Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the district to submit a resolution of application to the Riverside County Local Agency Formation Commission to initiate proceedings to expand the district. The bill would require the commission to order the expansion of the district subject to a vote of the registered voters residing within the territory to be annexed at an election following the completion of those proceedings. The bill would require the Board of Supervisors of the County of Riverside, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of commission proceedings, including a public hearing. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is, if required, approved, as specified. The bill would require the district to pay for election costs, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. Following the expansion of the board of directors, the bill would require the board of directors to adopt a resolution to divide the Desert Healthcare District into voting districts for the purpose of electing members of the board of directors from and by the electors of those voting districts beginning with the next district election after January 1, 2020, as specified.

This bill would state the intent of the Legislature that the Desert Healthcare District maximize the use of its assets to provide direct health services to individuals within the district, as specified.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the district to submit a resolution of application to the Riverside County Local Agency Formation Commission to initiate proceedings to expand the district. The bill would require the commission to order the expansion of the district subject to a vote of the registered voters residing within the territory to be annexed at an election following the completion of those proceedings. The bill would require the Board of Supervisors of the County of Riverside, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of commission proceedings, including a public hearing. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is, if required, approved, as specified. The bill would require the district to pay for election costs, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. Following the expansion of the board of directors, the bill would require the board of directors to adopt a resolution to divide the Desert Healthcare District into voting districts for the purpose of electing members of the board of directors from and by the electors of those voting districts beginning with the next district election after January 1, 2020, as specified.

This bill would state the intent of the Legislature that the Desert Healthcare District maximize the use of its assets to provide direct health services to individuals within the district, as specified.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the Board of Supervisors of the County of Riverside district to submit a resolution of application to the Riverside County Local Agency Formation Commission, and, Commission to initiate proceedings to expand the district. The bill would require the commission to order the expansion of the district subject to a vote of the registered voters residing within the territory to be annexed at an election following the completion of those proceedings. The bill would require the Board of Supervisors of the County of Riverside, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of commission proceedings, including a public hearing. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is, if required, approved, as specified. The bill would require the district to pay for election costs, as specified. The bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the Board of Supervisors of the County of Riverside to submit a resolution of application to the Riverside County Local Agency Formation Commission, and, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of commission proceedings, including a public hearing. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is, if required, approved, as specified. The bill would require the district to pay for election costs, as specified. The bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the Board of Supervisors of the County of Riverside to submit a resolution of application to the Riverside County Local Agency Formation Commission, and, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of commission proceedings, including a public hearing. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is, if required, approved, as specified. The bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the Board of Supervisors of the County of Riverside to submit a resolution of application to the Riverside County Local Agency Formation Commission, and, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of the review by the commission. The bill would require the review by the commission to include an analysis of funding sources available to the district and a recommendation of the districts boundaries, as specified. commission proceedings, including a public hearing. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is identified and, is, if required, approved, as specified. The bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

Existing law, the Local Health Care District Law, authorizes the organization and incorporation of local health care districts and specifies the powers of those districts, including, among other things, the power to establish, maintain, and operate, or provide assistance in the operation of, one or more health facilities or health services, including, but not limited to, outpatient programs, services, and facilities; retirement programs, services, and facilities; chemical dependency programs, services, and facilities; or other health care programs, services, and facilities and activities at any location within or without the district for the benefit of the district and the people served by the district.

This bill would authorize the expansion of the Desert Healthcare District to include the eastern Coachella Valley region by requiring the Board of Supervisors of the County of Riverside to submit a resolution of application to the Riverside County Local Agency Formation Commission, and, upon direction by the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of the review by the commission. The bill would require the review by the commission to include an analysis of funding sources available to the district and a recommendation of the districts boundaries, as specified. The bill would provide for expansion of the district upon voter approval, if a funding source sufficient to support the operations of the expanded district is identified and, if required, approved, as specified. The bill would require the board of directors of the district, following expansion, to adopt a resolution to increase the number of members of the districts board of directors from 5 to 7, and to appoint 2 members who are residents of the territory annexed by the district to fill the vacant positions, as specified. By imposing new duties on the County of Riverside, the bill would impose a state-mandated local program.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Coachella Valley region of Riverside County.

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.

This bill would declare that it is to take effect immediately as an urgency statute.

(Without Reference to File)

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2414

Author:(Eduardo Garcia)

As Amended Ver:August 19, 2016

Majority vote

Original Committee Reference: L. GOV.

SUMMARY: Establishes an annexation process for the Desert Healthcare District (District).

The Senate amendments:

1. Require the District, instead of the Riverside County Board of Supervisors (Board of Supervisors), to file the resolution of application to expand the District's boundaries and to pay for any associated fees.
2. Authorize the Riverside County Local Agency Formation Commission (Riverside LAFCO) to condition the annexation on the District's imposition of sufficient revenues to provide services within the annexed territory including, but not limited to the concurrent approval of special taxes for benefit assessments.
3. Require the District's Board of Directors (Board), following the expansion of the Board, to adopt a resolution to divide the District into seven voting districts, number the voting districts consecutively, and to elect Board members by voting district beginning with the first District election after January 1, 2020.
4. Require the Board, in establishing the voting districts, to provide for representation in accordance with demographic, including population, and geographic factors, of the entire are of the District.
5. Require the Board to fix the time and place and give public notice for a hearing on the proposed establishment of the voting districts, at which and elector of the District may present his or her views and plans for the proposed division of District.
6. Require the Board's resolution pursuant to 3) above, to declare the voting districts and describe the boundaries of each voting district. Require any necessary procedures for implementing the election of the Board by voting districts to be established and implemented on or before January 1, 2020.
7. Require one member of the Board to be elected by the electors of each of the voting districts. Prohibit a person from holding office as a Board member unless he or she has been a resident of the voting district from which he or she is elected from for the 30 days next preceding the date of the election. Provide an appointment process for a vacancy on the Board, as specified.
8. State that it is the intent of the Legislature that the District maximizes the use of its assets to provide direct health services to individuals within the District through direct operation of or funding to provide to organizations that own or operate hospitals and other facilities and services.

AS PASSED BY THE ASSEMBLY, this bill:

1. Established an annexation process for the District to include the East Coachella Valley region, as specified, and provided a new governance structure for the expanded District's Board.
2. Required the Board of Supervisors, on or before January 5, 2017, to file a resolution of application with Riverside LAFCO, to initiate LAFCO proceedings for the District's expansion.
3. Required the Board of Supervisors to pay any fees associated with the resolution of application, and to hold a hearing and provide specified notice.
4. Required Riverside LAFCO to complete the proceeding and direct the election. Prohibited the resolution of application from being subject to any protest proceedings. Prohibited Riverside LAFCO from disapproving the resolution of application.
5. Required Riverside LAFCO to order the expansion of the District subject to a vote of the registered voters residing within the territory to be annexed to the District at an election.
6. Required Riverside LAFCO to direct the Board of Supervisors to conduct the election for the District's expansion and any necessary funding source that requires voter approval.
7. Required the Board, 30 days after the expansion of the District, to adopt a resolution to appoint two additional Board members that are registered voters and residents of the territory annexed pursuant to this bill.
8. Found and declared that a special law is necessary and general law cannot be made applicable as specified.

FISCAL EFFECT: According to the Senate Appropriations Committee, there are:

1. Unknown reimbursable one-time costs, likely over $50,000, for the District to pay for costs to prepare an application for the expansion of the District and to conduct the specified election (General Fund). Actual reimbursable costs would be subject to a determination by the Commission on State Mandates (Commission), if the County files a successful reimbursement claim.
2. Unknown, likely minor reimbursable ongoing costs until 2020 related to the mandatory addition of two at-large District board members, should the election on the District expansion be approved by the voters (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the District files a successful reimbursement claim.
3. Additional estimated one-time reimbursable costs of approximately $300,000 to conduct activities related to the establishment of seven voting districts, to the extent the District expansion is approved by the voters (General Fund). Redistricting costs could include public outreach as well as legal, demographic, and communications consultant contracts. Actual reimbursable costs would be subject to a determination by the Commission.

COMMENTS:

1. LAFCO Law. LAFCOs regulate local government boundary changes through the approval or denial of proposals by other public agencies or individuals for these procedures. The Act establishes procedures for local government changes of organization, including annexations to a special district. The Act prescribes a process for the inclusion or addition of territory to a district (district annexation), which is similar to most boundary changes that require numerous steps: a) application to LAFCO, by petition or resolution; b) noticed public hearing, testimony, and approval or disapproval by LAFCO in which they can impose terms and conditions; c) additional public hearing for protests (if more than 25% of voters file protest, the LAFCO must order an election on the proposed annexation, and if more than 50% of voters protest, then the LAFCO must terminate the proceedings); d) an election, if there were significant protests; and, e) LAFCO staff files documents to complete the annexation.

In the past several years, the Legislature has established a modified LAFCO process or exempted specified requirements in the LAFCO process for the formation of several special districts following a history of failed attempts at the local level, including AB 2453 (Achadjian), Chapter 350, Statutes of 2014, for the creation of the Paso Robles Water District; and, AB 3 (Williams), Chapter 548, Statutes of 2015, for the formation of the Isla Vista Community Services District.

1. Bill Summary. This bill establishes an annexation process for the District to include the East Coachella Valley region that is exempt from the statutes that govern the usual process under LAFCO for district annexations. This bill requires the District, on or before January 5, 2017, to submit to Riverside LAFCO a resolution of application to initiate LAFCO proceedings to expand the District's boundaries to include the East Coachella Valley region. This bill requires Riverside LAFCO, within 150 days of receiving the resolution of application, to complete specified proceedings and direct the election for the expanded District.

Under this bill, the expanded District must include all communities currently served by the District and the communities of Indian Wells, La Quinta, Indio, Coachella, and the unincorporated area of Bermuda Dunes, Mecca, Thermal Oasis, North Shore, and Vista Santa Rosa. Riverside LAFCO would not have the usual power to disapprove the application and the protest provision would not apply to the proposed annexation. The District would only be expanded, if supported by a majority of voters within the territory proposed to be annexed to the District and the passage of any necessary funding. If the District is expanded, this bill requires, within 30 days, the five-member Board to appoint two new Board members, who are residents and registered voters in the area annexed to the District. This bill also requires after January 1, 2020 for Board members to be elected by seven voting districts and prescribes the process by which the board must divide the District. This bill is author-sponsored.

1. Author's Statement. According to the author, "Currently, there are significant barriers preventing Eastern Coachella Valley residents' access to health care providers and services. This has been well-documented by numerous stakeholders in the region. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving the persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Eastern Coachella Valley stakeholders and I believe that expanding the current healthcare district is best to address these persistent needs. Pointing to the impact and success of the [District] in addressing the health needs of its current constituency."
2. Desert Healthcare District. The District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers, and in 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets, including the Las Palmas Medical Plaza, while Tenant runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member Board elected at-large.

The relationship between LAFCOs and healthcare districts is unique in comparison to other special districts. The principal act for healthcare districts and the formation of some healthcare districts predate the Knox Nisbet Act, which created LAFCOs. As a consequence of the ambiguity in current law, the District has experienced past issues with allegations of grant recipients providing service outside of the boundaries of the District and within the communities identified for potential annexation by this bill. Due to the unique nature of healthcare services and the long history of healthcare district's principal act, the Legislature may wish to consider, beyond the scope of this individual bill, if there is a need to more clearly define the relationship between LAFCOs and healthcare districts, and undertake a closer examination of healthcare district's service boundaries.

1. Arguments in Support. The Borrego Community Health Foundation argues, "The [District] has a long history of acknowledged success in serving [their] residents. [The District's] leaders are acutely aware of and are sympathetic to health disparities in the East Coachella Valley and have collaborated with other agencies to provide services within the limitation of their fiduciary obligations to the District's residents. Expanding the current District will take away their limitation to help end the healthcare disparities that currently exist."
2. Arguments in Opposition. Riverside LAFCO argues, "Unfortunately, our primary issue, stripping LAFCO of its discretionary authority, remains unaddressed. While we have been and will continue to be available to assist the District with expansion of its boundaries, we do not believe additional legislation is necessary to accomplish this intended annexation."

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0004852

 THIRD READING  

Bill No: AB 2414

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 4-1, 6/22/16

AYES: Hertzberg, Beall, Hernandez, Pavley

NOES: Nguyen

NO VOTE RECORDED: Lara, Moorlach

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 50-25, 5/12/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill establishes an annexation process to expand the Desert Health Care District’s boundaries that is exempt from some statutes that generally govern district annexations.

Senate Floor Amendments of 8/19/16 (1) require the Desert Health Care District, if it expands its boundaries pursuant to the bill’s provision, to change from an at-large to a by-district method of electing the District’s governing board members; and (2) specify that the Desert Health Care District, not the County of Riverside, is responsible for submitting a resolution of application with Riverside County Local Agency Formation Commission to initiate proceedings to expand the District.

ANALYSIS: Existing law, pursuant to the Cortese-Knox-Hertzberg Local Government Reorganization Act (Act), generally controls how local officials change the boundaries of cities and special districts, putting local agency formation commissions (LAFCOs) in charge of the proceedings.

This bill:

1. Establishes an annexation process for the Desert Health Care District (District) to include the East Coachella Valley region, and provides a new governance structure for the District's Board of Directors, if the District is expanded pursuant to the process established by this bill.
2. Requires the District, on or before January 5, 2017, to file a resolution of application with Riverside LAFCO, to initiate proceedings by Riverside LAFCO for the expansion of the District to include the East Coachella Valley region. The District must pay any fees associated with the resolution of application.
3. Requires the Riverside LAFCO proceeding to be deemed initiated on the date the resolution of application is accepted for filing. Riverside LAFCO must hold a hearing and provide specified notice.
4. Requires the expanded District to include all communities currently served by the District as of the date the resolution of application is filed and the communities of Indian Wells, La Quinta, Indio, and Coachella, and the unincorporated areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore, and Vista Santa Rosa.
5. Requires Riverside LAFCO to complete the proceeding and direct the election no later than 150 days following receipt of the completed resolution of application.
6. Prohibits the resolution of application, filed by the Board of Supervisors, from being subject to any protest proceedings and prohibits Riverside LAFCO from disapproving the resolution of application.
7. Requires Riverside LAFCO to order the expansion of the District subject to a vote of the registered voters residing within the territory to be annexed to the District at an election following the completion of their proceedings. Riverside LAFCO may condition the annexation on the District’s imposition of sufficient revenues to provide services within the territory to be annexed, including, but not limited to, the concurrent approval of special taxes or benefit assessments that will generate those sufficient revenues.
8. Requires Riverside LAFCO to direct the Board of Supervisors to direct county officials to conduct the election, as specified, for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election. The District must pay the county for the actual costs of conducting the election.
9. Requires the District to be expanded in accordance with this bill, if the following occur:
   1. A majority of the voters within the territory proposed to be annexed to the District vote in favor of the expansion; and,
   2. A number of voters required under applicable law to approve any necessary funding source that requires voter approval vote in favor of that funding source.
10. Requires the District’s Board, 30 days after the expansion of the District, to adopt a resolution to increase the number of Board members from five to seven without the petition or approval of the voters residing within the District. The Board's resolution must be effective on the date of, and subject to any conditions specified in the resolution.
11. Requires the Board to appoint two additional Board members that are registered voters and residents of the territory annexed pursuant to this bill.
12. Requires the District, after its expansion, to elect the seven members of its board of directors by district, rather than at large, beginning with the first district election after January 1, 2020.
13. Establishes a method by which the District’s board of directors must establish the new voting districts.
14. Specifies the manner in which the new Board members’ term must be staggered and requires a vacancy to be filled pursuant to a specified statute.
15. Provides that the increase to the membership of the Board, the appointment of two new members, and the change in the manner of electing the Board only become operative if the District is expanded in accordance with the annexation process established by this bill.
16. Exempts the expansion of the District from the Act, except as specified in this bill.
17. Provides that the Act applies to any other change of organization or reorganization, following the reorganization of the District pursuant to this bill.

Background

The Act controls how local officials change the boundaries of cities and special districts, putting LAFCOs in charge of the proceedings. LAFCOs’ boundary decisions must be consistent with spheres of influence that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their spheres of influence, they must prepare municipal service reviews which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

Most boundary changes begin when a city or special district applies to LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCO can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations (AB 1335, Gotch, Chapter 1307, Statutes of 1993). Boundary changes, including annexations, require four (sometimes five) steps:

• First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, and a property tax exchange agreement between the county and the District.
• Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed annexation. LAFCO may impose terms and conditions relating to revenues and other considerations. If LAFCO disapproves, the proposed annexation stops.
• Third, LAFCO must hold another public hearing to measure protests.
• Fourth, if there was sufficient protest, an election must occur. A successful annexation requires majority-voter approval.
• Finally, LAFCO’s staff files formal documents to complete the annexation.

The District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers. In 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets, including the Las Palmas Medical Plaza, while Tenet runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District has adopted a grant program to invest in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member Board elected at-large.

Some public officials want to expand the District’s boundaries to provide services in communities within the Eastern Coachella Valley that lack adequate access to health care.

Comments

Purpose of the bill. This bill responds to significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving these persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Expanding the District will help to address the persistent needs in these underserved communities.

Precedent. This bill is one of several bills that the Legislature has considered in recent years that limit the discretion and authority that state law generally grant to LAFCOs over boundary changes and reorganizations. For example, AB 1232 (Huffman, Chapter 518, Statutes of 2009) allowed for the consolidation of the Sewerage Agency of Southern Marin and its member districts, after notice and hearing, but without protest hearings, AB 2453 (Achadjian, Chapter 350, Statutes of 2014) established a special process for forming the Paso Robles Water District, and AB 3 (Williams, Chapter 548, Statutes of 2015) created a special process for forming the Isla Vista Community Services District. Continuing to enact special legislation circumventing the LAFCO process for individual local government boundary changes and reorganizations may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues.

Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because this bill imposes additional duties on Riverside County officials, Legislative Counsel says that it imposes a new state mandate. This bill requires the state to reimburse local agencies if the Commission on State Mandates (Commission) determines that this bill imposes a reimbursable mandate.

Special legislation. The California Constitution prohibits special legislation when a general law can apply (Article IV, §16). This bill contains findings and declarations explaining the need for legislation that applies only to the District.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Unknown reimbursable one-time costs, likely over $50,000, for the District to pay for costs to prepare an application for the expansion of the District and to conduct the specified election (General Fund).  Actual reimbursable costs would be subject to a determination by the Commission on State Mandates (Commission), if the County files a successful reimbursement claim.
• Unknown, likely minor reimbursable ongoing costs until 2020 related to the mandatory addition of two at-large District board members, should the election on the District expansion be approved by the voters (General Fund).  Actual reimbursable costs would be subject to a determination by the Commission, if the District files a successful reimbursement claim.
• Additional estimated one-time reimbursable costs of approximately $300,000 to conduct activities related to the establishment of seven voting districts, to the extent the District expansion is approved by the voters  (General Fund).   Redistricting costs could include public outreach as well as legal, demographic, and communications consultant contracts.  Actual reimbursable costs would be subject to a determination by the Commission.

SUPPORT: (Verified 8/11/16)

Borrego Community Health Foundation

Clinicas De Salud Del Pueblo

Comite Civico del Valle

Inland Congregations United for Change

La Union Hace La Fuerza

OPPOSITION: (Verified 8/11/16)

California Association of Local Agency Formation Commissions

County of Riverside

Riverside County Local Agency Formation Commission

ARGUMENTS IN SUPPORT: Supporters argue that this bill, by facilitating the expansion of the District’s boundaries, will reduce significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services.

ARGUMENTS IN OPPOSITION: Opponents argue that this bill circumvents the LAFCO process for individual local government boundary changes and reorganizations, which may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues.

ASSEMBLY FLOOR: 50-25, 5/12/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron

NO VOTE RECORDED: Burke, Chang, Jones-Sawyer, Mayes, Wilk

Prepared by:

8/22/16 23:16:43

**** END ****

 THIRD READING  

Bill No: AB 2414

Author:

:

Vote:

SENATE GOVERNANCE & FIN. COMMITTEE: 4-1, 6/22/16

AYES: Hertzberg, Beall, Hernandez, Pavley

NOES: Nguyen

NO VOTE RECORDED: Lara, Moorlach

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/11/16

AYES: Lara, Beall, Hill, McGuire, Mendoza

NOES: Bates, Nielsen

ASSEMBLY FLOOR: 50-25, 5/12/16 - See last page for vote

SUBJECT:

SOURCE: Author

DIGEST: This bill establishes an annexation process to expand the Desert Healthcare District’s boundaries that is exempt from some statutes that generally govern district annexations.

ANALYSIS: Existing law, pursuant to the Cortese-Knox-Hertzberg Local Government Reorganization Act (Act), generally controls how local officials change the boundaries of cities and special districts, putting local agency formation commissions (LAFCOs) in charge of the proceedings.

This bill:

1. Establishes an annexation process for the Desert Healthcare District (District) to include the East Coachella Valley region, and provides a new governance structure for the District's Board of Directors, if the District is expanded pursuant to the process established by this bill.
2. Requires the Riverside County Board of Supervisors (Board of Supervisors), on or before January 5, 2017, to file a resolution of application with Riverside LAFCO, to initiate proceedings by Riverside LAFCO for the expansion of the District to include the East Coachella Valley region. The District must pay any fees associated with the resolution of application.
3. Requires the Riverside LAFCO proceeding to be deemed initiated on the date the resolution of application is accepted for filing. Riverside LAFCO must hold a hearing and provide specified notice.
4. Requires the expanded District to include all communities currently served by the District as of the date the resolution of application is filed and the communities of Indian Wells, La Quinta, Indio, and Coachella, and the unincorporated areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore, and Vista Santa Rosa.
5. Requires Riverside LAFCO to complete the proceeding and direct the election no later than 150 days following receipt of the completed resolution of application.
6. Prohibits the resolution of application, filed by the Board of Supervisors, from being subject to any protest proceedings and prohibits Riverside LAFCO from disapproving the resolution of application.
7. Requires Riverside LAFCO to order the expansion of the District subject to a vote of the registered voters residing within the territory to be annexed to the District at an election following the completion of their proceedings. Riverside LAFCO may condition the annexation on the District’s imposition of sufficient revenues to provide services within the territory to be annexed, including, but not limited to, the concurrent approval of special taxes or benefit assessments that will generate those sufficient revenues.
8. Requires Riverside LAFCO to direct the Board of Supervisors to direct county officials to conduct the election, as specified, for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election. The District must pay the county for the actual costs of conducting the election.
9. Requires the District to be expanded in accordance with this bill, if the following occur:
   1. A majority of the voters within the territory proposed to be annexed to the District vote in favor of the expansion; and,
   2. A number of voters required under applicable law to approve any necessary funding source that requires voter approval vote in favor of that funding source.
10. Requires the District’s Board, 30 days after the expansion of the District, to adopt a resolution to increase the number of Board members from five to seven without the petition or approval of the voters residing within the District. The Board's resolution must be effective on the date of, and subject to any conditions specified in the resolution.
11. Requires the Board to appoint two additional Board members that are registered voters and residents of the territory annexed pursuant to this bill.
12. Specifies the manner in which the new Board members’ term must be staggered and requires a vacancy to be filled pursuant to existing law which provides an appointment process for the Board.
13. Provides that the increase to the membership of the Board and appointment of two new members only becomes operative, if the District is expanded in accordance with the annexation process established by this bill.
14. Exempts the expansion of the District from the Act, except as specified in this bill.
15. Provides that the Act applies to any other change of organization or reorganization, following the reorganization of the District pursuant to this bill.

Background

The Act controls how local officials change the boundaries of cities and special districts, putting LAFCOs in charge of the proceedings. LAFCOs’ boundary decisions must be consistent with spheres of influence that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their spheres of influence, they must prepare municipal service reviews which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

Most boundary changes begin when a city or special district applies to LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCO can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations (AB 1335, Gotch, Chapter 1307, Statutes of 1993). Boundary changes, including annexations, require four (sometimes five) steps:

• First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, and a property tax exchange agreement between the county and the District.
• Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed annexation. LAFCO may impose terms and conditions relating to revenues and other considerations. If LAFCO disapproves, the proposed annexation stops.
• Third, LAFCO must hold another public hearing to measure protests.
• Fourth, if there was sufficient protest, an election must occur. A successful annexation requires majority-voter approval.
• Finally, LAFCO’s staff files formal documents to complete the annexation.

The District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers. In 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets, including the Las Palmas Medical Plaza, while Tenet runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District has adopted a grant program to invest in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member Board elected at-large.

Some public officials want to expand the District’s boundaries to provide services in communities within the Eastern Coachella Valley that lack adequate access to health care.

Comments

Purpose of the bill. This bill responds to significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving these persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Expanding the District will help to address the persistent needs in these underserved communities.

Precedent. This bill is one of several bills that the Legislature has considered in recent years that limit the discretion and authority that state law generally grant to LAFCOs over boundary changes and reorganizations. For example, AB 1232 (Huffman, Chapter 518, Statutes of 2009) allowed for the consolidation of the Sewerage Agency of Southern Marin and its member districts, after notice and hearing, but without protest hearings, AB 2453 (Achadjian, Chapter 350, Statutes of 2014) established a special process for forming the Paso Robles Water District, and AB 3 (Williams, Chapter 548, Statutes of 2015) created a special process for forming the Isla Vista Community Services District. Continuing to enact special legislation circumventing the LAFCO process for individual local government boundary changes and reorganizations may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues.

Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because this bill imposes additional duties on Riverside County officials, Legislative Counsel says that it imposes a new state mandate. This bill requires the state to reimburse local agencies if the Commission on State Mandates (Commission) determines that this bill imposes a reimbursable mandate.

Special legislation. The California Constitution prohibits special legislation when a general law can apply (Article IV, §16). This bill contains findings and declarations explaining the need for legislation that applies only to the District.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

According to the Senate Appropriations Committee:

• Unknown reimbursable one-time costs, likely over $50,000, for the District to reimburse Riverside County for costs to prepare an application for the expansion of the District and to conduct the specified election (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the County files a successful reimbursement claim.
• Unknown, likely minor reimbursable ongoing costs related to the mandatory addition of two District Board members, should the election on the District expansion be approved by the voters (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the District files a successful reimbursement claim.

SUPPORT: (Verified 8/11/16)

Borrego Community Health Foundation

Clinicas De Salud Del Pueblo

Comite Civico del Valle

Inland Congregations United for Change

La Union Hace La Fuerza

OPPOSITION: (Verified 8/11/16)

California Association of Local Agency Formation Commissions

County of Riverside

Riverside County Local Agency Formation Commission

ARGUMENTS IN SUPPORT: Supporters argue that this bill, by facilitating the expansion of the District’s boundaries, will reduce significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services.

ARGUMENTS IN OPPOSITION: Opponents argue that this bill circumvents the LAFCO process for individual local government boundary changes and reorganizations, which may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues.

ASSEMBLY FLOOR: 50-25, 5/12/16

AYES: Alejo, Arambula, Atkins, Bloom, Bonilla, Bonta, Brown, Calderon, Campos, Chau, Chiu, Chu, Cooley, Cooper, Dababneh, Daly, Dodd, Eggman, Frazier, Cristina Garcia, Eduardo Garcia, Gatto, Gipson, Gomez, Gonzalez, Gordon, Gray, Roger Hernández, Holden, Irwin, Levine, Lopez, Low, McCarty, Medina, Mullin, Nazarian, O'Donnell, Quirk, Ridley-Thomas, Rodriguez, Salas, Santiago, Mark Stone, Thurmond, Ting, Weber, Williams, Wood, Rendon

NOES: Achadjian, Travis Allen, Baker, Bigelow, Brough, Chávez, Dahle, Beth Gaines, Gallagher, Grove, Hadley, Harper, Jones, Kim, Lackey, Linder, Maienschein, Mathis, Melendez, Obernolte, Olsen, Patterson, Steinorth, Wagner, Waldron

NO VOTE RECORDED: Burke, Chang, Jones-Sawyer, Mayes, Wilk

Prepared by:

8/16/16 18:01:52

**** END ****

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2414 (Eduardo Garcia) - Desert Healthcare District

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 11, 2016

Bill Summary:

AB 2414 would provide an exemption from specified statutes that generally govern district annexations and require Riverside County to apply to the local agency formation commission (LAFCO) by January 5, 2017 to initiate proceedings to expand the Desert Healthcare District (District). The bill would also require the County to hold an election for approval of the District expansion and any necessary funding sources, as specified. The District would be required to pay for the costs of submitting the LAFCO application and for holding the election.

Fiscal Impact:

• Unknown reimbursable one-time costs, likely over $50,000, for the District to reimburse Riverside County for costs to prepare an application for the expansion of the District and to conduct the specified election (General Fund). Actual reimbursable costs would be subject to a determination by the Commission on State Mandates (Commission), if the County files a successful reimbursement claim.
  
• Unknown, likely minor reimbursable ongoing costs related to the mandatory addition of two District board members, should the election on the District expansion be approved by the voters (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the District files a successful reimbursement claim.

Author Amendments:

Require the District to pay any fees associated with the LAFCO application, and make technical code numbering changes.

Committee Amendments:

Require the District to pay the county for the actual costs of conducting the election.

-- END --

SENATE COMMITTEE ON

Senator Ricardo Lara, Chair

2015 - 2016 Regular Session

AB 2414 (Eduardo Garcia) - Desert Healthcare District

This bill meets the criteria for referral to the Suspense File.

Bill Summary:

AB 2414 would provide an exemption from specified statutes that generally govern district annexations and require Riverside County to apply to the local agency formation commission (LAFCO) by January 5, 2017 to initiate proceedings to expand the Desert Healthcare District (District). The bill would also require the County to hold an election for approval of the District expansion and any necessary funding sources, as specified.

Fiscal Impact:

• Unknown reimbursable one-time costs, likely over $50,000, for Riverside County to prepare an application for the expansion of the District and to conduct the specified election (General Fund). Actual reimbursable costs would be subject to a determination by the Commission on State Mandates (Commission), if the County files a successful reimbursement claim.
  
• Unknown, likely minor reimbursable ongoing costs related to the mandatory addition of two District board members, should the election on the District expansion be approved by the voters (General Fund). Actual reimbursable costs would be subject to a determination by the Commission, if the District files a successful reimbursement claim.

Background:

Existing law, the Cortese-Knox-Hertzberg Act, controls how local officials change the boundaries of cities and special districts, and designates a LAFCO in each county to oversee boundary changes. Most boundary changes begin when a city or special district files a resolution of application with the LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, a LAFCO can initiate some special district boundary changes at its own discretion, such as consolidations, dissolutions, mergers, subsidiary districts, or reorganizations. Boundary changes, including annexations, require four (sometimes five) steps:

• First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, and a property tax exchange agreement between the county and the district.
• Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed annexation. LAFCO may impose terms and conditions relating to revenues and other considerations. If LAFCO disapproves, the proposed annexation stops.
• Third, LAFCO must hold another public hearing to measure protests.
• Fourth, if there was sufficient protest, an election must occur. A successful annexation requires majority-voter approval.
• Finally, LAFCO’s staff files formal documents to complete the annexation.

The Desert Healthcare District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's governing board has leased hospital operations to medical facility providers. In 1997, the board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets, including the Las Palmas Medical Plaza, while Tenet runs the operations of the 387-bed acute care hospital.

The District indicates that it has an operating budget of roughly $9 million, and allocates more than $3 million each year for grants and other programs that invests in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by its residents, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member board elected at-large.

Proposed Law:

AB 2414 would establish a process for the expansion of the District’s boundaries that is exempt from some existing requirements for boundary changes in current LAFCO law. Specifically, this bill would:

• Require the Riverside County Board of Supervisors to file a resolution of application with the LAFCO by January 5, 2017 for the expansion of the District to include its current service area and the communities of Indian Wells, La Quinta, Indio, and Coachella, and the unincorporated areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore, and Vista Santa Rosa.
• Require the board of supervisors to pay any fees associated with the LAFCO application.
• Require the LAFCO proceeding to be deemed initiated on the date the completed application is accepted, and require the LAFCO to hold a noticed public hearing.
• Prohibit the LAFCO from disapproving the application and prohibits the application from being subject to protest proceedings.
• Require the LAFCO to order the expansion of the District, subject to a vote of the registered voters residing within the territory to be annexed at an election following the completion of their proceedings. The LAFCO must complete the proceeding and direct the election within 150 days of receiving the completed application.
• Authorize the LAFCO to condition the annexation on the District’s imposition of sufficient revenues to provide services to the expanded territory.
• Require the LAFCO to direct the County to conduct the election for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election, as specified.
• Specify that the District expansion is exempt from the provisions of the Cortese-Knox-Hertzberg Act, except as specified in the bill.

AB 2414 would also require the District’s board of directors to adopt a resolution to increase the size of the board from five to seven members, as specified, within 30 days of voter approval of the District expansion. The additional board members would be initially appointed by the current board, and must be registered voters and residents of the territory annexed pursuant to this bill.

Staff Comments:

By placing new duties on Riverside County and expanding the District’s board of directors, this bill would impose a reimbursable mandate. The County would likely be eligible for reimbursement for costs related to the application to LAFCO, and costs to conduct the necessary elections for District expansion and funding at the next countywide election. Staff estimates these one-time costs could exceed $50,000. In addition, the District would likely be eligible for reimbursement of ongoing costs associated with the mandatory expansion of its board by two members, to the extent the District expansion is approved by the voters. Ongoing costs to support the additional board members are likely to be relatively minor. Actual state-reimbursable costs would be subject to a determination by the Commission, if the County and District file successful reimbursement claims.

-- END --

SENATE COMMITTEE ON GOVERNANCE AND FINANCE

Senator Robert M. Hertzberg, Chair

2015 - 2016 Regular

Desert Healthcare District

Establishes an annexation process to expand the Desert Healthcare District’s boundaries that is exempt from some statutes that generally govern district annexations.

Background

The Cortese-Knox-Hertzberg Act controls how local officials change the boundaries of cities and special districts, putting local agency formation commissions (LAFCOs) in charge of the proceedings. LAFCOs’ boundary decisions must be consistent with spheres of influence (SOIs) that LAFCOs adopt to show the future boundaries and service areas of the cities and special districts. Before LAFCOs can adopt their spheres of influence, they must prepare municipal service reviews (MSRs) which analyze population growth, public facilities, and service demands. LAFCOs may also conduct special studies of local governments.

Most boundary changes begin when a city or special district applies to LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCO can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations (AB 1335, Gotch, 1993). Boundary changes, including annexations, require four (sometimes five) steps:

• First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, and a property tax exchange agreement between the county and the district.
• Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed annexation. LAFCO may impose terms and conditions relating to revenues and other considerations. If LAFCO disapproves, the proposed annexation stops.
• Third, LAFCO must hold another public hearing to measure protests.
• Fourth, if there was sufficient protest, an election must occur. A successful annexation requires majority-voter approval.
• Finally, LAFCO’s staff files formal documents to complete the annexation.

The Desert Healthcare District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers. In 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets, including the Las Palmas Medical Plaza, while Tenet runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District has adopted a grant program to invest in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member Board elected at-large.

Some public officials want to expand the District’s boundaries to provide services in communities within the Eastern Coachella Valley that lack adequate access to health care.

Proposed Law

Assembly Bill 2414 establishes an annexation process for the District to include the East Coachella Valley region, and provides a new governance structure for the District's Board of Directors, if the District is expanded pursuant to the process established by this bill.

AB 2414 requires the Riverside County Board of Supervisors, on or before January 5, 2017, to file a resolution of application with Riverside LAFCO, to initiate proceedings by Riverside LAFCO for the expansion of the District to include the East Coachella Valley region. The Board of Supervisors must pay any fees associated with the resolution of application.

AB 2414 requires the Riverside LAFCO proceeding to be deemed initiated on the date the resolution of application is accepted for filing. Riverside LAFCO must hold a hearing and provide specified notice.

AB 2414 requires the expanded District to include all communities currently served by the District as of the date the resolution of application is filed and the communities of Indian Wells, La Quinta, Indio, and Coachella, and the unincorporated areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore, and Vista Santa Rosa.

AB 2414 requires Riverside LAFCO to complete the proceeding and direct the election no later than 150 days following receipt of the completed resolution of application.

AB 2414 prohibits the resolution of application, filed by the Board of Supervisors, from being subject to any protest proceedings and prohibits Riverside LAFCO from disapproving the resolution of application.

AB 2414 requires Riverside LAFCO to order the expansion of the District subject to a vote of the registered voters residing within the territory to be annexed to the District at an election following the completion of their proceedings. Riverside LAFCO must direct the Board of Supervisors to direct county officials to conduct the election, as specified, for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election.

AB 2414 requires the District to be expanded in accordance with this bill, if the following occur:

• A majority of the voters within the territory proposed to be annexed to the District vote in favor of the expansion; and,
• A number of voters required under applicable law to approve any necessary funding source that requires voter approval vote in favor of that funding source.

AB 2414 requires the District’s board, 30 days after the expansion of the District, to adopt a resolution to increase the number of board members from five to seven without the petition or approval of the voters residing within the District. The Board's resolution must be effective on the date of, and subject to any conditions specified in the resolution.

AB 2414 requires the Board to appoint two additional Board members that are registered voters and residents of the territory annexed pursuant to this bill.

AB 2414 specifies the manner in which the new board members’ term must be staggered and requires a vacancy to be filled pursuant to existing law which provides an appointment process for the Board.

AB 2414 provides that the increase to the membership of the Board and appointment of two new members only becomes operative, if the District is expanded in accordance with the annexation process established by this bill.

AB 2414 exempts the expansion of the District from the Cortese-Knox-Hertzberg Local Government Reorganization Act, except as specified in this bill. The bill provides that the Act applies to any other change of organization or reorganization, following the reorganization of the District pursuant to this bill.

State Revenue Impact

No estimate.

Comments

1. Purpose of the bill. AB 2414 responds to significant barriers that impede Eastern Coachella Valley residents' access to health care providers and services. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving these persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Expanding Desert Healthcare District will help to address the persistent needs in these underserved communities.

2. LAFCO and local control. State law makes LAFCOs responsible for encouraging orderly formation and development of local agencies based on local conditions and circumstances. The local officials who sit on the Riverside County LAFCO, not 120 legislators from throughout California, are in the best position to evaluate the local conditions and circumstances that should determine the governance of the Desert Healthcare District. Some complex issues surrounding the District’s expansion, such as what revenues will be available to pay for services in the expanded territory, are left unanswered by AB 2414. The bill requires that the vote to expand the District must also seek voter approval of “any necessary funding source,” but does not specify what local entity will determine whether a funding source is “necessary.” Mandating that voters should decide whether to approve the District’s expansion without ensuring that adequate revenues will be available could result in voters becoming disillusioned if the expanded District lacks the resources to fulfill public needs and expectations. Having a public discussion among local stakeholders about these complex issues is one of the many advantages of the LAFCO reorganization process. The Committee may wish to consider amending AB 2414 to require that LAFCO must approve a proposed revenue source to support the District’s expansion.

3. Precedent. AB 2414 is one of several bills that the Legislature has considered in recent years that limit the discretion and authority that state law generally grant to LAFCOs over boundary changes and reorganizations. For example, AB 1232 (Huffman, 2010) allowed for the consolidation of the Sewerage Agency of Southern Marin and its member districts, after notice and hearing, but without protest hearings, AB 2453 (Achadjian, 2014) established a special process for forming the Paso Robles Water District, and AB 3 (Williams, 2015) created a special process for forming the Isla Vista Community Services District. Continuing to enact special legislation circumventing the LAFCO process for individual local government boundary changes and reorganizations may set a precedent that invites regular legislative involvement in all manner of disputes over local service delivery and boundary issues.

4. Expansion? Like several other local healthcare districts throughout California, the Desert Healthcare District no longer owns or operates a hospital and does not provide any direct health care services to its residents. Instead, the District relies largely on property tax revenues to make grants to support health care-related activities. According to its most recent audited financial report, the District spent $4.2 million – or 55% of its annual revenues – on grants while spending $2.7 million – or 35% of its annual revenues – on administrative costs. In the past two years, the District has faced criticism for making grants to a foundation that allegedly spent some of the funds on programs that benefitted communities outside of the District’s boundaries. The District has also experienced some recent governance issues, including being sued by one of its own board members and subsequently having its chief executive officer resign. Expanding a healthcare district that no longer performs its original functions and is the focus of questions about its governance and spending decisions may not be the best way to address the undeniable and important health care needs of communities in the Eastern Coachella Valley.

5. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 2414 imposes additional duties on Riverside County officials, Legislative Counsel says that it imposes a new state mandate. AB 2414 requires the state to reimburse local agencies if the Commission on State Mandates determines that the bill imposes a reimbursable mandate.

6. Special legislation. The California Constitution prohibits special legislation when a general law can apply (Article IV, §16). AB2414 contains findings and declarations explaining the need for legislation that applies only to the Desert Health Care District.

Assembly Actions

Assembly Local Government Committee: 7-1

Assembly Appropriations Committee: 15-5

Assembly Floor: 50-25

Support and Opposition

(6/16/16)

Support: Borrego Community Health Foundation; Clinicas De Salud Del Pueblo; Comite Civico del Valle; Inland Congregations United for Change; La Union Hace La Fuerza.

Opposition: California Association of Local Agency Formation Commissions; Riverside County Local Agency Formation Commission.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2414

Author:(Eduardo Garcia)

As Amended Ver:April 18, 2016

Majority vote

SUMMARY: Establishes an annexation process for the Desert Healthcare District (District). Specifically, this bill:

1. Establishes an annexation process for the District to include the East Coachella Valley region, and provides a new governance structure for the District's Board of Directors (Board), if the District is expanded pursuant to the process established by this bill.
2. Requires the Riverside County Board of Supervisors (Board of Supervisors), on or before January 5, 2017, to file a resolution of application with Riverside County Local Agency Formation Commission (Riverside LAFCO), to initiate proceedings by Riverside LAFCO for the expansion of the District to include the East Coachella Valley region, as specified pursuant to 5) below.
3. Requires the Board of Supervisors to pay any fees associated with the resolution of application.
4. Requires the Riverside LAFCO proceeding to be deemed initiated on the date the resolution of application is accepted for filing. Requires Riverside LAFCO to hold a hearing and provide specified notice.
5. Requires the expanded District to include all communities currently served by the District as of the date the resolution of application is filed. Requires the expanded District to also include, but not be limited to, the communities of Indian Wells, La Quinta, Indio, and Coachella, and the unincorporated areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore, and Vista Santa Rosa.
6. Requires Riverside LAFCO to complete the proceeding and direct the election no later than 150 days following receipt of the completed resolution of application.
7. Prohibits the resolution of application, filed by the Board of Supervisors, from being subject to any protest proceedings.
8. Prohibits Riverside LAFCO from disapproving the resolution of application.
9. Requires Riverside LAFCO to order the expansion of the District subject to a vote of the registered voters residing within the territory to be annexed to the District at an election following the completion of their proceedings.
10. Requires Riverside LAFCO to direct the Board of Supervisors to direct county officials to conduct the election, as specified, for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election.
11. Requires the District to be expanded in accordance with this bill, if the following occur:
    1. A majority of the voters within the territory proposed to be annexed to the District vote in favor of the expansion; and,
    2. A number of voters required under applicable law to approve any necessary funding source that requires voter approval vote in favor of that funding source.
12. Requires the Board, 30 days after the expansion of the District, to adopt a resolution to increase the number of board members from five to seven without the petition or approval of the voters residing within the District.
13. Requires the Board's resolution to be effective on the date of, and subject to any conditions specified in the resolution.
14. Requires the Board to appoint two additional Board members that are registered voters and residents of the territory annexed pursuant to this bill.
15. Requires the Board, upon appointment, to designate by lot one appointed member to leave office when their successor takes office, pursuant to the Uniform District Election Law, and one appointed member to leave office two years thereafter.
16. Requires a vacancy to be filled pursuant to existing law which provides an appointment process for the Board.
17. Provides that the increase to the membership of the Board and appointment of two new members only becomes operative, if the District is expanded in accordance with the annexation process established by this bill.
18. Exempts the expansion of the District from the Cortese-Knox-Hertzberg Local Government Reorganization Act (Act), except as specified in this bill. Provides that the Act applies to any other change of organization or reorganization, following the reorganization of the District pursuant to this bill.
19. Finds and declares that a special law is necessary and general law cannot be made applicable because of the unique community needs in Riverside County that would be served by the expansion of the District to include the entire Coachella Valley region, including the limited access in the eastern Coachella Valley to healthcare services by an underserved population that suffers from a higher than average prevalence of preventable disease.
20. Provides that, if the Commission on State Mandates determines that this bill contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made, pursuant to current laws governing state-mandated local costs.

FISCAL EFFECT: According to the Assembly Appropriations Committee:

1. Potentially reimbursable one-time mandate costs, likely in the range of $15,000 to $50,000, for the County to file the required application with LAFCO and conduct an election.
2. Potentially reimbursable mandate costs to the District to expand their Board by two members, should the annexation process be successful. These costs are minor and it is unlikely the District would file a reimbursement claim with the Commission on State Mandates.
3. No fiscal impact to the Riverside LAFCO. The County would pay the normal application fees that would cover the cost of processing the proposal.

COMMENTS:

1. LAFCO Law. LAFCOs are responsible for coordinating logical and timely changes in local governmental boundaries, conducting special studies that review ways to reorganize, simplify, and streamline governmental structures, and preparing a sphere of influence for each city and special district within each county. The courts refer to LAFCOs as the Legislature's "watchdog" over local boundary changes. The Act establishes procedures for local government changes of organization, including city incorporations, disincorporations, city and special district consolidations, and annexations to a city or special district. LAFCOs regulate boundary changes through the approval or denial of proposals by other public agencies or individuals for these procedures.

The Act prescribes a process for the inclusion or addition of territory to a district (district annexation), which is similar to most boundary changes that require numerous steps: a) application to LAFCO, by petition or resolution; b) noticed public hearing, testimony, and approval or disapproval by LAFCO in which they can impose terms and conditions; c) additional public hearing for protests (if more than 25% of voters file protest, the LAFCO must order an election on the proposed annexation, and if more than 50% of voters protest, then the LAFCO must terminate the proceedings); d) an election, if there were significant protests; and, e) LAFCO staff files documents to complete the annexation.

In the past several years, the Legislature has established a modified LAFCO process or exempted specified requirements in the LAFCO process for the formation of several special districts following a history of failed attempts at the local level, including AB 2453 (Achadjian), Chapter 350, Statutes of 2014, for the creation of the Paso Robles Water District; and, AB 3 (Williams), Chapter 548, Statutes of 2015, for the formation of the Isla Vista Community Services District.

1. Bill Summary. This bill establishes an annexation process for the District to include the East Coachella Valley region that is exempt from the statutes that govern the usual process under LAFCO for district annexations. This bill requires the Riverside County Board of Supervisors, on or before January 5, 2017, to submit to Riverside LAFCO a resolution of application to initiate LAFCO proceedings to expand the District's boundaries to include the East Coachella Valley region. This bill requires Riverside LAFCO, within 150 days of receiving the resolution of application, to complete specified proceedings and direct the election for the expanded District.

Under this bill, the expanded District must include all communities currently served by the District and the communities of Indian Wells, La Quinta, Indio, Coachella, and the unincorporated area of Bermuda Dunes, Mecca, Thermal Oasis, North Shore, and Vista Santa Rosa. Riverside LAFCO would not have the usual power to disapprove the application and the protest provision would not apply to the proposed annexation. The District would only be expanded, if supported by a majority of voters within the territory proposed to be annexed to the District and the number of voters required by existing law for any necessary funding. If the District is expanded, this bill requires, within 30 days, the five-member Board to appoint two new Board members, who are residents and registered voters in the area annexed to the District. This bill is author-sponsored.

1. Author's Statement. According to the author, "Currently, there are significant barriers preventing Eastern Coachella Valley residents' access to health care providers and services. This has been well-documented by numerous stakeholders in the region. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving the persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Eastern Coachella Valley stakeholders and I believe that expanding the current healthcare district is best to address these persistent needs. Pointing to the impact and success of the Desert Healthcare District in addressing the health needs of its current constituency."
2. Desert Healthcare District. The District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers. In 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets, including the Las Palmas Medical Plaza, while Tenant runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District has adopted a grant program to invest in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member Board elected at-large.

1. Policy Considerations. The Legislature may wish to consider the following:
   1. Limiting LAFCO Powers. The Legislature has delegated the power to control local boundaries to the 58 LAFCOs. This bill places several requirements on LAFCO, but does not allow for the usual annexation process to occur. The Legislature has seen an increasing number of bills seeking to bypass the LAFCO process; therefore, they may wish to consider, if prohibiting LAFCO from disapproving the application is taking away one of the fundamental powers the Legislature has tasked LAFCOs with.

The author may wish to consider allowing LAFCO to disapprove the application based on findings by the LAFCO that there is an insufficient source of funding, which would be consistent with the author's goal of ensuring adequate funding for the expanded District.

• 1. Healthcare Districts and LAFCO. The relationship between LAFCOs and healthcare districts is unique in comparison to other special districts. The Local Hospital District Law (now called the Local Healthcare District Law) and the formation of some healthcare districts predate the Knox Nisbet Act, which created LAFCOs and formalized the process for establishing a hospital district. As a consequence of the ambiguity in current law, the District has experienced past issues with allegations of grant recipients providing service outside of the boundaries of the District and within the communities identified for potential annexation by this bill. Due to the unique nature of healthcare services and the long history of healthcare district's principal act, the Legislature may wish to consider, beyond the scope of this individual bill, if there is a need to more clearly define the relationship between LAFCOs and healthcare districts, and undertake a closer examination of healthcare district's service boundaries.
  2. Applicant. The Legislature may wish to consider, if Riverside County is the best applicant to begin the annexation process established by this bill. The District may have a better sense of the services and funding necessary to support the expanded District and may therefore be the best applicant.

1. Arguments in Support. The Borrego Community Health Foundation argues, "The [District] has a long history of acknowledged success in serving [their] residents. [The District's] leaders are acutely aware of and are sympathetic to health disparities in the East Coachella Valley and have collaborated with other agencies to provide services within the limitation of their fiduciary obligations to the District's residents. Expanding the current District will take away their limitation to help end the healthcare disparities that currently exist."
2. Arguments in Opposition. Riverside LAFCO argues, "Annexation of the eastern Coachella Valley communities has been a topic of discussion at times over the past two decades, but has not been pursued, likely since no existing revenues would be available to fund services to the expanded area. Annexation under the normal process could have been initiated at any time and still can be. In addition to the elimination of virtually all LAFCO discretionary authority, the timeframes set out in the bill are unrealistic and carry unfunded mandates for local agencies."

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958 FN: 0002893

Date of Hearing: May 4, 2016

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 2414

Author:(Eduardo Garcia) – As Amended Ver:April 18, 2016

Urgency: No State Mandated Local Program: Yes Reimbursable: Yes

SUMMARY:

This bill authorizes the expansion of, and establishes an annexation process for, the Desert Healthcare District (District) outside of the usual process under LAFCO for district annexations. Specifically, this bill:

1. Requires the Riverside County Board of Supervisors, by January 5, 2017, to submit to Riverside LAFCO a resolution of application, and, upon direction of the commission, to place approval of district expansion on the ballot at the next countywide election following the completion of commission proceeding, including a public hearing.
2. Requires the expanded district to include all communities currently served by the District and the communities of Indian Wells, La Quinta, Indio, Coachella, and the unincorporated area of Bermuda Dunes, Mecca, Thermal Oasis, North Shore, and Vista Santa Rosa.
3. Specifies the Riverside LAFCO would not have the usual power to disapprove the application nor would the resolution of application be subject to any protest provision proceedings.
4. Requires Riverside LAFCO to complete its proceedings and direct the required election no later than 150 days following receipt of the completed resolution of application.
5. Requires the District to be expanded only if supported by a majority of voters within the boundaries of the expanded district and the number of voters required by existing law for any necessary funding.
6. Requires, 30 days after the expansion of the district, the five-member Board to appoint two new Board members who are residents and registered voters in the area annexed to the District.

FISCAL EFFECT:

1. Potentially reimbursable one-time mandate costs, likely in the range of $15,000 to $50,000, for the County to file the required application with LAFCO and conduct an election.
2. Potentially reimbursable mandate costs to the District to expand their Board by two members, should the annexation process be successful. These costs are minor and it is unlikely the District would file a reimbursement claim with the Commission on State Mandates.
3. No fiscal impact to the Riverside LAFCO. The County would pay the normal application fees that would cover the cost of processing the proposal.

COMMENTS:

1. Purpose. According to the author, "Currently, there are significant barriers preventing Eastern Coachella Valley residents’ access to health care providers and services. This has been well-documented by numerous stakeholders in the region. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving the persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Eastern Coachella Valley stakeholders and I believe that expanding the current healthcare district is best to address these persistent needs."
2. Desert Healthcare District. The District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers. In 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease while Tenant runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District has adopted a grant program to invest in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the Las Palmas Medical Plaza. The District is governed by a five-member Board elected at-large.

1. Arguments in Support. The Borrego Community Health Foundation argues, "The District has a long history of acknowledged success in serving their residents. The District's leaders are acutely aware of and are sympathetic to health disparities in the East Coachella Valley and have collaborated with other agencies to provide services within the limitation of their fiduciary obligations to the District's residents. Expanding the current District will take away their limitation to help end the healthcare disparities that currently exist."
2. Arguments in Opposition. Riverside LAFCO argues, "Annexation of the eastern Coachella Valley communities has been a topic of discussion at times over the past two decades, but has not been pursued, likely since no existing revenues would be available to fund services to the expanded area. Annexation under the normal process could have been initiated at any time and still can be. In addition to the elimination of virtually all LAFCO discretionary authority, the timeframes set out in the bill are unrealistic and carry unfunded mandates for local agencies."

Analysis Prepared by: Jennifer Swenson / APPR. / (916) 319-2081

Date of Hearing: April 13, 2016

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Susan Talamantes Eggman, Chair

ABPCA Bill Id:AB 2414 (

Author:Eduardo Garcia) – As Introduced Ver:February 19, 2016

SUBJECT: Desert Healthcare District.

SUMMARY: Establishes an annexation process for the Desert Healthcare District (District). Specifically, this bill:

1. Establishes an annexation process for the District to include the East Coachella Valley region, and provides a new governance structure for the District's Board of Directors (Board) if the District is expanded pursuant to the process established by this bill.
2. Requires the Riverside County Board of Supervisors (Board of Supervisors), on or before 15 days after the effective date of this bill, to file a resolution of application with Riverside County Local Agency Formation Commission (Riverside LAFCO), to initiate a comprehensive review and recommendation by Riverside LAFCO for the expansion of the District to include the East Coachella Valley region, as specified pursuant to 7), below.
3. Requires the Board of Supervisors to pay any fees associated with the resolution of application.
4. Requires Riverside LAFCO, in consultation with the Board of Supervisors, the Board, Riverside County Auditor-Controller, local entities affected by the expansion, and other relevant stakeholders, to conduct and complete an analysis of the funding sources available to the expanded District.
5. Provides that the financial analysis completed pursuant to this bill is not binding with respect to the final funding allocated to the District, if it is expanded pursuant to this bill.
6. Requires the review and recommendation of Riverside LAFCO to include a recommendation of the boundaries of the expanded District.
7. Requires the expanded District to include all communities currently served by the District as of the date the resolution of application is filed. Requires the expanded District to also include, but not be limited to, the communities of Indian Wells, La Quinta, Indio, and Coachella, and the unincorporated areas of Bermuda Dunes, Mecca, Thermal, Oasis, North Shore, and Vista Santa Rosa.
8. Requires Riverside LAFCO to complete the review on or before August 1, 2016.
9. Prohibits the resolution of application, filed by the Board of Supervisors, from being subject to any protest proceedings.
10. Prohibits Riverside LAFCO from disapproving the resolution of application.
11. Requires Riverside LAFCO, if a funding source sufficient to support the operations of the expanded District is identified, to order the expansion of the District subject to a vote of the registered voters residing within the boundaries of the proposed expanded District at an election following the completion of their review.
12. Requires Riverside LAFCO to direct the Board of Supervisors to direct county officials to conduct the election for the District's expansion and any necessary funding source that requires voter approval on the ballot at the next countywide election.
13. Requires the District to be expanded in accordance with this bill, if the following occur:
    1. A majority of the voters within the boundaries of the expanded district vote in favor
       of the expansion; and,
    2. A number of voters required under applicable law to approve any necessary funding source that requires voter approval vote in favor of that funding source.
14. Requires the Board, no later than December 1, 2016, to adopt a resolution to increase the number of board members from five to seven without the petition or approval of the voters residing within the District.
15. Requires the Board's resolution to be effective on the date of, and subject to any conditions specified in the resolution.
16. Requires the Board to appoint two additional Board members that are registered voters and residents of the territory annexed pursuant to this bill.
17. Requires the Board, upon appointment, to designate by lot one appointed member to leave office when their successor takes office, pursuant to the Uniform District Election Law, and one appointed member to leave office two years thereafter.
18. Requires a vacancy to be filled pursuant to existing law which provides an appointment process for the Board.
19. Provides that the increase to the membership of the Board and appointment of two new members only becomes operative if the District is expanded in accordance with the annexation process established by this bill.
20. Exempts the expansion of the District from the Cortese-Knox-Hertzberg Local Government Reorganization Act (Act), except as specified in this bill. Provides that the Act applies to any other change of organization or reorganization, following the reorganization of the District pursuant to this bill.
21. Exempts the District from the formation process established in the Local Healthcare District Law and authorizes the District to be expanded in accordance with this bill. Provides that all other provisions of the Local Healthcare District Law apply to the District following its reorganization, except as specified in this bill.
22. Contains an urgency clause in order to improve the provision of healthcare services and access to healthcare services by the residents of the Coachella Valley region as soon as possible.
23. Finds and declares that a special law is necessary and general law cannot be made applicable because of the unique community needs in Riverside County that would be served by the expansion of the District to include the entire Coachella Valley region, including the limited access in the eastern Coachella Valley to healthcare services by an underserved population that suffers from a higher than average prevalence of preventable disease.
24. Provides that, if the Commission on State Mandates determines that this bill contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made, pursuant to current laws governing state mandated local costs.

FISCAL EFFECT: This bill is keyed fiscal.

COMMENTS:

1. LAFCO Law. LAFCOs are responsible for coordinating logical and timely changes in local governmental boundaries, conducting special studies that review ways to reorganize, simplify, and streamline governmental structures, and preparing a sphere of influence for each city and special district within each county. The courts refer to LAFCOs as the Legislature's "watchdog" over local boundary changes. The Act establishes procedures for local government changes of organization, including city incorporations, disincorporations, city and special district consolidations, and annexations to a city or special district. LAFCOs regulate boundary changes through the approval or denial of proposals by other public agencies or individuals for these procedures.

The Act prescribes a process for the inclusion or addition of territory to a district (district annexation), which is similar to most boundary changes that requires numerous steps:
a) application to LAFCO, by petition or resolution; b) noticed public hearing, testimony,
and approval or disapproval by LAFCO in which they can impose terms and conditions;
c) additional public hearing for protests (if more than 25% of voters file protest, the LAFCO must order an election on the proposed annexation, and if more than 50% of voters protest then the LAFCO must terminate the proceedings); d) an election, if there were significant protests; and, e) LAFCO staff files documents to complete the annexation.

In the past several years the Legislature has established a modified LAFCO process or exempted specified requirements in the LAFCO process for the formation of several special districts following a history of failed attempts at the local level including AB 2453 (Achadjian), Chapter 350, Statutes of 2014, for the creation of the Paso Robles Water District, and AB 3 (Williams), Chapter 548, Statutes of 2015, for the formation of the Isla Vista Community Services District.

1. Bill Summary. This bill establishes an annexation process for the District to include the East Coachella Valley region that is exempt from the statutes that govern the usual process under LAFCO for district annexations. This bill requires the Riverside County Board of Supervisors, within 15 days after the effective date of this bill, to submit to Riverside LAFCO a resolution of application to initiate a comprehensive review and recommendation of LAFCO to expand the District's boundaries to include the East Coachella Valley region. This bill requires Riverside LAFCO, by August 1, 2016, to complete an analysis of the funding available to the expanded District and to recommend the boundaries of the expanded District.

Under this bill, the expanded District must include all communities current served by the District and the communities of Indian Wells, La Quinta, Indio, Coachella, and the unincorporated area of Bermuda Dunes, Mecca, Thermal Oasis, North Shore, and Vista Santa Rosa. Riverside LAFCO would not have the usual power to disapprove the application and protest provision would not apply to the proposed annexation. The District would only be expanded if supported by a majority of voters within the boundaries of the expanded district and the number of voters required by existing law for any necessary funding. If the District is expanded, this bill requires the five-member Board to appoint two new Board members who are residents and registered voters in the area annexed to the District. This bill is author-sponsored.

1. Author's Statement. According to the author, "Currently, there are significant barriers preventing Eastern Coachella Valley residents’ access to health care providers and services. This has been well-documented by numerous stakeholders in the region. Some of the barriers include shortages in the number of primary care providers, shortages in various medical and surgical specialties, a lack of urgent care services, and a lack of transportation. Solving the persistent barriers has proven to be challenging. Even with expanded Medicaid or commercial insurance coverage for eligible residents through the Affordable Care Act, industry analysts remain concerned that the number and capacity of providers will prove inadequate to meet demand. Eastern Coachella Valley stakeholders and I believe that expanding the current healthcare district is best to address these persistent needs. Pointing to the impact and success of the Desert Healthcare District in addressing the health needs of its current constituency."
2. Desert Healthcare District. The District was created in 1948 to provide healthcare services to residents in the Coachella Valley within a 457 square mile area that includes Palm Springs, Desert Hot Springs, Cathedral City, Thousand Palms, Rancho Mirage, Mountain Center, San Gorgonio, and the area of Palm Desert west of Cook Street. The District built and began operating Desert Hospital, which is now known as Desert Regional Medical Center. Since 1986, the District's Board had leased hospital operations to medical facility providers. In 1997, the Board voted to lease the hospital to Tenet Health Systems for a 30-year period. The District continues to own the lease and other assets includes the Las Palmas Medical Plaza, while Tenant runs the operations of the 387-bed acute care hospital.

According to the District, with an operating budget of roughly $9 million, the District allocates more than $3 million each year on grants and other programs. The District has adopted a grant program to invest in non-profits and public agencies whose activities and programs improve the health and wellbeing of District residents. The District is funded by property tax paid by the residents of the District, revenue for working capital for the hospital in the event the lease with Tenet is terminated, and rental income from the medical plaza. The District is governed by a five-member Board elected at-large.

1. Committee Amendments. The Committee may wish to consider the following:
   1. Timeline. In order to provide more time at the local level for the annexation process established by this bill, the Committee may wish to ask the author to remove the urgency clause from this bill. Additionally, the Committee may wish to ask the author to provide more time for Riverside County to submit the resolution of application and to Riverside LAFCO to produce the review required by this bill. The author may wish to consider further examining the timelines once a funding source is identified in the bill.
   2. Election. This bill requires that an election be held on both the expansion of the District's boundaries and on the necessary funding. Current law for district annexations provides discretion to LAFCOs to order the election only within the territory ordered to be annexed or both within the territory ordered to be annexed and within the existing district. In order to ensure that the voters in the area proposed for annexation who will be paying for the proposed funding are the ones voting, the Committee may wish to require the election to be held only within the territory proposed for annexation.
   3. LAFCO Requirements. Under this bill, Riverside LAFCO would need to propose the boundaries of the expanded district and identify a funding source. The Committee may wish to remove these requirements on LAFCO, and instead, require the resolution of application for the proposed annexation to identify a source of funding and include the proposed area for annexation consistent with the expanded boundaries identified by this bill. Riverside LAFCO may include additional areas to the proposed territory for annexation.

The Committee may also wish to ask the author to include in the annexation process a LAFCO hearing to receive objections or evidence regarding the resolution of application. These changes would more closely align the annexation process established by this bill with the process under LAFCO law.

1. Policy Considerations. The Committee may wish to consider the following:
   1. Limiting LAFCO Powers. The Legislature has delegated the power to control local boundaries to the 58 LAFCOs. This bill places several requirements on LAFCO, but does not allow for the usual annexation process to occur. This Committee has seen an increasing number of bills seeking to bypass the LAFCO process, therefore, the Committee may wish to consider if prohibiting LAFCO from disapproving the application is taking away one of the fundamental powers the Legislature has tasked LAFCOs with.

The author may wish to consider allowing LAFCO to disapprove the application based on findings by the LAFCO that there is an insufficient source of funding, which would be consistent with the author's goal of ensuring adequate funding for the expanded District.

• 1. Healthcare Districts and LAFCO. The relationship between LAFCOs and healthcare districts is unique in comparison to other special districts. The Local Hospital District Law (now called the Local Healthcare District Law) and the formation of some healthcare districts predate the Knox Nisbet Act, which created LAFCOs and formalized the process for establishing a hospital district. As a consequence of the ambiguity in current law, the District has experienced past issues with allegations of grant recipients providing service outside of the boundaries of the District and within the communities identified for potential annexation by this bill. Due to the unique nature of healthcare services and the long history of healthcare district's principal act, the Committee may wish to consider, beyond the scope of this individual bill, if there is a need to more clearly define the relationship between LAFCOs and healthcare districts, and undertake a closer examination of healthcare district's service boundaries.
  2. Applicant. The Committee may wish to consider if Riverside County is the best applicant to begin the annexation process established by this bill. The District may have a better sense of the services and funding necessary to support the expanded District and may therefore be the best applicant.

1. Arguments in Support. The Borrego Community Health Foundation argues, "The [District] has a long history of acknowledged success in serving [their] residents. [The District's] leaders are acutely aware of and are sympathetic to health disparities in the East Coachella Valley and have collaborated with other agencies to provide services within the limitation of their fiduciary obligations to the District's residents. Expanding the current District will take away their limitation to help end the healthcare disparities that currently exist."
2. Arguments in Opposition. Riverside LAFCO argues, "Annexation of the eastern Coachella Valley communities has been a topic of discussion at times over the past two decades, but has not been pursued, likely since no existing revenues would be available to fund services to the expanded area. Annexation under the normal process could have been initiated at any time and still can be. In addition to the elimination of virtually all LAFCO discretionary authority, the timeframes set out in the bill are unrealistic and carry unfunded mandates for local agencies."
3. Urgency Clause. This bill contains an urgency clause and requires a two-thirds vote on the Assembly floor.

REGISTERED SUPPORT / OPPOSITION:

Support

Borrego Community Health Foundation

Clinicas De Salud Del Pueblo

Comite Civico del Valle

Inland Congregations United for Change

La Union Hace La Fuerza

Opposition

California Association of Local Agency Formation Commissions

Riverside County Local Agency Formation Commission

Analysis Prepared by: Misa Lennox / L. GOV. / (916) 319-3958