LAFCO's Responsibility for Special Districts: Overseen or Overlooked?

F1

The recommendations SCC LAFCO makes through its mandatory service review reports are intended to improve agency performance and may recommend special district dissolution when the services those districts were intended to provide are no longer provided or needed; however, SCC LAFCO stops short of enforcing the implementation of its recommendations either because they do not think this is within their purview or because they are afraid of potential litigation. Response: The respondent disagrees partially with the finding. Please see below and the response to Recommendation 1A for the explanation. The reason for LAFCO not enforcing service review recommendations to dissolve special districts is not because LAFCO thinks that it is not within LAFCO's purview or because LAFCO is afraid of potential litigation. LAFCO of Santa Clara County clearly understands that it has the authority to initiate the dissolution of a special district (please see Attachment A: of the LAFCO Staff Report dated December 15, 2010 which identifies that LAFCO may initiate the dissolution of a special district). While potential litigation is a serious concern for LAFCO, as it is for any public agency, and while LAFCO may evaluate and consider the various risks from potential litigation, LAFCO of Santa Clara County has not made a decision on whether or not to initiate the dissolution of a special district solely based on this issue. Because the dissolution of a special district is a significant non-reversible action, LAFCO will begin dissolution proceedings only after careful consideration and a deliberate process which will evaluate whether dissolution of an agency is the answer to the issues identified and whether it is achievable. This process takes time, effort, strategy and involves collaboration and consultation with affected parties. Service Reviews provide LAFCO with information and preliminary analysis on potential options for government structure changes that could result in increased service efficiencies. The dissolution of a special district may be identified in the service reviews as one such potential government structure option. State law allows LAFCOs to initiate the dissolution of a special district provided LAFCO is able to make certain findings (i.e. LAFCO must establish that the dissolution will lead to similar or lower public service costs and must establish that there will be no reduction of public access or accountability for the service and financial resources). LAFCO's service reviews are not designed to be dissolution studies and may not contain this level of analysis. Therefore, LAFCO (using consultants) must prepare additional, more detailed analysis to support the necessary findings prior to taking any action to dissolve a special district. Take for example, the recently completed Countywide Fire Service Review adopted by LAFCO in December 2010. Following the adoption of the Fire Service Review, staff prepared a report on implementation of the government structure options identified in the Fire Service Review Report (please see Attachment A). LAFCO directed staff to pursue further research and report back to the Commission on the options including the dissolution of Saratoga Fire Protection District and Los Altos Hills County Fire District. Staff is in the process of preparing the additional information and consulting with the affected parties. Special district dissolutions are complex lengthy processes that could potentially be controversial and expensive. Besides the completion of specific studies and analysis required in order to initiate the dissolution of a special district, a strategic and favorable alignment of outside factors such as the local political climate, community interest/involvement, economic conditions, legislative changes (e.g. the recent passage of AB 912) and so on, may be necessary for LAFCO to pursue such changes in a successful manner.

Related Recommendations (5)

R1

December 15, 2010 LAFCO Staff Report: 2010 Countywide Fire Service Review Final Report and Sphere of Influence Updates for Fire Districts

R1A

Page 4

SCC LAFCO should develop and adopt policy directives that ensure, through its service reviews, that SCC LAFCO proactively examines, oversees, and makes recommendations regarding whether special districts should continue to exist. Response: The recommendation has not yet been implemented, but will be implemented by LAFCO in the next 6 months. While LAFCO does not have a specific policy concerning this, our practice has been to consider these issues through service reviews and in follow-up research and analysis (for example, the 2010 Countywide Fire Service Review). But in the interest of transparency, we would like to implement this recommendation and adopt specific written policies.

R1B

Page 4

SCC LAFCO should adopt policies that direct LAFCO staff to exercise its enforcement authority where appropriate. Response: The recommendation will not be implemented because it is not reasonable. LAFCO staff has no standalone enforcement authority. LAFCO staff brings issues /violations to the Commission's attention and provides recommendations concerning potential options for addressing these issues or violations. However, LAFCO must direct staff regarding any enforcement action.

R1C

Page 4

SCC LAFCO Commission should consider adopting a policy strongly encouraging Commissioners and staff who are active in CALAFCO's legislative committee to lobby the California legislature to strengthen protections against litigation based on LAFCO actions. Response: This recommendation will not be implemented because it is not warranted and is not reasonable. CALAFCO is well aware of this issue, and has testified on the subject of special district consolidations before a joint hearing held by the Assembly Local Government Committee and the Assembly Accountability and Administrative Review Committee in March 2011. CALAFCO identified five opportunities for solutions that may help encourage more consolidation efforts of local agencies including protection against the threat of litigation. The Committee as well as several legislators have expressed interest in CALAFCO's recommendations and may consider potential legislation in the future. Furthermore, CALAFCO has an adopted set of legislative policies for seeking legislative changes that affect LAFCOs across the state. The LAFCO Executive Officer and a LAFCO Commissioner are both active members of CALAFCO's Legislative Committee and will continue to work on these issues within CALAFCO's established framework and policies. CALAFCO's current work on Assembly Bill 912 (Gordon), which was recently signed by the Governor, is an excellent example of CALAFCO's legislative advocacy process and LAFCO's involvement.

R1D

Page 5

SCC LAFCO staff should actively oversee that agencies address and implement recommendations made in LAFCO service review reports. Response: The recommendation has been implemented. Where appropriate and at the direction of LAFCO, LAFCO staff is doing this. See Attachment A for proposed steps for implementation of recommendations / options identified in the Countywide Fire Service Review Report. However, LAFCO may not have oversight over certain service review recommendations. For example, the recent Countywide Fire Protection Service Review Report identified several opportunities for fire service providers to achieve greater efficiencies and economies of scale, such as consolidating emergency communications systems, consolidating stations and apparatus, and sharing fire specialized staff. LAFCO has no authority over implementing these recommendations. But LAFCO staff tracks those recommendations and provides updates to LAFCO accordingly. An excellent example of this is LAFCO staff's June 1, 2011 update to LAFCO concerning recent efforts in the northern portion of the county with regard to regionalization of fire protection services.

F2

Previous SCC LAFCO service reviews fall short of addressing subjects of transparency, the examination of effective service delivery by special districts, or addressing the continuing need to maintain any given district, which, together with the topics the reports do cover, would constitute a performance audit. Response: The respondent disagrees partially with the finding. Prior to LAFCO's first round of service reviews, there was little information available concerning special districts, especially the smaller, lesser known districts. At that time neither LAFCO nor most special districts had current maps of special district boundaries. LAFCO's first round of service reviews focused more heavily on data collection and developing an accurate map of a district's boundaries and less on conducting a detailed analysis. As a result, the degree to which detailed analysis regarding transparency, effective service delivery, and the need to maintain any given district, were included in LAFCO's first round of service reviews varies. In hindsight, LAFCO's 2007 review of the El Camino Hospital District is an example of where more analysis regarding these issues should have been included. However, since then, we have become more familiar with these issues and are using the second round of service reviews to conduct a more in-depth examination of these issues. LAFCO recently completed its second round Countywide Fire Protection Service Review and is conducting further research and analysis on these issues in relation to potential changes in the governance structure of two fire districts. LAFCO is also currently conducting a Countywide Water Service Review which will also address these issues in relation to water districts and resource conservation districts and the remaining service reviews will also address these issues in much greater detail than the previous service reviews, starting with a separate focused service review for the El Camino Hospital District (please see Attachment B).

Related Recommendations (4)

R2

August 3, 2011 LAFCO Staff Report: Proposed Work Plan for El Camino Hospital District Service Review ::LAFICO Local Agency Formation Commission of Santa Clara County LAFCO Meeting: December 15, 2010 TO: (cid:9) LAFCO FROM: (cid:9) Neelima Palacherla, Executive Officer Dunia Noel, Analyst SUBJECT:(cid:9) 2010 COUNTYWIDE FIRE SERVICE REVIEW FINAL REPORT AND SPHERE OF INFLUENCE UPDATES FOR FIRE DISTRICTS Agenda Item #5 STAFF RECOMMENDATIONS SERVICE REVIEW REPORT AND SPHERE OF INFLUENCE UPDATES

R2A

Page 6

SCC LAFCO should continue with the proposed plan to perform a service review of special districts (other than fire and water) separate from municipalities. Response: The recommendation has been implemented for the El Camino Hospital District (ECHD). LAFCO has directed staff to prioritize LAFCO's review of ECHD and LAFCO staff is recommending that LAFCO conduct a separate focused service review for El Camino Hospital District including a forensic accounting of the District's revenues (please see Attachment B). Regarding the remaining special districts and cities, the recommendation requires further analysis. Within the next 6 months, LAFCO staff will develop a work plan for completing the remaining service reviews taking into consideration changes and events that have and are occurring at the state and local level.

R2B

Page 6

SCC LAFCO should handle the next service review for special districts as a performance audit, to include an examination of effective service delivery and an assessment of the continued need for the district, if any. Response: The recommendation has been implemented or will be implemented in the future. As noted in our response to Finding 2, the subjects of transparency, effective service delivery, and the need to maintain any given district, will be addressed in LAFCO's upcoming El Camino Hospital District service review which will begin by January 2012. Furthermore, LAFCO's 2010 Countywide Fire Protection Service Review addressed these issues and LAFCO's remaining service reviews will address these issues in detail.

R2C

Page 7

Particularly as there appears to be no urgency to its decision with respect to El Camino Hospital District (see minutes of the April 2011 meeting), SCC LAFCO should complete a thorough El Camino Hospital District service review prior to any further Commission action on the topic. Response: The recommendation has been implemented. LAFCO, at its June 1, 2011 meeting, directed staff to take a closer look at El Camino Hospital District as part of the upcoming service review and to include a forensic accounting of the financing of the purchase of Los Gatos Hospital and to report back to the Commission on this issue after the service review is completed. Furthermore, LAFCO, at its August 3, 2011 meeting approved a work plan (please see Attachment B) that also includes an examination of any financing of other facilities that are outside of the District (e.g. dialysis centers), examination of effective service delivery, and an assessment of the continued need for the district.

F3

SCC LAFCO has failed to initiate action to dissolve special districts that it has already determined are obsolete, such as the Saratoga Cemetery District. Response: The respondent disagrees wholly with the finding. No such determination has been made by LAFCO or in LAFCO's service reviews regarding the Saratoga Cemetery District.

Related Recommendations (1)

R3

Facilitated by its service review recommendations, SCC LAFCO should proceed with action to dissolve those special districts that have outlived their usefulness or that can continue to provide the same level of service without property tax revenues. Response: The recommendation has not yet been implemented, but will be implemented by LAFCO where appropriate. LAFCO must conduct additional analysis before it can decide whether it is appropriate to dissolve a special district and before it can make the statutorily required findings to initiate the dissolution of a special district. LAFCO's Countywide Fire Service Review indentified potential changes in governance structure that could achieve greater efficiencies in fire service. LAFCO has directed staff to take a closer look at two fire districts (i.e. Saratoga Fire Protection District and Los Altos Hills County Fire District) that contract with another fire district for fire service, in order to see if there is an opportunity. LAFCO staff is currently working on this.

F4

SCC LAFCO Commissioners receive limited training about LAFCO and are not fully educated as to their broad responsibilities to oversee LAFCO or LAFCO's responsibilities regarding special districts. Response: The respondent disagrees wholly with the finding. All LAFCO commissioners receive comprehensive orientation training on LAFCO upon receiving their appointment to LAFCO. Commissioners also have opportunities to attend CALAFCO Conferences that include sessions on various aspects of LAFCO, including special districts. Many commissioners will be attending CALAFCO's upcoming Conference. Also, some commissioners have attended CALAFCO University's daylong classes on specific LAFCO issues, such as fire district consolidations and agricultural mitigation. Additionally, LAFCO does receive training on a "just in time" basis. An excellent example of this is the December 15, 2010 LAFCO staff report (please see Attachment A) and presentation to LAFCO regarding the Countywide Fire Protection Service Review and the specific options identified in the service review report for achieving fire service efficiencies. As another example — prior to processing the San Martin Incorporation Proposal, LAFCO hired a consultant who was familiar with the incorporation process to provide two special training sessions or workshops, for LAFCO, affected agencies and for the community of San Martin on the incorporation process and issues. Lastly, several Bay Area LAFCO Executive Officers, including Santa Clara LAFCO, are trying to organize a CALAFCO University class regarding Hospital/Healthcare Districts that commissioners would be encouraged to attend in order to gain greater knowledge. The materials from that class could also be provided to commissioners at a LAFCO meeting.

Related Recommendations (3)

R4

Adopt sphere of influence (SOI) updates along with sphere of influence determinations for the four fire districts as included in the Service Review Report: a. Retract the SOI for Santa Clara County Central Fire Protection District (CCFD) as recommended and depicted in the Service Review Report b. Reaffirm the existing SOI for South Santa Clara County Fire Protection District (SCFD) c. Establish a zero SOI for Saratoga Fire Protection District (SFD) d. Retract the SOI for Los Altos Hills County Fire District (LAHFD) as recommended and depicted in the Service Review Report.

R4A

Page 8

SCC LAFCO Commissioners should initiate means to more completely understand the full range of their authority, through independent learning and more thorough staff briefings. Response: The recommendation has been implemented. Please see LAFCO's response to Finding 4 for further explanation.

R4B

Page 9

SCC LAFCO staff should use Commission information packets to provide "just in time" training. Examples: present a full range of options when presenting recommendations for Commission decisions, weigh the alternative options, include information on the full range of LAFCO authority, and include broader contextual information surrounding an issue on the agenda. Response: The recommendation has been implemented. Please see LAFCO's response to Finding 4 for further explanation. We appreciate the Grand Jury's interest in LAFCO of Santa Clara County. Thank you for the opportunity to respond to the findings/recommendations presented in the report. Sincerely, s, Chairperson 0 of Santa Clara County ATTACHMENTS 1. December 15, 2010 LAFCO Staff Report: 2010 Countywide Fire Service Review Final Report and Sphere of Influence Updates for Fire Districts 2. August 3, 2011 LAFCO Staff Report: Proposed Work Plan for El Camino Hospital District Service Review ::LAFICO Local Agency Formation Commission of Santa Clara County LAFCO Meeting: December 15, 2010 TO: (cid:9) LAFCO FROM: (cid:9) Neelima Palacherla, Executive Officer Dunia Noel, Analyst SUBJECT:(cid:9) 2010 COUNTYWIDE FIRE SERVICE REVIEW FINAL REPORT AND SPHERE OF INFLUENCE UPDATES FOR FIRE DISTRICTS Agenda Item #5 STAFF RECOMMENDATIONS SERVICE REVIEW REPORT AND SPHERE OF INFLUENCE UPDATES 1. Accept comments and consider any further revisions to the Revised Draft 2010 Countywide Fire Service Review Report. 2. Adopt the 2010 Countywide Fire Service Review Report (Service Review Report) with revisions as necessary. 3. Adopt service review determinations for each of the fire agencies as included in the Service Review Report. 4. Adopt sphere of influence (SOI) updates along with sphere of influence determinations for the four fire districts as included in the Service Review Report: a. Retract the SOI for Santa Clara County Central Fire Protection District (CCFD) as recommended and depicted in the Service Review Report b. Reaffirm the existing SOI for South Santa Clara County Fire Protection District (SCFD) c. Establish a zero SOI for Saratoga Fire Protection District (SFD) d. Retract the SOI for Los Altos Hills County Fire District (LAHFD) as recommended and depicted in the Service Review Report. 5. Direct staff to prepare the Final Report for the 2010 Countywide Fire Service Review and to distribute the Final Report to all the affected agencies. 6. Direct staff as necessary, to pursue further research / analysis of specific options identified in the Service Review Report and report back to the commission. CEQA ACTION 1. Determine that the 2010 Countywide Fire Service Review Report and the updates to the sphere of influence of the four special districts are categorically exempt from CEQA under §15306 Class 6 and §15061(b)(3) General Rule of the CEQA Guidelines. West Hedding Street • 11th Floor, East Wing • San Jose, CA 95110 ' (408) 299-5127 s (408) 295-1613 Fax n www.santaclara.lafco.ca.gov COMMISSIONERS: Pete Constant, Liz Kniss, Margaret Abe-Koga, Mike Wasserman, Susan Vicklund-Wilson ALTERNATE COMMISSIONERS: Sam Liccardo, AI Pinheiro, George Shirakawa, Terry Trumbull EXECUTIVE OFFICER: Neelima Palacherla BACKGROUND SERVICE REVIEW AND SPHERE OF INFLUENCE REQUIREMENTS The Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000 (California Government Code §56000 et seq.) requires that each LAFCO conduct service reviews prior to or in conjunction with the 5-year mandated sphere of influence (SOI) updates. A service review is a comprehensive review of municipal services in a designated geographic area in order to obtain information about services, evaluate provision of services, and recommend actions when necessary, to promote the efficient provision of those services. In Santa Clara County, service reviews are intended to serve as a tool to help LAFCO, the public and other agencies better understand the public service structure and to develop information to update the spheres of influence of the 29 special districts and 15 cities in the county. As. part of the service review, LAFCO must prepare an analysis and written statement of determinations regarding each of the following six categories: • Growth and population projections for the affected area • Present and planned capacity of public facilities and adequacy of public services, including infrastructure needs or deficiencies • Financial ability of agencies to provide services • Status of, and opportunities for, shared facilities • Accountability for community service needs, including governmental structure and operation efficiencies • Any other matter related to effective or efficient service delivery, as required by commission policy. As part of the sphere of influence update, LAFCO must prepare an analysis and written statement of determinations for each agency regarding each of the following categories: • The present and planned land uses in the area, including agricultural and open- space lands • The present and probable need for public facilities and services in the area • The present capacity of public facilities and adequacy of public services that the agency provides or is authorized to provide • The existence of any social or economic communities of interest in the area if the commission determines that they are relevant to the agency • The nature, location, and extent of any functions or classes of services provided by existing district (applies to special districts only). The 2010 Countywide Fire Service Review is a review of countywide fire services in Santa Clara County and includes service review determinations for each of the fire service provider agencies in the County as well as sphere of influence recommendations and determinations for the four fire districts. SERVICE REVIEW PROCESS In December 2009, a Technical Advisory Committee (TAC) was established to select the consultant, serve as a liaison between LAFCO and the various affected agencies, and to provide technical expertise and guidance throughout the service review process. In addition to LAFCO Commissioner Pete Constant, the members of the TAC for the 2010 Countywide Fire Protection Service Review include: Representing the Santa Clara County/Cities Managers' Association: • Thomas Haglund, City Administrator, City of Gilroy Representing the Santa Clara County Fire Chiefs' Association: • Dale Foster, Fire Chief, City of Gilroy • Ken Waldvogel, Fire Chief, Santa Clara County Central Fire Protection District • Steven Woodill, Fire Chief, South Santa Clara County Fire Protection District In February 2010, LAFCO retained Management Partners Inc. to conduct the 2010 Countywide Fire Protection Service Review. Arne Croce of Management Partners is the Project Manager for this service review. As a first step, information regarding various aspects of fire service was gathered from each of the fire service agencies/providers in the County. The consultant made available a web site for agencies to upload the requested information. This information was then tabulated and sent to the fire agencies for verification. Follow-up information and further clarification was obtained through interviews with each service provider. In order to better reflect the current financial situation of various service providers, updated budget information for the current fiscal year was obtained. Criteria that would be used in making the required service review determinations was developed and reviewed with the TAC. Information gathered was analyzed and preliminary

LAFCO's Responsibility for Special Districts: Overseen or Overlooked?

Findings and Recommendations 4 findings

Comments 2

No Responses Found 1