Existing law, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, provides the exclusive authority and procedure for the initiation, conduct, and completion of changes of organization and reorganization for cities and districts, except as specified. The act continues in existence in each county a local agency formation commission (LAFCO) that consists of members appointed, as specified, and that oversees those changes of organization and reorganization. The act authorizes a LAFCO to, among other things, review and approve with or without amendment, wholly, partially, or conditionally, or disapprove proposals for changes of organization or reorganization, including incorporation of a city or formation of a district, as specified.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Local Agency Formation Commission for the County of Los Angeles.

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 the statutory provisions noted above.

Existing law, the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, provides the exclusive authority and procedure for the initiation, conduct, and completion of changes of organization and reorganization for cities and districts, except as specified. The act continues in existence in each county a local agency formation commission (LAFCO) that consists of members appointed, as specified, and that oversees those changes of organization and reorganization. The act authorizes a LAFCO to, among other things, review and approve with or without amendment, wholly, partially, or conditionally, or disapprove proposals for changes of organization or reorganization, including incorporation of a city or formation of a district, as specified.

This bill would require the Local Agency Formation Commission for the County of Los Angeles (LALAFCO) to establish the East Los Angeles Task Force for the purposes of identifying and evaluating the potential impacts of incorporation of, or the establishment of special districts within, East Los Angeles, as defined. The bill would require the task force to be composed of 11 members appointed by LALAFCO in consultation with the County of Los Angeles. The bill would require the task force to meet quarterly, incorporating robust community engagement, to discuss the potential impacts of incorporation or the establishment of special districts in East Los Angeles, as specified. The bill, by December 1, 2026, bill would require the task force to complete and submit a report to the Legislature on the potential impacts of city and special district incorporation in East Los Angeles, including an analysis of advantages, disadvantages, and recommendations for future actions. actions, as specified. The bill would repeal these provisions on January 1, 2027. make these provisions contingent upon an appropriation by the Legislature in an amount sufficient to reimburse the LALAFCO for its costs to implement these provisions. The bill would make these provisions inoperative upon the task force completing and submitting its report to the Legislature.

This bill would make legislative findings and declarations as to the necessity of a special statute for the Local Agency Formation Commission for the County of Los Angeles.

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 the statutory provisions noted above.

Existing law, the Los Angeles County Regional Housing Finance Act, establishes the Los Angeles County Affordable Housing Solutions Agency and states that the agencys purpose is to increase the supply of affordable housing in the County of Los Angeles by providing for significantly enhanced funding and technical assistance at a regional level for renter protections, affordable housing preservation, and new affordable housing production, as specified . Existing law authorizes the agency to determine its organizational structure. Existing law specifies that any subsidiary unit established by the agency shall be referred to as an organizational unit and it, or its chief executive officer, may be delegated powers or duties deemed appropriate, as specified .

This bill would make nonsubstantive changes to the provisions described above authorizing the agency to delegate an organizational unit, or its chief executive officer, appropriate powers and duties.

 THIRD READING  

Bill No: AB 2986

Author: Wendy Carrillo (D)

Amended: 7/3/24 in Senate

Vote: 21

SENATE LOCAL GOVERNMENT COMMITTEE: 5-0, 7/3/24

AYES: Durazo, Glazer, Skinner, Wahab, Wiener

NO VOTE RECORDED: Seyarto, Dahle

SENATE APPROPRIATIONS COMMITTEE: 4-1, 8/15/24

AYES: Caballero, Ashby, Becker, Wahab

NOES: Jones

NO VOTE RECORDED: Bradford, Seyarto

ASSEMBLY FLOOR: 62-0, 5/21/24 - See last page for vote

SUBJECT: County of Los Angeles: East Los Angeles: report

SOURCE: Author

DIGEST:

This bill requires the County of Los Angeles (LA County) to complete and submit a report to the Legislature by March 1, 2025 regarding services and investments in each unincorporated community with a population over 10,000, and the feasibility of forming a municipal advisory council, or a coordinating council representing the comprehensive interests of the East Los Angeles Community (East LA), as specified.

ANALYSIS:

Existing law:

1. Establishes a Local Agency Formation Commission (LAFCO) in each county to control the boundaries of cities and special districts.
2. Specifies the process for boundary changes, including through a petition by citizens or an application by a local agency.

This bill:

1. Requires LA County to complete and submit a report to the Legislature by March 1, 2025 on all of the following:
   1. Services and investments for each of the unincorporated communities with a population of over 10,000 in collaboration with all relevant departments and special districts.
   2. For East LA only: the feasibility of forming a municipal advisory council, a local town council, or a coordinating council that could represent comprehensive interests of the entire East LA community, as specified, and all the following information:
      1. Consultant and County costs related to the past two East LA incorporation studies with estimated projected cost in 2024.
      2. Impacts and diversions to other resources and studies under LA LAFCO’s purview.
      3. Impacts and diversions to other resources, studies, and programs under the County purview.
      4. Summary of findings from last two incorporation studies.
      5. Summary and breakdown of existing federal, state, and local revenue sources and projection of revenues as an incorporated city, with a comparison of investments in capital projects, programs, and municipal services over the last ten years.
      6. Analysis and feasibility of East LA fiscal viability as a city or special district.
2. Allows LA County, in lieu of completing a separate report to meet the bill’s requirements, to submit any reports that it has produced if they contain substantially similar information.
3. Includes findings and declarations to support its purposes.

Background

The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to LAFCOs in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (AB 2838, Hertzberg). The courts often refer to LAFCOs as the Legislature’s watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. 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 SOIs, 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 a LAFCO, or when registered voters or landowners file petitions with a LAFCO.

City incorporations must follow a specific process in order to be initiated, and the LAFCO must make findings in order to approve a proposal that includes an incorporation. LAFCO law requires a petition for the incorporation of a city to include the signatures of not less than 25 percent of the registered voters or landowners (representing at least 25 percent of the assessed value) residing in the area to be incorporated. Any affected local agency in the area proposed for incorporation may also become the applicant by adopting a Resolution of Application. For any proposal that includes an incorporation, the executive officer of the LAFCO must prepare a comprehensive fiscal analysis. The analysis must review and document each of the following:

1. The costs to the proposed city of providing public services and facilities during the three fiscal years following incorporation, as specified.
2. The revenues of the proposed city during the three fiscal years following incorporation.
3. The effects on the costs and revenues of any affected local agency during the three fiscal years of incorporation.
4. Any other information and analysis needed to make findings, as specified.

East Los Angeles. East LA is an unincorporated area situated within LA County United States Census Bureau data from the 2020 decennial census shows that East LA has a population of 118,786, approximately 96 percent of whom are Hispanic or Latino. According to the LAFCO for Los Angeles County (LA LAFCO), incorporation of East LA has been attempted at least four times since 1961. According to LA LAFCO, in 1961 and 1975, voters rejected incorporation proposals for East LA. An attempt in 1963 did not garner the required number of petition signatures, and LA LAFCO denied a proposal in 2012. The 2012 proposal documented that a new City of East Los Angeles would not be economically viable, as the new city would face a shortfall of $19 million its first year. The author wants the County to review governance options for East LA.

Comments

1. Purpose of the bill. According to the Whittier Merchants Association, “AB 2986 requires the County of Los Angeles to report to the Legislature, on or before March 1, 2025, the fiscal viability of East Los Angeles as special district or incorporation, as well as the feasibility of forming a Municipal Advisory Council, a local Town Council, or a Coordinating Council that could represent the comprehensive interests of the entire East Los Angeles community… The businesses and residents in unincorporated East Los Angeles are suffering from lack of representation, we need some form of constituent base representation. This is something our community has never been allowed to have and we have seen the effects of this leadership drought for decades. Please help our community reverse this just like every community around us has. Those who understand and directly impact the issues at hand must make decisions for our community. Outside influences, while well-intentioned, may not fully grasp the complexities of our neighborhood and may not have our community's best interests at heart. We must ensure fair and equitable decision-making by collaborating and representing all voices in our neighborhood. We are asking for your support for AB2986 for the people of East LA.”
2. Is there a problem? Existing LAFCO law spells out the procedures for incorporation, which requires LAFCO to evaluate a proposal for incorporation if a petition for incorporation is signed by 25 percent of the residents or landowners of the area. However, a LAFCO cannot approve an incorporation if it doesn’t find that the city will be fiscally sustainable over the first three years. These requirements exist for good reasons: they ensure that the local community is genuinely supportive of the effort to incorporate, and they prevent formation of a new local government that immediately goes bankrupt. The East LA community most recently navigated this process in 2012, when a sufficient number of signatures were submitted to require LA LAFCO to consider the petition. As noted previously, when LA LAFCO last looked at it, it found that incorporation would immediately create a deficit. AB 2986 requires LA County to update these numbers to current dollars and study other aspects of potential incorporation by the community. These are steps that mirror recent motions adopted by the LA County Board of Supervisors regarding East LA and other unincorporated areas within the county on April 23, 2024 and May 21, 2024, respectively. Accordingly, the County is already pursuing the information that AB 2986 would provide. It is unclear whether AB 2986 is necessary, or whether it would lead to any substantially different outcomes regarding incorporation.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, Unknown reimbursable state mandated local costs for LA County to collect data regarding investments in unincorporated communities, and to study the feasibility of forming a municipal, local town, or coordinating council to represent the interests of East LA. Staff notes that local costs to comply with the bill’s requirements could be minor, to the extent that LA County has completed reports with substantially similar information prior to this bill’s enactment date. See Staff Comments. (General Fund)

SUPPORT: (Verified 8/15/24)

Retired State Senator Martha M. Escutia

California [un]incorporated

East LA Coalition

East Los Angeles Chamber of Commerce

Eastmont Community Center

Los Angeles Lowrider Alliance

Whittier Blvd Merchant Association of East Los Angeles

392 Individuals

OPPOSITION: (Verified 8/15/24)

Association for Los Angeles Deputy Sheriffs

Bienestar Human Services

California Association of Professional Employees

California Professional Firefighters

City of Monterey Park

Clinica Monseñor Oscar A. Romero

County of Los Angeles Board of Supervisors

Dolores Huerta Foundation

East Area Progressive Democrats

East LA Community Corporation

East Los Angeles Boys and Girls Club

El Proyecto Del Barrio, INC.

Fideicomiso Comunitario Tierra Libre

God's Pantry

IBEW Local 11

Jovenes, INC.

LA County Hispanic Managers Association

Labor Council for Latin American Advancement - LA Chapter

Liuna Local 300

Los Angeles County

Los Angeles County - Supervisor Hilda L. Solis

Los Angeles County Asian American Employees Association

Los Angeles County Chicano Employees Association

Los Angeles County Democratic Party

Los Angeles County Firefighters Local 1014

Los Angeles County Probation Officers Union, Afscme Local 685

Los Angeles County Professional Peace Officers Association

Los Angeles LAFCO

Mother of East Los Angeles

Neighborhood Legal Services of Los Angeles County

Nuevo Amanecer Mujer Integral

Operation Healthy Hearts

Our Lady of Victory Church

Plaza De LA Raza, INC.

San Gabriel Valley Conservation and Service Corps

Sandra Mcneill Consulting

Sbcc Thrive LA

Service Employees International Union, Local 721 (seiu Local 721)

Spiritt Family Services

The Wall Las Memorias Project

Unite Here Local 11

1435 Individuals

ASSEMBLY FLOOR: 62-0, 5/21/24

AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Berman, Boerner, Bonta, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Flora, Vince Fong, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Jackson, Kalra, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Rodriguez, Blanca Rubio, Sanchez, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Robert Rivas

NO VOTE RECORDED: Bennett, Bryan, Calderon, Cervantes, Megan Dahle, Mike Fong, Friedman, Gabriel, Holden, Irwin, Jones-Sawyer, Lackey, Mathis, Muratsuchi, Reyes, Luz Rivas, Santiago, Zbur

Prepared by: Anton Favorini-Csorba / L. GOV. / (916) 651-4119

8/18/24 17:50:25

**** END ****

SENATE COMMITTEE ON

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 2986 (Wendy Carrillo) - County of Los Angeles: East Los Angeles: report

Bill Summary:

AB 2986 would require the County of Los Angeles (LA County) to complete and submit a report to the Legislature by March 1, 2025 regarding services and investments in each unincorporated community with a population over 10,000, and the feasibility of forming a municipal advisory council, or a coordinating council representing the comprehensive interests of the East Los Angeles Community (East LA), as specified.

Fiscal Impact:

• Unknown reimbursable state mandated local costs for LA County to collect data regarding investments in unincorporated communities, and to study the feasibility of forming a municipal, local town, or coordinating council to represent the interests of East LA. Staff notes that local costs to comply with the bill’s requirements could be minor, to the extent that LA County has completed reports with substantially similar information prior to this bill’s enactment date. See Staff Comments. (General Fund)

Background:

Existing law, the Cortese-Knox-Hertzberg Act, controls how local officials change the boundaries of cities and special districts, and designates a local agency formation commission (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. Existing law requires a petition for the incorporation of a city to include the signatures of at least 25 percent of the registered voters or landowners residing in the area proposed for incorporation. For any proposed incorporation, the executive officer of the LAFCO must prepare a comprehensive fiscal analysis, among other requirements. The LAFCO cannot approve an incorporation if it does not find that the city will be fiscally sustainable over the first three years following incorporation.

East LA is an unincorporated area situated within LA County. According to 2020 United States Census Bureau data, East LA has a population of 118,786, approximately 96 percent of whom are Hispanic or Latino. According to the LAFCO for Los Angeles County (LA LAFCO), incorporation of East LA has been attempted at least four times since 1961: in 1961 and 1975, voters rejected incorporation proposals for East LA; an attempt in 1963 did not garner the required number of petition signatures; and LA LAFCO denied an incorporation proposal in 2012. The 2012 proposal documented that a new City of East Los Angeles would not be economically viable, as the new city would face a shortfall of $19 million its first year.

Proposed Law:

AB 2986 would require LA County to complete and submit a report to the Legislature by March 1, 2025 on all of the following:

• Services and investments for each of the unincorporated communities with a population of over 10,000 in collaboration with all relevant departments and special districts.
• For East LA only: the feasibility of forming a municipal advisory council, a local town council, or a coordinating council that could represent comprehensive interests of the entire East LA community, as specified, and all the following information:
  • Consultant and County costs related to the past two East LA incorporation studies with estimated projected cost in 2024.
  • Impacts and diversions to other resources and studies under LA LAFCO’s purview.
  • Impacts and diversions to other resources, studies, and programs under the County purview.
  • Summary of findings from last two incorporation studies.
  • Summary and breakdown of existing federal, state, and local revenue sources and projection of revenues as an incorporated city, with a comparison of investments in capital projects, programs, and municipal services over the last ten years.
  • Analysis and feasibility of East LA fiscal viability as a city or special district.

AB 2986 would authorize LA County, in lieu of completing a separate report to meet the bill’s requirements, to submit any reports that it has produced if they contain substantially similar information.

Staff Comments:

The LA County Board of Supervisors has adopted two recent motions regarding East LA and other unincorporated areas within the county on April 23, 2024 and May 21, 2024, respectively. The April motion directs the LA County Chief Executive Officer (CEO) to engage with specified parties and report back to the Board within 120 days with information regarding the East LA community that is identical to the information required by this bill. The May motion directs the LA County CEO to provide an annual report on services and investments for each unincorporated community in the County with a population of over 10,000 in collaboration with all relevant departments and special districts, and to engage with these unincorporated areas via a formal informational campaign to provide information on County services, projects, and programs. The motion does not include a specific due date for the annual reporting requirement. The CEO indicates that there are 28 unincorporated communities with a population of over 10,000.

By placing requirements on LA County to report specified information regarding the East LA community, and services provided in larger unincorporated communities in the County, this bill imposes a state mandated local program. The LA County CEO estimates costs to complete these reports would be approximately $13.7 million ($5.1 million for the East LA component, and $8.6 million for the reporting on larger unincorporated communities). It is unclear the extent to which some of the costs to complete the reports would be state-reimbursable since the County has internally acted to request reporting information from its staff that is identical to that which is required by the bill. To the extent the County determined that the costs to perform those studies that the Board has voted to request, and revises or dispenses with those requirements, this bill could result in state-reimbursable mandated costs. However, to the extent the CEO completes the required reports pursuant to the direction of the Board prior to the March 1, 2025 deadline, the bill would not result in state-reimbursable mandated costs. Whether the bill would require state-reimbursement, and the amount of those General Fund costs, would ultimately depend upon a determination by the Commission on State Mandates regarding what specific mandated duties, if any, are deemed reimbursable, if the County files a claim for reimbursement.

-- END --

SENATE COMMITTEE ON LOCAL GOVERNMENT

Senator María Elena Durazo, Chair

2023 - 2024 Regular

Local Agency Formation Commission for the County of Los Angeles: East Los Angeles Task Force

Requires the Local Agency Formation Commission of the County of Los Angeles, upon appropriation by the Legislature, to establish the East Los Angeles Task Force for the purposes of identifying and evaluating the potential impacts of incorporation of, or the establishment of special districts within, East Los Angeles.

Background

Local government boundaries. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to LAFCOs in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (AB 2838, Hertzberg). The courts often refer to LAFCOs as the Legislature’s watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. 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 SOIs, 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 a LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCOs can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations. Boundary changes generally require four (sometimes five) steps:

• First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, an agreement on how property taxes will be transferred, and a plan for services that describes what services will be provided at what level and how those services will be financed.
• Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed reorganization. The LAFCO may impose terms and conditions that spell out what happens to the assets and liabilities of affected local agencies. If LAFCO disapproves, the proposed reorganization stops.
• Third, LAFCO must hold another public hearing to count written protests in order to determine whether an election is needed. Although there are many exceptions, in most cases an election is required if 25 percent of the voters in a district, or voters representing 25 percent of the assessed value of land, submit written protests. In nearly all cases, if a majority of voters or landowners protest, the reorganization also stops.
• Fourth, if an election is required, it occurs among the affected voters, requiring majority voter approval.
• Finally, LAFCO’s staff files formal documents to complete the reorganization.

Formations of special districts are generally conducted as authorized in the principal act of the special district, except that the LAFCO typically serves as the conducting authority. If a change of organization consists of an incorporation, the LAFCO must order the change of organization subject to confirmation of the voters. A protest proceeding must not be conducted.

Incorporations. City incorporations have a specific process in order to be initiated, and the LAFCO must make findings in order to approve a proposal that includes an incorporation. LAFCO law requires a petition for the incorporation of a city to include the signatures of not less than 25 percent of the registered voters or landowners (representing at least 25 percent of the assessed value) residing in the area to be incorporated. Any affected local agency in the area proposed for incorporation may also become the applicant by adopting a Resolution of Application. For any proposal that includes an incorporation, the executive officer of the LAFCO must prepare a comprehensive fiscal analysis. The analysis must review and document each of the following:

• The costs to the proposed city of providing public services and facilities during the three fiscal years following incorporation, as specified.
• The revenues of the proposed city during the three fiscal years following incorporation.
• The effects on the costs and revenues of any affected local agency during the three fiscal years of incorporation.
• Any other information and analysis needed to make findings, as specified.

For any proposal that includes an incorporation, the executive officer of the LAFCO must, at the request of an interested party, and prior to issuing the report and recommendation, ask the State Controller to review the comprehensive fiscal analysis. LAFCO law also requires the commission to not approve or conditionally approve any proposal that includes an incorporation, unless the LAFCO finds, based on the entire record, that:

• The proposed incorporation is consistent with LAFCO law, including, but not limited to, specified policies;
• It has reviewed the spheres of influence of the affected local agencies and the incorporation is consistent with those spheres of influence;
• It has reviewed the comprehensive fiscal analysis and the Controller’s report;
• It has reviewed the executive officer’s report and recommendation and the testimony presented at its public hearing; and
• The proposed city is expected to receive revenues sufficient to provide public services and facilities and a reasonable reserve during the three fiscal years following incorporation.

East Los Angeles. East Los Angeles (East LA) is an unincorporated area situated within Los Angeles County (LA County). United States Census Bureau data from the 2020 decennial census shows that East LA has a population of 118,786, approximately 96 percent of whom are Hispanic or Latino. According to the LAFCO for Los Angeles County (LA LAFCO), incorporation of East LA has been attempted at least four times since 1961. According to LA LAFCO, in 1961 and 1975, voters rejected incorporation proposals for East LA. An attempt in 1963 did not garner the required number of petition signatures, and LA LAFCO denied a proposal in 2012. The 2012 proposal documented that a new City of East Los Angeles would not be economically viable, as the new city would face a shortfall of $19 million its first year.

The author wants to review governance options for East LA, including incorporation or formation of special districts.

Proposed Law

Assembly Bill 2986 requires LA LAFCO, upon appropriation by the Legislature, to establish the East Los Angeles Task Force for the purposes of identifying and evaluating the potential impacts of incorporation of, or the establishment of special districts within, East LA.

The task force must comprise 11 members appointed by LA LAFCO in consultation with the County of Los Angeles, and LA LAFCO must solicit interest throughout the East Los Angeles community.

The task force must meet quarterly, incorporating robust community engagement, to discuss the potential impacts of incorporation or the establishment of special districts in East Los Angeles, including, but not limited to, fiscal impacts, governance structure, public services, community identity, and local control.

Within 18 months of receiving the appropriation from the Legislature, the task force must complete and submit a report to the Legislature on the potential impacts of city and special district incorporation in East Los Angeles, including an analysis of advantages, disadvantages, and recommendations for future actions. The report must include comprehensive community input and engagement.

AB 2986 also:

• Provides that it does not limit or affect the ability of LA LAFCO or any local jurisdiction’s authority or ability to consider or approve proposals for incorporation or the establishment of special districts in accordance with LAFCO law;
• Sunsets the task force and the bill after the report is completed;
• Defines its terms; and
• Includes findings and declarations to support its purposes.

Comments

1. Purpose of the bill. According to the author, “AB 2986 will establish an East Los Angeles Task Force, bringing together a diverse set of stakeholders to study potential improvements to governance structures and facilitate community participation in East Los Angeles. East Los Angeles has long been recognized for its vibrant community of cultural significance. Incorporation or the establishment of special districts could provide East Los Angeles with a greater ability to address local needs, improve public services, and enhance community development and engagement. However, the potential impacts of these changes, including the fiscal, governmental, and community effects, require thorough examination to ensure that the interests of East Los Angeles residents are fully considered and protected. Therefore, this Task Force will explore the implications and feasibility of incorporating East Los Angeles as a city or establishing a special district.”

2. Is there a problem? Existing LAFCO law spells out the procedures for incorporation, which requires LAFCO to evaluate a proposal for incorporation if a petition for incorporation is signed by 25 percent of the residents or landowners of the area. However, a LAFCO cannot approve an incorporation if it doesn’t find that the city will be fiscally sustainable over the first three years. These requirements exist for good reasons: they ensure that the local community is genuinely supportive of the effort to incorporate, and they prevent formation of a new local government that immediately goes bankrupt. The East LA community most recently navigated this process in 2012, when a sufficient number of signatures were submitted to require LA LAFCO to consider the petition. As noted previously, when LA LAFCO last looked at it, it found that incorporation would immediately create a deficit. LA LAFCO’s estimate was independently reviewed by the State Controller’s Office, which found that LA LAFCO had underestimated the deficit because it used its own estimate of costs for the sheriff’s duties under incorporation, rather than the estimate provided by the sheriff.

Since the 2012 proposal for incorporation of East LA, changes in state law have made incorporation fiscally more difficult. Specifically, SB 89 (Committee on Budget and Fiscal Review, 2011), which implemented portions of the Governor’s public safety realignment proposal, shifted the responsibility for some state public safety programs to local governments and redirected certain revenues that were previous supporting areas that incorporated after August 5, 2004. However, LA LAFCO’s fiscal review of the East LA incorporation in late 2011 included these revenues to the new city. Because those new revenues would not be available to a city that incorporates now, it is unclear whether incorporation of East LA is more fiscally feasible today than it was in 2012.

AB 2986 proposes a task force to examine incorporation or formation of special districts, at a cost of $6 million, according to the County of Los Angeles. These costs will be born by the state of California, per the terms of the bill. However, following the report from the task force, the requirements for a petition and the fiscal analysis that demonstrates viability for the new city in LAFCO law will remain. Accordingly, AB 2986 may cost state funds without any indication that: (1) there is local support sufficient to qualify a petition to LAFCO to begin incorporation, or (2) an updated fiscal analysis would support incorporation compared to the 2012 study that estimated a deficit. The Committee may wish to consider whether AB 2986 is an effective use of resources.

3. What’s so special about special districts? AB 2986 requires the task force to examine the possibility of creating one or more special districts in the East LA area. Special districts are useful local governments for solving focused service provision issues—if there are issues with water service, electrical service, access to parks, or other services that local governments provide, forming a special district may help. What special districts can’t do is exercise the Constitutional police power that lets cities and counties—and only cities and counties—regulate activities and land uses within their jurisdictions. To the extent that the discontent over the current governance of East LA is based on issues of land uses or other ways the county is exercising its police powers, such as parking requirements, street vending rules, or development approvals, forming a special district won’t address these issues.

4. Local solution for a local problem? The Los Angeles County Board of Supervisors has adopted two recent motions that pertain to East Los Angeles. These motions include requirements for the Los Angeles County Chief Executive Officer to report back to the Board with the following information:

• Services and investments for each of the unincorporated communities with a population of over 10,000 in collaboration with all relevant departments and special districts;
• For East LA only: the feasibility of forming a Municipal Advisory Council (MAC), a local Town Council, or a Coordinating Council that could represent comprehensive interests of the entire East LA community with associated cost, timeline, and structure similar to other unincorporated area town councils within the County unincorporated areas and all the following information:
  • Consultant and County costs related to the past two East LA incorporation studies with estimated projected cost in 2024;
  • Impacts and diversions to other resources and studies under LA LAFCO’s purview;
  • Impacts and diversions to other resources, studies, and programs under the County purview;
  • Summary of findings from last two incorporation studies;
  • Summary and breakdown of existing revenues (federal, state, and local sources) and projection of revenues as an incorporated City, with a comparison of investments in capital projects, programs, and municipal services over the last ten years; and
  • Analysis and feasibility of East LA fiscal viability as a city or special district.

These reports may provide sufficient information for the Legislature to evaluate next steps on the East LA community. The Committee may wish to consider amending AB 2986 to remove the provisions of the bill and instead require the County of Los Angeles to report to the Legislature, on or before March 1, 2025, all of the above information, or provide the Legislature with an existing report or reports containing substantially similar information.

5. Special legislation. Section 16 of Article IV of the California Constitution prohibits special legislation when a general law can apply. AB 2986 contains findings and declarations explaining the need for legislation that applies only to East LA because of the unique circumstances surrounding the potential incorporation of East LA.

6. Mandate. The California Constitution requires the state to reimburse local governments for the costs of new or expanded state mandated local programs. Because AB 2986 increases the duties of local officials, Legislative Counsel says it imposes a new state mandate. AB 2986 says that if the Commission on State Mandates says that the bill creates a reimbursable mandate, then reimbursement must be made pursuant to existing statutory provisions.

Assembly Actions

Assembly Local Government Committee: 8-0

Assembly Appropriations Committee: 14-0

Assembly Floor: 62-0

Support and Opposition

(6/28/24)

Support: Retired State Senator Martha M. Escutia 
California [un]incorporated
East LA Coalition
East Los Angeles Chamber of Commerce
Eastmont Community Center
Los Angeles Lowrider Alliance
Whittier Blvd Merchant Association of East Los Angeles
392 Individuals

Opposition: LA County Board of Supervisor Hilda Solis
Association for Los Angeles Deputy Sheriffs
Bienestar Human Services
California Association of Professional Employees
California Professional Firefighters
City of Monterey Park
Clinica Monseñor Oscar A. Romero
County of Los Angeles Board of Supervisors
Dolores Huerta Foundation
East Area Progressive Democrats
East LA Community Corporation
East Los Angeles Boys and Girls Club
Fideicomiso Comunitario Tierra Libre
IBEW Local 11
Jovenes, INC.
LA County Hispanic Managers Association
Labor Council for Latin American Advancement - LA Chapter
Liuna Local 300
Los Angeles County Asian American Employees Association
Los Angeles County Chicano Employees Association
Los Angeles County Democratic Party
Los Angeles County Firefighters Local 1014
Los Angeles County Probation Officers Union, Afscme Local 685
Los Angeles County Professional Peace Officers Association
Los Angeles LAFCO
Mother of East Los Angeles
Nuevo Amanecer Mujer Integral
Our Lady of Victory Church
Sandra Mcneill Consulting
Service Employees International Union, Local 721 (seiu Local 721)
Union of American Physicians and Dentists - UAPD/AFSCME Local 206
Unite Here Local 11
1435 Individuals

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 2986

Author:(Wendy Carrillo)

As Amended Ver:April 29, 2024

Majority vote

SUMMARY

Requires the Los Angeles Local Agency Formation Commission (LA LAFCO) to establish the East Los Angeles (East LA) Task Force to identify and evaluate potential impacts of incorporation of, or the establishment of special districts within, East LA.

Major Provisions

1. Requires, upon an appropriation by the Legislature, the LA LAFCO to establish the East LA Task Force for the purposes of identifying and evaluating the potential impact of incorporation of, or the establishment of special districts within, East LA.
2. Specifies that the task force shall be composed of 11 members appointed by LA LAFCO in consultation with Los Angeles County (LA County).
3. Requires the LA LAFCO to issue a solicitation of interest throughout the East LA community and select the representatives to be part of the task force.
4. Provides that the task force shall meet quarterly, incorporating robust community engagement, to discuss the potential impacts of incorporation or the establishment of special districts in East LA, including, but not limited to, fiscal impacts, governance structure, public services, community identity, and local control.
5. Requires the task force to complete and submit a report to the Legislature, as specified, on the potential impacts of city and special district incorporation in East LA, including an analysis of advantages, disadvantages, and recommendations for future actions.
6. Specifies that nothing in this bill shall be construed to limit or affect the ability of LA LAFCO or any local jurisdiction's authority or ability to consider or approve proposals for incorporation or the establishment of special districts, as specified.
7. Defines "East LA" as the unincorporated area situated within LA County that is designated as East LA by the United States Census Bureau in the most recent decennial census.
8. Provides that the provisions of this bill shall be contingent upon an appropriation by the Legislature in an amount sufficient to reimburse the LA LAFCO for its cost to implement this bill.

COMMENTS

1. Local Government Boundaries. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to LAFCOs in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 [AB 2838 (Hertzberg), Chapter 761, Statutes of 2000]. The courts often refer to LAFCOs as the Legislature's watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. 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 SOIs, 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 a LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCOs can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations. Boundary changes generally require four (sometimes five) steps:

• 1. First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, an agreement on how property taxes will be transferred, and a plan for services that describes what services will be provided at what level and how those services will be financed.
  2. Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed reorganization. The LAFCO may impose terms and conditions that spell out what happens to the assets and liabilities of affected local agencies. If LAFCO disapproves, the proposed reorganization stops.
  3. Third, LAFCO must hold another public hearing to count written protests in order to determine whether an election is needed. Although there are many exceptions, in most cases an election is required if 25% of the voters in a district, or voters representing 25% of the assessed value of land, submit written protests. In nearly all cases, if a majority of voters or landowners protest, the reorganization also stops.
  4. Fourth, if an election is required, it occurs among the affected voters, requiring majority voter approval.
  5. Finally, LAFCO’s staff files formal documents to complete the reorganization.

Formations of special districts are generally conducted as authorized in the principal act of the special district, except that the LAFCO typically serves as the conducting authority. If a change of organization consists of an incorporation, the LAFCO must order the change of organization subject to confirmation of the voters. A protest proceeding must not be conducted.

1. Incorporations. City incorporations have a specific process in order to be initiated and the LAFCO must make findings in order to approve a proposal that includes an incorporation. LAFCO law requires a petition for the incorporation of a city to include the signatures of not less than 25% of the registered voters residing in the area to be incorporated or not less than 25% of the number of landowners within the territory proposed to be incorporated who also own not less than 25% of the assessed value of land within the same territory. Any affected local agency in the area proposed for incorporation may also become the applicant by adopting a Resolution of Application. For any proposal that includes an incorporation, the executive officer of the LAFCO must prepare a comprehensive fiscal analysis. The analysis shall review and document each of the following:
   1. The costs to the proposed city of providing public services and facilities during the three fiscal years following incorporation, as specified.
   2. The revenues of the proposed city during the three fiscal years following incorporation.
   3. The effects on the costs and revenues of any affected local agency during the three fiscal years of incorporation.
   4. Any other information and analysis needed to make findings, as specified.

For any proposal that includes an incorporation, the executive officer of the LAFCO shall, at the request of an interested party, and prior to issuing the report and recommendation, request the Controller to review the comprehensive fiscal analysis. LAFCO law also requires the commission to not approve or conditionally approve any proposal that includes an incorporation, unless the LAFCO finds, based on the entire record, that:

• 1. The proposed incorporation is consistent with LAFCO law, including, but not limited to, specified policies.
  2. It has reviewed the spheres of influence of the affected local agencies and the incorporation is consistent with those spheres of influence.
  3. It has reviewed the comprehensive fiscal analysis and the Controller’s report.
  4. It has reviewed the executive officer’s report and recommendation and the testimony presented at its public hearing.
  5. The proposed city is expected to receive revenues sufficient to provide public services and facilities and a reasonable reserve during the three fiscal years following incorporation.

1. East Los Angeles. East LA is an unincorporated area situated within LA County. United State Census Bureau data from the 2020 decennial census shows that East LA has a population of 118,786, approximately 95.5% of whom are Hispanic or Latino. According to the LA LAFCO, incorporation of East LA has been attempted since 1961. The most recent incorporation attempt was in 2012 and was denied by the LA LAFCO.

According to the Author

According to the author, "AB 2986 will establish an East Los Angeles Task Force, bringing together a diverse set of stakeholders to study potential improvements to governance structures and facilitate community participation in East Los Angeles. East Los Angeles has long been recognized for its vibrant community of cultural significance. Incorporation or the establishment of special districts could provide East Los Angeles with a greater ability to address local needs, improve public services, and enhance community development and engagement. However, the potential impacts of these changes, including the fiscal, governmental, and community effects, require thorough examination to ensure that the interests of East Los Angeles residents are fully considered and protected. Therefore, this Task Force will explore the implications and feasibility of incorporating East Los Angeles as a city or establishing a special district."

Arguments in Support

According to the East Los Angeles Chamber of Commerce, "Over the past years residents and business owners in East Los Angeles have been excluded from important meetings regarding metro planning, unlicensed street events, impermissible pop-up restaurants, and the impact they have on business, the right of way, as well as the health and safety of elderly and ADA (Americans with Disabilities Act) residents. By supporting AB 2986, the East Los Angeles Chamber of Commerce is advocating for measures that would involve the voices of those in the unincorporated area in decision-making processes related to metro planning and Los Angeles County numerous new administrative regulations and citations which impact business & homeowners.

"East Los Angeles has a significant population out numbering many surrounding cities, yet businesses and residents who have lived in East Los Angeles unincorporated area for over 20 years have witnessed a decline in Los Angeles including the impacted at the county table voice, during the early planning phase. The goal for the East Los Angeles Chamber of Commerce is in improving the well-being and rights of the community, particularly the elderly, ADA residents, businesses, and resident landowners."

Arguments in Opposition

According to LA County, "If approved, AB 2986 is expected to cost the County and LALAFCO $5.8 million ($5.1 million for County costs, and $750,000 for LALAFCO costs). The County's $5.1 million cost estimate reflects the level of resources utilized to complete a similar Comprehensive Financial Report (CFR) in 2012 (costs have been adjusted to account for the County's current staff pay scale). These significant costs are primarily driven by the necessity for staff resources dedicated to furnishing information to the Task Force. This workload includes, but is not limited to, tasks such as liaising with County Departments to conduct a financial assessment of the expenses related to delivering services in unincorporated East L.A., evaluating current revenue streams utilized for service provision, and analyzing the fiscal ramifications for the County in the event of East L.A.'s incorporation.

"The 2012 CFR, commissioned by LALAFCO, documented that a new City of East Los Angeles would not be economically viable, as the new city would face a shortfall of $19 million in its first year alone. This report also underscored the considerable financial challenges confronting East LA, stemming from continuously escalating expenses. These challenges encompass nontaxable assets such as cemeteries and freeways, constrained revenue-generating capabilities, protracted incorporation procedures, and the State's withdrawal of the Vehicle License Fee Bump for new cities. Further, preliminary data indicates a substantial surge in costs for East LA, with expenses from the Sheriff's Department escalating by 66% and those from the Fire District by 59%, among others. Any costs exceeding the property tax revenues collected from taxpayers are borne by the County. Despite the bill's intent, there is no indication that an attempt at city incorporation would be successful in 2024 when it has failed by several different means in the past; and the costs associated with another attempt does not bode well during times of economic uncertainty."

FISCAL COMMENTS

According to the Assembly Appropriations Committee, "State-mandated one-time General Fund cost pressures of $750,000 to the LA LAFCO to establish the task force and conduct the study pursuant to this bill. According to the LA LAFCO:

The effort would require a substantial commitment of time, resources, and costs for staff (estimated at $100,000) and legal counsel (estimated at $200,000); LAFCO would need to hire a financial consultant (estimated at $300,000); and there are additional costs for public outreach, notice, and documentation (estimated at $150,000). In addition, absent state funding the bill is an unfunded mandate placed upon LAFCO, and one which could only be financed by increasing annual assessments on the County of Los Angeles, the eighty-eight (88) cities in Los Angeles County, and the fifty-one (51) independent special districts in Los Angeles County.

"Under existing law, state-mandated costs to LAFCOs are not eligible for reimbursement by the state. This bill specifies the formation of the East LA Task Force is contingent upon a GF appropriation sufficient to reimburse the LA LAFCO for its costs."

VOTES

ASM LOCAL GOVERNMENT: 8-0-1

YES: Juan Carrillo, Waldron, Valencia, Kalra, Pacheco, Ramos, Ward, Wilson

ABS, ABST OR NV: Essayli

ASM APPROPRIATIONS: 14-0-1

YES: Wicks, Sanchez, Arambula, Bryan, Wendy Carrillo, Dixon, Mike Fong, Grayson, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

ABS, ABST OR NV: Calderon

UPDATED

VERSION: April 29, 2024

CONSULTANT: Jimmy MacDonald / L. GOV. / (916) 319-3958 FN: 0002971

Date of Hearing: May 15, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2986

Author:(Wendy Carrillo) – As Amended Ver:April 29, 2024

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

SUMMARY:

This bill requires the Los Angeles Local Agency Formation Commission (LA LAFCO) to establish the East Los Angeles (East LA) Task Force to identify and evaluate potential impacts of the incorporation of East LA.

Specifically, this bill:

1. Requires the LA LAFCO to establish the East LA Task Force for the purposes of identifying and evaluating the potential impact of the incorporation of, or the establishment of special districts within, East LA.
2. Specifies the task force be composed of 11 members appointed by LA LAFCO in consultation with the County of Los Angeles (LA County).
3. Requires the LA LAFCO to issue a solicitation of interest throughout the East LA community and select the representatives to be part of the task force.
4. Requires the task force to meet quarterly, incorporating robust community engagement, to discuss the potential impacts of incorporation or the establishment of special districts in East LA, including, but not limited to, fiscal impacts, governance structure, public services, community identity, and local control.
5. Requires, by December 1, 2026, the task force to complete and submit a report to the Legislature, as specified, on the potential impacts of city and special district incorporation in East LA, including an analysis of advantages, disadvantages, and recommendations for future actions.
6. Requires the task force to ensure the report required to be submitted pursuant to 5), above, includes comprehensive community input and engagement.

FISCAL EFFECT:

State-mandated one-time General Fund cost pressures of $750,000 to the LA LAFCO to establish the task force and conduct the study pursuant to this bill. According to the LA LAFCO:

The effort would require a substantial commitment of time, resources, and costs for staff (estimated at $100,000) and legal counsel (estimated at $200,000); LAFCO would need to hire a financial consultant (estimated at $300,000); and there are additional costs for public outreach, notice, and documentation (estimated at $150,000). In addition, absent state funding the bill is an unfunded mandate placed upon LAFCO, and one which could only be financed by increasing annual assessments on the County of Los Angeles, the eighty-eight (88) cities in Los Angeles County, and the fifty-one (51) independent special districts in Los Angeles County.

Under existing law, state-mandated costs to LAFCOs are not eligible for reimbursement by the state. This bill specifies the formation of the East LA Task Force is contingent upon a GF appropriation sufficient to reimburse the LA LAFCO for its costs.

COMMENTS:

1. Purpose. According to the author:

[This bill] will establish an East Los Angeles Task Force, bringing together a diverse set of stakeholders to study potential improvements to governance structures and facilitate community participation in East Los Angeles. East Los Angeles has long been recognized for its vibrant community of cultural significance. Incorporation or the establishment of special districts could provide East Los Angeles with a greater ability to address local needs, improve public services, and enhance community development and engagement. However, the potential impacts of these changes, including the fiscal, governmental, and community effects, require thorough examination to ensure that the interests of East Los Angeles residents are fully considered and protected. Therefore, this Task Force will explore the implications and feasibility of incorporating East Los Angeles as a city or establishing a special district.

1. Background. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to LAFCOs in each county. Local governments can only exercise their powers and provide services where a LAFCO allows them to.

LAFCO boundary decisions must be consistent with spheres of influence (SOIs) that LAFCOs adopt to show the future boundaries and service areas of cities and special districts. Before LAFCOs can adopt their SOIs, 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 a LAFCO, or when registered voters or landowners file petitions with a LAFCO. LAFCO law requires a petition for a city incorporation to include the signatures of not less than 25% of the registered voters residing in the area to be incorporated or not less than 25% of the number of landowners within the territory proposed to be incorporated who also own not less than 25% of the assessed value of land within the same territory. For any proposal that includes an incorporation, the executive officer of the LAFCO must prepare a comprehensive fiscal analysis.

East LA is an unincorporated area within LA County with a population of around 118,800, approximately 95.5% of whom are Hispanic or Latino. According to the LA LAFCO, this would be the fourth time a proposal to incorporate East Los Angeles has been filed with LAFCO. Two were defeated by the voters (1961 and 1975), one did not garner the required number of petition signatures (1963), and one was denied by the LAFCO (2012). The 2012 proposal documented that a new City of East Los Angeles would not be economically viable, because the new city would face a shortfall of $19 million its first year. According to the LA LAFCO, there is no evidence available now to demonstrate that a future cityhood effort would yield a different outcome. The LA LAFCO also notes, since the 2012 denial, no East Los Angeles stakeholder has contacted LAFCO about a potential city incorporation.

1. Arguments in Support. An individual writing in support states:

East L.A., as an unincorporated community, has limited influence over planning and economic development, public services, and public dollars. Incorporation can provide community control over these and other vital issues facing East L.A., including enhancing the ability to attract and retain local businesses and strengthen East L.A.’s voice in County decision-making. There have been unsuccessful attempts to incorporate East L.A. During this time, several of East L.A.’s surrounding communities were incorporated.

1. Arguments in Opposition. The LA LAFCO is opposed to the bill for cost and other reasons mentioned above.

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

Date of Hearing: April 24, 2024

ASSEMBLY COMMITTEE ON LOCAL GOVERNMENT

Juan Carrillo, Chair

ABPCA Bill Id:AB 2986 (

Author:Wendy Carrillo) – As Amended Ver:March 21, 2024

SUBJECT: Local Agency Formation Commission for the County of Los Angeles: East Los Angeles Task Force.

SUMMARY: Requires the Los Angeles Local Agency Formation Commission (LA LAFCO) to establish the East Los Angeles (East LA) Task Force to identify and evaluate potential impacts of incorporation of, or the establishment of special districts within, East LA. Specifically, this bill:

1. Requires the LA LAFCO to establish the East LA Task Force for the purposes of identifying and evaluating the potential impact of incorporation of, or the establishment of special districts within, East LA.
2. Specifies that the task force shall be composed of 11 members appointed by LA LAFCO in consultation with Los Angeles County (LA County).
3. Requires the LA LAFCO to issue a solicitation of interest throughout the East LA community and select the representatives to be part of the task force.
4. Provides that the task force shall meet quarterly, incorporating robust community engagement, to discuss the potential impacts of incorporation or the establishment of special districts in East LA, including, but not limited to, fiscal impacts, governance structure, public services, community identity, and local control.
5. Requires, by December 1, 2026, the task force to complete and submit a report to the Legislature, as specified, on the potential impacts of city and special district incorporation in East LA, including an analysis of advantages, disadvantages, and recommendations for future actions.
6. Specifies that the task force shall ensure the report required to be submitted pursuant to 5) above, includes comprehensive community input and engagement.
7. Provides that, upon completing its duties, the task force shall cease to exist.
8. Specifies that nothing in this bill shall be construed to limit or affect the ability of LA LAFCO or any local jurisdiction’s authority or ability to consider or approve proposals for incorporation or the establishment of special districts, as specified.
9. Defines “East LA” as the unincorporated area situated within LA County that is designated as East LA by the United States Census Bureau in the most recent decennial census.
10. Provides that this bill shall remain in effect only until January 1, 2027, and as of that date is repealed.
11. Finds and declares that a special statute is necessary and that a general statute cannot be made applicable because of the unique circumstances surrounding the potential incorporation of East LA.
12. Contains additional findings and declarations to support its purposes.
13. Provides that if the Commission on State Mandates determines that this act contains costs mandated by the state, reimbursement to local agencies and school districts for those costs shall be made.

FISCAL EFFECT: This bill is keyed fiscal and contains a state mandated local program.

COMMENTS:

1. Bill Summary. This bill requires the LA LAFCO to establish the East LA Task Force for the purposes of identifying and evaluating the potential impacts of incorporation of, or the establishment of special districts within, East LA. This bill specifies that the task force must have 11 members appointed by the LA LAFCO with representative from throughout East LA. This bill also requires the taskforce to meet quarterly, and it must submit a report to the Legislature by December 1, 2026. Upon completing its specified duties, the task force must cease to exist. This bill is sponsored by the author.
   
2. Author’s Statement. According to the author, “AB 2986 will establish an East Los Angeles Task Force, bringing together a diverse set of stakeholders to study potential improvements to governance structures and facilitate community participation in East Los Angeles. East Los Angeles has long been recognized for its vibrant community of cultural significance. Incorporation or the establishment of special districts could provide East Los Angeles with a greater ability to address local needs, improve public services, and enhance community development and engagement. However, the potential impacts of these changes, including the fiscal, governmental, and community effects, require thorough examination to ensure that the interests of East Los Angeles residents are fully considered and protected. Therefore, this Task Force will explore the implications and feasibility of incorporating East Los Angeles as a city or establishing a special district.”
   
3. Local Government Boundaries. The Legislature has the authority to create, dissolve, or otherwise modify the boundaries and services of local governments. Beginning in 1963, the Legislature delegated the ongoing responsibility to control the boundaries of cities, county service areas, and most special districts to LAFCOs in each county. The responsibilities and authority of LAFCOs have been modified in subsequent legislation, including a major revision of the LAFCO statutes in the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 [AB 2838 (Hertzberg), Chapter 761, Statutes of 2000]. The courts often refer to LAFCOs as the Legislature’s watchdog over boundary changes.

Local governments can only exercise their powers and provide services where LAFCO allows them to. 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 SOIs, 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 a LAFCO, or when registered voters or landowners file petitions with a LAFCO. In limited circumstances, LAFCOs can initiate some special district boundary changes: consolidations, dissolutions, mergers, subsidiary districts, or reorganizations. Boundary changes generally require four (sometimes five) steps:

• 1. First, there must be a completed application to LAFCO, including a petition or resolution, an environmental review document, an agreement on how property taxes will be transferred, and a plan for services that describes what services will be provided at what level and how those services will be financed.
     
  2. Second, LAFCO must hold a noticed public hearing, take testimony, and may approve the proposed reorganization. The LAFCO may impose terms and conditions that spell out what happens to the assets and liabilities of affected local agencies. If LAFCO disapproves, the proposed reorganization stops.
     
  3. Third, LAFCO must hold another public hearing to count written protests in order to determine whether an election is needed. Although there are many exceptions, in most cases an election is required if 25% of the voters in a district, or voters representing 25% of the assessed value of land, submit written protests. In nearly all cases, if a majority of voters or landowners protest, the reorganization also stops.
     
  4. Fourth, if an election is required, it occurs among the affected voters, requiring majority voter approval.
     
  5. Finally, LAFCO’s staff files formal documents to complete the reorganization.
     

Formations of special districts are generally conducted as authorized in the principal act of the special district, except that the LAFCO typically serves as the conducting authority. If a change of organization consists of an incorporation, the LAFCO must order the change of organization subject to confirmation of the voters. A protest proceeding must not be conducted.

1. Incorporations. City incorporations have a specific process in order to be initiated and the LAFCO must make findings in order to approve a proposal that includes an incorporation. LAFCO law requires a petition for the incorporation of a city to include the signatures of not less than 25% of the registered voters residing in the area to be incorporated or not less than 25% of the number of landowners within the territory proposed to be incorporated who also own not less than 25% of the assessed value of land within the same territory. Any affected local agency in the area proposed for incorporation may also become the applicant by adopting a Resolution of Application. For any proposal that includes an incorporation, the executive officer of the LAFCO must prepare a comprehensive fiscal analysis. The analysis shall review and document each of the following:
   1. The costs to the proposed city of providing public services and facilities during the three fiscal years following incorporation, as specified.
   2. The revenues of the proposed city during the three fiscal years following incorporation.
   3. The effects on the costs and revenues of any affected local agency during the three fiscal years of incorporation.
   4. Any other information and analysis needed to make findings, as specified.

For any proposal that includes an incorporation, the executive officer of the LAFCO shall, at the request of an interested party, and prior to issuing the report and recommendation, request the Controller to review the comprehensive fiscal analysis. LAFCO law also requires the commission to not approve or conditionally approve any proposal that includes an incorporation, unless the LAFCO finds, based on the entire record, that:

• 1. The proposed incorporation is consistent with LAFCO law, including, but not limited to, specified policies.
     
  2. It has reviewed the spheres of influence of the affected local agencies and the incorporation is consistent with those spheres of influence.
     
  3. It has reviewed the comprehensive fiscal analysis and the Controller’s report.
     
  4. It has reviewed the executive officer’s report and recommendation and the testimony presented at its public hearing.
     
  5. The proposed city is expected to receive revenues sufficient to provide public services and facilities and a reasonable reserve during the three fiscal years following incorporation.
     

1. East Los Angeles. East LA is an unincorporated area situated within LA County. United State Census Bureau data from the 2020 decennial census shows that East LA has a population of 118,786, approximately 95.5% of whom are Hispanic or Latino. According to the LA LAFCO, incorporation of East LA has been attempted since 1961. The most recent incorporation attempt was in 2012 and was denied by the LA LAFCO.
2. Policy Consideration. LAFCO law dictates how LAFCOs are funded. Existing law requires LAFCOs to adopt annually, following noticed public hearings, a proposed budget by May 1 and final budget by June 15. LAFCOs are funded by the cities, counties, and, in 30 counties, special districts. The LA LAFCO notes that the bill’s requirements are an unfunded mandate and would cost an estimated $750,000 to implement. LA LAFCO’s adopted 2023-2024 budget is approximately $1.6 million. In light of the estimated costs to implement this bill, the Committee may wish to consider if funding should be provided to the LAFCOs in order to conduct the study required by this bill.
3. Author Amendments. Due to time constraints, the Author has requested that the Committee adopt the following amendments:

56387. (a) The Upon an appropriation by the Legislature pursuant to Subdivision (f), the Local Agency Formation Commission for the County of Los Angeles (LALAFCO) shall establish the East Los Angeles Task Force for the purposes of identifying and evaluating the potential impacts of incorporation of, or the establishment of special districts within, East Los Angeles.

(b) (1) The task force shall be composed of 11 members appointed by LALAFCO in consultation with the County of Los Angeles.

(2) The LALAFCO shall issue a solicitation of interest throughout the East Los Angeles community and select the representatives to be part of the task force pursuant to paragraph (1).

(c) (1) The task force shall meet quarterly, incorporating robust community engagement, to discuss the potential impacts of incorporation or the establishment of special districts in East Los Angeles, including, but not limited to, fiscal impacts, governance structure, public services, community identity, and local control.

(2) By December 1, 2026, the deadline described in subdivision (g), the task force shall complete and submit a report to the Legislature, in compliance with Section 9795 of the Government Code, on the potential impacts of city and special district incorporation in East Los Angeles, including an analysis of advantages, disadvantages, and recommendations for future actions.

(3) The task force shall ensure the report required to be submitted pursuant to paragraph (2) includes comprehensive community input and engagement.

(d) Upon completing its duties required under subdivision (c), the task force shall cease to exist.

(e)

(d) Nothing in this section shall be construed to limit or affect the ability of LALAFCO or any local jurisdiction’s authority or ability to consider or approve proposals for incorporation or the establishment of special districts in accordance with this division.

(f)

(e) For purposes of this section:

(1) “East Los Angeles” means the unincorporated area situated within the County of Los Angeles that is designated as East Los Angeles by the United States Census Bureau in the most recent decennial census.

(2) “LALAFCO” means the Local Agency Formation Commission for the County of Los Angeles.

(g) This section shall remain in effect only until January 1, 2027, and as of that date is repealed.

(f) The creation of task force described in subdivision (a) shall be contingent upon an appropriation by the Legislature in an amount sufficient to reimburse the LALAFCO for its costs to implement this section.

(g) (1) The report described in subdivision (c) shall be submitted to the Legislature no later than 18 months after receipt of funds from the Legislature pursuant to subdivision (f).

(2) Upon completing its duties required under subdivision (c), the task force shall cease to exist.

(3) This section shall become inoperative upon the completion and submission of its report to the Legislature pursuant to subdivision (c).

1. Arguments in Support. An individual writing in support states that, “East L.A., as an unincorporated community, has limited influence over planning and economic development, public services, and public dollars. Incorporation can provide community control over these and other vital issues facing East L.A., including enhancing the ability to attract and retain local businesses and strengthen East L.A.’s voice in County decision-making. There have been unsuccessful attempts to incorporate East L.A. During this time, several of East L.A.’s surrounding communities were incorporated.

“Several of East L.A.’s institutions were severed from the community by the incorporation of neighboring cities, including Commerce Center on Whittier Boulevard and East Los Angeles Community College. Moreover, East L.A.’s most recent attempt at incorporation was negatively affected by SB 89 (2011), which took away about $200 million in funds previously allocated to cities through the State’s Vehicle Licensing Fee (VLF). While California provided other communities that had recently incorporated the needed revenue to avoid a shortfall, California needs to reconcile how the VLF cut hampered the incorporation of East L.A., which was in the middle of its incorporation effort.”

1. Arguments in Opposition. According to the LA LAFCO, “LAFCO respectfully raises the following concerns about AB 2986:

• Cost: The effort would require a substantial commitment of time, resources, and costs for staff (estimated at $100,000) and legal counsel (estimated at $200,000); LAFCO would need to hire a financial consultant (estimated at $300,000); and there are additional costs for public outreach, notice, and documentation (estimated at $150,000). (NOTE: Separate from LAFCO’s costs, AB 2986 would require that Los Angeles County incur significant costs to provide comprehensive financial data solicited from all County departments for LAFCO to analyze).
• Funding: Because AB 2986 provides no funding for its implementation, the bill is an unfunded mandate placed upon LAFCO, and one which could only be financed by increasing annual assessments on the County of Los Angeles, the eighty-eight (88) cities in Los Angeles County, and the fifty-one (51) independent special districts in Los Angeles County.
• Diversion of Resources: The effort would divert staff and legal resources from addressing an existing backlog of proposal (applications), as well as the start of a five-year process to draft MSRs and SOI Updates for 72 cities and 65 special districts.
• Outcome: This would be the fourth time a proposal to incorporate East Los Angeles has been filed with LAFCO: two were defeated by the voters (1961 and 1975), one did not garner the required number of petition signatures (1963), and one was denied by the Commission (2012). The 2012 proposal documented that a new City of East Los Angeles would not be economically viable, as the new city would face a shortfall of $19 million its first year. There is no evidence available now to demonstrate that a future cityhood effort would yield a different outcome.
• Stakeholder Interest: Since the denial of cityhood incorporation for East Los Angeles in 2012, no East Los Angeles stakeholder has contacted LAFCO about a potential city incorporation.

“For the reasons stated herein, LA LAFCO oppose AB 2986.”

REGISTERED SUPPORT / OPPOSITION:

Support

5 Individuals

Opposition

Los Angeles County

Los Angeles LAFCO

18 Individuals

Analysis Prepared by: Jimmy MacDonald / L. GOV. / (916) 319-3958