BILL ANALYSIS                                                                                                                                                                                                    

                                                                     AB 851

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          Date of Hearing:  May 13, 2015


                                 Jimmy Gomez, Chair

          851 (Mayes) - As Amended May 7, 2015

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          Urgency:  No  State Mandated Local Program:  YesReimbursable:   


          This bill makes changes to the city disincorporation process in  
          the Cortese-Knox Hertzberg Act (Act).  Specifically, this bill: 


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          1)Requires the city to provide a written statement to the local  
            agency formation commission (LAFCO) prior to filing a proposal  
            to initiate disincorporation proceedings that determines and  
            certifies the indebtedness of the city, the amount of money in  
            the city's treasury, the amount of any tax levy or other  
            obligation due the city that is unpaid or has not been  
            collected, and the amount of current and future liabilities.  
            Requires the city to identify the successor agency to the  
            city's former redevelopment agency, if any.  

          2)Specifies information that must be included in a plan for  
            services with a proposal for a disincorporation.

          3)Requires notification to affected local agencies and requires  
            local agencies to provide data to the executive officer in  
            order to process a proposal in a timely manner.  

          4)Requires the executive officer to prepare a comprehensive  
            fiscal analysis for a disincorporation proposal. 

          5)Prohibits a LAFCO from approving or conditionally approving  
            any proposal that includes a disincorporation, unless a LAFCO  
            makes specified determinations.

          6)Requires LAFCO to determine the amount of property tax revenue  
            to be exchanged by the disincorporating city and any successor  
            agency or affected local agency pursuant to a specified  
            process that is substantially similar to the process in  
            existing law for incorporations. 

          FISCAL EFFECT:


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          Negligible state costs. Local mandate costs to LAFCOs are  
          non-reimbursable because they charge fees for the services they  


          1)Purpose. According to the author, "The statutes addressing  
            disincorporation have not been updated since the inception of  
            LAFCOs in 1963.  Under existing law, the intended procedure  
            for dispensing with debt and unfunded liabilities is not in  
            compliance with Propositions 13 and 218.  This could result in  
            the county at large being responsible for the debts and  
            unfunded liabilities of a city that has disincorporated.  This  
            bill brings the sections of the Act into full compliance with  
            the mandates of Propositions 13 and 218."

          2)LAFCOs. LAFCOs are responsible for coordinating logical and  
            timely changes in local governmental boundaries. The Act  
            establishes procedures for local government changes of  
            organization, including city incorporations,  
            disincorporations, annexations to a city or special district,  
            and city and special district consolidations.  LAFCOs regulate  
            boundary changes through the approval or denial of proposals  
            by other public agencies or individuals.  

          3)Disincorporation in California.  Seventeen cities have  
            disincorporated in California's history, but only two cities  
            have disincorporated since the creation of LAFCOs in 1963.   
            The City of Cabazon, located in Riverside County, was  
            disincorporated in 1973, and went through the process  
            contained in LAFCO law.  The Town of Hornitos, located in  
            Mariposa County, was disincorporated by statute in 1972 (AB  
            2374, Chappie).  


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            More recent discussions regarding disincorporation relate to  
            several cities in California impacted by the redirection of  
            Vehicle License Fee (VLF) revenues away from newly  
            incorporated cities and annexations as part of the realignment  
            shift in 2011. 


          Analysis Prepared by:Jennifer Swenson / APPR. / (916)