the executive officer shall
8grant, 30 days for the affected agencies, pursuant to paragraph (4),
9to renegotiate an exchange of property tax revenues.
10Notwithstanding the time period specified in paragraph (4), if the
11resolutions required pursuant to paragraph (6) are not presented
12to the executive officer within the 30-day period, all proceedings
13of the jurisdictional change shall automatically be terminated.

14(8) In the case of a jurisdictional change that consists of a city’s
15qualified annexation of unincorporated territory, an exchange of
16property tax revenues between the city and the county shall be
17determined in accordance with subdivision (e) if that exchange of
18revenues is not otherwise determined pursuant to either of the
19following:

20(A) Negotiations completed within the applicable period or
21periods as prescribed by this subdivision.

22(B) A master property tax exchange agreement among those
23local agencies, as described in subdivision (d).

24For purposes of this paragraph, a qualified annexation of
25unincorporated territory means an annexation, as so described, for
26which an application or a resolution was filed on or after January
271, 1998, and on or before January 1, 2015.

28(9) No later than the date on which the certificate of completion
29of the jurisdictional change is recorded with the county recorder,
30the executive officer shall notify the auditor or auditors of the
31exchange of property tax revenues and the auditor or auditors shall
32make the appropriate adjustments as provided in subdivision (a).

33(c) Whenever a jurisdictional change is not required to be
34reviewed and approved by a local agency formation commission,
35the local agencies whose service area or service responsibilities
36 would be altered by the proposed change, shall give notice to the
37State Board of Equalization and the assessor and auditor of each
38county within which the territory subject to the jurisdictional
39change is located. This notice shall specify each local agency
40whose service area or responsibility will be altered by the
P20   1jurisdictional change and request the auditor and assessor to make
2the determinations required pursuant to paragraphs (1) and (2) of
3subdivision (b). Upon notification by the auditor of the amount
4of, and allocation factors with respect to, property tax subject to
5exchange, the local agencies, pursuant to the provisions of
6paragraphs (4) and (6) of subdivision (b), shall determine the
7amount of property tax revenues to be exchanged between and
8among the local agencies. Notwithstanding any other provision of
9law, no such jurisdictional change shall become effective until
10each county and city included in these negotiations agrees, by
11resolution, to accept the negotiated exchange of property tax
12 revenues. The exchange may be limited to an exchange of property
13tax revenue from the annual tax increment generated in the area
14subject to the jurisdictional change and attributable to the local
15agencies whose service area or service responsibilities will be
16altered by the proposed jurisdictional change. The final exchange
17resolution shall specify how the annual tax increment shall be
18allocated in future years. Upon the adoption of the resolutions
19required pursuant to this section, the adopting agencies shall notify
20the auditor who shall make the appropriate adjustments as provided
21in subdivision (a). Adjustments in property tax allocations made
22as the result of a city or library district withdrawing from a county
23free library system pursuant to Section 19116 of the Education
24Code shall be made pursuant to Section 19116 of the Education
25Code, and this subdivision shall not apply.

26(d) With respect to adjustments in the allocation of property
27 taxes pursuant to this section, a county and any local agency or
28agencies within the county may develop and adopt a master
29property tax transfer agreement. The agreement may be revised
30from time to time by the parties subject to the agreement.

31(e) (1) An exchange of property tax revenues that is required
32by paragraph (8) of subdivision (b) to be determined pursuant to
33this subdivision shall be determined in accordance with all of the
34following:

35(A) The city and the county shall mutually select a third-party
36consultant to perform a comprehensive, independent fiscal analysis,
37funded in equal portions by the city and the county, that specifies
38estimates of all tax revenues that will be derived from the annexed
39territory and the costs of city and county services with respect to
40the annexed territory. The analysis shall be completed within a
P21   1period not to exceed 30 days, and shall be based upon the general
2plan or adopted plans and policies of the annexing city and the
3intended uses for the annexed territory. If, upon the completion of
4the analysis period, no exchange of property tax revenues is agreed
5upon by the city and the county, subparagraph (B) shall apply.

6(B) The city and the county shall mutually select a mediator,
7funded in equal portions by those agencies, to perform mediation
8for a period not to exceed 30 days. If, upon the completion of the
9mediation period, no exchange of property tax revenues is agreed
10upon by the city and the county, subparagraph (C) shall apply.

11(C) The city and the county shall mutually select an arbitrator,
12funded in equal portions by those agencies, to conduct an advisory
13arbitration with the city and the county for a period not to exceed
1430 days. At the conclusion of this arbitration period, the city and
15the county shall each present to the arbitrator its last and best offer
16with respect to the exchange of property tax revenues. The
17arbitrator shall select one of the offers and recommend that offer
18to the governing bodies of the city and the county. If the governing
19body of the city or the county rejects the recommended offer, it
20shall do so during a public hearing, and shall, at the conclusion of
21that hearing, make written findings of fact as to why the
22recommended offer was not accepted.

23(2) Proceedings under this subdivision shall be concluded no
24more than 150 days after the auditor provides the notification
25pursuant to paragraph (3) of subdivision (b), unless one of the
26periods specified in this subdivision is extended by the mutual
27agreement of the city and the county. Notwithstanding any other
28provision of law, except for those conditions that are necessary to
29implement an exchange of property tax revenues determined
30pursuant to this subdivision, the local agency formation
31commission shall not impose any fiscal conditions upon a city’s
32qualified annexation of unincorporated territory that is subject to
33this subdivision.

34(f) Except as otherwise provided in subdivision (g), for the
35purpose of determining the amount of property tax to be allocated
36in the 1979-80 fiscal year and each fiscal year thereafter for those
37local agencies that were affected by a jurisdictional change which
38was filed with the State Board of Equalization after January 1,
391978, but on or before January 1, 1979. The local agencies shall
40determine by resolution the amount of property tax revenues to be
P22   1exchanged between and among the affected agencies and notify
2the auditor of the determination.

3(g) For the purpose of determining the amount of property tax
4to be allocated in the 1979-80 fiscal year and each fiscal year
5thereafter, for a city incorporation that was filed pursuant to
6Sections 54900 to 54904 after January 1, 1978, but on or before
7January 1, 1979, the amount of property tax revenue considered
8to have been received by the jurisdiction for the 1978-79 fiscal
9year shall be equal to two-thirds of the amount of property tax
10revenue projected in the final local agency formation commission
11staff report pertaining to the incorporation multiplied by the
12proportion that the total amount of property tax revenue received
13by all jurisdictions within the county for the 1978-79 fiscal year
14bears to the total amount of property tax revenue received by all
15jurisdictions within the county for the 1977-78 fiscal year. Except,
16however, in the event that the final commission report did not
17specify the amount of property tax revenue projected for that
18incorporation, the commission shall by October 10 determine
19pursuant to Section 54790.3 of the Government Code the amount
20of property tax to be transferred to the city.

21The provisions of this subdivision shall also apply to the
22allocation of property taxes for the 1980-81 fiscal year and each
23fiscal year thereafter for incorporations approved by the voters in
24June 1979.

25(h) For the purpose of the computations made pursuant to this
26section, in the case of a district formation that was filed pursuant
27to Sections 54900 to 54904, inclusive, of the Government Code
28after January 1, 1978, but before January 1, 1979, the amount of
29property tax to be allocated to the district for the 1979-80 fiscal
30year and each fiscal year thereafter shall be determined pursuant
31to Section 54790.3 of the Government Code.

32(i) For the purposes of the computations required by this chapter,
33in the case of a jurisdictional change, other than a change requiring
34an adjustment by the auditor pursuant to subdivision (a), the auditor
35shall adjust the allocation of property tax revenue determined
36pursuant to Section 96 or 96.1 or its predecessor section, or the
37annual tax increment determined pursuant to Section 96.5 or its
38predecessor section, for each local school district, community
39college district, or county superintendent of schools whose service
P23   1area or service responsibility would be altered by the jurisdictional
2change, as determined as follows:

3(1) The governing body of each district, county superintendent
4of schools, or county whose service areas or service responsibilities
5would be altered by the change shall determine the amount of
6property tax revenues to be exchanged between and among the
7affected jurisdictions. This determination shall be adopted by each
8affected jurisdiction by resolution. For the purpose of negotiation,
9the county auditor shall furnish the parties and the county board
10of education with an estimate of the property tax revenue subject
11to negotiation.

12(2) In the event that the affected jurisdictions are unable to agree,
13within 60 days after the effective date of the jurisdictional change,
14and if all the jurisdictions are wholly within one county, the county
15board of education shall, by resolution, determine the amount of
16property tax revenue to be exchanged. If the jurisdictions are in
17more than one county, the State Board of Education shall, by
18resolution, within 60 days after the effective date of the
19jurisdictional change, determine the amount of property tax to be
20exchanged.

21(3) Upon adoption of any resolution pursuant to this subdivision,
22the adopting jurisdictions or State Board of Education shall notify
23the county auditor who shall make the appropriate adjustments as
24provided in subdivision (a).

25(j) For purposes of subdivision (i), the annexation by a
26community college district of territory within a county not
27previously served by a community college district is an alteration
28of service area. The community college district and the county
29shall negotiate the amount, if any, of property tax revenues to be
30exchanged. In these negotiations, there shall be taken into
31consideration the amount of revenue received from the timber
32yield tax and forest reserve receipts by the community college
33district in the area not previously served. In no event shall the
34property tax revenue to be exchanged exceed the amount of
35property tax revenue collected prior to the annexation for the
36purposes of paying tuition expenses of residents enrolled in the
37community college district, adjusted each year by the percentage
38change in population and the percentage change in the cost of
39living, or per capita personal income, whichever is lower, less the
40amount of revenue received by the community college district in
P24   1the annexed area from the timber yield tax and forest reserve
2receipts.

3(k) At any time after a jurisdictional change is effective, any of
4the local agencies party to the agreement to exchange property tax
5revenue may renegotiate the agreement with respect to the current
6fiscal year or subsequent fiscal years, subject to approval by all
7local agencies affected by the renegotiation.

8

begin deleteSEC. 21.end delete
9begin insertSEC. 20.end insert  

If the Commission on State Mandates determines that
10this act contains costs mandated by the state, reimbursement to
11local agencies and school districts for those costs shall be made
12pursuant to Part 7 (commencing with Section 17500) of Division
134 of Title 2 of the Government Code.



O

    98