Bill Text: CA AB2032 | 2015-2016 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Change of organization: cities: disincorporation.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2016-08-22 - Chaptered by Secretary of State - Chapter 163, Statutes of 2016. [AB2032 Detail]
Download: California-2015-AB2032-Amended.html
Bill Title: Change of organization: cities: disincorporation.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2016-08-22 - Chaptered by Secretary of State - Chapter 163, Statutes of 2016. [AB2032 Detail]
Download: California-2015-AB2032-Amended.html
BILL NUMBER: AB 2032 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY APRIL 5, 2016
AMENDED IN ASSEMBLY MARCH 17, 2016
INTRODUCED BY Assembly Member Linder
FEBRUARY 16, 2016
An act to amend Sections 56770, 56804,
56813, 56816, 57405, 57407, and 57412
of the Government Code, relating to local government.
LEGISLATIVE COUNSEL'S DIGEST
AB 2032, as amended, Linder. Change of organization: cities:
disincorporation.
(1) Existing law, the Cortese-Knox-Hertzberg Local Government
Reorganization Act of 2000, provides the authority and procedure for
the initiation, conduct, and completion of changes of organization
and reorganization for cities and districts. The act prohibits the
local area formation commission from approving or conditionally
approving any proposal that includes a disincorporation of a city
unless the commission determines, 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.
This bill would additionally require the commission to determine
that the proposed disincorporation is consistent with the intent that
all debt and contractual obligations and responsibilities of the
city being disincorporated be the responsibility of the same
territory for repayment, that existing and projected future revenues
of the city to be disincorporated are sufficient to meet all
expenditures, debts, and obligations of the former city, as
specified, and that the appropriate appointing power of the successor
or successors approves the terms of continuing employment or
transfer of any employees from employment with the disincorporated
city to employment with the successor or successors. By imposing new
duties on local officials, this bill would impose a state-mandated
local program.
(2)
(1) Existing law law, the
Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000,
requires the executive officer of the a
local agency formation commission to prepare a comprehensive
fiscal analysis for any proposal that includes an
incorporation, a disincorporation, as specified.
Existing law requires the comprehensive fiscal analysis to include,
among other things, a review and documentation of specified costs
associated with the proposed disincorporation.
This bill would require the comprehensive fiscal analysis
to include an analysis of the former city's most recently completed
financial statements audited by a certified public accountant, as
specified. The bill would additionally require the executive officer
to obtain written input from the successor or successors proposed to
assume responsibility for the former city's operations during the
preparation of the comprehensive fiscal analysis, as specified. The
bill would additionally require the comprehensive fiscal
analysis to include, among other things,
include a review and documentation of all debt
obligations and current and long-term
liabilities of the city proposed for disincorporation and
specified revenue sources. The bill would require the executive
officer to provide the successor or successors at least 30 days to
evaluate and validate the accuracy and sufficiency of the data used
to prepare the comprehensive fiscal analysis. By imposing new duties
on local officials, this bill would impose a state-mandated local
program. disincorporation.
(3) Existing law requires the commission to determine the amount
of property tax revenue to be exchanged by the affected city and any
successor or affected local agency for a proposal that includes a
disincorporation of a city and sets forth the procedures to be
followed in making that determination.
This bill would revise these provisions to require the
determination to be included in the comprehensive fiscal analysis, as
specified.
(4) Existing law
(2) The act states 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.
Existing law To ascertain this information, the act
requires the city being disincorporated to provide a written
statement prior to issuance of a certificate for filing for
a proposal that includes a disincorporation that includes
specified information relating to its debts and contractual
obligations.
This bill would additionally require that statement to
include, among other things, the amount of money in the possession of
custodians and trustees and an identification of whether any of the
money is restricted, and a statement of whether there is any pending
or potential litigation or claims against the city proposed to be
disincorporated. include the amount of any assessment
due the city that is unpaid or uncollected.
(5) Existing law
(3) The act requires the county
tax collector to collect a tax that has been levied by the
disincorporated city that remains uncollected.
This bill would additionally require the county tax collector to
collect an assessment that has been levied by the disincorporated
city that remains uncollected. By imposing new duties on local
officials, this bill would impose a state-mandated local program.
(6) Existing law requires all money paid into the county treasury
pursuant to provisions relating to the disincorporation of a city to
be placed to the credit of a special fund established for the purpose
of settling the affairs of the disincorporated city.
This bill would provide that the successor or successors to the
disincorporated city are not liable to creditors of the former city,
if at all, other than for those amounts actually paid into that
special fund.
(7) Existing law
(4) The act requires the board of
supervisors to provide for the collection of debts due to a city
being disincorporated and to wind up its affairs, as specified.
This bill would instead require the governing board of the
successor to the city being disincorporated to
provide for the collection of debts due to the city and to wind up
its affairs, as specified.
The
(5) 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:
SECTION 1. Section 56770 of the Government Code
is amended to read:
56770. The commission shall not approve or conditionally approve
a proposal that includes a disincorporation, unless, based on the
entire record, the commission makes all of the following
determinations:
(a) The proposed disincorporation is consistent with both of the
following:
(1) The intent of this division to provide for a sustainable
system for the delivery of services.
(2) The intent stated in Section 56816 that all debt and
contractual obligations and responsibilities of the city being
disincorporated shall be the responsibility of the same territory for
repayment.
(b) The commission has considered the service reviews of municipal
services and spheres of influence of the affected local agencies,
and the disincorporation will address the necessary changes to those
spheres of influence, if any.
(c) It has reviewed the comprehensive fiscal analysis prepared
pursuant to Section 56804.
(d) It has reviewed the executive officer's report and
recommendation prepared pursuant to Section 56665, and the oral or
written testimony presented at its public hearing.
(e) Existing and projected future revenues of the city to be
disincorporated are sufficient to meet all expenditures, debts, and
obligations of the former city or, if there are not sufficient
revenues, the tax rate upon which the commission conditions its
approval for disincorporation shall be sufficient to meet all
identified financial shortfalls of the former city.
(f) The service responsibilities of the city proposed for
disincorporation have been assigned through terms and conditions
authorized by Sections 56885.5, 56886, and 57302, and Chapter 5
(commencing with Section 57400) of Part 5.
(g) The appropriate appointing power of the successor or
successors approves the terms of continuing employment or transfer of
any employees from employment with the disincorporated city to
employment with the successor or successors.
SEC. 2. Section 56804 of the Government Code is
amended to read:
56804. (a) For any proposal that includes a disincorporation, the
executive officer shall prepare, or cause to be prepared by
contract, a comprehensive fiscal analysis that includes an analysis
of the former city's most recently completed financial statements
audited by a certified public accountant and identifies any concerns
raised by the certified public accountant. The executive officer
shall obtain written input from the successor or successors or the
petitioners proposed to assume responsibility for the former city's
operations during the preparation of the comprehensive fiscal
analysis to assist in determining whether revenue shortfalls, if any,
will leave unfunded debts or liabilities after disincorporation.
This analysis shall become part of the report required pursuant to
Section 56665. Data used for the analysis shall be from the most
recent fiscal year for which data is available, preceding the
issuances of the certificate of filing. When data requested by the
executive officer in the notice to affected agencies, pursuant to
paragraph (2) of subdivision (b) of Section 56658, is unavailable,
the analysis shall document the source and methodology of the data
used. The analysis shall review and document each of the following:
(1) The direct and indirect costs incurred by the city proposed
for disincorporation for providing public services during the three
fiscal years immediately preceding the submittal of the proposal for
disincorporation.
(2) The direct and indirect costs incurred by the city proposed
for disincorporation for current and proposed capital improvements,
facilities, assets, and infrastructure.
(3) The sources of funding, if any, available to the entities
proposed to assume the obligations of the city proposed for
disincorporation.
(4) The anticipated costs, including all direct and indirect
costs, to the entities proposed to assume the obligations of the city
proposed for disincorporation in the provision of services to the
area proposed for disincorporation.
(5) When determining costs, the executive officer shall also
include all direct and indirect costs of any public services that are
proposed to be transferred to state agencies for delivery.
(6) The revenues of the city proposed for disincorporation during
the three fiscal years immediately preceding the initiation of the
disincorporation proposal.
(7) All debt obligations and current and long-term liabilities of
the city proposed for disincorporation, including the balance of
restricted and unrestricted funds available to extinguish the
obligations and liabilities.
(8) The required financing mechanism(s) to address any shortfalls
and obligations for those responsibilities identified in this
section, including, but not limited to, taxes or assessments.
(9) A determination of the proportion that the amount of property
tax revenue derived by the city being disincorporated pursuant to
subdivision (b) of Section 93 of the Revenue and Taxation Code bears
to the total amount of revenue from all sources available for general
purposes received by the city being disincorporated in the prior
fiscal year. For purposes of making this determination and the
determination required by paragraph (3) of subdivision (c) of Section
56813, "total amount of revenue from all sources available for
general purposes" means the total amount of revenue that the city
being disincorporated may use on a discretionary basis for any
purpose and does not include any of the following:
(A) Revenue that, by statute or ordinance, is required to be used
for a specific purpose.
(B) Revenue from fees, charges, or assessments that are levied to
specifically offset the cost of particular services and that do not
exceed the cost reasonably borne in providing these services.
(C) Revenue received from the federal government that is required
to be used for a specific purpose.
(10) Any other information and analysis needed to make the
findings required by Section 56770.
(b) The executive officer shall provide the successor or
successors at least 30 days to review, evaluate, and validate the
accuracy and sufficiency of the data used to prepare the
comprehensive fiscal analysis.
SEC. 3. Section 56813 of the Government Code is
amended to read:
56813. (a) If the proposal includes the disincorporation of a
city, as defined in Section 56034, the commission shall determine the
amount of property tax revenue to be exchanged by the affected city
and any successor or affected local agency pursuant to this section.
(b) The commission shall notify the county auditor of the
proposal, the affected local agencies to be extinguished, and the
services proposed to be transferred to new jurisdictions, and
identify for the auditor the changes to occur.
(c) The commission shall determine, based on information certified
by the governing body of the city being disincorporated, an amount
equal to the total net cost to that city during the prior fiscal year
of providing those services that an affected agency will assume
within the area subject to the proposal. For purposes of this
paragraph, "total net cost" means the total direct and indirect costs
that were funded by general purpose revenues of the city being
disincorporated and excludes any portion of the total cost that was
funded by any revenues of that agency that are specified in
subparagraphs (A), (B), and (C) of paragraph (9) of subdivision (a)
of Section 56804.
(d) For the services to be transferred to each affected local
agency, the commission shall multiply the amount determined pursuant
to subdivision (c) by the proportion determined pursuant to paragraph
(9) of subdivision (a) of Section 56804 to derive the amount of
property tax revenue used to provide services by the city being
disincorporated during the prior fiscal year within the area subject
to the proposal. The county auditor shall adjust the amount so
determined by the annual tax increment pursuant to the procedures set
forth in Chapter 6 (commencing with Section 95) of Part 0.5 of
Division 1 of the Revenue and Taxation Code, to the fiscal year in
which the affected agency receives its next allocation of property
taxes.
(e) If the proposal for disincorporation would transfer all of the
service responsibilities of the city proposed for disincorporation,
other than those that are proposed to be discontinued, to a single
successor, the commission shall request the auditor to determine the
property tax revenue allocated to the city being disincorporated by
tax rate area, or portion thereof, and transmit that information to
the commission.
(f) The executive officer shall notify the auditor of the amount
determined pursuant to paragraph (9) of subdivision (a) of Section
56804 or of subdivision (e) of this section, as the case may be, and,
where applicable, the period of time within which and the procedure
by which the transfer of property tax revenues will be effected
pursuant to this section, at the time the executive officer records a
certificate of completion pursuant to Section 57203 for any proposal
described in subdivision (a), and the auditor shall transfer that
amount to the affected agency or agencies that will assume the
services as determined by the commission. Any property tax not
transferred to an affected agency pursuant to paragraph (9) of
subdivision (a) of Section 56804 shall be transferred to the affected
county.
(g) For purposes of this section, "prior fiscal year" means the
most recent fiscal year preceding the issuance of the certificate of
filing for which data is available on actual direct and indirect
costs and revenues needed to perform the calculations required by
this section.
(h) Any action brought by a city, county, or district to contest
any of the determinations of the county auditor or the commission
with regard to the amount of property tax revenue to be exchanged by
the affected local agencies pursuant to this section shall be
commenced within three years of the effective date of the
disincorporation.
SEC. 4. Section 56816 of the Government Code is
amended to read:
56816. (a) It is the intent of the Legislature that any proposal
that includes the disincorporation of a city result in a
determination that the debt or contractual obligations and
responsibilities of the city being disincorporated shall be the
responsibility of that same territory for repayment. To ascertain
this information, the city shall provide a written statement that is
certified by its legislative body and determines all of the following
to the commission prior to the issuance of a certificate of filing
for a disincorporation proposal, pursuant to Sections 56651 and
56658:
(1) The indebtedness of the city.
(2) The amount of money in the city's treasury, including an
identification of any money that is restricted.
(3) The amount of money in the possession of custodians and
trustees and an identification of any money that is restricted.
(4) The amount of any tax levy, direct assessment, or other
obligation due the city that is unpaid or has not been collected.
(5) Current and long-term receivables owed to the city.
(6) A statement of whether there are any pending or potential
litigation or claims against the city, including potential liability.
(7) The amount of current and future liabilities, both internal
debt owed to other special or restricted funds or enterprise funds
within the agency and external debt owed to other public agencies or
outside lenders or that results from contractual obligations, which
may include contracts for goods or services, retirement obligations,
actuarially determined unfunded pension liability of all classes in a
public retirement system, including any documentation related to the
termination of public retirement contract provisions, and the
liability for other postemployment benefits. The information required
by this paragraph shall include any associated revenue stream for
financing that may be or has been committed to that liability,
including employee contributions.
(8) The annual amount of voter-approved pensions levied by the
city and a determination of unfunded pension tax liability owed to
the California Public Employees' Retirement System.
(b) The successor agency to the city's former redevelopment
agency, if any, shall be determined pursuant to Section 34173 of the
Health and Safety Code.
SECTION 1. Section 56804 of the
Government Code is amended to read:
56804. For any proposal that includes a disincorporation, the
executive officer shall prepare, or cause to be prepared by contract,
a comprehensive fiscal analysis. This analysis shall become part of
the report required pursuant to Section 56665. Data used for the
analysis shall be from the most recent fiscal year for which data is
available, preceding the issuances of the certificate of filing. When
data requested by the executive officer in the notice to affected
agencies, pursuant to paragraph (2) of subdivision (b) of Section
56658, is unavailable, the analysis shall document the source and
methodology of the data used. The analysis shall review and document
each of the following:
(a) The direct and indirect costs incurred by the city proposed
for disincorporation for providing public services during the three
fiscal years immediately preceding the submittal of the proposal for
disincorporation.
(b) The direct and indirect costs incurred by the city proposed
for disincorporation for current and proposed capital improvements,
facilities, assets, and infrastructure.
(c) The sources of funding, if any, available to the entities
proposed to assume the obligations of the city proposed for
disincorporation.
(d) The anticipated costs, including all direct and indirect
costs, to the entities proposed to assume the obligations of the city
proposed for disincorporation in the provision of services to the
area proposed for disincorporation.
(e) When determining costs, the executive officer shall also
include all direct and indirect costs of any public services that are
proposed to be transferred to state agencies for delivery.
(f) The revenues of the city proposed for disincorporation during
the three fiscal years immediately preceding the initiation of the
disincorporation proposal.
(g) Any other information and analysis needed to make the findings
required by Section 56770.
(h) All current and long-term liabilities, including, but not
limited to, debt obligations, of the city proposed for
disincorporation, including the balance of the restricted and
unrestricted funds available to extinguish the obligations and
liabilities.
SEC. 2. Section 56816 of the Government
Code is amended to read:
56816. (a) It is the intent of the Legislature that any proposal
that includes the disincorporation of a city result in a
determination that the debt or contractual obligations and
responsibilities of the city being disincorporated shall be the
responsibility of that same territory for repayment. To ascertain
this information, the city shall provide a written statement that
determines and certifies all of the following to the commission prior
to the issuance of a certificate of filing for a disincorporation
proposal, pursuant to Sections 56651 and 56658:
(1) The indebtedness of the city.
(2) The amount of money in the city's treasury.
(3) The amount of any tax levy levy,
assessment, or other obligation due the city that is unpaid or
has not been collected.
(4) The amount of current and future liabilities, both internal
debt owed to other special or restricted funds or enterprise funds
within the agency and external debt owed to other public agencies or
outside lenders or that results from contractual obligations, which
may include contracts for goods or services, retirement obligations,
actuarially determined unfunded pension liability of all classes in a
public retirement system, including any documentation related to the
termination of public retirement contract provisions, and the
liability for other postemployment benefits. The information required
by this paragraph shall include any associated revenue stream for
financing that may be or has been committed to that liability,
including employee contributions.
(b) The city shall provide a written statement identifying the
successor agency to the city's former redevelopment agency, if any,
pursuant to Section 34173 of the Health and Safety Code.
SEC. 5. SEC. 3. Section 57405 of the
Government Code is amended to read:
57405. If a tax or assessment has been levied by the
disincorporated city and remains uncollected, the county tax
collector shall collect it when due and pay it into the county
treasury on behalf of the designated successor agency or county to
wind up the affairs of the disincorporated city.
SEC. 6. Section 57407 of the Government Code is
amended to read:
57407. (a) All money paid into the county treasury pursuant to
this chapter shall be placed to the credit of a special fund
established for the purpose of settling the affairs of the
disincorporated city.
(b) The successor or successors to the disincorporated city shall
not be liable to creditors of the former city, if at all, other than
for those amounts actually paid into the special fund established
pursuant to subdivision (a). For purposes of this section, creditors
include, but are not limited to, employees and bondholders of the
disincorporated city.
SEC. 7. SEC. 4. Section 57412 of the
Government Code is amended to read:
57412. The governing body of the successor shall provide for
collection of debts due the city and wind up its affairs. Upon an
order by the commission, the appropriate officer of the successor
shall perform any act necessary for winding up the city affairs, with
the same effect as if it had been performed by the proper city
officer.
SEC. 8. SEC. 5. If the Commission on
State Mandates determines that this act contains costs mandated by
the state, reimbursement to local agencies and school districts for
those costs shall be made pursuant to Part 7 (commencing with Section
17500) of Division 4 of Title 2 of the Government Code.
