LOCAL AGENCY FORMATION COMMISSION ORANGE COUNTY 12 Civic Center Plaza, Room 235 Santa Ana, CA (714) FAX (714) MEETING AGENDA

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1 LOCAL AGENCY FORMATION COMMISSION ORANGE COUNTY 12 Civic Center Plaza, Room 235 Santa Ana, CA (714) FAX (714) MEETING AGENDA Wednesday, August 8, 2012, 9:00 a.m. (Continental breakfast will be served at 8:30 a.m.) Ebell Society of Santa Ana, Fireside Room 625 French Street, Santa Ana, CA Any member of the public may request to speak on any agenda item at the time that item is being considered by the Commission. 1. CALL THE MEETING TO ORDER 2. PLEDGE OF ALLEGIANCE COMMISSIONER JAMES FISLER 3. ROLL CALL 4. APPROVAL OF MINUTES: a.) July 11, 2012 Regular Commission Meeting 5. PUBLIC COMMENT This is an opportunity for members of the public to address the Commission on items not on the agenda, provided that the subject matter is within the jurisdiction of the Commission and that no action may be taken on an off-agenda item(s) unless authorized by law. 6. CONSENT CALENDAR None 7. PUBLIC HEARING None 8. COMMISSION DISCUSSION AND ACTION a.) LAFCO Strategic Planning Session i) Shared Services and Public/Private Partnerships Eddie Northen, OCBC Board Member and Vice President of Finance for United Parcel Service (Western Region), will speak about public/private partnerships and shared services.

2 ii) LAFCO Strategic Plan The Commission will consider adoption of the 2013 Strategic Plan along with the year-end budget report, the final legislative report and recommended changes to the work plan. 10. COMMISSIONER COMMENTS This is an opportunity for Commissioners to comment on issues not listed on the agenda, provided that the subject matter is within the jurisdiction of the Commission and that no action may be taken on off-agenda items unless authorized by law. 10. INFORMATIONAL ITEMS & ANNOUNCEMENTS a.) Appointment of CALAFCO Executive Director The Commission will receive an oral report on the appointment of the new CALAFCO Executive Director. b.) CALAFCO Annual Conference The CALAFCO Annual Conference will take place in Monterey, CA, October 3-5, c.) Coalition of California LAFCOs (CCL) Update The next CCL quarterly meeting will be held on August 13, 2012 at the Santa Ana Train Station. 11. CLOSED SESSION a.) Public Employee Performance Evaluation Pursuant to Government Code Section Title: Executive Officer b.) Conference with Labor Negotiators Pursuant to Government Code Section Agency designated representatives: Chair Charley Wilson, Vice Chair Susan Wilson, and Commissioner John Moorlach Unrepresented employee: Executive Officer 12. ADJOURNMENT OF REGULAR COMMISSION MEETING NOTICE REGARDING ITEMS DISTRIBUTED TO THE COMMISSION LESS THAN 72 HOURS PRIOR TO THE LAFCO REGULAR MEETING: Pursuant to Government Code Section public records that relate to open session agenda items that are distributed to a majority of the Commission less than seventy-two (72) hours prior to the meeting will be available to the public at Orange County LAFCO offices at 12 Civic Center Plaza, Rm. 235, Santa Ana, CA during regular business hours. These records when possible will also be made available on the OC LAFCO website at NOTICE: State law requires that a participant in a LAFCO proceeding who has a financial interest in a decision and who has made a campaign contribution of more than $250 to any commissioner in the past year must disclose the contribution. If you are affected, please notify the Commission s staff before the hearing. LAFCO Agendas and supporting documentation are available on the Internet at

3 Local Agency Formation Commission Orange County DRAFT MINUTES 4a LAFCO REGULAR MEETING Wednesday, July 11, 2012, 9:00 a.m. Hall of Administration Room Civic Center Plaza Santa Ana, CA 1. CALL TO ORDER Chair Charley Wilson called the regular meeting of the Local Agency Formation Commission (LAFCO) to order at 9:00 a.m. 2. PLEDGE OF ALLEGIANCE Commissioner Bob Ring led the Pledge of Allegiance. 3. ROLL CALL The following Commissioners and Alternates were present: Chair Charley Wilson Vice Chair Susan Wilson Commissioner Joe Carchio Commissioner Peter Herzog Commissioner John Moorlach Alternate Commissioner Bill Campbell Alternate Commissioner James Fisler Alternate Commissioner Derek McGregor Alternate Commissioner Bob Ring The following Commissioners and Alternates were absent: Commissioner Pat Bates Commissioner John Withers The following LAFCO staff members were present: Executive Officer Joyce Crosthwaite Assistant Executive Officer Carolyn Emery

4 July11, 2012 DRAFT Minutes Page 2 of 5 Analyst Benjamin Legbandt Analyst Joe Serrano Commission Clerk Cheryl Carter-Benjamin Legal Counsel Clark Alsop 4. APPROVAL OF MINUTES May 9, 2012 Regular Commission Meeting Minutes The minutes were approved with revisions. MOTION: SECOND: FOR: AGAINST: None ABSTAIN: None MOTION PASSED 5. PUBLIC COMMENT Approve the May 9, 2012 Regular Commission Meeting Minutes (Joe Carchio) Susan Wilson Charley Wilson, Susan Wilson, Bill Campbell, Joe Carchio, James Fisler, Peter Herzog, John Moorlach Chair Charley Wilson requested public comments on any non-agenda items. There were none. 6. CONSENT CALENDAR None 7. PUBLIC HEARING None Commissioners Withers arrived at 9:19 a.m. 8. COMMISSION DISCUSSION AND ACTION 8a. South County Update Dan Kelly, Senior Vice President of Governmental Relations, Rancho Mission Viejo Company, presented a presentation on the Ranch s development plans. Commissioner Campbell raised the issue of future governance for the Rancho Mission Viejo property.

5 July11, 2012 DRAFT Minutes Page 3 of 5 Executive Officer Joyce Crosthwaite added that the future governance of this area will be an evolving concept. Ms. Crosthwaite stated that a thorough understanding of County revenues and expenditures in this area will be key steps in guiding governance options for this future community. 8b. Comprehensive Quarterly Report Policy Analyst Joe Serrano presented the staff report on the comprehensive quarterly report for FY Commissioner Moorlach asked about the success of the Fiscal Trend Analysis Program. Policy Analyst Benjamin Legbandt replied that 90% of the 2011 CAFRs have been received and will be incorporated into the program by the end of July. MOTION: SECOND: FOR: AGAINST: None ABSTAIN: None MOTION PASSED Receive and file the Comprehensive Quarterly Report (John Withers) Susan Wilson Charley Wilson, Susan Wilson, Bill Campbell, Joe Carchio, Peter Herzog, John Moorlach, John Withers 8c. Fair Political Practice Commission (FPPC) Gift Regulations Update 2012 Legal Counsel Clark Alsop presented the staff report on the updated 2012 FPPC gift regulations. MOTION: SECOND: FOR: AGAINST: None ABSTAIN: None MOTION PASSED Receive and file the FPPC Gift Regulations Report (John Withers) Susan Wilson Charley Wilson, Susan Wilson, Bill Campbell, Joe Carchio, Peter Herzog, John Moorlach, John Withers 8d. OC LAFCO Unincorporated Islands Web Page Commission Clerk Cheryl Benjamin presented an overview of the revised Unincorporated Islands Webpage.

6 July11, 2012 DRAFT Minutes Page 4 of 5 8e. Community Islands Task Force Lessons Learned Executive Officer Joyce Crosthwaite discussed options to improve the islands task force pilot project. Ms. Crosthwaite asked the Commission for direction in developing an improved process to better address controversial issues related to unincorporated islands. After considerable discussion, the Commission provided staff with the following direction: Provide informal briefings prior to the Commission hearing; Include detailed information in staff reports detailing all steps in the annexation process, including any issues that were raised by stakeholders included in the process; Change the timeframe for mailing out the agenda to allow more Commission review time; Provide options for reconsidering spheres of influence for islands; Consider changes that may be needed regarding LAFCOs public notification process. MOTION: SECOND: FOR: AGAINST: None ABSTAIN: None MOTION PASSED Incorporate options to improve the islands task force pilot process and information disseminated to the Commission (John Withers) Peter Herzog Charley Wilson, Susan Wilson, Bill Campbell, Joe Carchio, Peter Herzog, John Moorlach, John Withers Commissioner Campbell left at 10:18 a.m. 8f. Local Agency Investment Update (LAIF) Account Update Assistant Executive Officer Carolyn Emery presented the staff report and recommended that the Commission adopt the revised resolution authorizing designated staff to invest agency funds in the LAIF account. MOTION: SECOND: FOR: Adopt the revised resolution authorizing designated staff to invest agency funds in LAIF (John Withers) Peter Herzog Charley Wilson, Susan Wilson, Joe Carchio, Peter Herzog John Moorlach, John Withers

7 July11, 2012 DRAFT Minutes Page 5 of 5 AGAINST: None ABSTAIN: None MOTION PASSED Commissioner Moorlach left at 10:19 a.m. 10. COMMISSIONER COMMENTS None 11. INFORMATIONAL ITEMS AND ANNOUNCEMENTS 11a. Carmel/Lampson Island Annexation to the City of Stanton (IA 12-02) Executive Officer Joyce Crosthwaite gave an oral update on the status of the Carmel/Lampson Island annexation to the City of Stanton. Ms. Crosthwaite stated that the City is no longer interested in moving forward with the island annexation. 11b. Coalition of California LAFCOs (CCL) Update Assistant Executive Officer Carolyn Emery gave an oral update on the Coalition of California LAFCOs quarterly meeting which took place May 21, 2012, in San Diego. Ms. Emery indicated that the next CCL quarterly meeting will be held on August 13, 2012 at 10:00 a.m. at the Santa Ana Train Depot, Logan Room 5 th Floor. 12. CLOSED SESSION None 13. ADJOURNMENT OF REGULAR COMMISSION MEETING The meeting adjourned at 10:20 a.m. Charley Wilson, Chair Orange County Local Agency Formation Commission By: Cheryl Carter-Benjamin Commission Clerk

8 Local Agency Formation Commission Orange County August 8, 2012 CHAIR Charley Wilson Director Santa Margarita Water District VICE CHAIR Susan Wilson Representative of General Public Pat Bates Supervisor 5 th District Joe Carchio Councilmember City of Huntington Beach Peter Herzog Councilmember City of Lake Forest John Moorlach Supervisor 2 nd District John Withers Director Irvine Ranch Water District TO: FROM: SUBJECT: Local Agency Formation Commission Executive Officer LAFCO s Strategic Plan Attached is the Orange County LAFCO Strategic Plan. As a reminder the Strategic Planning session will be held on the Commission s regularly scheduled meeting date of August 8, The meeting will start at 9:00 am but breakfast will be provided at 8:30 am. The Commission will meet at the Ebell Society s building located at 625 French Street in Santa Ana. You can enter the Ebell Society s parking lot off of Santa Ana Blvd and Mortimer Street, four (4) blocks east of Broadway and the Orange County Civic Center Plaza. The following is a picture of the entrance to the Ebell Society s building. ALTERNATE Bill Campbell Supervisor 3 rd District ALTERNATE James Fisler Director Mesa Consolidated Water District ALTERNATE Derek J. McGregor Representative of General Public ALTERNATE Bob Ring Councilmember City of Laguna Woods Joyce Crosthwaite Executive Officer 12 Civic Center Plaza, Room 235, Santa Ana, CA (714) FAX (714)

9 2012 Orange County LAFCO s Strategic Plan Orange County Local Agency Formation Commission 8/8/2012

10 OCLAFCO STRATEGIC PLAN AND REVISED WORK PLAN FOR FY Introduction The 2012 LAFCO Strategic Plan includes our mission, a legislative report, an end-of-year budget report, a look-back at past activities and recommended changes to the two-year work plan for We will also have a guest speaker, Eddie Northen, Vice President of Finance for the western region of United Parcel Service. Mr. Northen, immediate past chair of the Orange County Business Council (OCBC), will talk about innovation in the private sector and public/private partnerships. The session will be held on Wednesday, August 8 th, starting at 9:00 a.m. at the Ebell Society Building in Santa Ana. OC LAFCO s Mission LAFCO serves the citizens of Orange County: by facilitating constructive changes in governmental structure and boundaries through special studies, programs, and actions that resolve intergovernmental issues, by fostering orderly development and governance, and by promoting the efficient delivery of services. LAFCO also serves as a resource for local governments and citizens by providing a structure for sharing information among stakeholders in Orange County. Page 1 OC LAFCO 2012 Strategic Plan

11 Legislative Update The Legislature reconvened from summer recess on August 6 th and has until August 29 th to complete business for the current legislative session. It is not anticipated that the concluding legislative activities will hold any surprises for the LAFCO community. The table below provides updates on the seven bills of interest that the Commission has tracked and adopted positions on over the past year. The annual Cortese-Knox-Hertzberg omnibus bill (AB 2698), an effort led by the CALAFCO Legislative Committee, was signed by the Governor in June and represents a major accomplishment. Additional details on AB 2698 and pending/failed bills are included in the attached Legislative Quarterly Report (Attachment A). The Legislative Quarterly Report will also be distributed to each special district, city and the County. Legislation OC Position Current Status AB 1902 (Jones) Online Public Notices AB 2238 (Perea) Public Water Systems AB 2624 (Smyth) Sustainable Communities AB 2698 (LGC) CKH Omnibus Bill SB 1395 (Rubio) State Auditor SB 1498 (Emerson) LAFCO Powers SB 1566 (Negrete) VLF Allocations Support Oppose Support Support Watch Watch Support Failed to pass out of committee Senate Appropriations Senate Appropriations (Suspense file) Chaptered (Chapter 62, Status of 2012) Assembly Appropriations Failed to pass out of committee Failed to pass out of committee Page 2 OC LAFCO 2012 Strategic Plan

12 End of Fiscal Year Budget The attached August Comprehensive Quarterly Report (Attachment B) analyzes LAFCO s financial performance for fiscal year (FY) with detailed information about our budget and investments. It also provides a detailed overview of the revenue and expenditures for the months of July 2011 June 2012 as well as a recap of our budget for all four quarters of the fiscal year. Our Successful Partnerships It was more than 15 years ago that Orange County LAFCO began a formal strategic planning process. Since that time LAFCO and Orange County have changed significantly. Over those 15 years, the Commission has considered incorporations, successful and unsuccessful, consolidations, mergers, detachments and reorganizations. Twelve special districts have been reorganized and three cities formed. During the same period, the Commission approved annexations totaling 40,000 acres. They have ranged in size from the 4,287 acre El Toro annexation to the City of Irvine to a one acre parcel to the City of Costa Mesa. Of the 64 islands, large and small, identified in 2000, 39 have been annexed through partnerships among the cities, the County, LAFCO and residents. There are 25 small islands, totaling less than 1,000 acres, remaining in eleven (11) cities. There are also 11 large islands remaining in 8 cities as shown on Figure 1. Page 3 OC LAFCO 2012 Strategic Plan Figure 1: Orange County Large Islands

13 The island annexation process evolved under this Commission s direction as problems with annexing the remaining islands emerged. In 2011, after an 18-month stakeholder process with four cities, the County and LAFCO, we are now concentrating on aligning services so that the barriers to annexing the remaining islands can be reduced over time. While southern Orange County is not considered an island, efforts to develop a plan for future governance for the area moved forward. In 2010 the unincorporated communities of Coto De Caza and Las Flores were placed in the sphere of influence (SOI) of the City of Rancho Santa Margarita after a facilitated process with the County, the City, LAFCO and the communities to study governance options. With the economy improving (somewhat) and development starting on the Ranch, the discussion about future governance for the entire southern Orange County area is poised to begin anew. The Commission completed two rounds of Municipal Service Reviews (MSRs) and SOIs. Our stakeholder process, unique in California in meeting the MSR requirements, brought people and agencies together to find mutually agreed upon solutions. The SOIs for all 61 agencies under LAFCO s purview were reviewed and, in the process, we developed an accurate and up-to-date Geographic Information System (GIS) and electronic database. Our approach to conducting MSRs also evolved. Considering two of the determinations LAFCO is required to address ( Opportunities for Shared Services and Fiscal Ability of Agencies to Provide Service ), we decided to use technology to add value to the MSR process. With a stakeholder working group, we developed a series of eight (8) financial ratios that accurately describe the fiscal situation of cities. Not only do the ratios provide accurate data, they also are based on easily obtainable information--the agencies own annual financial reports. The purpose was to both counter misinformation produced by illconceived studies as well as to meet the requirements of the state law while decreasing the burden on our cities and special districts to provide information. The Shared Services program also began with a stakeholder working group. The stakeholder group noted that the budgets of local government were strapped and that help in finding new ways to provide high quality services and save money were needed. We developed a matching program to connect agencies wanting to buy services with agencies wanting to sell services. Page 4 OC LAFCO 2012 Strategic Plan

14 The Future While the economy may be showing some sign of recovery, municipal revenues have not consistently shown the same signs of improving health. With the revenue from redevelopment agencies gone and all agencies struggling to keep service levels up with fewer staff, shared services remains an increasingly important way for LAFCO to be a resource to our agencies. We receive calls weekly from other organizations, including other LAFCOs, counties and Council of Governments (COGs) about the program. The number of participants in OC is growing. For example, recently LAFCO staff noticed that the largest number of matches was for fleet services. We organized a stakeholder meeting of the 12 agencies interested in sharing that service. The agencies asked LAFCO to continue the meetings, provide some additional information about overlapping Capital Improvement Projects (CIPs) and write a white paper to help them answer questions from elected officials and overcome resistance from line staff about sharing fleet services. The group also concluded that meeting face-to-face helped to move the discussion of shared services, facilities or staff forward. The group also noted that they expected that once started, the group would eventually continue without LAFCO support. Another improvement to the shared services effort is finding a means to assist agencies wanting to explore public/private partnerships. Because our Shared Service website was developed with public funds and is considered a limited public forum, private companies cannot register since advertising could be considered a gift of public funds. Recommended Additions to the Work Plan The Commission previously approved a two year work plan (FY ). Staff is recommending that the Commission: Discuss and prioritize the following additions to that work plan. 1. Review selected Spheres of Influence A majority of the existing SOIs for island areas were established years ago. While a majority of the islands are completely surrounded by a city, there are several islands located on the borders of two cities. Staff is recommending that the SOI for these islands Page 5 OC LAFCO 2012 Strategic Plan

15 be revisited to determine if circumstances are different enough to warrant a change in the SOI. The islands staff is recommending for reexamination are: Bolsa/McFadden (currently the City of Westminster SOI) Carmel/Lampson (currently the City of Stanton SOI) Lincoln/Glassell (currently City of Orange SOI) Santiago Creek (currently City of Orange SOI) Santa Ana Country Club (currently the City of Costa Mesa SOI) South of Mesa (currently the City of Costa Mesa SOI) In addition, the island policy has not been updated to reflect this Commission s adoption of the Community Task Force s guiding principles and process. Staff is recommending that the attached policy (Attachment C) be revised. 2. Resume South County Future Governance Discussions With the uptick in the economy, building is beginning again in southern OC. Staff is recommending conducting an ascertainment study of conditions in southern OC to determine the best way to proceed with discussions on future governance for the area. The study and recommendations for proceeding with discussions on future governance would be brought back to the Commission for consideration and approval. 3. Changes in Reports to the Commission At the May 2012 meeting the Commission requested that future reports contain more detailed information including applicable policies, process followed by LAFCO staff and requirements of the government code. A template (Attachment D) staff uses for our reports has been amended and is attached. In addition the Commission requested that staff reports be received earlier. Staff is recommending that the agenda mail-out be moved to two weeks before the Commission meeting. A schedule (Attachment E) for the remainder of FY is attached. Staff is also recommending that the September meeting be cancelled to ensure that there is adequate time before the next Commission meeting. 4. Public Comment Forums While public hearings are often the largest and most transparent means of participation in government, they are sometimes considered to be biased in favor of citizens with strong views. Those residents who don t have time to attend a meeting due to work or family pressures, who don t like to speak in public, who don t want to seem confrontational or impolite, who don t want to face intimidating oppositions or those who might have moderate views generally do not attend public hearings. The challenge is to have a Page 6 OC LAFCO 2012 Strategic Plan

16 broad, diversified public participation process that enables public leaders to consider items in ways that increase public trust. Individual citizens are online almost constantly and they want to engage with organizations from whatever device they may be using at that moment--laptop, tablet, phone, etc. This pattern of behavior is an opportunity to engage with these individuals about LAFCO and our projects. In order to increase the range of public comments, staff is recommending a series of actions. They are: Investigate additional means of collecting public comments on line using public posts and open government comment boards Ensure that our website can be accessed by mobile devices Establish an e-alert system for LAFCO updates Change the format of the notices that are required to be sent to residents in order to make them more noticeable and interesting 5. Shared Services There are improvements that can be made in the program. For example, we currently send s to agencies/contact people when the program finds a match in broad categories of services. We have also provided a CIP map that agencies and the public can scan. As we notice additional links between agencies, we will organize additional stakeholder meetings with the same expected outcome. Agencies would like us to further refine the types of matches. For example, if agencies have clicked water services, that might include meter readers, purchase of pipes, backhoes or pumps. The next improvement will be to modify the search parameters through the addition of drop-down menus. 6. Disincorporation policy Recently OC LAFCO staff helped to organize a CALAFCO class on the process for the consolidation or disincorporation of cities. The sections of the Cortese-Knox-Hertzberg Act addressing both processes predate Proposition 13 and are badly in need of updating. OC LAFCO staff wrote a white paper from the class notes (Attachment F), which is attached. The white paper will be sent to the CALAFCO Legislative Committee for their consideration. Participants in the CALAFCO class did not expect many applications for consolidation and/or disincorporation. However the participants in the class concluded that, given the rocky economic times for municipalities, individual LAFCOs should adopt policies addressing consolidations and disincorporations until changes in the law can be Page 7 OC LAFCO 2012 Strategic Plan

17 thoroughly vetted through CALAFCO, through all LAFCOs and through the California State Legislature. The underlying concern was to manage expectations of citizens and/or public agencies that the process can provide a quick fix to serious issues. Therefore staff is recommending that we develop a policy that would include basic guiding principles for the consolidation and/or disincorporation of a city. 7. Fellows To encourage more participation by college students and graduates in local government and public service, LAFCO is proposing a limited LAFCO Fellows program. It would introduce one or two participants each year to LAFCO issues. Through working in the LAFCO offices at student wages, the Fellows would develop hands-on experience in complex public issues while developing professional skills and networks. LAFCO would gain fresh perspectives and a lower cost employee. Currently the OC city managers group is working on a similar effort and LAFCO staff will talk to them about participating in that effort. REVISED WORK PLAN FY The following chart is a status update on the projects approved by this Commission for inclusion in the work plan. Red type in the status column indicates that the project is inactive and is not expected to reoccur. Green type indicates completed projects, and blue type indicates projects on hold but that are expected to require staff resources in the next 18 months or projects that are on-going. Orange type indicates a proposed revision to the adopted work plan. APPLICANT PROJECTS Project Description Status Comments Los Alamitos annexation County boundary changes Orange County Water District annexations Garden Grove Sanitary District detachment Possible annexation to the City of Los Alamitos Subsequent reorganizations to the LA/OC boundary changes EIR for annexations is being prepared Detachment of areas outside the City of Garden Grove Inactive Complete On Hold On Hold Completed four reorganizations checking with Long Beach on additional changes Comment letter prepared; staff is monitoring EIR Awaiting further direction from City of Garden Grove. Page 8 OC LAFCO 2012 Strategic Plan

18 Yorba Linda Water District annexation Mission Viejo annexation Mesa WD annexations Rancho Santa Margarita annexation Costa Mesa Sanitary District annexation Rossmoor Community Services District latent powers activation Annexation of territory known as Locke Ranch to formalize sewer service to the area Applicants in discussions with City Working with Mesa staff on application and timing issues Annexation of portion of parking lot for Santa Margarita High School Approved by Commission Proposed application to activate additional powers of the Rossmoor CSD Complete Ongoing Complete Withdrawn Complete On Hold One annexation application filed for addition of a dog park to City; discussions underway with additional landowner re: potential residential annexation to City Application withdrawn and fees refunded No application from CSD for activation of latent powers of Rossmoor CSD SPHERES OF INFLUENCE Project Description Status Comments City Council visits Continue LAFCO outreach efforts by meeting with each OC city council to present SOI for 2013 re-adoption. Meetings with onethird of OC cities complete Staff will complete remaining visits by June 2013 Special District visits Continue LAFCO outreach efforts by meeting with each OC special district to present SOI for 2013 re-adoption. Meetings with one-half of OC special districts complete Staff will complete remaining visits to special districts by June 2013 Islands SOI Study Revisit SOI for islands on the border of two cities New COMMUNICATION Project Description Status Comments California Coalition of LAFCOs (CCL) Continue membership in CCL Ongoing AEO is CCL Executive Officer Page 9 OC LAFCO 2012 Strategic Plan

19 CALAFCO OC Legislative Breakfast Community workshops Electronic training manual for new elected officials Implement additional social media tools Dis-incorporations and Consolidations Prepare quarterly opinion/editorial articles Track CA Forward CSDA feedback team OCLAFCO Newsletter GIS Working Group Public Comment Forums Continue membership with CALAFCO, attend staff workshop and conferences, and participate in CALAFCO s legislative committee. Host a breakfast for OC legislators Hold workshops in communities to answer questions about LAFCO Prepare a CD for newly elected Orange County officials on OC LAFCO. Add Twitter and YouTube to LAFCO s social media network. CALAFCO course held in June 2012 to discuss draft changes to guidelines and LAFCO process for disincorporations and consolidations Prepare opinion pieces on LAFCO issues for publication in local media outlets. Monitor activities of CA Forward. EO on Feedback Team as CSDA looks at LAFCO law Prepare OC LAFCO newsletter for distribution to member agencies. Continue to participate with Southern California LAFCOs in the GIS Working Group. Prepare option for inclusive public comment forum to increase public input on LAFCO projects Ongoing AEO is a member of the CALAFCO Legislation Committee Postponed Rescheduled for October/November 2012 As requested To date, have conducted a workshop for mutual water companies and prepared compliance handbook for mutual water companies Complete Staff developed LAFCO 101 Webpage as LAFCO resource for newly elected and public; webpage will be launched in late July 2012 Complete Complete Ongoing Ongoing Ongoing Ongoing Ongoing New Staff completed a white paper summarizing course comments and proposing legislative changes to clarify the disincorporation process Staff to attend CA Forward workshop in July 2012; monitoring activities are included in Quarterly Legislative Report Page 10 OC LAFCO 2012 Strategic Plan

20 INTERNAL EFFICIENCIES Project Description Status Comments Implement project management system Complete webpage updates (SOIs and Islands) Performance audit training Operations and benefits study Policies and procedures update Comprehensive quarterly reports Implement a computer-based project tracking system Update SOI and Islands web pages on LAFCO s website. Partner with the County Office of Performance Audit to receive specialized training. Review current LAFCO operations and benefits Complete annual policies and procedures update Prepare quarterly reports for the Commission Complete Ongoing On hold Complete Complete Ongoing Spreadsheet tracking system implemented at no cost to agency Islands webpage complete; SOI webpage update underway. Change in Performance Audit staffing has necessitated postponement of training to undetermined date Annual budget Audit Complete archiving project Begin RFP process for auditing services Coordinate CCL Clerk Working Group Implement Changes in LAFCO reports Prepare LAFCO s annual budget and determine funding apportionments for member agencies. Prepare financial records and documents for annual outside audit of LAFCO s financial operations. Complete the purging and archiving of LAFCO s outstanding files and documents. Conduct an RFP process to select a CPA firm to conduct financial audits for participating Southern California LAFCOs. Initiate a Clerk Working Group with Southern California LAFCOs. Include more information in LAFCO reports and send out one week earlier Complete Underway LAFCO staff is scheduled to meet with the new audit team on in mid-july to begin the audit process Complete All LAFCO files (since 1963) have been removed from County warehouse and archived, saving agency $800/month in storage fees Complete Ongoing New Initial WG meeting will be held once San Bernardino LAFCO completes Clerk recruitment process Page 11 OC LAFCO 2012 Strategic Plan

21 MSRs/SOIs Project Description Status Comments Package MSRs/SOIs Combine past MSR/SOI reports efforts to meet MSR requirements. Ongoing Will be completed by December 2012 FISCAL TRENDS Project Description Status Comments Form working group Reform the Fiscal Trends Working Group Underway Fiscal Trends WG will be reactivated in August 2012 Add additional Fiscal Trends ratios Propose two additional fiscal ratios. Underway Fiscal Trends WG will be reactivated in August 2012 Develop right size agency model Research and analyze the right size agency to maximize service efficiency and effectiveness. On hold Special Study: Fiscal health Explore the key characteristics of fiscally healthy agencies. On hold Special Study: enterprise funds and property taxes Analyze possible impacts on enterprise funds if the State takes more property taxes. On hold Page 12 OC LAFCO 2012 Strategic Plan

22 SHARED SERVICES Project Description Status Comments Add alert system Add alert system to allow customized alerts for participants Complete Implement user agreement Add mandatory user agreement to Shared Services website. Complete Special Study: shared service success stories Prepare report documenting shared services success stories (e.g., Brea/Fullerton fire departments). Complete A series of success stories are displayed in the Shared Services Program and are now available on LAFCO s website. Research public/private partnerships Explore opportunities for expanding the Shared Services Program through collaboration with other public/private entities. Underway Staff presented an overview of the Shared Services Program to the Orange County Business Council on 3/20/2012. Discussion led to the Program s Capital Improvement Plan (CIP) Map being placed on the LAFCO website. Increase special district outreach Expand outreach efforts to special districts. Consider reinstituting special districts advisory committee Underway LAFCO and ISDOC cohosted a Shared Services Workshop on 1/26/2012 highlighting successful special district collaborations within Orange County; LAFCO and ISDOC co-hosted session to discuss responses to Grand Jury report. Continued collaboration to educate future Grand Jurors. Page 13 OC LAFCO 2012 Strategic Plan

23 Form regional stakeholder group Research opportunities for sub regional group to maximize service sharing opportunities. Underway LAFCO hosted the initial Fleet Maintenance Working Group meeting on 6/28/2012 Explore neighboring county opportunities Research opportunities for expanding the Shared Services Program to neighboring counties and LAFCOs. Underway Staff completed ID of DUCs (disadvantaged unincorporated communities) for LA and Riverside LAFCOs; provided clerking assistance for LA LAFCO; may provide staff to help implement shared services in two other counties Form stakeholder group with school districts Form a stakeholder working group to explore opportunities for school districts to participate in the Shared Services Program. Underway Staff s formal outreach to school districts will begin again in August 2012 OC COMMUNITIES TASK FORCE Project Description Status Comments Implement work plan Contact cities and Supervisors interested in participation Complete Formed Working Group with the Cities of Stanton, Placentia, La Habra and Newport Beach on annexations Out of area agreements (maps/list) Conduct comprehensive inventory and mapping of out of area service agreements. Complete Implement disadvantaged communities strategy Assess how to address SB 244 determination. Complete Page 14 OC LAFCO 2012 Strategic Plan

24 Community identity Guidelines Explore options/alternatives for preserving community identity following annexation or reorganization. Complete Commission adopted community identity policy in updated Policies and Procedures Handbook Incorporation resource group Assemble group of finance, city management and other public sector professionals to advise groups considering initiating an incorporation proposal. On hold South County Future Governance Begin studies on future governance options for southern OC New Disincorporation/ Consolidation Guidelines Develop guiding principles for processing of potential incorporations/consolidations of cities New Page 15 OC LAFCO 2012 Strategic Plan

25 Orange County Local Agency Formation Commission ATTACHMENT A August 8, 2012 Legislative Quarterly Report Vol. 1 Issue 3 The Legislature s Waning Days August 6 marked the end of the Legislature s summer recess. The next three weeks will likely be a flurry of activity as legislators work to get their legislation approved by both houses and to the Governor s desk for signature. The Governor has until September 30 to sign or veto bills. This quarterly report highlights seven bills of LAFCO interest introduced during the legislative session. Many of the bills tracked by the Commission over the past several months have died in committee. Others are making their way through the legislature and may reach the Governor s desk by the August 31 deadline. One bill, AB 2698, was signed by the Governor and chaptered into law in June. AB 2698 is the annual cleanup legislation for the LAFCO law and represents a successful effort led by the CALAFCO Legislative Committee. The legislation is discussed on Page 2 of this report. The waning days of the State Legislature are not likely to produce any controversial legislation relating to LAFCO. Stay tuned for future updates on legislation of interest to the LAFCO community. The bill language for legislation of interest to the Commission can be reviewed online at Aug. 6 Calendar August 2012 S M T W T F S Aug. 17 Aug. 24 Aug. 31 Legislature reconvenes from Summer Recess Last day for fiscal committees to meet and report bills to the Floor Last day to amend on the Floor Last day for each house to pass bills September 2012 S M T W T F S Sep. 30 Last day for Governor to sign or veto bills passed by the Legislature Orange County LAFCO 12 Civic Center Plaza, Rm. 235 Phone (714) Santa Ana, CA Fax (714)

26 August 8, Legislation of Interest ATTACHMENT A Vol. 1 Issue 3 Major Success AB 2698 (Committee on Local Government) 2012 Cortese-Knox-Hertzberg Omnibus Bill Each year CALAFCO works with the Assembly Committee on Local Government regarding legislation proposing non-controversial and non-substantive changes and clarifications to the Cortese-Knox- Hertzberg Local Government Reorganization Act of While the Omnibus bill includes non-substantive changes, the revisions involved a major undertaking by the CALAFCO Legislative Committee as code sections were moved to more appropriate sections of the law and edited to ensure correct cross references. Substantial work was made toward two notable improvements in the Act s transparency. For many years some LAFCOs have struggled to interpret the Act s protest and waiver of public notice provisions. The protest provisions are the mechanisms outlined in the CKH Act which provide the public with the ultimate veto power to LAFCO decisions. Code sections were reorganized and clarified to facilitate more consistent understanding and application of the law. The bill also included several minor technical changes. Pending Legislation SB 1395 (Rubio) Local agency audit program LAFCO Interest: MSRs; local agency fiscal health Summary: The current bill language makes changes to State law made by AB 187 (2011) clarifying that the State Auditor is the single state entity responsible for audits. Location: Assembly Committee on Appropriations Next hearing: 8/6/2012 Affected agencies: LAFCO, cities, special districts Commission position: Watch CALAFCO position: None at this time AB 2238 (Perea) - Public water systems: drinking water LAFCO interest: MSR studies; unfunded mandate Summary: As amended this bill requires the Department of Public Health to review LAFCO studies and consult with LAFCO staff when evaluating applications for funding under the Safe Drinking Water State Revolving Fund. Location: Senate Committee on Appropriations Next hearing: 8/6/2012 Affected agencies: LAFCO, cities, special Districts Commission position: Oppose CALAFCO position: Support Failed Legislation AB 1902 (Jones) Public noticing: internet websites Summary: This bill proposed for the posting of public notices in a web-based newspaper. AB 2624 (Smyth) Sustainable communities Summary: This bill proposed to make LAFCOs eligible for the award of financial assistance for specified planning purposes under the Safe Drinking Water Act of SB 1498 (Emmerson) LAFCO powers Summary: This bill proposed expansion of LAFCO authority over out of area service provision by local agencies and amended sections of Government Code recently enacted by SB 244 in SB 1566 (Negrete) Vehicle license fees: allocation Summary: This bill would have reinstated certain motor vehicle license fee revenues lost through passage of SB 89 (2011). - Page 2 -

27 ORANGE COUNTY LAFCO ATTACHMENT B FY Comprehensive Quarterly Report Fiscal Year End Edition 1 st 4 th Quarter Financial Analysis

28 Introduction The August Comprehensive Quarterly Report (CQ Report) marks the end of the fiscal year (FY) This edition analyzes LAFCO s financial performance of the approved budget and investment portfolio. FY Budget Overview Exhibit B (pages 4-5) provides a detailed overview of the revenue and expenditures for the months of July 2011 June The following budget overview also includes a summary of the agency s investment return and a recap of all four quarters. Banking Accounts The following illustrates the bank account balances at the end of FY (as of June 30, 2012): As of 6/30/12 Balance Wells Fargo Checking $230, Wells Fargo Savings $210, Payroll Account $96, Total $537, Financial Statements The CQ report includes additional financial statements to better understand LAFCO s financial status throughout the fiscal year. The following two financial statements provide a snapshot of LAFCO s performance and details on the agency s assets, liabilities, and equity. Balance Sheet 1 This financial document (see page 6) summarizes the agency s assets and liabilities during the month of June on an accrual basis, or when earnings and expenses are incurred. Cash Flow Statement This financial document (see page 7) provides information on the cash inflow and outflow the agency endured during the fourth quarter (April June). Expenditures The expenditure balance for FY ended at $952,811 which is approximately 83% of the total budget. The following table shows the funds used in each quarter. Total funds used by Quarter 1 st Qtr. 2 nd Qtr. 3 rd Qtr. 4 th Qtr. Target $286,625 $573,250 $859,875 $1,146,500 Actual $209,198 $450,715 $703,185 $952,811 FY Carryover Amount $193,689 *Note - Total carryover amount does not include all year-end data due to pending year-end financial reports 1 Unaudited Subject to change Comprehensive Quarterly Report 2

29 Investment Report The following table illustrates the balance of LAFCO s investment portfolio at the end of FY : As of 6/30/12 Balance LAIF $259, OC Fund $127, Total $387, The total interest earned was $4,748, which is approximately fifty-eight (58%) of the projected interest earnings for FY For the FY budget, the interest projections were adjusted to more accurately reflect the expected interest revenue. LAFCO Reserves The FY budget did not include an increase in agency allocations. Based on the Commission s direction to freeze the total apportionment fees at $926,683 until the total reserves reach twenty percent (20%) of the total budget, the agency continues to subsidize the expenditures by using reserve funds. For FY , LAFCO used $211,617 from reserves to balance the budget. During the May 2012 hearing, the Commission approved a one-time refund total of $200,000 to be widely distributed to the 61 funding agencies (34 cities and 27 special districts). If the unreserved equity continues to be used to fund current or similar budget levels while keeping agency apportionments the same, staff projects reaching the appropriate reserve balance at the end of FY The reserve balance should be reevaluated and discussed during the preparation of the FY budget. Exhibit A illustrates the annual decrease in LAFCO s reserve balance. Comprehensive Quarterly Report 3

30 Exhibit B Quarterly Overview Orange County Local Agency Formation Commission July 1, 2011 through June 30, stQtr Jul-Sep 2nd Qtr Oct-Dec 3rd Qtr Jan-Mar 4th Qtr April-June TOTAL FY Budget Revenue Use of Unrestricted Reserve Funds $211, $211, Apportionments $926, $926, Misc Revenue $ $ $ $48.48 $0.00 Funds Used (%) Funds Comparison ($) Inter & Dividend $1, $1, $1, $1, $8, % $3, Total Revenue $1,140, $1, $1, $1, $1,146, % $2, Expenditures (+) funds remaining (-) under budgeted Salaries $100, $99, $91, $90, $409, % $28, Benefits & Insur Opt Benef Plan $1, $0.00 $18, $0.00 $24, % $4, Ex Defer Comp $ $ $1, $1, $6, % $2, Retire Benefits $31, $21, $32, $40, $155, % $29, Health Care Ins $11, $11, $16, $17, $39, % -$17, Dental Insur $ $ $1, $1, $4, % $ Life Insurance $ $ $ $ $ % $ Workers Comp $ $ $ $ $1, % $ Medicare $1, $1, $1, $2, $5, % -$ Unempl Insur $ $ $ $ $1, % $ Salary Contin $ $ $ $ $ % -$ Acc Death Insur $33.58 $28.98 $30.52 $30.94 $ % -$ Other EE Insur $0.00 $0.00 $0.00 $0.00 $ % $ Exec EE Insur $1, $1, $1, $1, $7, % $ Total Benefits & Insurance $51, $39, $74, $64, $248, % $18, Info Technology $ $2, $ $3, $13, % $5, Telephone $ $1, $3, $2, $10, % $2, County of Oran -$ $4, $ $3, $5, % -$1, Gen Liability Ins $2, $2, $5, $3, $14, % $1, Mainten Build $0.00 $ $ $0.00 $2, % $1, Membership $2, $2, $3, $2, $20, % $8, Comprehensive Quarterly Report 4

31 Office Equipment/Supplies $1, $2, $1, $1, $20, % $11, Contract Labor $0.00 $6, $4, $3, $25, % $10, Profess Services Legal $1, $18, $6, $13, $65, % $25, Accting/Audit $8, $8, $7, $10, $35, % $ Human Resour $ $0.00 $0.00 $0.00 $2, % $1, Mapping/Archiv $0.00 $7, $3, $3, $15, % $ Other Prof Ser $12, $18, $24, $19, $136, % $61, Total Professional Services $22, $53, $42, $47, $255, % $88, Invest Adm Fee $ $92.55 $ $30.08 $ % $ SBE $2, $ $1, $0.00 $0.00 -$4, Public Noticing $0.00 $ $3, $2, $15, % $8, Postage $ $ $ $1, $3, % $ Office Lease $9, $9, $9, $9, $37, % -$ Eq Leases/Maint $1, $1, $2, $2, $9, % $1, Com & Staff Exp $1, $2, $1, $2, $5, % -$1, Com Stipends & Taxes/Fees $3, $3, $4, $2, $14, % $1, Staff Training $75.00 $2, $ $ $5, % $1, Transport/Travel $10, $4, $ $3, $30, % $11, Com Meeting Exp $6.43 $ $ $ $2, % $ Total Expenditures $209, $241, $252, $249, $1,146, % $193, Comprehensive Quarterly Report 5

32 Comprehensive Quarterly Report 6

33 Comprehensive Quarterly Report 7

34 ATTACHMENT C Policy & Procedural Guidelines for Annexation of Small Islands (Gov t Code ) IV. SMALL ISLAND ANNEXATION PROCEDURAL GUIDELINES The following shall serve as procedural guidelines for processing small island annexations pursuant to Government Code The Commission may approve small island annexations, and order the annexation of territory without protest or an election, if it determines that all of the following conditions apply: A. The annexation is initiated on or after January 1, 2000 and before January 1, B. The annexation is proposed by resolution adopted by the affected city. C. The annexation does not exceed 150 acres in area, and that area constitutes the entire island. D. The territory is surrounded in either of the following ways: surrounded, or substantially surrounded, by the city to which annexation is proposed or by the city and a county boundary or the Pacific Ocean, or surrounded by a city to which annexation is proposed and adjacent cities. An unincorporated island is substantially surrounded if: (1) more than 50 percent of the island s boundary is contiguous to the annexing city, or (2) more than 50 percent of the island s boundary is contiguous to the annexing city and the Pacific Ocean. E. The territory is not located within a gated community where services are currently provided by a community services district. F. The territory is substantially developed or developing based upon one or more factors, including, but not limited to, the following: The availability of public utilities The presence of public improvements The presence of physical improvements upon the parcel or parcels in the area G. It is not prime agricultural land. H. The territory will benefit from the annexing city. I. The Commission may offer incentives such as reduced fees for cities annexing small islands.