LAFCO to revise annexation fee structure

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San Diego County’s Local Agency Formation Commission will be revising the structure of annexation application fees.

No vote was taken at LAFCO’s Dec. 3 meeting following the discussion, and the action which drew no board member objections was to release the proposed fee structure for public review.  An actual vote is expected Feb. 4 after potentially affected agencies and other stakeholders such as the building industry can review the proposed changes and provide input.

“It’s about time,” said LAFCO executive officer Keene Simonds.

San Diego County’s Local Agency Formation Commission will be revising the structure of annexation application fees.

No vote was taken at LAFCO’s Dec. 3 meeting following the discussion, and the action which drew no board member objections was to release the proposed fee structure for public review.  An actual vote is expected Feb. 4 after potentially affected agencies and other stakeholders such as the building industry can review the proposed changes and provide input.

“It’s about time,” said LAFCO executive officer Keene Simonds.

LAFCO has had sporadic updates to its application fees themselves with the most recent being a 10 percent increase in 2007, but the fee structure has not changed since 1972.  The process itself has changed since then.  “You just have a lot more to do when it comes to these proposed reviews,” Simonds said.

City incorporations, special district formations, and consolidations currently have flat fees regardless of the geographical size of the territories involved, but the current fees for annexations, detachments, and latent powers expansions are based on the affected territory’s acreage.  “We want to transition from that,” Simonds said.

Any jurisdictional change for half an acre or less currently has a charge of $2,660 and seven other specific fee amounts apply for applications from 0.51 acres to 199.9 acres while the fee for a change involving 200 acres or more is currently $9,060 plus $90 per 100 acres exceeding 200 acres.  Under the proposed new structure annexations, detachments, latent powers establishments, and service power divestitures will have costs based on the level of environmental review and on whether a protest hearing is required.

“That’s the key transition you’re looking at,” Simonds said. “These factors, environmental review and protest, really drive your staff time.”

If full consent occurs, which is the case when a property owner wishes to annex to a jurisdiction (including when approval for a development is conditioned upon annexing to a jurisdiction or when a well or septic system failure warrants annexation of a property), the fee for a single jurisdictional change would be $6,405 if the jurisdictional change itself qualifies for a California Environmental Quality Act exemption, $7,045 if an initial CEQA study is required, and $7,686 if an Environmental Impact Report is required.  If there is not full consent a protest hearing will be held in which case the fee would be $8,326 for a CEQA exemption, $8,967 if an initial study is involved, and $9,607.50 if an EIR is needed.

For each additional jurisdictional change (for example, a detachment from an existing agency or annexation to multiple agencies) the fees with full consent would be $4,163.25 for a CEQA exemption, $4,579.58 for an initial study, and $4,995.90 for an EIR while without full consent the proposed fees for each additional change are $5,412.23 for an exemption, $5,828.55 for an initial study, and $6,244.88 for an EIR.

The proposed new fees are based on staff time costs.

“We also need to assign a set number of staff hours on a proposal type,” Simonds said.

The proposed revisions to the structure also include estimates of staff time along with the hourly salary, benefit, and overhead costs for staff members involved. The staff costs are also new to LAFCO for proposals.

“We don’t have an hourly staff rate,” Simonds said.

Special district formations and consolidations (which would include the dissolution of one or more agencies) or city incorporations would involve deposits with actual billing based on time and material. The deposit for a special district formation would be $9,150 which would cover the first 75 hours of staff time. The consolidation deposit of $12,200 would cover the first 100 hours. The $24,400 deposit for an incorporation would cover the first 200 hours. The jurisdictional boundary change fees would be non-refundable but may be augmented by one or more deposits if additional staff time is needed while the deposits to cover staff time for formations, consolidations, and incorporations would be refundable if the actual staff time is less than the estimate.

Currently LAFCO’s executive officer can waive fees, which in some cases is for financial hardships and in other cases to induce support for changes which provide logical readjusted boundaries.

“There’s an inherent conflict out there,” Simonds said.

Under the proposed new system the LAFCO board will act as a check to ensure that fee waivers are not granted solely for projects favored by LAFCO staff, so any fee waivers would require LAFCO board approval.

Three pre-authorized reductions would not need LAFCO board approval for the specified reduction amount while additional reductions or a full waiver could occur by a LAFCO board majority vote.  A city annexation of an entire “island”, or unincorporated area completely surrounded by a city, would have a pre-authorized 50 percent fee reduction as would a city annexation of a disadvantaged unincorporated community.  A jurisdictional change (including a latent power expansion) initiated in response to an existing or pending well or septic system failure would receive a 75 percent reduction contingent on the proposal having 100 percent consent of the affected landowners and confirmation of the pending or existing failure from the county’s Department of Environmental Health.

Any applications submitted prior to the adoption of the new fee schedule will not be subject to the new fee structure.  If a landowner or public agency consults with LAFCO staff prior to submitting an application, the LAFCO staff time involved prior to the submittal of the application would not be added to the staff time involved in processing the application.

A municipal service review evaluates services and anticipated needs. A sphere of influence study determines the boundaries best served by a particular agency. Municipal service review and sphere of influence updates are prerequisites to a jurisdictional change other than annexation of land within the sphere of influence, and LAFCO also periodically conducts sphere of influence updates for all cities and special districts.

Currently the fee to prepare a municipal service review and sphere of influence update for a proposed jurisdictional change is $11,000.  The proposed changes would alter that to a municipal service review maintenance fee equal to 5 percent of the baseline applicant fee.

Certain exemptions would apply, including jurisdictional proposals which necessitate their own municipal service review and sphere of influence updates.

If a member of the public requests that LAFCO staff perform general research there would be no cost if the research involves no more than two hours of staff time. Any research beyond two hours would result in a charge based on the hourly staff rate for LAFCO staff members utilized.

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