5.1 Staff Report

Overview

Potential applicants presenting themselves as “Bodega Bay Against Unfair Taxation” have indicated that they have collected sufficient petition signatures to support a proposal to detach the Bodega Bay area from the Palm Drive Health Care District (PDHCD).

The applicants delivered a letter to the Executive Officer on December 2, 2018, seeking a waiver of fees for processing the anticipated proposal (attached). Staff is seeking a determination from the Commission in response to this request.

Staff is providing information regarding the work associated with processing of an application of this type, as well as the authority granted to the Commission by state law and Commission policy to consider fee waiver requests.

Staff recommends that the Commission seek public comment on this issue, followed by discussion and direction to staff. Staff has provided a range of options that the Commission might consider.

Commission Fee Schedule

The Commission adopts a schedule of fees each year as part of its consideration of the annual budget. The fees that applicants are required to pay when filing applications are intended to cover the costs of staff time to process, analyze and evaluate proposals, and prepare materials for the Commission’s adjudication, as well as the costs for services from other entities to support processing of applications.

For changes of organization, such as detachment of territory from a special district, without 100% landowner consent and involving territory with more than fifty voters, the current Fee Schedule requires a $5,000 deposit towards actual costs.

Staff records the costs associated with processing the application; applicants are required to defray those costs prior to recordation of the Commission’s ruling.

Work Required to Process an Application for a Change of Organization

The processing of an application for a change of organization entails many steps, some required by state law and others part of staff’s due diligence to complete tasks effectively and efficiently. The types of activities undertaken by LAFCO staff to process, analyze, and evaluate an application for detachment may include the following:

• Review of the application for completeness and adequacy; determination to issue a Certificate of Sufficiency and a Certificate of Filing (or denial).
• Set-up of application file, review requirements of state law for processing; scheduling deadlines; preparation of mailing lists if necessary; preparation of materials to process fee deposit.
• Ussuance of referrals to affected agencies, as required by state law; responses to inquiries from affected agencies.
• Preparation of notices of public hearings for publication in newspapers and on the Commission’s website for Commission proceedings on the merits of the proposal and conducting authority (protest) proceedings.
• Preparation of a CEQA determination (lead or responsible agency) and associated analysis.
• Preparation of staff reports to guide Commission adjudication at each step of the review and consideration process; preparation of other documents for Commission information. If a Municipal Service Review for the subject agency has not been conducted recently, applicants are expected to pay for the costs of preparing or updating a Review.
• Preparation of draft resolution(s) for Commission review and consideration.
• Review of staff reports, resolutions, and associated work for Commission for substance, format and editing.
• Preparation and delivery of verbal reports to the Commission.
• Conferences and discussions with legal counsel.
• Conducting of a protest proceeding, including noticing the hearing, preparation of a staff report and resolution, and assessment of protest petitions.
• Closing of file including preparation and sending or filing of documents for County Recorder, County Clerk, State Board of Equalization and other agencies, as well as to applicant, as necessary; file scanning.
• Responses to inquiries from the public, interested parties, and applicants throughout the process.

In addition to staff’s direct work on a proposal, the Commission’s Fee Schedule calls for separate billing to the applicant for legal counsel work associated with the application.

Other “actual costs” include the cost of providing notices of public hearing, any costs that the Registrar of Voters and/or the Assessor’s Office may charge for verification of voter or landowner application or protest petitions, and fees to state agencies.

Discussion

Commission Authority

The Cortese-Knox-Hertzberg Act (§56383) allows waiver of fees:

“The Commission may reduce or waive a fee, service charge, or deposit if it finds that payment would be detrimental to the public interest. The reduction or waiver of any fee, service charge, or deposit is limited to the costs incurred by the commission in the proceedings of an application.”

Staff interprets this provision as allowing the Commission to waive fees if it makes a determination that the payment of fees would be detrimental to the public interest, and that only commission-incurred fees (i.e. staff time) can be waived. Costs incurred from outside agencies and noticing costs, under this interpretation, cannot be waived.

Potential Costs

Staff cannot provide an estimate for processing the impending application, but does note that based on the composition of the territory proposed for detachment, newspaper notices for public hearings will be sufficient rather than mailed notices.

Further, staff completed a Municipal Service Review for the District in 2016, which could likely serve as the basis for consideration of the impending proposal with perhaps some updated information and supplemental Determinations.

Finally, the required number of signatures to support the anticipated application is modest (fewer than 300), so fees to verify the validity of signatures should be modest.

Precedent

In 2016, the Commission was presented with a proposal to detach Russian River-area communities from PDHCD. The applicants requested a reduction of the fee deposit when filing their application, and the Commission granted a reduction from $5000 to $2500. 

At the conclusion of the adjudication of the proposal, the applicants petitioned the Commission for a reduction in fees. The Commission elected to grant a fee waiver, assessing fees only to cover external charges (primarily the costs for legal counsel, publication of hearing notices, and recordation fees).  That waiver reduced fees from $11,011 to $5,111. 

It should also be noted that the Commission expressly waived the costs for the preparation of a Municipal Service Review of the District, which were therefore excluded from the $11,011 in accrued costs.

Proponents’ Justification for Fee Waiver

The applicants have indicated the following justifications for a fee waiver:

• “The cost of administering our detachment will not be significant to LAFCO when compared to detachment movements of much larger districts.”
• “…our group of citizen taxpayers are not a municipality with “deep pockets” to defray this expense.”
• “We further believe that the Act is not meant to make it difficult or penalize a citizens group from achieving what is their lawful rights.”

If the Commission determines that these justifications, or those offered during public testimony, indicate that fees would be detrimental to the public interest, a fee waiver could be justified.

The Commission has authority by statute and policy to waive internal fees for this anticipated application based on a finding that the fees would be detrimental to the public interest.

Staff notes the following options available to the Commission:

• Based on a finding that the application fees should not be waived, require the applicants to provide a $5000 deposit against actual incurred expenses, including internal (staff) costs, at the time of filing.  The applicants would be eligible for a refund of deposit funds if actual costs were lower than the deposit amount, or liable for additional fees if the costs exceed $5000.
• With a finding as above, the Commission could consider lowering the deposit amount.
• The Commission could direct staff to collect a $5000 deposit, or a lower amount, at the time of application, and direct staff to track all costs associated with processing the application, with consideration of a fee waiver at a later date.
• The Commission could direct staff to collect a $5000 deposit or lower amount, but grant the applicants a waiver of internal (staff) costs. External costs would be assessed against the deposit.

1. Letter dated December 2, 2018, from potential applicants seeking a fee waiver for an impending application for detachment of the Bodega Bay area from the Palm Drive Health Care District.(PDF: 243 kB)