HomeMy WebLinkAboutBolsa Chica Annexation Study - Submitted for Council conside A4 V. P ion
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CITY OF HUNTINGTON BEACH
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
Council/Agency Meeting Held:
Deferred/Continued to:
❑Ap roved ❑ Conditionally Approved U Denied b,9I91J7Y it Clerk's Signature
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> bu cl eeting ate:�z Feb nary ,1999� Department ID Number: CD99-11
CITY OF HUNTINGTON BEACH
REQUEST FOR ACTION
SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS
SUBMITTED BY: RAY SILVER, City Administrator
PREPARED BY: MELANIE FALLON, Assistant City Administrator '
ROBERT BEARDSLEY, Direct blic
MICHAEL DOLDER, Fire Chie
HOWARD ZELEFSKY, Director of Planning �� �� y�
SUBJECT: RECEIVE AND FILE THE BOLSA CHICA ANNEXATION STUDY
[sutementofissue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s)
Statement of Issue:
At the City Council meeting of January 20, 1998, the Council directed Staff to prepare a cost
benefit analysis of annexation of the Bolsa Chica into the City of Huntington Beach. The
purpose of this transmittal is to submit the Bolsa Chica Annexation Study (dated January 7,
1999) to the City Council and to request adoption of a negotiation strategy that could result
in the annexation of the Bolsa Chica prior to development.
Funding Source: Not applicable.
Recommended Action:
Motion to:
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1. "Receive and file the Bolsa Chica Annexation Study dated January 7,1999��0 F1scA� Tees
(ATTACHMENT NO. 1)", and �DA7LwD� 9 Y
2. "Direct the City Administrator to develop a strategy that could result in annexing the
Bolsa Chica to the City of Huntington Beach prior to development of homes in the Bolsa
Chica" and
LA,.,.
I
REQUEST FOR ACTION
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
UP -To Ana i neLvoin6
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3. "Direct the City Administrator to consult with the City Council to 3
to establish those
parameters which should be addressed in any negotiation of a pre-annexation
agreement for the Bolsa Chica" and
4. "Authorize Staff to begin pre-annexation agreement discussions with Hearthside Homes
based on the negotiation strategy presented on pages 4 4".aad or- -me
5. "Authorize Staff to communicate with all property owners within the Bolsa Chica
regarding the possibility of annexation into the City of Huntington Beach" and
6. "Provide the City Council with a status report at a subsequent date addressing additional
issues which are not relatedPe to the property owned by Hearthside Homes."
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ternative Action:
The City Council may make the following alternative motion:
Do not pursue one or more of the recommended negotiation strategies and direct staff
accordingly.
Analysis:
A. BACKGROUND
On January 20, 1998, the City Council directed staff to explore the potential fiscal impacts
on the City of Huntington Beach in relation to the possible annexation of the Bolsa Chica.
As a result, Staff has prepared a study that addresses the question of whether annexation
of the Bolsa Chica would result in a positive or negative fiscal impact to the City.
The fiscal study examined three scenarios, all of which assumed that development will
occur on the Bolsa Chica Mesa. The three scenarios studied included annexation prior to
development, development without annexation and annexation after development is
complete. In response to questions raised during public review, a fourth scenario was
analyzed. This analysis (which can be found in Section 6 of the report, as part of
responses to questions) examined the fiscal impact to the City if Bolsa Chica were
annexed, but development did not occur.
The study was prepared using a format that will allow review by the Local Agency
Formation Commission (LAFCO) which is the State-mandated agency that has the ability
to review, approve, amend and approve, or deny proposed annexations. LAFCO's
analysis of potential fiscal impacts of a proposed annexation generally incorporates the
CD99-11 2 February 18, 1999 5:44 PM
REQUEST FOR ACTION
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
review of the "marginal" or"incremental" costs associated with annexation; therefore the
study has been prepared utilizing this methodology.
A four-year horizon was used for each alternative, consistent with project build-out
projections. Analysis of each of the four alternatives resulted in the following findings:
1. Annexation prior to development
The fiscal impact to the City under this scenario resulted in a negative cash flow the first
year after annexation and positive cash flow annually thereafter. The four-year cumulative
surplus to the City totaled $1,412,087 (discussed on page 12 of the report).
2. Development without annexation
This scenario resulted in a negative fiscal impact to the City during the first three years of
project build-out. By the fourth year, however, the City begins to realize a surplus
($167,249). This is principally due to required up-front capital expenditures in the initial
years to construct a new fire station. The overall cumulative deficit over the four-year
horizon is $2,989,749 (discussed on page 25 of the report).
3. Annexation after development is complete
This scenario assumes annexation in the fifth year, after build-out of the project is
complete. During the four years of project construction, while the area remains
unincorporated, a total deficit impact to the City of$2,989,749 has been created. After
annexation in year five, an annual surplus to the City begins to reduce this deficit. By year
eight, the deficit remains, but is reduced to $2,116,884 (discussed on page 27 of the
report).
4. Annexation without development
This scenario results in a small revenue surplus for all four years with a cumulative surplus
of$72,630. The fourth-year annual surplus dwindles to under $6,000 however, principally
due to expected reductions in oil extraction tax revenues (discussed on page 47 of the
report).
The study and conclusions were presented, in draft form, to the Council Subcommittee on
July 29, 1998. Over a period of six months, the Subcommittee conducted noticed, public
workshops to discuss the draft report. These meetings provided an opportunity for
interested individuals and organizations to provide input regarding the study's contents.
Staff documented all concerns voiced and, as a result, modified the study to respond to
those comments. Information added to the report as a result of those concerns included
additional background on study methodology and clarification of report assumptions. At
the request of the Council Subcommittee, analysis was also added to the study that
addressed the "pros and cons" of annexation.
CD99-11 3 February 18, 1999 5:44 PM
REQUEST FOR ACTION
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
Master Property Tax Agreement
The County of Orange currently receives a 6% "share" of the total property tax paid on
properties located in unincorporated areas. If Bolsa Chica were to be annexed into
Huntington Beach, this 6% share would be divided between the City and the County. For
the purpose of this analysis, this report assumes that the property tax ratio contained in the
Master Property Tax Agreement between the City and the County, and set forth in a City
Council resolution adopted on October 28, 1980, will apply to Bolsa Chica. The division of
property tax proscribed by the agreement, which is based on historical tax ratios prior to
the passage of Proposition 13, is 56% City/ 44% County. Other tax revenues will also
become available to the City upon annexation and are discussed in the report, including
Orange County Fire Authority and Library taxes.
Analysis of the four scenarios identified the fiscal trend that would result from annexation.
In every case, annexation creates a beneficial impact to the City of Huntington Beach;
however, the City obtains the greatest benefits if annexation occurs prior to development.
On January 7, 1999 the Council Subcommittee made the following motions to the City
Council:
"Move that the Bolsa Chica Subcommittee recommend to the City
Council that they direct the City Administrator to develop a strategy
that could result in annexing the Bolsa Chica to the City of Huntington
Beach prior to development of homes in the Bolsa Chica. °
Also move that the Bolsa Chica Subcommittee recommend to the City
Council that they direct the City Administrator to consult with the City
Council to establish those parameters which should be addressed in
any negotiation of a pre-annexation agreement for the Bolsa Chica."
B. STAFF RECOMMENDATION
Pre-Annexation Negotiation Strategy
A pre-annexation agreement could be negotiated between the City and Hearthside Homes.
Such an agreement would set for the terms and conditions of annexation and would clarify
the responsibilities and rights of annexation for both parties, including development rights,
development standards, and infrastructure requirements. If a pre-annexation agreement
were to be negotiated, staff would recommend that annexation should occur as early as
possible. Staff also recommends that all property owners within the Bolsa Chica area
should be contacted regarding the possibility of annexation, and signatures should be
obtained to verify the property owners' willingness to participate in the annexation process.
CD99-11 4 February 18, 1999 5:44 PM
REQUEST FOR ACTION
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
Annexation Issues
If the City were to begin annexation discussions for the Bolsa Chica, Staff has identified
several issues that should be negotiated as part of a pre-annexation strategy.
Fire
The City Fire Department has indicated that annexing the Bolsa Chica will have an impact
on the Department's ability to assume and provide fire protection services throughout the
City. Annexing the Bolsa Chica area will consume system-wide facility resources. Goals to
achieve (relating to fire issues) include funding for necessary capital improvements,
meeting required response time standards for fire or medical emergencies and obtaining
acceptable access to the Bolsa Chica Planned Community.
Public Works
Any pre-annexation agreement would include provisions to address streets, water and
wastewater issues.
Water
Production, distribution, and storage of water should all be part of the pre-annexation
negotiations. The City's goal is to ensure that adequate supplies of water are available
under all conditions, including provision of storage in case of a temporary cessation of
deliveries, and in meeting fire flow pressure and volume.
Wastewater
Negotiations must address the means by which wastewater will be collected and pumped
and how related facilities will be financed. The City should create the most efficient design
to accommodate both the current wastewater service needs and the needs of future
development.
Streets
The project must accommodate efficient traffic circulation, address traffic safety standards,
and adequately meet parking demands.
Community Services
It is anticipated that the increase in population will further burden current over-utilized
recreation facilities in proximity to the Bolsa Chica area. The Community Services
Department has projected the need to provide additional sports field improvements at two
adjacent elementary schools. The impacts on facilities will occur whether or not the Bolsa
Chica is annexed into the City, however, a pre-annexation agreement may provide the
CD99-11 , February 18, 1999 5:44 PM
REQUEST FOR ACTION
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
opportunity for the City to negotiate park design standards and adequate funding to
address service/maintenance costs.
Police
If annexed, the City's Police Department will provide all law enforcement related services to
the Bolsa Chica area. Goals relating to police issues include maintaining service
(response times, etc.) and safety to current City residents while also providing adequate
service to any new residents of the Bolsa Chica Planned Community. Negotiating points
critical to the operation of law enforcement include obtaining adequate funding to offset
service costs and the ability to provide equipment necessary to adequately service the
Bolsa Chica.
Library
The additional population generated by the proposed development will increase the use of
library services throughout the City. The Library Services Department has indicated that
additional impacts on library services would generate the need for additional staffing. The
City desires to maintain the level of services currently provided to City residents. The staff
would pursue negotiations with the County of Orange to secure tax dollars from the library
fund.
Planning
Negotiations should address the project's development standards to ensure that they
match the City's to the closest degree possible. A goal of negotiations will be to address
the project's compatibility with surrounding uses. Planning issues to be evaluated are
discussed in more detail in the 17 Bolsa Chica Principles adopted by City Council on
November 7, 1994 and also in the Summary of Bolsa Chica Coastal Issues dated August
30, 1998 (Attachments 2 & 3).
Environmental Status: Not applicable. This action is for the purpose of filing a report and a
request for authorization to negotiate and does not constitute a project under the California
Environmental Quality Act.
CD99-11 6 February 18, 1999 5:44 PM
REQUEST FOR ACTION
MEETING DATE: February 22,1999 DEPARTMENT ID NUMBER: CD99-11
Attachment(s):
City Clerk's '
. . - Number No Description Bolsa Chica Annexation Study dated January 7, 1999
2 Bolsa Chica Principles Adopted by the Huntington Beach City Council
on November 7, 1994
3 City of Huntington Beach Summary of Bolsa Chica Coastal Issues
dated August 30, 1995
RCA Author:wn
CD99-11 7 February 18, 1999,5:44 PM
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OLSA C ICA ANNEXATION STUDY
REVIEW OF OPTIONS
LAFCO FISCAL & TECHNICAL REVIEW PROCEDURES
4:
A Report to the Huntington Beach City Council
Subcommittee on the Bolsa Chica
January 7, 1999
BOLSA CHICA ANNEXATION STUDY
STAFF: CITY OF HUNTINGTON BEACH
Ray Silver, City Administrator
Melanie Fallon, Assistant City Administrator
Michael Dolder,Fire Chief
Robert Beardsley, Public Works Director
Scott Field, Deputy City Attorney
John Reekstin,Director of Administrative Services
Ron Hagen, Community Services Director
Ron Hayden, Library Services Director
Ronald Lowenberg, Chief of Police
Howard Zelefsky, Planning Director
Wendy Nowak,Assistant Planner
PARTICIPATING CONSULTANTS
Laurie McKinley, Senior Partner/MNA Consulting
Dan Miller, Principal/RSG Associates
Bob Fisher, Robert G. Fisher& Associates
TABLE OF CONTENTS
SECTION PAGE
Executive Summary Wi
1. Background and Purpose of Report 1
2. Applicable Annexation Procedures and Policies 3
3. Study Approach and Assumptions 10
4. Fiscal Study 12
5. County/Hearthside Homes Development Agreement 32
6. Responses to Questions 37
7. Pros & Cons of Annexation 55
8. Attachments 57
BOLSA CHICA ANNEXATION STUDY
REVIEW OF OPTIONS
LAFCO FISCAL & TECHNICAL REVIEW PROCEDURES
A Report to
the Huntington Beach City Council Subcommittee on the Bolsa Chica
January 7, 1999
Executive Summary
EXECUTIVE SUMMARY
This report was prepared to address the question of whether annexation of the
unincorporated"island",known as Bolsa Chica,would result in a positive or negative
fiscal impact to the City of Huntington Beach.
The first five sections of this report were prepared and issued as a draft document on
July 29, 1998. On that date, and at three subsequent meetings held in August, September
and November of 1998,the City's Bolsa Chica Subcommittee conducted noticed,public
workshops to discuss the draft report. The workshops were designed to elicit input from
interested individuals and organizations.
As a result of the public workshops revisions were made to the original draft text and a
few assumptions were altered which resulted in minor adjustments to final numbers. In
addition, Sections 6 and 7 were added to this final draft report. Section 6 responds to
fifty-three questions raised during public discussion,providing additional background on
study methodology and further clarifying report assumptions. At the request of the
Council Subcommittee, Section 7 provides a matrix summary of the potential"pros and
cons"of annexation.
Fiscal Study Findings
The fiscal study examined three scenarios,all of which assume that development will
occur on the Bolsa Chica Mesa. The three scenarios studied included annexation prior to
development, development without annexation and annexation after development is
complete. In response to questions raised during public review,a fourth scenario was
analyzed. This analysis (which can be found in Section 6 of the report, as part of
responses to questions)examined the fiscal impact to the City if Bolsa Chica were
annexed,but development did not occur.
A four-year horizon was used for each alternative, consistent with project build-out
projections. Analysis of each of the four alternatives resulted in the following findings:
1. Annexation prior to development
The fiscal impact to the City under this scenario resulted in a negative cash flow the first
year after annexation and positive cash flow annually thereafter. The four-year
cumulative surplus to the City totaled$1,412,087.
2. Development without annexation
This scenario resulted in a negative fiscal impact to the City during the first three years of
project build-out. By the fourth year,however,the City begins to realize a surplus
($167,249). This is principally due to required up-front capital expenditures in the initial
years to construct a new fire station. The overall cumulative deficit over the four-year
horizon is $2,989,749.
i
3. Annexation after development is complete
This scenario assumes annexation in the fifth year, after build-out of the project is
complete. During the four years of project construction,while the area remains
unincorporated, a total deficit impact to the City of$2,989,749 has been created. After
annexation in year five, an annual surplus to the City begins to reduce this deficit. By
year eight,the deficit remains,.but is reduced to $2,116,884.
4. Annexation without development
This scenario results in a small revenue surplus for all four years with a cumulative
surplus of$72,630. The fourth-year annual surplus dwindles to under$6,000 however,
principally due to expected reductions in oil extraction tax revenues.
Summary
This study has been prepared for the Huntington Beach City Council to be used as a
decision-making tool as they deliberate the issue of annexation of Bolsa Chica.
It should not be assumed that the deficit and surplus projections presented in this report
represent exact future sums. Every fiscal study must be based on assumptions,which
could alter actual, future figures. This study makes every attempt,however,to insure that
all assumptions—on both the cost and revenue side—are sound and conservative.
Analysis of the four scenarios presents a clear picture of the fiscal trend that would result
from annexation. In every case, annexation creates a beneficial fiscal impact to the City
of Huntington Beach.
ii
Section 1
Background and Purpose of Report
Section 1
BACKGROUND AND PURPOSE OF REPORT
A. Status of Proposed Hearthside Homes* Development Project
Annexation of the Bolsa Chica area to the City of Huntington Beach has been a topic of
community discussion for over twenty-five years. Until recently,the discussion most
often focused on the lowland wetlands. With the purchase of the wetlands by the State of
California, and State commitment to restoration of the vast majority of the wetlands, most
of the attention has shifted to the area proposed for development on the Bolsa Chica
Mesa.
As of this writing,the status of the unincorporated Bolsa Chica"island"is as follows:
-Hearthside Homes secured tentative General Plan and zoning approvals from the
County. A Development Agreement for the project has also been approved by the
County Board of Supervisors.
-Hearthside Homes has sold most of its lowland ownership to the State,which is
preparing a wetland restoration program for that area.
-Hearthside Homes is required by the development agreement with the County to .
dedicate all 49 acres of its land on the Huntington Beach Mesa for incorporation into
the Wieder Regional Park, after Coastal Commission certification of the Local
Coastal Program for the area, and prior to mass grading or issuance of building
permits.
-The Coastal Commission's certification of the LCP,with required modifications,
was challenged in court,resulting in an order to the Commission to hold a hearing
and reconsider the project based upon modifications which include those ordered by
the court.
-Hearthside Homes has appealed this court ruling.
-Neither the County's development approvals, nor the provisions of the development
agreement, will take effect unless/until the Coastal Commission reconsiders and
certifies a newly modified LCP, or Hearthside Homes is successful in its appeal of the
court decision.
(*formerly known as Koll Real Estate Group)
1
On January 20, 1998, the City Council considered a report by staff on the status of Bolsa
Chica with respect to the following issues:
1. Hearthside Homes' proposal to provide water service by creating a private water
company and obtaining water via a pipeline connection to Southern California
Water Company facilities in the City of Cypress;
2. The potential annexation of Bolsa Chica into the City and the role of LAFCO;
3. The status and prospects for Bolsa Chica service agreements with respect to fire,
library and sewer services.
At the conclusion of the January 201h meeting, the Council provided direction to staff to
undertake a review of the potential fiscal impact to the City of annexation of Bolsa Chica.
B. Purpose of This Study
This report is provided in response to the City Council request of January 20, 1998,to
review major costs and/or benefits that could occur if the unincorporated area of Bolsa
Chica were to be annexed into the City of Huntington Beach.
This study has been prepared using a methodology that will enable review by the Local
Agency Formation Commission(LAFCO). The ultimate authority to review,to approve,
amend and approve, or to deny annexation will rest with this State-mandated agency.
LAFCO's analysis of potential fiscal impacts of a proposed annexation generally
incorporates review of the"marginal"or"incremental"costs associated with annexation.
This is a different methodology than the prior fiscal study prepared for the City, which
used a "cost averaging"approach to measure the estimated total cost of new
development. Both methodologies are valid,but serve different purposes. To meet the
intended purpose of this report, it was important to use methodologies appropriate for
review and use by LAFCO.
2
Section 2
Applicable Annexation Procedures and
Policies
Section 2
APPLICABLE ANNEXATION PROCEDURES AND POLICY
A. The Local Agency Formation Commission(LAFCO)
The Local Agency Formation Commission was originally established by the State
legislature in 1963 to oversee the jurisdictional boundary process for local governments
(cities and districts)and the formation of new jurisdictions. Until the early 1990's the
role of LAFCO was limited to its authority to approve or deny jurisdictional annexations,
detachments,formations and other changes of organization related to jurisdictional
boundaries.
Recent legislation has given added authority to LAFCO to initiate local government
consolidations and has made it mandatory that LAFCO review and approve or deny
proposals for the extension of contract services outside of any agency's jurisdictional
boundaries.
B. Annexation Procedures
The applicable law governing city annexation proceedings is found in the California
Government Code, Sections 5600 et. seq., also known as the Cortese-Knox Local
Government Reorganization Act.
By memorandum opinion(RLS 98-148)dated March 31, 1998,the City Attorney has
provided an extensive discussion of annexation law and procedures,pointing out the
complexity of the process. That memorandum is attached for reference (Attachment 1).
A proposal to annex territory into the boundaries of a municipality may be initiated by
any affected city, county or other affected jurisdiction,by a property owner, or by
registered voters living within the area proposed for annexation. The final decision on
annexation is made by the Local Agency Formation Commission. Once LAFCO
approves an annexation, only protest from the affected landowner(s)or registered voters
can terminate proceedings as provided by the Cortese-Knox Act.*
(*Your City attorney opinion notes that all annexations require agreement between the annexing city and
the county on a property tax revenue exchange. Failure to reach agreement on this issue could potentially
delay annexation activity,however,recent amendments to the Revenue and Tax Code make it extremely
difficult to fail to ultimately complete the required tax negotiations.)
3
There are two separate procedural provisions for annexation into a city: "uninhabited"
and"inhabited". "Uninhabited" annexation procedures apply to undeveloped property,
when there are less than twelve (12)registered voters living within the area proposed to
be annexed. Once development has occurred, if more than twelve registered voters live
within the territory under consideration for annexation, "inhabited" annexation
procedures apply.
1. Uninhabited Annexations:
a. Initiation
An uninhabited annexation may be initiated by resolution of any affected
city, county or district, or by petition of the landowner. In the case of
Bolsa Chica,the affected public agencies eligible to initiate annexation
include the City of Huntington Beach,the County of Orange and/or the
Orange County Sanitation District. A property-owner petition for
annexation could be made by any landowner within the Bolsa Chica
unincorporated island. If initiated by a property-owner,the petitioner
must own not less than 5%of the total assessed value of the area proposed
to be annexed. Any of the Bolsa Chica landowners could petition to
annex only any portion of Bolsa Chica held in their ownership. A listing
of property ownerships and respective assessed values, obtained from the
County Assessor's Office in February, 1998, is provided below.
Property Owner Total Gross Total Other Total Net
Value Exemption Value
Signal Bolsa Corporation $16,715,224 $0 $16,715,224
(Hearthside Homes)
State of California $4,697,388 $4,697,388 $0
Fieldstone Company $1,485,690 $0 $1,485,690
Shea Homes Limited Partnership $1,265,000 $0 $1,265,000
Ocean View School District $869,385 $869,385 $0
David Farrar Esq Tr of Bolsa Chica $673,385 $0 $673,635
Pacific Coast Homes $437,000 $0 $437,000
Metropolitan Water District of $236,763 $236,763 $0
Southern California
Donald Goodell; Shirley Co- $179,177 $0 $179,177
Trustees
City of Huntington Beach $160,418 $0 $160,418
4
b. LAFCO Proceedings
Once a complete application has been received by LAFCO,LAFCO staff
will prepare an analysis of the proposal for annexation and make
recommendations to the Commission. The Commission has the authority
to approve,to modify, or to deny the annexation proposal.
In the case of unincorporated"island"annexations, if only a portion of the
island is proposed for annexation,LAFCO staff will nonetheless review
the feasibility of annexation of the island in its entirety(please refer to
discussion of annexation policies). The Commission has the authority to
amend the annexation to include a larger area,and would consider
recommendations from their staff. The Commission may also attach
conditions to an annexation approval, including conditions related to the
timing of annexation,potential transfer of public facilities and the
disposition of bonded indebtedness and/or any special revenues.
If all affected property owners have consented in writing to the
annexation, LAFCO may waive hearing requirements and act on the
proposal as a consent agenda item. When there is controversy surrounding
an annexation proposal,the Commission may choose to hold a noticed
hearing even if all property owners have consented. If written consent is
not acquired by all affected property owners, LAFCO must notice and
hold a public hearing.
c. Conducting Authority Proceedings
If a proposed annexation is approved by LAFCO, a LAFCO resolution
incorporating any amendments and/or conditions is forwarded to the
"Conducting Authority"for the purpose of calling a protest hearing.
The affected city becomes the Conducting Authority for City annexations,
which in this case would be the City of Huntington Beach. If the City fails
to take action as the Conducting Authority,however, LAFCO has legal
authority to appoint the County as the Conducting Authority.
The Conducting Authority is required to notice and hold a public hearing
on the annexation as approved by LAFCO,unless the Commission has
waived hearing requirements. Similar to the LAFCO hearing,the
Commission may chose to waive notice and hearing requirements when
the annexation has landowner consent and there is little or no cui.iroversy
surrounding the proposal.
The Conducting Authority has no legal authority to modify or amend the
annexation proposal. If there is protest at the Conducting Authority
5
hearing from landowners representing 50%of the total number of owners
of land and 50%of the total assessed valuation of land within the territory
to be annexed,the Conducting Authority must deny the annexation. If
there is less than 50%ownership protest,the Conducting Authority must
approve the annexation.
2. Inhabited Annexations:
a. Initiation
Like an uninhabited annexation,an inhabited annexation may be initiated
by resolution of any affected city, county or district, or by a petition of
landowners representing not less than 5%of the number of owners and 5%
of the total assessed value of the area proposed to be annexed. An
inhabited annexation may also be initiated by a petition of registered
voters. A registered voter petition for annexation must be signed by not
less than 5%of the number of registered voters residing within the
territory proposed to be annexed..
b. LAFCO Proceedings
LAFCO proceedings for an inhabited annexation are identical to those of
an uninhabited annexation. The Commission may approve,modify or
deny the proposal, and adopt terms and conditions for the annexation. The
proposal is then sent to the Conducting Authority where no further
modifications may be made.
c. Conducting Authority Proceedings
The Conducting Authority for inhabited annexations is the City Council of
the affected city unless LAFCO elects to appoint the Board of Supervisors
to this role. During Conducting Authority proceedings for an inhabited
annexation,the Conducting Authority must determine the level of protest
from registered voters that reside within the proposed annexation area, and
from landowners owning property within the annexation territory. After
determining the level of written protest,the Conducting Authority must
take the following action:
• If there is protest from fewer than 25%of the registered voters within
the annexation territory,and from less than 25%of the landowners
owning less than 25%of the assessed value of the total property,the
Conducting Authority must approve the annexation as approved by
LAFCO.
6
• If protests filed represent at least 25%but less than 50%of the
registered voters in the area, or between 25-50%of the landowners and
assessed value,the Conducting Authority must call an election on the
question of annexation.
• When 50%or more of the registered voters protest in writing,the
proceedings must be terminated.
• If there is 50%or more protest from landowners, owning at least 50%
of the assessed value of the annexation area, an election within the
area must be held.
A. Orange County LAFCO Policies
The Orange County Local Agency Formation Commission has several adopted policies
related to city annexations, which would apply to Bolsa Chica. These include policies
which define standards for evaluating LAFCO proposals and policies related to the
purpose and use of adopted Spheres of Influence. The LAFCO policies generally
encourage any unincorporated area which is developed or is about to be developed to
annex into a municipality in order to receive urban services such as the provision of water
and sewer, road maintenance, emergency service and for the provision of community
services like libraries and parks. Further,the LAFCO policies are very clear that areas
located within a city's Sphere of Influence should annex into and receive service from
that city,and special efforts should be directed toward annexing"islands"—
unincorporated areas surrounded by a city—into adjacent municipalities.
1. Spheres of Influence:
The unincorporated island area of Bolsa Chica is located within the adopted Sphere
of Influence for the City of Huntington Beach. LAFCO is required by State law to
adopt a Sphere for every agency within its'jurisdiction. The Orange County
LAFCO policy on Spheres of Influence states that Spheres are a planning tool to
guide LAFCO decisions, and that the Sphere boundaries are meant to facilitate the
logical and economical extensions of government facilities and services: "Territory
placed within a city's sphere indicates that the city is the most logical provider of
urban services for development." (Sphere Policy Guideline#5)
The Orange County Sphere Guidelines include a specific policy on unincorporated
"islands". Policy Guideline#4 reads as follows:
"City spheres that include unincorporated islands of territory should be
encouraged to annex the islands to the city. The Commission acknowledges
that unincorporated islands are generally costly for county government to serve
and often have service impacts on the surrounding city. LAFCO discourages
7
the formation of"special districts within unincorporated islands for services that
are readily available from the surrounding city."
2. Annexation Review Policies:
The Orange County Commission has also adopted specific policies to direct their
review of annexation proposals. These are the Commission"Policies and
Standards for Evaluating Proposals for LAFCO Consideration", and several of
these speak directly to city annexations.
Policy A,"Encouraging Orderly Formation and Development of Agencies"
provides a preferred order of priority for extending urban services, into an
unincorporated area. Policy A-4 finds explicitly that annexation into a city is the
number one preference for providing services such as sewer, water and emergency
service, and policy A-6 states that"LAFCO will encourage in-fill development in
urban areas and annexations of areas inside the city spheres of influence."
Policy B, "Encouraging Consistency with Spheres of Influence and Recommended
Reorganization of Agencies" deals more specifically with areas after development
has occurred, and strongly encourages these areas to be annexed into municipal
boundaries. It also pays special attention to unincorporated islands. Policy B-5
reads:
,,All developed urban land inside a city's sphere of influence shall be
encouraged to annex to the city. The burden of proof as to why any such
areas should not be annexed shall rest with the residents and owners of the
property being annexed. All islands of unincorporated territory and areas
substantially surrounded located within the city's sphere of influence shall
be encouraged to annex to the city, as the logical provider of services and
controls..."
The Orange County LAFCO also has a specific policy related to annexation of
proposed regional parks,which would apply to the proposed Weider Regional
Park which is currently partly within the Huntington Beach City boundary. This
policy, D-4, suggests that any proposal for annexation of a regional park into a
city should"include an agreement setting forth the ultimate boundary of the
regional park, as well as proposed uses, support services and any special
conditions including timeframe for dedication."
The Orange County LAFCO policies include a list of"Commission Standards for
Review of Proposals." It is important to note that annexation of Bolsa Chica
would be consistent with the top three priority"Factors Favorable to Approval"of
an annexation. These include 1) an annexation proposal which"would eliminate
or reduce islands;" 2) a proposal"consistent with the adopted spheres of
influence", and; 3) a proposal that"includes a city/county regional park
8
t
agreement." The fifth favorable factor would also directly apply to Bolsa.Chica-
5) "the proposed annexation area is urban in character or urban development is
imminent,requiring municipal or urban-type services."
B. County of Orange Annexation Policies
The County of Orange is currently working at the staff level to prepare policies related to
annexation of unincorporated areas into cities. A draft"Proposed Policies for Orderly
Development"is under review.
The draft policies under discussion are designed to "direct urban development to occur
within cities,"and include a specific policy that"Urban development shall occur within
existing or planned incorporated cities which exist to provide a full range of municipal
services ...." (proposed General Policy# 1).
In areas located within a city Sphere of Influence, such as Bolsa Chica,the draft policy
proposes that annexation to the city should occur prior to receiving grading or building
permits, and suggests that"Annexation to the city shall be pursued in lieu of forming new
County service areas or expanding existing Service Areas."
9
Section 3
Study Approach and Assumptions
Section 3
FISCAL STUDY APPROACH AND ASSUMPTIONS
A. Study Approach
Because the primary,purpose of this study is to analyze the incremental fiscal impacts of
annexation, this report focuses on what additional City services would be required if
Bolsa Chica were annexed into the City of Huntington Beach. The principal question
addressed by this report is the question of annexation: in other words, assuming Bolsa
Chica does develop, is it more or less advantageous to the City to annex the area? Thus,
this report analyses the forecasted"marginal"(or"incremental") cost of City services that
would be added as a result of annexation, and reviews what"marginal" (or
"incremental")revenues could reasonably be expected to be available to fund those
services.
The study assumes development as currently proposed by Hearthside Homes will occur*.
The study then centers on a compilation of the forecasted incremental revenues and
expenditures of annexation over a four-year period(i.e.,the projected buildout for the
area). It should be understood that there will usually be differences between the forecasts
and actual results because events and circumstances frequently do not occur as expected,
and those differences may be material.
It is also important to note that this fiscal study primarily focuses on recurring revenues
and expenditures. Although the study does analyze selected future,one-time costs for
capital improvement projects that may become necessary as a result of development
within the annexation area(relocation of a fire station and capital expenditures for
improvements to sports fields),these are projects that may be necessary even if
annexation does not occur. The study also discusses selected development impact fees
which may accrue to the City if the area is annexed,however land use processing,
inspection fees or charges that would be collected from new development which are used
to offset direct costs to the City are assumed to be fiscally neutral.
B. Potential Impacts of Optional Approaches to Annexation
Annexation of Bolsa Chica can be accomplished in one proceeding, or it may occur
incrementally. Annexation, in whole or in part,may also occur before, during or after
potential development in the area.
(*Development project information project obtained from Fiscal Impact Analysis,Bolsa Chica—County of
Orange, Stanley R.Hoffman Associates; October 14, 1997)
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The fiscal analysis prepared for this report(Section 4) focuses on the incremental cost
and revenue impacts that would occur if the entire area of Bolsa Chica were annexed into
the City prior to development. However, in order to provide comparative information,
the study also examines potential incremental cost/revenue implications of development
without annexation, and of annexation after development. In addition, Section 4 briefly
discusses the alternative of phasing annexation as development occurs, and potential
implications of annexation of only a portion of the Bolsa Chica"island".
C. Study Assumptions
The Bolsa Chica unincorporated area is bordered on the northwest by Huntington Harbor
and Warner Avenue, on the east by existing residential development, on the southwest by
residential areas and open spaces with oil facilities and on the west by the Pacific Coast
Highway and Bolsa Chica State Beach.
The current proposed plan for Bolsa Chica within the unincorporated area allows for
1,203 residential units; including 1,023 single-family detached units, and 180 attached
units. Other land uses include bikeways,parks, flood control facilities and open space
such as restored wetlands, restored open space buffers, and restored environmentally
sensitive habitat area.
The project is estimated to have a four-year buildout period. Phasing for the residential
units in Bolsa Chica begins in"Year I"with 234 units, increasing to 412 units in"Year
II", 380 new units in"Year III"and 177 new units the final year of buildout("Year IV").
Population associated with Bolsa Chica area is estimated using a ratio of 2.4 persons per
dwelling unit for all units. In the first year of absorption, 562 persons are projected.
Population is projected to increase to 1,550 in the second year and reach 2,887 persons at
project buildout.
The current secured assessed valuation of the Bolsa Chica area is $21.3 million.
Estimated secured assessed valuation for the Bolsa Chica development for the 234 units
in 1999 is estimated at$91.2 million(see Exhibit 1, Forecasted AV), increasing to an
estimated secured and unsecured assessed valuation of$512.3 million by project
buildout.
The major public agencies currently providing services in the Study Area are the County
of Orange and the Orange County Fire Authority. The County of Orange is currently
responsible for policymaking and administration,law enforcement,animal control,
planning and land-use regulation,building inspection,parks and recreation, library
services, flood control, and the maintenance and improvement of roads in both areas.
The Orange County Fire Authority currently is responsible for providing fire protection,
rescue and emergency paramedic services to all properties within the Bolsa Chica area.
11
EXHIBIT 1
Forecasted Assessed Values - ProPea Tax Transfer
Bolsa Chica Fiscal Impact Analysis
(Full Year) (Full Year) (Full Year) (Buildout)
Year 1 Year 2 Year 3 Year 4
2*/o Growth Rate
Secured Assessed Value 21,334,201 114,754,285 285,063,770 442,836,846
Increases from Development 91,170,000 164,720,000 149,090,000 68,865,000
Unsecured Value 597,358 609,305 621,491 633,921
TOTAL ASSESSED VALUE 113,101,558 280,083,589 434,775,261 512,335,766
GENERAL PROPERTY TAX LEVY 1,131,016 2,800,836 4,347,753 5,123,358
CURRENT PROPERTY TAX DISTRIBUTION
100% County of Orange @ 0.0637 72,046 178,413 276,952 326,358
0% City of Huntington Beach @ 0 0 0 0 0
100% Library District @ 0.0172 19,453 48,174 74,781 88,122
100% Fire Authority @.1160 131,198 324,897 504,339 594,309
POTENTIAL PROPERTY TAX DISTRIBUTION
44% County of Orange @ 0.0280 31,700 78,502 121,859 143,597
56% City of Huntington Beach @ 0.0356 40,346 99,911 155,093 182,760
70.5% Library District(City)@ 0.0121 13,715 33,963 52,721 62,126
100% Fire Authority(City)@ 0.1160 131,198 324,897 504,339 594,309
100% HB City Employment Retirmt @.04930 55,759 138,081 214,344 252,582
Potential City Tax Rate= 0.2130
Property Tax Revenue Calculation:
Proposed New SFR Units 234 412 380 177
Huntington Beach(56%of Current Tax Distrib.) 40,346 99,911 155,093 182,760
Library District-(Gen Levy x 0.0172 x 70.5%) 13,715 33,963 52,721 62,126
Fire Authority-(Gen Levy x 0.1160) 131,198 324,897 504,339 594,309
HB City Employment Retirmt @.04930 55,759 138,081 214,344 252,582
Property Tax Total: 241,017 596,853 926,497 1,091,777
PROPERTY TRANSFER TAXES
Value Transferred @ 5% 5,655,078 14,004,179 21,738,763 25,616,788
Revenue to City @$0.551$1,000 3,110 7,702 11,956 14,089
RSG,Inc., 1/5/99 Fisimpd Property&Transfer Taxes
Section 4
Fiscal .Study
Section 4
FISCAL STUDY
SCENARIO A
ANALYSIS OF INCREMENTAL FISCAL IMPACTS:ANNEXATION PRIOR TO
DEVELOPMENT
Annexation is often proposed to take place prior to anticipated development in order to
insure that municipal services are in place. Annexation at this time also provides
assurances to the annexing City that development revenues,both one-time and ongoing,
will accrue to the city that will serve the newly annexed area.
Annexation prior to development generally transfers all land-use authority to the
annexing City. In the case of Bolsa Chica,however, a Development Agreement(DA)
between the County and the Hearthside Homes limits the authority of the City to make
land-use/development decisions. A discussion of the DA is included as Section 5 of this
report, and an opinion from your City Attorney regarding the DA is attached
(Attachment 2).
As was noted in the Study Approach summary in Section 3, it is not the purpose of this
report to analyze the total cost to the City of the Hearthside Homes development
proposal. The purpose of this study is to determine the potential incremental costs that
the City would incur if the area were to receive municipal services through annexation
into City of Huntington Beach. These costs are then compared to new revenues that can
be anticipated to become available to the City as the result of annexation. The following,
therefore, discusses the forecast incremental expenditures to be made by the City of
Huntington Beach if annexation were to occur prior to development, and projects the new
revenues that could be expected to be received by the City as the result of annexation.
L EXPENDITURES
The following provides an analysis of the potential cost impacts of annexation to
specific City functions and programs, including costs for staffing, operating
services and supplies, equipment and other miscellaneous expenditures.
Expenditures have been categorized by departments within the City's
organizational structure and are estimated as follows:
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1. General Government:
a. Administration
The analysis assumed no new positions, equipment or major operating
costs would be incurred as a result of the annexation. Minimal
expenditures including legal costs, advertising,postage, and other
selected services and supplies were estimated. Costs associated with
bi-annual elections are included. Costs were estimated based on a case
by case analysis or a per capita rate using City budget data.
b. Animal Control
Animal Control Field and Shelter Services are provided by the County
through a contract with the City. The City compensates the County for
these services, net of any licensing and animal control-related revenues
collected by the County. The cost for Animal Control Services within
this report is an estimate based upon a per-capita formula,net of related
revenues.
C. County Property Tax Collection Charges
Beginning in 1992-93,the County Auditor-Controller's Office charged
cities and local districts receiving property tax revenue for incidental
administrative costs. These charges are estimated at 2%of all property
tax revenues.
2. Community Development:
Upon the annexation of the Study Area,the City Community Development
Department will assume the processing of all land use related services. These
services will,in most cases,be off-set by fees. Those services not covered by
fees have been estimated at$2,500 per year in fiscal year 1998-99 dollars.
These costs have been escalated by 3%per year to account for inflation.
13
3. Public Safety:
a. Police Department
If annexed,the City's Police Department will provide all law
enforcement related services to the Bolsa Chica area. The annexed area
is completely enveloped by the City, all ingress and egress will impact
traffic enforcement,collision calls, and criminal activity calls. The
Police Department estimates the need for two additional officers (patrol
and traffic), one records clerk, and one crossing guard.
In preparing cost estimates,the Department notes that the City
currently staffs at an average ratio of 1.2 officers per thousand.
Translated literally,an average development with a buildout population
of 2,887 would require three additional officers. However,Department
analysis considers socio-economic and development density factors. By
comparing"like developments",the Department has determined that
fewer than average calls can be anticipated from this development
which results in the need for one less officer.
The cost associated with the addition of these positions includes
salaries,benefits, supplies,training, equipment maintenance, and
associated small equipment. First year only costs include vehicle and
radio pack purchases. The forecasted costs are based on calls for back-
up assistance,traffic accidents,traffic infractions, and various criminal
victimization calls.
Because the build-out of the project is spread over a four-year period, it
was determined that only one patrol officer is required in Years 1 and
2. Costs for a second officer are added in year three.
b. Fire Protection
The City Fire Department has indicated that temporarily the existing
fire stations in proximity to the Bolsa Chica area will be able to
adequately provide fire protection and paramedic services. Thus,no
new positions, equipment or facilities will be required at that station.
However,the Fire Department has indicated that annexing the Bolsa
Chica area will have an impact on the Department's ability to assume
and provide services throughout the City. Currently,the Fire
Department is not meeting its required response standards for fire or
medical emergencies. Annexing the Bolsa Chica area will consume
systemwide fire facility resources. Some mitigation towards fire
system facility needs will be required. These deficiencies will require
the relocation of Fire Station No. 8 at Heil and Springdale to a corner
site at Graham and Production.
14
The estimated cost of the fire station relocation and construction is
approximately$3.5 million. For purposes of this Report, a fair share
capital contribution fee of$2.5 million is assumed to be the financial
responsibility of the developer,based on the current Letter of
Understanding between the Orange County Fire Authority,the City,
and the Hearthside Homes. The City would be required to fund the
remaining $1 million. The City would either use available funds from
the General Fund or create bonded indebtedness. Bonding for a$1
million debt service could spread the payments over 20 to 30 years.
Recurring fire protection expenditures were estimated using current
City Fire Department budget data for cost associated with vehicle
maintenance, fuel consumption and vehicle supplies. Although added
personnel are not required to serve the annexed area,the service
capacity is available only because of the personnel added to mitigate
the nearby Holly Seacliff development.
Additional costs resulting from annexation are projected for fire
inspection services. The Department anticipates that a new fire
structure/oil field inspector will be necessary,primarily to serve the
lowland wetlands oil leases. It is important to note that this cost is not
attributable to annexation of uplands area proposed by Hearthside
Homes for development. This is a cost that would occur if the wetlands
were to be annexed as part of an overall "island"annexation, or if the
wetlands were to be annexed separately, independent of the proposed
development area.
If annexed,the obligation to provide ambulance services to Bolsa Chica
will be assumed by the City. The City's ambulance service response is
currently at capacity and a fourth ambulance unit is anticipated to be
required as a result of annexation. The cost of personnel, operating
services and supplies, and equipment will be partially offset by
Paramedic and Ambulance Transport Fees. Total ambulance cost
estimates are based on buildout population with a one-time capital
equipment cost the first year.
4. Library Services:
The additional population generated by the proposed development within the
Study Area will increase the use of library services throughout the City. The
Library Services Department has estimated additional staffing, including a
librarian and a half-time senior library clerk,operating services and supplies,
and equipment expense required at existing City library facilities.
15
5. Community Services:
Within the residential area,there is no anticipated financial impact relative to
existing landscape maintenance services. All parks, open space areas and
landscaping are assumed to be maintained by a proposed homeowners
association. A discussion of the potential cost if the City were to assume all
maintenance is included in the"Public Works"section of this report. All
regional open space and wetland areas will be the responsibility of the State
of California.
It is anticipated that the increase in population, especially the youth who will
live in the proposed residential development, will further burden current
over-utilized recreation facilities in proximity to the Bolsa Chica area. The
Community Services Department has projected the need to provide additional
sports field improvements, including field lights,at two adjacent elementary
schools. The costs for these improvements, as well as incremental operating
costs are discussed below and included in the cost/benefit calculations.
However, like library services, it is important to note that these are costs that
will be incurred by the City if development occurs,regardless of annexation,
unless the City elects to adopt a new policy prohibiting participation by non-
residents in sports programs (see also section"Scenario B: Development
Without Annexation").
The capital improvement costs for field improvements are estimated at a one-
time only cost of$300,000. The cost of operations and maintenance of these
fields will be primarily offset by user charges and implementation of current
policy which provides that the school district assume maintenance costs for
facilities at school sites. The City does anticipate, however, an annual set-up
maintenance cost of$3,600 which is reflected in Exhibit 2.
The user charges associated with sports and other recreation activities at the
two subject elementary school facilities will be collected by the City and
submitted to the School District to offset maintenance requirements.
Additional maintenance will be supplied by various organized sports groups.
It is likely that the residents of the Bolsa Chica Study area will create
additional impacts on existing sports facilities and other areas of the City.
However,the additional facility improvements at the two local elementary
schools will more than offset this burden and the youth from other areas of
the City will also benefit from the availability of the additional improved
sports facilities.
The current development plan is based on a park standard of 2'/z acres per
1,000 population. The City's park standard is 5 acres per 1,000 population.
Mitigating the additional park demand has not been included as a forecasted
cost. It is assumed that the proposed linear park to the south,the proposed
16
private open space and common areas, and the substantial regional park,
beach,wetland, and other open space facilities will be sufficient mitigation.
While the great majority of homeowners will not be senior citizens, it is
assumed that some seniors often live with their offspring. Based on similar
residential areas, a number of seniors would require Senior Outreach
services, including meal delivery,transportation,counseling, and other adult
day care services. A minimal annual cost of$3,000 is forecasted. Again,
whether the Bolsa Chica area is annexed or not,the service demand for
Senior Outreach will exist.
There will also be some impacts on existing youth recreation programs,
including swim lessons, day care, summer camp,etc. These classes currently
have waiting lists. The additional youth generated from the Bolsa Chica
development project could increase the length of this waiting list. Once
again,the impact on youth recreation programs will exist whether or not the
City annexes the Bolsa Chica area.
6. Public Works:
a. Sewer Maintenance Services
The addition of residential units to the City from the Bolsa Chica Study
Area will require the maintenance of the applicable local sewer system
services,including sewer line cleaning, sewer lift station maintenance
and catch basin inlet cleaning. Maintenance costs forecasted were
based on the number of units constructed and assuming 220 gallons per
unit per day of sewer flow.
Capital costs for improvements to or replacement of pump stations
were not included in this analysis. Hearthside Homes is proposing to
annex into Orange County Sanitation District No. 11, and has pre-paid
some portion of annexation fees to the District,representing payments
toward the developer's share to replace lift station"D". This station,
which carries flows from both the City and the unincorporated area of
Sunset Beach,will be replaced with City, County and developer
funding. If an additional lift station is ultimately required to serve the
Bolsa Chica development,this study assumes that such capital
improvement costs would be provided by the developer.
b. Park and Landscape Maintenance Services
As discussed earlier, it is assumed that all park,open space,median and
landscape slope maintenance will be the financial responsibility of a
homeowners association. Thus,no landscape maintenance costs have
been included as forecasted expenditures in Exhibit 2. These improved
17
areas will be dedicated as private easements, or as public easements
with a license agreement to allow maintenance by a private
homeowners association.
While the current development plan indicates homeowners association
cost responsibility,the City, as in other residential areas of the City,
could assume maintenance responsibility. These annual maintenance
costs, if the City's General Fund was required to fund these costs, are
as follows:
Park Maintenance $ 70,000
Park Play Equipment Maintenance 5,200
Tree Maintenance 35,000
Median/Landscape Slope Maintenance 200,000
Equipment Replacement Fund 10,000
Total Annual Cost $320,000
C. Tidal Inlet
A key component of the Bolsa Chica Restoration Plan is a tidal inlet.
The inlet will traverse Pacific Coast Highway and cross into the City of
Huntington Beach. The exact location of the tidal inlet is still
unknown. If the weiland restoration project proceeds as anticipated
maintenance costs of the tidal inlet will not be affected by annexation.
Monies have been set aside as part of the purchase of the lowland for
the appropriate public agency to maintain the inlet.
7. Contingency:
A 10%contingency factor has been added to the General Fund expenditure
estimate to meet unforeseen programs or emergency needs.
8. Road Maintenance:
a. Street Maintenance
The street maintenance expenditure was projected ba§ed upon
estimated public curb miles and area size using budget data from the
City. This cost includes general street maintenance; City-w+dP street
slurry sealing, street sweeping,centerline striping, and safety and sign
painting. A total of 14.42 lane miles of roads are estimated for this
project. Of the total project lane miles,4.26 lane miles will be publicly
maintained and the remaining lane miles will be private local roads.
18
b. Bike Trail Maintenance
The project includes 2.4 lineal miles of Class 1 bikeways. Annual
maintenance cost of the paved off-street bike path is included.
C. Traffic Signal Maintenance
Upon annexation,the City will be required to maintain one additional
traffic signal located at the intersection of Warner Avenue and the
Mesa connector streets.
II. REVENUES
The following revenue section analyses new,recurring revenues from various state and
local sources that will be received by the City as the result of annexation. One-time only,
development related fees are discussed as potential revenue-sources but, except for
assumed development contributions to the library and towards fire station relocation
(discussed in"Expenditures"),these one-time fees are not incorporated into the
cost/benefit calculations.
The primary sources of General Fund revenues are noted below and shown on Exhibit 2:
1. Taxes:
a. Property Taxes
The County of Orange currently receives a 6%"share"of the total
property tax paid on properties located in the unincorporated areas. If
Bolsa Chica were to be annexed into Huntington Beach,this 6% share
would be divided between the City and the County. For the purpose of
this analysis,this report assumes that the property tax ratio contained in
the Master Property Tax Agreement between the City and the County,
and set forth in a City Council resolution adopted on October 28, 1980,
will apply to Bolsa Chica. The division of property tax proscribed by
the agreement,which is based on historical tax ratios prior to the
passage of Proposition 13,is 56%City/44% County. If this assumption
is used,upon annexation the City would receive 56%of the total
current County General Fund property tax revenue (3.560/o), and the
'County would retain the remaining 44%of their current General Fund
property tax revenue share (2.44%).
In addition to the split of the County 6%base property tax,the City
would receive the tax override of 4.93%for the City's Employee
Retirement System; an estimated 70.5%of the total current County
19
r f
Library District property tax revenues (1.21%); and 100% of the total
current Orange County Fire Authority property tax revenues (11.6%).
Cumulatively,the City would receive a combined tax rate of 21.3%.
b. Property Transfer Taxes
Property transfer taxes are generated at the time a new property is sold
or an existing property is resold. A property transfer tax of$1.10 per
$1,000 (0.110%)of transferred value is levied on the sale of real
property and is divided between the County of Orange and the City.
The amount of property transfer tax received will depend upon the sale
of land and the level of resale activity within the Study Area. These
revenues have been estimated using the assumption of a 5%turnover
rate annually at the rate of.55¢per$1,000 of assessed values.
C. Homeowners Property Tax Relief
Revenue estimates generated from the Homeowner's Property Tax
Relief were not specifically projected because this analysis bases the
Property Tax Apportionment on assessed valuation gross of the
Homeowners Exemption. Therefore, revenue from the Homeowner's
Property Tax Relief is included in the Property Tax Apportionment.
d. Utility User Tax
A utility tax was estimated by projecting monthly utility uses (cable
TV, gas, electrical and phone)and the projected population growth and
then applying the City's 5%tax rate to all service billings. Water
services revenues were not included in this analysis.
e. Sales Taxes
Upon annexation,the City will be eligible to receive a percentage of the
sales tax charged on qualifying retail sales from businesses within the
Study Area. However,no direct sales tax revenues were projected to
be generated in the Bolsa Chica area. Indirect sales tax will be
contributed to the City by the increase in population, creating additional
purchasing potential of new local residents,regardless of annexation.
However, the Study did not include any estimates of these indirect
revenues.
f. Transient Occupancy Taxes
There are currently no planned hotels,motels or any facilities that
provide short-term or overnight lodging in the Study Area. Therefore,
no estimation of Transient Occupancy Tax revenue has been included.
20
2. State Subventions (Motor Vehicle Fees):
Upon annexation,the City will be eligible to receive Motor Vehicle In-Lieu
taxes. These taxes are collected by the State's Department of Motor Vehicles
and allocated to cities on a per capita basis based on a set rate determined
annually. Off-road Vehicle taxes are also allocated to cities by the State on a
per capita basis. Both subventions are based on the estimated population for
the Study Area during each development phase.
The per capita figures used in the revenue summary have been provided by
the State Controller's office for the 1997-98 fiscal year.
3. Franchise Fees:
Upon annexation,the City will receive the franchise fees currently paid to the
County by the cable television operator, various Southern California utilities
and the refuse collection operator. These fees have been estimated on a per
capita basis using budget figures from the City.
4. Development Related Fees:
The fees described below are not included unless as noted below in the
cost/benefit calculations because these fees specially offset costs of
development related processing services, capital facilities and infrastructure
impacts. Only the"net"cost of the related services are indicated under
"Expenditures".
a. Library Community Enrichment and Development Fees
The City has instituted and currently assesses two separate library-
related development fees. A fee of$0.15 per square foot is assessed on
all new development under the Community Enrichment Library Fee.
An additional $0.25 per square foot is charged as a Library
Development Fee. Anticipated revenues to be collected from the
combined library fees are reflected in Exhibit 2.
b. Land Use Planning,Regulation and Inspection Fees
The City is authorized to charge fees for all land use planning,
regulation and inspection services. The City would utilize the City's
existing fee schedule. Fees off-set most of the City's cost in providing
these services and are collected for building and permit insr--inn
services,plan checking,public works inspection, grading permit
issuance and review and other engineering related services.
21
C. Development Impact Fees
Under the provisions of State law,the City may collect development
fees for the purpose of construction or improving capital facilities. Fees
received must demonstrate a nexus between the new development and
the impact on affected capital facilities and infrastructure. These fees
must also be segregated from the General Fund in order to avoid
commingling. Certain fees must be spent or committed within five
years from the time they are collected.
The City currently imposes traffic mitigation, library,park and
recreation, water and sewer impact fees. These fees are determined
based on the number of dwelling units and/or trip ends. The City may
also collect additional impact fees through individual developer
agreements. The City and the land developer for the Study Area have
had discussions about additional fees for future fire protection, and
emergency medical capital facilities needs. A discussion of
requirements for capital funding of overall fire, rescue, and emergency
medical systemwide enhancements are included in the"Expenditure"
section.
Development impact fees are one-time only revenues and must not
exceed the cost of required capital facilities. Except for the fire station
capital contribution discussed in the fire services expenditures
overview, for purposes of this report no impact fees have been
forecasted.
5. Other Revenues:
a. Paramedic and Ambulance Transport Fees
Upon annexation, it is assumed that the City will impose a paramedic
and ambulance transport fee. These were forecasted based on an
average transport fee of$361 and a paramedic fee of$185. These fees
were applied to estimated patient transports and the number of
transports accompanied by paramedic personnel.
b. Fines and Forfeitures
This represents both Motor Vehicle Code fines, Municipal Code fines,
and other miscellaneous fines and forfeitures. Motor Vehicle and
Municipal Code fines were estimated on a per capita basis using current
budget data from the City.
22
C. Oil Extraction Tax
The City imposes a tax on each barrel of oil extracted from active wells
within the City. The current tax rate is $0.21 per barrel. Oil well
production has been declining at 8%per year. Based on this factor,
revenues were projected through buildout. Like the oil-field inspection
costs,the oil extraction tax revenues would accrue to the City as a
result of annexation of the lowlands wetland area,not as a result of
proposed development or annexation of the Hearthside Homes
property.
d. Miscellaneous Revenues
Miscellaneous revenues include map sales, microfilm sales,
code/certificate compliance, special investigation fees, nuisance
abatement and other revenues. This revenue has been estimated on a
per-capita basis using the City's fiscal year 1997-98 budget.
6. Interest•
Interest earnings are based on the investment of excess cash. In a fiscal year
that indicates a deficit, a negative interest amount will be incurred.
7. Road Fund:
All Road Fund subventions are calculated and allocated to the cities on a per
capita basis, with the exception of Section 2107.5. The State Subvention
Section 2107.5 is allocated to the cities based upon total population size. It is
estimated that the proposed annexation of the Study Area would add
approximately 2,887 population to the existing population of the City.
According to State data,this added population will not place the City's
population status into the next revenue threshold. As such, no revenue is
reflected relative to Section 2107.5. Similar to other state subventions, road
fund revenues initially would be based at the estimated population during
each development phase. Other Road Fund revenues include the voter-
approved Measure"M" sales tax distributed by the Orange County
Transportation Authority.
Revenues attributed to these gasoline taxes are restricted for use on road
related maintenance expenditures.
23
III. SUMMARY OF FINDINGS: ANNEXATION PRIOR TO DEVELOPMENT
The forecasted expenditures and revenues for this study have been calculated using
conservative methodologies and modest escalation factors. Based upon this fiscal
analysis of annexation of Bolsa Chica, forecasted expenditures for the first fiscal year
exceed the estimated total revenues. However,the projections indicate a cumulative
surplus by the buildout year(Fiscal Year 4)of$1,412,087.
The total forecasted expenditures exceed the estimated revenues for Fiscal Year 1 for a
shortfall of$474,941. In fiscal years 2 through 4,however,the total forecasted revenues
will exceed the forecasted expenditures by a range of$183,995 to $1,186,618. By the
third fiscal year,the cumulative deficit will have been eliminated and by year 4 a
cumulative surplus of$1,412,087 has been achieved.
The forecasted Road Fund revenues exceed estimated Road Fund expenditures in each
fiscal year. It is important to note that the use of these funds is restricted to road-related
expenditures. In fiscal years I through IV,the total forecasted road fund revenues exceed
related expenditures by a range of$5,626 to $40,117,with a cumulative surplus of
$97,031.
24
EXHIBIT 2
Four Year Revenue &•Expenditure Summary
Bolsa Chica Fiscal Impact Analysis
Year Year Year Year
(Full Year) (Full Year) hatnge (Full Year) �s, a „ (Buildout)
GENERAL FUND REVENUES
F
TAXES
Property Tax 241,017 596,853 - -°0 926,497 $ 1,091,777
Property Transfer Tax 3,110 �1 �. 0 7,702 .3"0 11,956 �_ ". 14,089
Utility User Tax 70,762 °0 201,211 u 319,570 -°a 374,701
Sales Tax 0 0 0 0
Transient Occupancy Tax 0 0 = 0 0
Subtotal 314,889 , 3 °0 805,766 °0 1,258,024 8_ 1,480,567
MOTOR VEHICLE FEES -
y
Motor Vehicle In-Lieu 22,290 61,535 97,733 _ 114,593
Off-Highway License 9 1?6°le 25 = 9°u 40 g_ %n 47
Subtotal 22,299 - ?bm 61,561 97,773 ., , °0 114,640
FRANCHISE FEES "
-
Gas,Electric,Trash,and Cable TV 5,379 1T6 0 14,850 9'✓0 23,586 %a 27,655
Subtotal 5,379 14,850 23,586 27,655
OTHER REVENUES
Paramedic and Ambulance Transport Fees 124,200 "`0°` 124,200 0°0 124,200 0°0 124,200
Fines&Forfeitures 7,048 19,458 30,904 7,1% 36,235
Oil Extraction Tax 111,545 80 102,621 8%0 94,412 -8"% 86,859
Capital Contribution Fee(Fire) 350,000 207/g 1,075,000 (!% 1,075,00000°70 0
Capital Contribution Fee(Library) 202,320 361,680 �9�10 329,880 a 151,720
Miscellaneous Revenues 2,008 T6'/o 5,543 59°0 8,803 17° 10,321
Subtotal 797,121 i12%' 1,688,502 ,bra " 1,663,199539°i 409,336
�_ ° o`
Interest Ea_rning, -23,971 F 8,214 9 "� 24,165 a 13?"Io 57,189
TOTAL GENERAL FUND 1,115,717 2,578,894 "'���0 3,066,746 '� , 2oa 2,089,387
ROAD FUNDS ,
Section 2105 3,415 T6°�o 9,42659`0 14,971 % 17,554
Section 2106 2,235 s6°0 6,1710 9,800 11,491
Section 2107 4,762 7760 13,147 � I°o 20,881 � �"���:?°�0 24,483
Section 2107.5
0 , 0 0 0
Measure"M"Local Tumback 2,505 6,914 10,982 12,876
Interest Eamines 281 4 °l0 963 , 66°0 1,595 "0 2,001
TOTAL ROAD FUNDS 13,197 o`.¢a�_ a 36,6220 58,229 68,406
TOTAL ALL REVENUES 1,128 914 `- 132' 2 615 516N a" 3 124 976 3" 2,157 793
RSG,Inc., 1/5/99 Fisimpct EXHIBIT 2
EXHIBIT 2
Four Year Revenue & Expenditure SumDi=
Bolsa Chica Fiscal Impact Analysis
Year,1 Year 2 `�, Year 3Year 4
(Full Year) banger (Full Year) Chan a (Full Year) (Buildout)
GENERAL FUND EXPENDITURES
GENERAL GOVERNMENT
Administration 1,019 6 1,6630 4,467 3,097
Animal Control(Net) 1,191 ° 3,287 ' 5,2206,121
County Tax Collection Charge 4,820 _ $" 11,937 x.�',0 18,5301 21,836
Subtotal 7,030 =' 16,887 °0 28,217 31,054
COMMUNITY DEVELOPMENT
Community Development(Net) 2,500 W • 2,575 - °:0 2,652 „f ;0 2,732
Subtotal 2,500 °' 2,575 °a 2,652 ° 2,732
PUBLIC SAFETY = "
Law Enforcement Services 170,150 ° 148,512a 257,300 276,598
Fire Protection and Inspection 130,525 g°e 106,452 °a 112:568 ° 118,472
Ambulance Services 305,333 :p-W 1 en 251,720 , °0 264,306 "' 277,521
Fire Station Relocation 420:000 ° 1,540,000 v a 1,540,000 0
Subtotal 1,026,008 a 2,046,684 2,174,174 672,591
LIBRARY SERVICES `
Library Services 103,000 106,090 "_0 109,273 )'u 112,551
Subtotal 103,000 ° 106,090 °0 109,273 112,551
COMMUNITY SERVICES _M-
Community Services 306,600 6,798 : °ld 7,002 ° 7,212
Subtotal 306,600 80a 6,798 � 3".0 7,002 "° 7,212
PUBLIC WORKS m.
Sewer Maintenance Services 6,030 : 15,706 k°. 26,231 'n 31,030
Subtotal 6,030 15,706 a 26,231 31,030
CONTINGENCY 145,117 = s.? a 219,474 °ri 234,755 85,717
TOTAL GENERAL FUND 1,596,284s 2,414,214 °0 2,582,304 942,886
ROAD MAINTENANCE
Street Maintenance 1,845 8 5,265 __ aa 8,338 a. 9,793
Street Sweeping 80 '� _�(! 165 0 262 0 307
Bike Trail Maintenance 3,008 4 8,2569°0 13,120 0 13,360
Traffic Signal Operation/Maintenance 1,950 2,048 'ti 2,150 2,257
Contingency 688 1,573 "0 2,387 2,572
TOTAL ROAD FUND 7,571 17,307 26,257 28,289
TOTAL ALL EXPENDITURES 1,603,856 2,431,521 °; 2,608,561 .. 971,175
REVENUE SURPLUS/(SHORTFALL) (474,941) ' 183,995 8 ao 516,415 1,186,618
CUMULATIVE SURPLUS/(DEFICIT) (474,941) (290,946) 225,468 1,412,087
General Fund Surplus/(Shortfall) (480,567) 164,679 484,442 1,146,501
Cumulative General Fund (480,567) (315,888) 168,554 1,315,056
Road Fund Surplus/(Shortfall) 5,626 19,315 31,973 40,117
Cumulative Road Fund 5,626 24,941 56,914 97,031
RSG,Inc., 115199 Fisimpct EXHIBIT
SCENARIO B
ANALYSIS OFINCREMENTAL FISCAL IMPACTS: DEVELOPMENT WITHOUT
ANNEXATION
I. EXPENDITURES&REVENUES
If the City does not annex Bolsa Chica,certain costs will still be incurred by the City
because of the proximity of the developed area. Assuming the County will retain animal
control, land use planning, regular public work services, and law enforcement
responsibility,the City will nonetheless incur recurring costs in additional law
enforcement services, library services and community services. These costs are
summarized in Exhibit 3.
In addition to the fiscal impacts summarized in Exhibit 3,the Community Services
Department has expressed concern that annexation at a later date prohibits the City from
influencing the planning of park location and design. This may increase park
maintenance requirements, resulting in additional future cost implications that cannot be
projected at this time.
Certain taxes, state subventions, franchise fees or development related fees are not
available to the City to offset anticipated costs if annexation does not occur.
In addition,in January, 1996,the County Board of Supervisors approved an
agreement with the City of Huntington Beach which acknowledges that new Bolsa Chica
residents would utilize City library services and that therefore provides the City with a
one-time fee of$100 per unit for library capital costs and 70.5%of the annual library
district property taxes. The City also reached a tentative, separate agreement with
Hearthside Homes, which requires the developer to pay the City an additional one-time
fee of$200 per unit for library capital costs. The revenues estimated to the City as a
result of these agreements are incorporated into the revenue summary on Exhibit 3.
Fire Services Agreement
In 1997,the City,the Orange County Fire Authority(OCFA)and Hearthside Homes
entered into discussion regarding the possibility and advantages of providing City fire
and emergency/medical services to the areas of Bolsa Chica, Sunset Beach and Surfside
Colony. From these discussions a list of general understandings was developed. If
implemented,this would alter the expectations for both costs to the City and anticipated
revenues to the City under the no annexation scenario.
The following is a summary of the understandings that would serve as a basis for
developing a fire/emergency medical service agreement, and from which the assumptions
for both cost and revenue estimates were based for Exhibit 3. (For the purpose of this
study, analysis has been focused only on the additional service cost and reimbursement
created by the Bolsa Chica project area, and not those of Sunset Beach and Surfside
Colony.).
25
• The City will provide fire,rescue, emergency paramedic and ambulance
transportation services to the Bolsa Chica development at a level deemed appropriate
by the OCFA and the City.
• OCFA will annually pay the City 80%of the Fire Fund Property Tax for the Bolsa
Chica area
• Upon receipt of one-time capital funds from Hearthside Homes, OCFA will pay the
City a one-time capital contribution as partial funding for the relocation of
Huntington Beach Fire Station 8 to the Graham/Production site owned by the City.
The cost to relocate the station is estimated at$3.5 million.
• In consideration of capital fund payments from the Bolsa Chica development,the
City will provide primary paramedic service and secondary (back-up)response for
fire,rescue, and/or ambulance transport services to the Sunset Beach and Surfside
Colony areas(OFCA will agree to consider the City's request to provide ambulance
transportation services to these areas during the next OCFA contract renewal, and the
Sunset Beach/Surfside Colony agreement will be subject to a one-year notice of
termination by either the City or the County)
II. SUMMARY OF FINDINGS. NO ANNEXATION
Exhibit 3 provides a summary of expenditures and revenues that could be anticipated if
Bolsa Chica develops and is not annexed into the City. Exhibit 3 assumes that the 1997
draft principles of understanding between the City and OCFA are implemented.
Primarily because of the capital facility costs associated with relocation of Fire Station 8,
even with an implemented fire agreement,the City will incur significant annual deficits
in Fiscal Years 1,2 and 3. A minimal operating deficit continues through Year 4.
With the inclusion of the fair share capital contribution fees for library and fire facilities,
the total cumulative deficit for the four-year period is forecasted at$2,989,749. Total
forecasted expenditures exceed estimated revenue for Fiscal Years 1 through 3 by a range
of$962,500 to $1,608,834. Once the new fire station construction is completed,
forecasted revenues will exceed estimated expense by$167,249.
26
EXHIBIT 3
Four Year Revenue & Expenditure Summ=_..
Bolsa Chica Fiscal Impact Analysis (Without Annexation)
Year l Year 2 Year 3 Year 4
(Full Year) =G6a»ge- (Full Year) Cta»g (Full Year) Glfa» a (Buildout)
GENERAL FUND REVENUES-
TAXES
Property Tax 118,673 _- $"a 293,881 456,192 _ " ° 537,573
Property Transfer Tax 0 0 = 0 0
Utility User Tax 0 0 0 0
Sales Tax(Direct) 0 0 0 0
Transient Occupancy Tax 0 0 _ 0 0
Subtotal 118,6738°; 293,881 °0 456,192 `' 537,573
MOTOR VEHICLE FEES
Motor Vehicle In-Lieu 0 0 0 0
Off-Highway License 0 0 0 0
Subtotal 0 0 0 .- 0
FRANCHISE FEES _
Gas,Electric,Trash,and Cable TV 0 0 0 •• 0
Subtotal 0 0 0 ,• 0
OTHER REVENUES
Paramedic and Ambulance Transport Fees 124,200 ' �0 124,200 0";v 124,200 0°l0 124,200
Fines&Forfeitures 1,624 lflS�o 3,324 '.,'%d 7,115 1, 8,343
Oil Extraction Tax 0 0 �d 0 r 0
Capital Contribution Fee(Fire) 150,000 63'°.0 1",100,000 0 0 0
Capital Contribution Fee(Library) 70,200 �: ' -0 123,6000 114,000 ° 53,100
Miscellaneous Revenues 0 0 •, 0 0
Subtotal 346,024 1,351,124 8 %a 245,315 - 42"/0 185,643
Interest Earnines -48,011 29,214 . 80,251 8,343
TOTAL GENERAL FUND 416,686 ,'2$80 1,615,791 2Plo 621,256 731,559
'l
ROAD FUNDS
Section 2105 0 0 0 0
Section 2106 0 0 0 0
Section 2107 0 0 0 0
Section 2107.5 0 0 „ 0 0
Measure"M"Local Turnback 0 0 0 0
jnjerest Earnings 0 0 0 0
il
TOTAL ROAD FUNDS 0 0 0` 0
TOTAL ALL REVENUES 416,686 $ °.0 1,615,791 " 621,256... 731,559
RSG,Inc., 1/5/99 Fisimpct EXHIBIT 3
EXHIBIT 3
Four Year Revenue & Expenditure Summary
Bolsa Chica Fiscal Impact Analysis (Without Annexation)
Year 1 4 Year 2 Rrt Year 3 Year 4
(Full Year) Change'!(Full Year) Change (Full Year) Chang e (Buildout)
GENERAL FUND EXPENDITURES
GENERAL GOVERNMENT
Administration 0 0r6R 0 0
Animal Control(Net) 0 0 01 11 0
County Tax Collection Charge 2,3738° 5,878 SSA 9,124 $°Tu 10,751
Subtotal 2,373 48°` 5,878 9,124 -TS°` 10,751
COMMUNITY DEVELOPMENT
Community Development(Net) 0 0 0 00
Subtotal 0; ` ' 0 0. � 0
�szEMA
5,11
PUBLIC SAFETY
;
Law Enforcement Services 116,500 90,837 s° 97 °,650 $ 104,974
Fire Protection and Inspection 0 0 0 &, 0
01
Ambulance Services 305333 18% 251,720 5°u 264,306 ' � % 277,521
Fire Station Relocation 420:000 „ 26,7°�0 1,540,000
1,540,000 00'u 0
Subtotal 841,833£ r=124y°lo- 1,882,557 y�`2°I° 1,901,956 U' $tl°lo 382,495
LIBRARY SERVICES
L
Library Services 103,000(- °� 106,090 NO 109,273 �� ���o= 112,551
Subtotal 103,000 °lob 106,090 3u 109,273 112,551
COMMUNITY SERVICES Y�Community Services 306,600 98°lu 6,798 r °o, 7,002 ,? "3°a 7,212
Subtotal 306,600 98° 6,798 �;3 7,002 ° 7,212
PUBLIC WORKS ,
Sewer Maintenance Services 0 0 0 0
Subtotal 0 0 0 = 0
CONTINGENCY 125,381 0°0 200,132II 202,73575" 51,301
TOTAL GENERAL FUND 1,379 187 _ -0- 2,201,455 0 2,230,090 7 564,310
311
ROAD MAINTENANCE
Street Maintenance 0 0 ' 0 0
Street Sweeping 0 0 0 0
Bike Trail Maintenance 0 0 0 " 0
Traffic Signal Operation/Maintenance 0 :_ 0 5 0 0
Contingency 0 t 0 0 0
TOTAL ROAD FUND 0 ,<, 0 0 '. - 0
TOTAL ALL EXPENDITURES 1,379,187 # 2,201,455 °ij 2,230,090 --a,7 a 564,310
(585,6 r 167,249REVENUE SURPLUS/(SHORTFALL) (962,500)
CUMULATIVE SURPLUS/(DEFICIT) (962500) . ' =° (1,548,164)� 'yam (3,156,998)' >�'t� (2,989,749)
General Fund Surplus/(Shortfall) (962,500). (585,664) (1,608,834) 167,249
Cumulative General Fund (962,500) (1,548,164) (3,156,998) (2,989,749)
Road Fund Surplus/(Shortfall) 0 0 0 0
Cumulative Road Fund 0 0 0 0 1
RSG,Inc., 1/5/99 Fisimpct EXHIBIT 3
SCENARIO C
ANALYSIS OF INCREMENTAL FISCAL IMPACTS:ANNEXATIONAFTER
DEVELOPMENT
L EXPENDITURES&REVENUES
It is possible that if Bolsa Chica is developed and not annexed into the City prior to
construction of new residences, annexation could occur at a later date. Once
development has occurred and residents have moved into the area, annexation is typically
initiated by the resident registered voters (see Section 2 for discussion of this process).
Generally, annexation is requested if residents perceive a need for increased public
services (police, fire/emergency response,etc.). Because development is complete,
annexation at this time does not provide the city with options to negotiate new or
additional assessments or fees, and several revenue sources available to the City if an
area is annexed prior to development may not be available if annexation occurs after
buildout.
H. SUMMARY OF FINDINGS:ANNEXATIONAFTER DEVELOPMENT
Exhibit 4 provides expenditure/revenue projections that summarize the additional costs
and revenues that would accrue to the City if annexation takes place after four years of
development under County jurisdiction. Although cost projections are generally identical
to those under Scenario A(annexation prior to development),revenue assumptions differ
considerably. The revenue assumptions in these Exhibits reflect a conservative
interpretation of the ability to apply new taxes to an existing residential development in
this post-proposition 218 era. In addition to the certain loss of property tax transfers from
new housing units,revenues are not anticipated to be available from the utility users tax,
the City's tax over-ride,or the Oil Extraction Tax.
Exhibit 4 assumes annexation of Bolsa Chica in Year 5, after buildout of the proposed
project. Although fewer revenues are available to the City if annexation takes place after
development(versus prior to development),the forecasted new revenues for years 5
through 8 exceed estimated additional expenditures each year. Total revenues accruing
during this time,however, are not adequate to reduce the cumulative deficit created
during the four years of development of Bolsa Chica under County jurisdiction(refer to
Exhibit 3).
The total forecasted revenue shown in Exhibit 4 exceeds estimated expenditures for
Fiscal Years 5 through 8 by a range of$161,391 to $265,408 carryover,which reduces
the projected cumulative deficit in Year 8 to $2,116,884.
27 ►
EXHIBIT 4
Four Year Revenue & Expenditure Summary-
Bolsa Chica Fiscal Impact Analysis (Annexation - Post Development)
Year 4 Year 5 x,, Year 6 NYear 7 Year 8
(Buildout) (Full Year) Change (Full Year) (Full Year) CFao z" (Full Year)
Community Development(Net) 0 2,732 2,814 2,898 ae 2,985
Subtotal 0 2,732 = °l0 2,814 _ uQ 2,898 °0 2,985
PUBLIC SAFETY
Law Enforcement Services 104,974 308,598 0 297,343 '° 319,644 b 343,617
Fire Protection and Inspection 0 148,997 `= op 124,396 ° 130,615 0 137,146
Ambulance Services 277,521 343,121 `� �°� 291,397 °� 305,967 321,265
Subtotal 382,495 800,716 '1 713,136&F� 'ftq 756,226 � '' 802,028
LIBRARY SERVICES
Library Services 112,551 115,928 °0 119,405 122,988 =°' 126,677
Subtotal 112,551 115,928 119,405035" 122,988 ° 126,677
COMMUNITY SERVICES
Community Services 7,212 7,428 �` ° 7,651 7,881 s - 8,117
Subtotal 7212 7,428 ."l0 7,651 °0 7,881 ° 8,117
PUBLIC WORKS
Sewer Maintenance Services 0 31,030 <°0 31,961 " 32,920 °fo 33,907
Subtotal 0 31,030 31,961 30 32,920Q 33,907
CONTINGENCY 51,301 97,628 =$° 89,378 `0a 94,211 0 99,329
TOTAL GENERAL FUND 564,310 1,083,100 992,446 °' 1,045,694 0 1,102,098
ROAD MAINTENANCE
Street Maintenance 0 9,793 0 10,087 ° 10,389 10,701
Street Sweeping 0 301 0. 310 . 319 329
Bike Trail Maintenance 0 13,360 ' a 13,761 14,174 14,599
Traffic Signal Operation/Maintenance 0 1,950 09 2,009 2,069 2,131
Contingency 0 2,540 " °4 2,617 2,695 2,776
TOTAL ROAD FUND 0 27,944 °'' 28,783 °" 29,646 30,536
TOTAL ALL EXPENDITURES 564,310 1,111,044 ' 1,021,228 w4=11411,075,341 � 1,132,633
REVENUE SURPLUS/(SHORTFALL) 167,249 161,391 ° 265,408 239,534 206,533
CUMULATIVE SURPLUS/(DEFICIT) (2,989,749) (2,828,358) (2,562,951) (2,323,417) (2,116,884)
General Fund Surplus/(Shortfall) 167,249 119,369 237,155 204,034 168,161
Cumulative General Fund (2,989,749) (2,870,380) (2,633,225) (2,429,191) (2,261,030)
Road Fund Surplus/(Shortfall) 0 42,022 28,253 35,500 38,372
Cumulative Road Fund 0 42,022 70,275 105,775 144,146
RSG,Inc., 1/5/99 Fisimpct EXHIBIT4
EXHIBIT 4
Four Year Revenue & Eaenditure,Summary.:::
Bolsa Chica Fiscal Impact Analysis (Annexation -Post Development)
Year 4 Year 5 Year 6 Year 7 Year 8
(Buildout) (Full Year) bang (Full Year) han e. (Full Year) Chao a (Full Year)
GENERAL FUND REVENUES
TAXES
Property Tax 537,573 869,195 886,579 904,310 , °d 922,397
Property Transfer Tax 0 14,371 15,090 .d 15,844 °u 16,636
Utility User Tax 0 0 0 0 0
Sales Tax 0 0 0 0 0
Transient Occupancy Tax 0 0 0 0 0
Subtotal 537,573 883,566 �� � 901,668 �' 920,155 939,033
MOTOR VEHICLE FEES
Motor Vehicle In-Lieu 0 114,600 114,600 114,600 114,600
Off-Highway License 0 45 � •s 45 45 7u 45
Subtotal 0 114,645 .x - (1°' 114,645 0 114,645 114,645
FRANCHISE FEES ` '
Gas,Electric,Trash,and Cable TV 0 27,604 ° 28,432 29,285 °u 30,164
Subtotal 0 27,604 _ ° 28,432 .29,285 °a 30,164
OTHER REVENUES
Paramedic and Ambulance Transport Fees 124,200 124,200 124,200 124,200 0 124,200
Fines&Forfeitures 8,343 36,200 ° 38,010 °r' 39,911 ` 41,906
Oil Extraction Tax 0 0 0 - 0 0
Capital Contribution Fee(Library) 53,100 0 0 0 .. 0
Miscellaneous Revenues 0 10,300 ° 10,815 11,356 11,924
Subtotal 185,643 170,700 ° 173,025 175,466 178,030
Interest Eamines 8,343 5,954 11,830 10,177 8,388
TOTAL GENERAL FUND 731,559 1,202,469 r 1,229,600 ` 0 1,249,728 1,270,259
ROAD FUNDS
Section 2105 0 17,600 17,600 17,600 ; 17,600
Section 2106 0 11,500 0 11,500 11,500 11,500
Section 2107 0 24,500 13,147 20,881 - 24,483
Section 2107.5 0 0 0 0 0
Measure"M"Local Turnback 0 12,876 12,876 12,876 12,876
Interest Earnines 0 3,490 1,912 2,289 2,448
TOTAL ROAD FUNDS 0 69,966 57,036M 65,146 68,907
TOTAL ALL REVENUES 731,559 1,272,435 ` a 1,286,636 °¢ 1,314,874 1,339,166
GENERAL FUND EXPENDITURES M
GENERAL GOVERNMENT
Administration 0 3,090 3,183 3,278 ° 3,377
Animal Control(Net) 0 61100 6,100 0 6,100 0 6,100
County Tax Collection Charge 10,751 18,448 18,817 19,193 199577
Subtotal 10,751 27,638 28,100 28,571 29,054
COMMUNITY DEVELOPMENT
RSG,Inc., 1/5/99 Fisimpct EXHIBIT 4
OTHER ANNEXATION OPTIONS
PHASED ANNEXATION/PARTIAL ANNEXATION
L PHASED ANNEXATION
A less traditional approach to annexation,but one employed by several cities where
growth is proposed on the municipal fringe,provides for annexation to occur in phases
during the development process. Under this scenario,the developer and the City would
enter into an agreement to phase the annexation of Bolsa Chica as maps, grading permits
and/or building permits are issued. This approach has the advantage of meeting the urban
service objectives of LAFCO, and could provide benefits to both the City and to
Hearthside Homes.
Many cities enter into "pre-annexation" agreements with property owners prior to
initiating annexation. The pre-annexation agreement can detail the circumstances under
which each party agrees to annexing property: level of development that will be allowed,
fees to be assessed and timing of annexation are all topics suited to such an agreement.
The pre-annexation agreement may provide that an entire property is annexed, or that
annexation will occur as tentative maps, grading permits, or building permits are issued.
It may provide that certain fees,beyond the normally established permit fees,be paid as
part of annexation and/or development, and/or may stipulate specified financing
mechanisms for public facilities. A sample outline,providing examples of the types of
topics that may be included in a pre-annexation agreement is attached for your
information as Exhibit 5.
The cost/revenue implications of a phased annexation are identical to those summarized
in Exhibit 2 for Scenario A (annexation prior to development). A pre-annexation
agreement may provide that the City assume responsibility for building permit and
inspection services and thus receive associated fees. However,because such fees are
assumed to be established only as cost-recovery mechanisms,they are assumed to be
revenue-neutral and do not affect the overall cost/revenue picture. In addition,a pre-
annexation agreement may contain requirements for special, one-time only fees related to
development impacts. However, because the level of such participation cannot be
anticipated prior to completion of actual negotiation between the developer and the City,
this analysis assumes no additional impact fees.
28
H. PARML ANNEXATION
LAFCO policy does not encourage annexation of portions of unincorporated islands,but
in some cases will consider such proposals. Any property owner may individually
initiate annexation of land in their ownership. In addition, any affected agency may
initiate annexation of a portion of Bolsa Chica. (Section 2 of this report provides a
complete discussion of annexation procedures and a list of all ownerships within Bolsa
Chica.)
The City may wish to investigate the possibility of annexation of only the State-owned
lowlands, or may desire to cooperate with one or more property owners to annex other
portions of the unincorporated island, such as the area proposed for development as a
County park. It is noted in the discussion for Scenario A that specific costs and revenues
can be identified for the wetlands. These are summarized below:
Expenditures Specific to Annexation of LowlandlWetlands
One-time cost to purchase one vehicle $ 30,000
Annual cost of one Fire Structure/Oil Field Inspector $100,000*
(*includes salary,benefits, and related services and supplies)
• Revenues Specific to Annexation of Lowland/Wetlands
Oil Extraction Tax/Anticipated Annual Revenue**
Year 1 $111,545
Year 2 $102,621
Year 3 $ 94,412
Year 4 $ 86,859
(**current rate of$0.21 per barrel is applied, but production rates are anticipated to decline at
current rate of 8%annually)
29
Exhibit 5
Pre-Annexation Agreement: Sample Outline
Recitals
• Ownership
• Acknowledgement of City Sphere
• Acknowledgement of Previous (County)Project Approvals
• Intent for Document to Serve as Pre-annexation Agreement and as
Development Agreement pursuant to GC Section 65864 upon
Annexation
Definitions and Exhibits
• General Definitions
• Project Approvals(listed)
• Development Plan(defined and attached)
Covenants and General Provisions
• Binding Effect of Agreement
• Assignment(s)
General Obligations and Commitments of Parties
• Intent to annex
Cooperation of both parties
Timing/phasing of annexation
• City Adoption of Development Plan
• Incorporation of mitigation measures in adopted EIR
• Termination Provisions
Rights to Develop
• Establishing Hearthside Homes' vested right to develop according to
Development Plan
• Recognition and Continuation of County Project Approvals(commitment to
continue in full force as if approved by City)
• Timing of Development: Flexibility for developer to respond to market
constraints
30
A. Sample Pre-Annexation Agreement Outline,page 2
Reservation of City Authority
• To apply City regulations consistent with the Development Plan
• Establishing process for Changes and Future Amendments to Development Plan:
including provision clarifying City has no obligation to approve changes which
modify overall development intensity, density, land-use categories or phasing
• Authority to assess City fees and charges
• Authority to consistently apply procedural regulations
• Authority to impose regulations governing construction standards and
specifications
• Continued authority to protect public health and safety
• Recognition of developer and City's legal obligation to meet State and Federal
land-use laws/requirements
Miscellaneous Other Issues
• Public Infrastructure Financing(Potential Future financing District(s)
(Assessment/Mello, etc)/Developer Turn-key facilities/City constructed
improvements financed through fees, etc.
• Periodic and/or Special Reviews
General Concluding Provisions
• Term of Agreement
• Severability
• Mutual Covenants, etc.
31
Section 5
County/ Hearthside Homes Development
Agreement
Section 5
COUNTY/HEARTHSIDE HOMES DEVELOPMENT AGREEMENT
The development agreement(DA)was entered into on April 18, 1995. It applies to the
approximately 1,165 acres owned at the time by the Hearthside Homes. That property
does not include lands which were owned by others in 1995. In fact, the ownership
pattern has changed considerably since the DA was signed. The following list provides a
summary of land ownership in the Bolsa Chica in 1995 and 1998`:
Acreage Acreage
Owner April 1995 November 1998
Hearthside Homes 1,165 350
The State of California 309 1,175
The Fieldstone Company 42 0
Shea Homes 0 4.5
Ocean View School District 15 15
David Farrar Esq. Tustee for the
Bolsa Chica Land Trust 0 25
Pacific Land Company 2.7 2.7
Goodell 6.2 6.2
Metropolitan Water District 38 0
City of Huntington Beach 13 13
(Acreages are approximate. Some property owners may have changed since the printing of this report.)
The DA establishes the 1994 County approved Local Coastal Program(LCP)Land Use
Plan(LUP)as the development plan for the entire approximately 1,600-acre Bolsa Chica
area, i.e.,the lowland,unincorporated portions of the Huntington Mesa and the Bolsa
Chica Mesa. In return for County assurances that it will maintain its approval of the
LCP/LUP for the period of the Agreement,Hearthside Homes agrees to provide
32
"additional public benefits (enumerated below), i.e., over and above those ascribed to
the land use plan itself. Recital I of the DA states that"OWNER(Hearthside Homes) is
willing to assist in providing the Public Facilities (`additional public benefits')only with
the assurance that it will be able to complete the development of the property as provided
in the Agreement." "In this respect,the public improvements and dedications provided
for herein,together with development contemplated by the Development Plan, are
interdependent and together comprise an indivisible project."
Recital K states the County"desires to be assured that if the property is annexed to, or
included within the boundaries of, a Local Agency (the City and/or special districts such
as the County Sanitation District), OWNER'S obligation will be completed to the extent
required by this (DA)irrespective of jurisdiction by the Local Agency . . . and survive
any transfer of land use jurisdiction to a Local Agency."
The"Development Plan"contemplated by the DA is not simply that which was approved
by the County in 1994. DA Section 1.2.13 provides that the"Development Plan"is that
approved on December 14, 1994, as amended to the"effective date." (Underlining
added). "The LCP and,therefore,the Development Plan includes a Wetlands Restoration
Program(`WRP') . . . and any amendments to the WRP shall be deemed to be
amendments to the LCP and the Development Plan for purposes of this Agreement."
The"Effective Date"of the DA does not occur until the California Coastal Commission
approves the LCP, and until any changes in the plan required by the Coastal Commission
for its approval are agreed to by Hearthside Homes and the County and incorporated into
the LCP. (DA Section 1.2.15 and Section 8). The term of the Agreement is twenty-five
(25)years from the "Effective Date" if there is lowland residential development;fifteen
(15)years is only the Bolsa Chica Mesa is developed(Section 9.1).
The DA commits Hearthside Homes to a long and wide-ranging list of public benefits
which go beyond what the County considered were inherent in the project or would
constitute customary mitigation measures. In return,the County provided through the
DA assurances that Hearthside Homes would be entitled to build the approved project
over time without new or changed requirements.
Following, in summary form, is a list of the public benefits which still apply to the
project after sale of much of the lowland to the State of California for joint state/federal
agency wetland restoration, and as amended by Hearthside Homes to satisfy a recent
Superior Court ruling in its quest for Coastal Commission approval.
1. Mesa Conservation Fund:
A fee of$2,000 for each residential building permit issued,to a maximum
of$5 million(which would represent 2,500 units, over twice the number
currently proposed),would be paid to the County for wetland restoration,
flood control, (unspecified) conservation and/or park improvements in the
project area.
33
2. Area Traffic Improvements:
A complex program of offsite traffic circulation improvements to be
funded by Hearthside Homes is required in accordance with a County
prepared Area Traffic Improvement Plan(ATIP). The ATIP was
developed to better ensure adequate levels of service and roadway
operations in the general area, including Warner Avenue, Bolsa Chica
Street,Pacific Coast Highway and local freeway connections.
Roadway deficiencies through the year 2020 were identified and
Hearthside Homes' share of construction improvements were correlated
with phases of Bolsa Chica project development. Many of the required
improvements were tied to lowland development and would not now
apply. However,others remain applicable, with Hearthside Homes' share
dependent on the number of residential units built on the Bolsa Chica
Mesa.
3. Child Care Fund:
A fee of$20 per dwelling unit is required for a County approved child
care facility prior to the issuance of the 1000th building permit.
4. Wieder Regional Park Contributions:
a. An offer to dedicate 49 acres on Huntington Beach Mesa for
inclusion in the regional park is required following Coastal
Commission certification of the LCP and prior to issuance of
any mass grading permit for the residential project.
b. The offer must also provide for the undergrounding of all oil
and gas pipelines now located within the park dedication area,
to be phased with park development.
c. The offer is to be in a form and substance acceptable to the
County. (Historically,this has required the clearance or
subordination of all leases and other title encumbrances,and
the remediation of soils where contamination is present).
d. Payment, not to exceed$500,000, for the costs of constructing
an ecological interpretive center within the park,not to exceed
5,000 square feet in size. Financial security is required prior to
the issuance of the 500th residential building permit.
-34
5. Recreation Trails Development:
All bicycle and pedestrian trails shown on the development plan and
Master Plan of Countywide Bikeways(other than those in the regional
park), subject to the approval of permitting agencies, are to be constructed
and dedicated to the County in conjunction with final tract maps. (The
DA seems to contemplate the trails being provided only within the areas to
be developed; however,the DA could also be interpreted to require the
trails even though the lowland residential areas were sold to the state).
6. Fire Protection:
a. Construction,equipping and dedication of a one-acre/10,000
square foot project area or nearby fire station is required.
However, a financial contribution equivalent to the station's
cost may be substituted in accordance with an agreement
acceptable to the City of Huntington Beach.
b. The DA also provides for an all-weather fire vehicle access
road over the East Garden Grove-Wintersburg Flood Control
Channel for fire protection to the mesa and lowland.
7. County General Fund Impact Mitigation:
The fiscal impacts of the project on the County General Fund are to be
mitigated in accordance with an agreement entered into prior to recording
the first final tract map.
8. County General Plan Maintenance:
$100,000 is to be paid the County for maintaining the County's General
Plan-- one half to be paid within 10 days of recording the DA;the other
within 10 days after Board of Supervisors adoption of a certified LCP.
9. A Plan of Emergency Services:
A plan for sheriff/police, fire and paramedic protection prepared in
consultation with the City is required prior to final Board of Supervisors
action on a certified LCP. The City has entered into such a plan.
10. Flood Control:
An elaborate plan for 100-year flood protection in the area, and a device to
improve water quality within Huntington Harbour,were also required by
the DA. However,the State's purchase of the lowland and undertaking of
wetland restoration relieved Hearthside Homes of these obligations.
35
A City Attorney memo dated March 27, 1998 (Attachment 2)points out
that State law protects the provisions of the DA—both the project
entitlements and obligations—in the event of annexation to the City, for
eight years following annexation, unless there is a danger to public health
and safety. Thus,to modify the project as entitled,the public benefits
obligation would require approval by the County, Hearthside Homes (or
its successor in interest) and perhaps the Coastal Commission, depending
on the modifications involved.
The Bolsa Chica project has already been substantially changed with the
sale of the lowland, elimination of proposed residential development there,
reduction of proposed mesa development, and preparation of a
federal/state agency restoration plan that may depart substantially from
that contemplated in the DA. Furthermore, it appears that a modification
of the DA may be necessary with respect to the required of land for the
regional park,because of oil lease/encumbrances. Others changes may
become necessary as well if the Superior Court ruling requiring a de novo
hearing by the Coastal Commission is upheld on appeal.
36
Section 6
Responses to Questions
Section 6
BOLSA CHICA ANNEXATION STUDY
RESPONSES TO QUESTIONS
Subsequent to the issuance of the first public draft of this Fiscal Study,the Huntington
Beach City Council Subcommittee on Bolsa Chica held three special workshops (July 29,
August 28, September 24, and November 36, 1998). The workshops were noticed,public
meetings where individuals and organizations were requested to provide input, ask
questions, and express concerns.
The following are responses to the many questions received,both in writing and at the
public workshops, during this public review period.
Development/Land Use
1. The question of land-use is a key issue for Bolsa Chica. Shouldn't this study
address the question of whether or not development should occur?
This study was prepared specifically to review the question of the potential cost to the
City of Huntington Beach of annexation of Bolsa Chica. The Bolsa Chica area currently
remains within the unincorporated County and, as such,the authority for land-use
decisions rests with the County Board of Supervisors. Because the County Board has
approved a development plan for the Bolsa Chica, and has entered into a binding
Development Agreement with Hearthside Homes,the most prudent land-use assumption
for the purpose of this report was to reflect the project as approved by the Orange County
Board.
2. The study should discuss the probability of development on Bolsa Chica if it
is not annexed into the City. One interpretation of the Hoffman report
prepared for the County in October, 1997,is that development at Bolsa
Chica would create a significant negative fiscal impact for the County. Can a
conclusion be made from this that the County has motivation to encourage
annexation in order to reduce County expenses? Given the position recently
taken by the County on the Ladera development proposal, is it likely that the
County will provide the services necessary for development?
Since the bankruptcy,the County has indicated its desire to eliminate the burden of
providing municipal levels of service to the unincorporated territory. To accomplish this
objective,the County is encouraging cities to annex unincorporated area or where
feasible,the creation of new cities. This County goal should not be interpreted to
represent that the County will no longer provide at least the minimally required municipal
services to unincorporated areas. This level of services,however, is substantially less
than a city would provide.
gAcommdev\nowak\BCannex\199gstn.doc 37 January 5,1999
3. Is the Shea development within the County part of the annexation analysis?
Hearthside Homes is not the only property-owner in Bolsa Chica. We should
evaluate planning for the entire mesa,including those properties split by
jurisdictions.
Shea Homes owns approximately 5 acres within the unincorporated area of Bolsa Chica,
which is being planned for residential development as part of a larger ownership, including
45 acres already within the City boundary. The total number of homes planned for the
acreage currently outside the City is 27.
In addition to the Shea ownership,2.7 acres of the PLC"Holly Seacliff'development project
is located outside City boundaries in the unincorporated Bolsa Chica area. These 2.7 acres,
which are contiguous to,and a part of the approved PLC residential project,are planned for
10 homes.
The 37 total residential units planned by Shea and PLC now in the County are not included in
this fiscal analysis. It is unlikely that the addition of 37 homes would substantively alter the
fiscal findings. However,both Shea Homes and PLC Land Company are applying to
LAFCO for annexation of their unincorporated holdings into Huntington Beach,and separate
fiscal analyses for these proposals are being prepared. When completed,the information
developed from these two fiscal reports could be incorporated into this analysis.
4. What is the status of Bolsa Chica in the City's General Plan? Is it designated for
"urban growth' ? How will the City handle incorporating the Bolsa Chica into
the General Plan?
The General Plan for the City of Huntington Beach does not include the unincorporated
Bolsa Chica island.LAFCO requires,by policy,that an area proposed for annexation be
"pre-zoned"by the annexing City. If the City Council were to direct staff to begin to pursue
the possibility of annexation of Bolsa Chica, City staff would recommend that a General Plan
Amendment be undertaken for the entire Bolsa Chica island area,as part of the pre-zoning
process.
Annexation
5. Is this (now) the best time to annex or not?The report should discuss the pros
and cons of annexation.
Annexation prior to development generally provides a City Council with a better ability to
exert authorities in the areas of land-use,fees and taxes. Currently the City has no land-use
authority and may not levy fees or taxes on Bolsa Chica properties. Upon annexation,the
municipal powers of the City apply. As discussed in the report,existing land-use approvals
from the County and the Development Agreement between the County and Hearthside
Homes would limit the City's ability to exercise its' land-use authority upon annexation.
However, annexation after development also clearly places limits on land-use authority,
simply by the presence of land-uses other than open-space. From a fiscal standpoint,the
ability to levy existing City fees and taxes is clearly greater if Bolsa Chica is annexed prior to
development.
g:\commdev\nowak\BCannex\199gstn.doc 38 January 5,1999
There are other considerations that may be relevant to the issue of annexation,and not all
considerations can be objectively quantified. The City has asked interested organizations and
individuals to express their views on this question, in the form of listing"pros and cons"to
annexation. Input provided on this question will be discussed at a Bolsa Chica Subcommittee
meeting, and a special chapter on the pros and cons of annexation will be added to the draft
report before it is finalized for City Council review and discussion.
6. The report should discuss the impact of annexation to the lowlands.
Page 29 of the report specifically discusses the potential costs and revenues associated with
annexation of only the State-owned tidelands in Bolsa Chica. Because the tidelands are
property of the State of California,and designated specifically for open-space preserve,there
is no property tax revenue to be generated by the lowland area. The lowlands contain,
however, several oil drilling facilities that would be subject to the City's Oil Extraction Tax if
annexed into the City. The principal recurring cost associated directly with annexation of the
Bolsa Chica lowlands are related to the need for the City to provide oil field inspection.
Exclusion of the lowlands from the annexation proposal would eliminate approximately
$395,000 in oil extraction tax revenues and approximately$460,000 in oil field fire
inspection costs over the four-year period,thus creating a net positive cumulative fiscal
impact of approximately$65,000. Other minimal cost decreases in law enforcement and
public works services may also occur.
If annexation of the Bolsa Chica"island"were proposed,the State of California—as owner
of the tidelands property—would be notified. Although LAFCO could choose to remove the
tidelands from the annexation if the State protests its inclusion, it would not necessarily be
mandatory. Annexation proceedings must be terminated only if over 50%of the total
landowners in the area to be annexed,who also represent over 50%of the assessed value,
protest the inclusion of their property. Because the State tidelands are government-owned
open space,and are exempt from property taxes,they have no assessed net value.
7. How realistic is partial annexation,or annexation by phasing?
Annexation by phases is not an uncommon approach to annexation of large areas with
specific development plans. Many cities enter into agreements with property owners that
stipulate that annexation will occur as each tract map is approved or as grading permits are
issued for a project phase.
Partial annexation of Bolsa Chica is also possible,although LAFCO's policies clearly
acknowledge a preference to annex unincorporated"islands" in their entirety. If annexation
of only a portion of Bolsa Chica were proposed,LAFCO would consider how logical the
proposed boundary would be and what potential might exist to expand the proposal to
incorporate additional unincorporated territory before approving,denying,or possibly
amending,the annexation request.
g:\commdev\nowak\BCannex\199gstn.doc 39 January 5,1999
8. Can the City impose conditions on the annexation process? Is a pre-annexation
agreement the tool for this,and is the City considering entering into one with
Hearthside Homes?
The City of Huntington Beach may not impose conditions on the annexation of Bolsa Chica.
However, authority does rest with the Local Agency Formation Commission(LAFCO)to do
so. Typically,LAFCO will request that affected agencies submit proposed conditions, which
are then considered by the LAFCO Commission.
A pre-annexation agreement is an excellent tool for establishing proposed conditions to be
imposed by LAFCO. When a pre-annexation agreement is completed and submitted to
LAFCO,the Commission understands that the issues addressed by the agreement have been
resolved to the satisfaction of both the property owner and the annexing City.
It will be a decision of the Huntington Beach City Council whether or not to pursue entering
into pre-annexation agreement discussions with Hearthside Homes. A pre-annexation
agreement may stipulate timing and intensity for planned development, establish fees or
methods of financing for public infrastructure and/or address a myriad of other development-
related topics. The outcome of a pre-annexation agreement is the result of negotiation
between the City and the property owner,and both parties must agree to the final content. A
sample pre-annexation agreement outline is provided in the report as Exhibit 5.
9. Can annexation facilitate the purchase of the property to maintain as open
space?
Annexation of Bolsa Chica prior to development would place the property under the
municipal authority of the City. As noted in the report and in response to other questions,
however,the existing land-use approvals for the Hearthside Homes project and the
Development Agreement between the developer and County place limits on the City's ability
to exercise land-use control after annexation. Thus,the City would not be at liberty to simply
rezone the property to open-space,but must recognize the legal requirements of the existing
Development Agreement. If the Development Agreement provides for a process to pursue
purchase of some or all of the property currently planned for development,annexation into
the City may facilitate discussion between the landowner and City Council.
10. Could annexation make it possible for the City to receive part or all of the$50
million in restoration funds for Bolsa Chica?
This comment appears to refer to the Bolsa Chica Development Agreement,which obligated
the developer to spend up to$45 million on restoring the lowland wetlands. Koll sold the
lowland property to the State Lands Commission that will use State and federal funds for
restoration,thus relieving the developer of the $45 million funding obligation. Hearthside
Homes retains the obligation to protect the"Warner Pond"wetlands on the Bolsa Chica
Mesa.
The Development Agreement continues to obligate the developer to pay the County a fee of
$2,000 per residential building permit issued(to a maximum of$5 million) into a"Mesa
Conservation Fund"for purposes of wetland restoration,flood control,and unspecified
gAcommdev\nowak\BCannex\199gstn.doc 40 January 5,1999
conservation and/or park improvements in the project area. At 1,203 dwelling units,this
obligation would generate $2,406,000. If the City chose to negotiate a pre-annexation
agreement, it would likely seek to secure this funding.
11. Will a new EIR be required prior to annexation?
Annexation of Bolsa Chica will require environmental review. However,the form of
environmental review—recertification of the existing EIR,preparation of a new EIR,
supplemental EIR or other environmental documentation-will depend on the adequacy of
information presented in existing environmental documents. If annexation is initiated by the
City,the City may examine the possibility of re-certifying the existing Bolsa Chica EIR,
preparing a supplemental EIR, or preparing a new EIR as part of a General Plan amendment.
If annexation is initiated by the property owner,the Local Agency Formation Commission
(LAFCO)becomes the"lead"agency and must determine the appropriate form of
environmental review.
12. Does the annexation process differ if initiated by the property owner versus by
the City?
If annexation is initiated by the City,the City becomes the"lead agency"for purposes of
environmental review. As the lead agency,the City would be responsible to determine what
level of envrionmental review the project should undergo (i.e. Environmental Impact Report,
Supplemental Report to the existing County EIR,Negative Declaration, etc.),and to prepare
and certify the related documents. If annexation is proposed by the property owner,the
Local Agency Formation Commission(LAFCO)would assume this role. Annexation may
also be initiated by the County Board of Supervisors, in which case,the County would
become the lead agency.
The remainder of the LAFCO process—LAFCO hearings and Conducting Authority protest
hearings—would not differ. Once a proposal has been determined complete by LAFCO and
set for hearing by the Commission,only LAFCO has authority to approve, modify or deny
the annexation. With an"uninhabited"annexation, such as Bolsa Chica,proceedings would
also terminate if protest was received by 50%or more of the property owners,representing at
least 50%of the assessed value of the annexing area.
13. Will the City enter into an agreement with Hearthside Homes to insure that the
developer pays for its fair share of start-up costs related to existing City facilities
that the new development will be using(i.e.:water system,fires service facilities,
etc).The report should include one-time start-up costs and an analysis of costs
required to buy into existing infrastructure.
The report does include some"start-up"costs identified by the City, including fire station
relocation,police and ambulance vehicle costs and sports field improvements. One key
advantage of annexing property prior to development is that it provides an opportunity for the
City to use a pre-annexation agreement to examine and address potential"fair share"
financial contributions toward public infrastructure that will be used by new development.
(See the response to question no. 8 for more discussion on the use of pre-annexation
agreements.) It is important to keep in mind,however,that in determining what represents
"fair share"contributions,the City must establish nexus between the infrastructure cost and
gAcommdev\nowak\BCannex\199gstn.doc 41 January 5,1999
the project's impacts on those facilities. Existing development impact fees (such as the
library capital contribution fees discussed in the report), development processing fees and
connection fees that will be paid by the development are already specifically calculated and
designed as a tool to cover new development's share of many of the City's previous
infrastructure expenditures. If the Council directs staff to investigate the possibility of
annexation, staff will be evaluating the costs to the City of existing infrastructure that may be
impacted by the Bolsa Chica. Staff will also be assessing the City's current fee structure,to
determine if there are costs not covered by existing fees that should be negotiated as part of a
pre-annexation agreement.
General Fiscal
14. The fiscal report gives a minimal estimate of the net revenue to the City from the
per barrel oil taxes. How were these numbers calculated and based on what
assumptions? Were offshore oil wells included? Are these(offshore wells)to be
incorporated into the annexation process?
Previous assumptions(Bolsa Chica Revised EIR)have indicated that the amount of oil
extracted has been declining and that trend will likely continue at 8%at year. Confirming
this trend would require obtaining information from the well owner/operator,which was
deemed unfeasible.
Offshore wells were not included because the beach and coastal waters west of Bolsa Chica
are already within the incorporated limits of Huntington Beach.
15. Please explain the difference between the level of tax burden on residents living
in the City vs. living in the County.
Generally,a resident within County territory would have the same tax(property or sales)
burden as a City resident. However,assuming City annexation prior to development,a City
resident would pay the following additional taxes/fees:
♦ Retirement System Tax Override—approximately$197 per year per household
♦ Utility Tax—approximately$120 per year per household
♦ Paramedic and Ambulance Transport Fees—If used, $361 average per transport fee and
an additional $ 185 average per transport fee, if accompanied by paramedic personnel.
It must also be noted that these additional taxes/fees are more than offset by higher levels of
public safety, community service, library services, and public works activities which benefit
City residents.
g:\commdev\nowak\BCannex\199gstn.doc 42 - January 5,1999
16. The previous fiscal study prepared for the City used a different methodology.
This report examines primarily"incremental" or"marginal" costs,whereas the
previous study was apparently performed on the basis of"total cost." Why is
the different methodology being used in this report,and what are the principle
differences in methodology and conclusions? Could there be an analysis made
to compare the reports in a similar manner?
The purpose of the original fiscal study prepared for the City was to analyze all potential
costs that could be incurred by the City as a result of development. These costs included
direct, new costs, and, in addition, assessed to the new development its "share"of indirect
costs related to current City expenditures for existing services.
This study assumes that development will occur and focuses only on the question of whether
the fiscal impact to the City would be greater if the area is developed within its municipal
boundaries or developed under the jurisdiction of the County. Any new,direct costs (or
incremental costs)are therefore analyzed.
The current study has also been prepared using a methodology that will enable review by the
Local Agency Formation Commission (LAFCO). The ultimate authority to review,to
approve,amend and approve or to deny annexation will rest with this State-mandated agency.
LAFCO's analysis of potential fiscal impact of a proposed annexation generally incorporates
review of the"marginal"or"incremental"costs associated with annexation. This is a
different methodology than the prior fiscal study prepared for the City,which used a"cost
averaging"approach to measure the estimated total cost of new development. Both
methodologies are valid,but serve different purposes.
Also, Section 3 of the current study provides a detailed description of the study approach. It
is not possible to describe principle differences in conclusions except to note major
differences in assumptions such as:
1. Methodology(see above)
2. Number of residential units: 1,203 (current)versus 2,500 (option A)and 3,200
(option B) in the 1994 City study
3. Fire Service: the current study assumes relocation of one Fire Station,no additional
staffing,and City receipt of Fire District revenues. The 1994 study assumed the
construction and staffing of either one or two new fire stations and no revenue from
the County.
A separate consultant study could be done at additional cost(estimate$20,000)to compare
the two reports.
17. The report uses a build-out period of only four-years. Is this accurate or
optimistic?
The build-out period was based on the County study(Hoffman)and confirmed by the land
developer.
g:\commdev\nowak\BCannex\199gsm.doc 43 January 5,1999
18 The fiscal projections should extend beyond four years to better estimate the
long-term fiscal impact of annexation. No projections are made for years five
and beyond,which leaves the reader with the impression that all future years
will have the same net fiscal impacts as year four. The Hoffman report
prepared for the County shows post build-out revenues declining due to loss of
revenues from the property transfer tax on new development. If the timeframe
is longer,what would we expect the result to be?
Generally recurring revenue and expenditure projections will not significantly vary each year
beyond year 4. At year 4,the operating surplus is approximately$1.2 million. This surplus
level will not substantially change for each fiscal year thereafter. Certain fiscal years will
experience periodic one-time additional expenditures such as new vehicle purchases for law
enforcement personnel or road slurry sealing. However,the cost of these capital investments
can easily be covered by the recurring operating surplus.
The fiscal summary(Exhibit 2)only included property tax transfer tax projections for re-
sales, not new development. Thus,this revenue item will not significantly vary each fiscal
year. The fiscal summary should have included projections of additional property transfer
tax revenue associated with all new housing units sold. This revenue item was actually
understated by approximately$240,000 over the four-year development period.
19. The report projects revenues from motor vehicle fees. Are these the fees that
are being cut by the State? What impact will this have?
The fees for owners of motor vehicle have been cut by 25%. This cut will not financially
impact cities(or counties)because the State has supplanted this revenue loss with State
General Funds.
20. Exhibit 2 projects interest earnings of$106,000 to$140,000 to the City each
year. If City is spending its' income,where is the interest money coming from?
A negative interest earning(loss)of approximately$27,180 should be included in year 1.
This adjustment will have minimal impact on the cumulative surplus.
This study did not assume that the City would target the forecasted surplus to be spent for
other services or projects in other parts of the City. While the City obviously has the
discretion to enhance service levels because of increased revenues, it would be speculative at
this time,absent a stated City intent,to assume that the City would annually fully spend out
the forecasted surplus.
21. Could a risk assessment associated with each of the key assumptions be provided
for the report?
Economic downturns,natural disasters,or other events are difficult if not impossible to
predict. The revenue sources indicated are generally not localized only to the City,but are
long-standing,traditional municipal revenue sources. The risks associated with this
development are no different than any other development. Again,with or without
annexation,the risks are likely the same.
gAcommdev\nowak\BCannex\199gstn.doc 44 January 5,1999
22. Please provide a present value analysis of the figures presented in order to show
how today's dollars compare to the impacts in the future.
Applying a present value analysis must address equally the net present value of revenues to
be received and the cost of the services to be rendered. If a net present value is applied
annually to the recurring surplus at a standard discount rate of 10%,the net present value of
the cumulative surplus prior to year 5 will be reduced by approximately$150,000.
23. The report states that there are often differences between forecasts and actual
results(pg. 10). Please expand on this statement and clarify what impact it
could have on the fiscal projections.
The analysis was based on certain existing land use and financial assumptions. If these
assumptions vary substantially,the differences"may"also vary.
24. Other studies have shown that,in general,housing costs cities money. How is
this situation different? How is it not going to cost the City money if no
commercial or industrial development is included in the land-use mix?
Some studies have shown that, in general,residential development projects cost local
governments more to serve than they generate in tax revenue. An examination of revenues
generated from property taxes levied on homes with an average assessed value would likely
lead to this conclusion. However,this conclusion is not applicable to every situation,and
each project must be evaluated individually.
In this case, several factors lead to the projection that income to the City will exceed the cost
for services demanded by the project. Higher market values associated with the homes
planned for Bolsa Chica translate into higher than average property tax revenues and,
conversely,translate into lower service costs due to decreased demands for policing and other
services. City maintenance costs are reduced by the Homeowners Association assumption of
maintenance of many internal roads and parkways. Annexing the area prior to development
allows the City to assess the municipal utility tax and tax-override,which substantially adds
to the property tax revenue base,and the oil taxes from Bolsa Chica supplement this income
even further. Finally, based on the assumption that the City would receive 100%of the
Orange County Fire Authority's affected property tax revenues,the City's recurring fire
service revenues significantly exceed the City's recurring fire service costs for the area,thus
allowing these revenues to cover other non-fire service costs.
25. The status of revenue sources for cities has not been stable since Proposition 13.
The State can take property tax and put it in other places(schools,etc). The
property tax is not fixed and each year is different. How does this affect the
fiscal projections?
A State raid on local municipality's property tax revenues would have implication-f far
beyond this one development. A property tax shift related to this one development would be
a very small portion of the overall significant fiscal impacts City wide of a property tax shift.
g:\commdev\nowak\BCannex\199gsm.doc 45 January 5,1999
26 The report projects a minimal ($2,500)estimate of costs to the Community
Development Department. The Department already has one person working
substantial time on Bolsa Chica. With annexation, how could that go anywhere
but up?
The $2,500 figure represents the net costs after fees. As indicated on Page 13, most
development related costs are borne by the developer through fees.
27. Exhibit 3 shows some property tax revenue to the City even without annexation.
This suggests that parcels already within the City have been included in the
revenue analysis. Doesn't this approach unnecessarily inflate all revenue values,
with or without annexation?
The property tax revenues indicated in Exhibit 3 assume the City will receive 80%of the
Orange County Fire Authority's affected property tax revenues if the area is developed but
not annexed by the City. This reflects a tri-party agreement developed between the City of
Huntington Beach,the Orange County Fire Authority and Hearthside Homes which provides
that the OCFA will contract with the City for fire service. This agreement is discussed in
more detail in response to question No. 38.
28. It appears that the City's cost to provide certain services are"front-loaded" into
the first year of the project. For example,the cost of hiring an additional police
officer and other law enforcement staff are shown to be incurred by the City in
the first year of development. This unfairly inflates the cost projections in
relationship to revenue. Shouldn't the cost analysis assign the costs of a
particular service to the project year in which the costs will more realistically be
incurred?
The report does, in fact,take a conservative approach to anticipated costs and apply costs for
certain services earlier than they would realistically be expected to be incurred by the City.
For example, if the first additional police officer is not needed until year two,the current
first-year deficit would be reduced by approximately$84,000. The result of this approach is
that the fiscal projections in the report are conservative,but the fiscal trend is clear:
annexation will result in a fiscally positive situation for the City.
29. The property values used in the report are taken from the County of Orange
Fiscal Impact Report,which contained housing prices from early 1997. Prices
since then have increased dramatically,and the revenue figures—which reflect
these lower values—are thus 20-25% lower than what would exist today.
The report used the 1997 Hoffman study as the basis for all project-related assumptions. We
agree that housing prices have increased considerably and the revenues from taxes are
conservatively stated.
g:\commdev\nowak\BCannex\199gstn.doc 46 January 5,1999
30. An attempt should be made to quantify the sales tax revenue accruing to the
City treasury as a result of purchases by residents of the new development.
The new residents of Bolsa Chica will shop in the City of Huntington Beach even if the area
remains unincorporated. The purpose of this study was to examine only the costs and
revenues that would result from the action of annexation.
31. Reference is made on pg. 10 to the County fiscal impact report by Stanley R.
Hoffman. Has the Hoffman report been made available to City decision-makers
and to the public? \
The Hoffman report was prepared for the County in October 1997. Copies of the report are
on file in the Community Development Department and are also available by contacting the
County.
32. What fiscal impact would there be to the City if Bolsa Chica annexes,and
development does not subsequently occur?
To answer this question,we have prepared a fourth scenario,"No Development". This
analysis,which is summarized on Exhibit 6,assumes there is no current—nor will there be
future—development in Bolsa Chica. Under this scenario,the City would only receive
substantially reduced property tax revenues, but all of the oil extraction tax revenues. With
the exception of oil field fire inspection services, all other City service requirements are
minimal and can be absorbed within existing City budgets. By Year 4,the City would
achieve a cumulative surplus of$72,630.
g:\commdev\nowak\BCannex\199gsm.doc 47 January 5,1999
EXHIBIT 6
Four Year Revenue-& Expenditure Summarx
Bolsa Chica Fiscal Impact Analysis (No Development)
Year 1 Year 2 Yeair2 Year 3j4r,34Year 4 YeaC 4
(Full Year) (Full Year) Change (Full Year) (Buildout) an-e
GENERAL FUND REVENUES
TAXESProperty Tax 46,736 47,670 - °0 48,62449,596Property Transfer Tax 0 0 00
Utility User Tax 0 0 ;' 00
Sales Tax 0 0 00
Transient Occupancy Tax 0 0 1 ." ` 00Subtotal 46,736" 47,670 ° 48,624 49,596MOTOR VEHICLE FEES
Motor Vehicle In-Lieu 0 0 00Off-Highway License 0 00 0
Subtotal 0 0 0 0
FRANCHISE FEES '
Gas,Electric,Trash,and Cable TV 0 0 "0 0
Subtotal 0 0 0 0 "
OTHER REVENUES
Paramedic and Ambulance Transport Fees 0 0 0 0 -
Fines&Forfeitures 0 0 GIN0 - 0w
Oil Extraction Tax 111,545 102,621 8%a 94,412 � $°a 86,859
Capital Contribution Fee(Fire) 0 0 0 �,_
Capital Contribution Fee(Library) 0 04 � 0 0
Z
Miscellaneous Revenues 0 0 , 0 Yw 0
Subtotal 111,545 102,621 �'-8%4 94,412 =$° 86,859
4 •.
Interest Earnines 718 1,688 1n350 952 4,_ 265 2°a
tx L
W
TOTAL GENERAL FUND 158,999 151,980 % 143,988 "fie 136,720l'fo
ROAD FUNDS y
Section 2105 0 0 waa ,k T
0 r : 0 r
Section 2106 0 0 0 .0
Section 2107 0 0 5, 0 0
Section 2107.5 0 0 0 _;4 0
Measure"M"Local Turnback 0 0 " _ 0 - 0
a-
Interest Earnines 0 0 = 0 0
TOTAL ROAD FUNDS 0 0 _, 0 - 0
TOTAL ALL REVENUES 158,999 151,980 , ," 143,988 N 5°!0 136,720 0
t
RSG,Inc., 1/5/99 Fisimpct EXHIBIT 6
EXHIBIT 6
Four Year Revenue & Expenditure Summer
Bolsa Chica Fiscal Impact Analysis (No Development)
Year I Year 2 Year 3 � Yeaim Year 4
(Full Year) (Full Year) Chang (Full Year) C a`ge (Buildout) Chang
GENERAL FUND EXPENDITURES -
GENERAL GOVERNMENT -
Administration 0 0 0 0
Animal Control(Net) 0 0 0 0
County Tax Collection Charge 935 953 972 ', " 992Zo
Subtotal 935 953 ° 972 992 A
COMMUNITY DEVELOPMENT
Community Development(Net) 0 0 0 0
Subtotal 0 0 0 0
PUBLIC SAFETY �I
Law Enforcement Services 0 0 0� 0 �
Fire Protection and Inspection 130,525 106,452 R :=i8% 112,568 -b"/o 118,472
A 0
Ambulance Services 0 0 _ - 0 �'
Fire Station Relocation 0 0 0 0 s
W �;:
Subtotal 130,525 106,452 =$���, 112,568 ` �%p 118,472 ` � b
LIBRARY SERVICES
Library Services 0 0 " _ 0 . 0
Subtotal 0 0 0 0
COMMUNITY SERVICES
Community Services 0 0 0 � 0
Subtotal 0 0 -� 0 0 `
PUBLIC WORKS
Sewer Maintenance Services 0 0t 0 0 1
Subtotal 0 0 0 � 0 --
CONTINGENCY 13,146 10,741 n'' 11,354 _b� 11,946
TOTAL GENERAL FUND 144,606 118,146 8°► 124,895 9/ 131,410
ROAD MAINTENANCE
Street Maintenance 0 0 0 "' 0
Street Sweeping 0 0 0 - 0 ;
Bike Trail Maintenance 0 0 ';T 0 0
Traffic Signal Operation/Maintenance 0 0 0 0 ;
Contingency 0 0 0 0
TOTAL ROAD FUND 0 0 0 0
TOTAL ALL EXPENDITURES 144,606 118,146 - $ 124,895 ti , 131,410
REVENUE SURPLUS/(SHORTFALL) 14,393 33,834 19,094 5,310
CUMULATIVE SURPLUS/(DEFICIT) 14,393 48,227 67,320 72,630 R � - ''
General Fund Surplus/(Shortfall) 14,393 33,834 19,094 5,310
Cumulative General Fund 14,393 48,227 67,320 72,630
Road Fund Surplus/(Shortfall) 0 0 0 0
Cumulative Road Fund 0 0 0 0
RSG,Inc., 1/5/99 Fisimpd EXHIBIT 6
Streets
33. Who will pay for the maintenance of the estimated 10.16 miles of private roads?
Various references in the Report indicate that a Homeowners Association will be responsible
for certain maintenance costs,including private roads.
34. Are expenses such as trash collection,street sweeping,and tree trimming
accounted for in the analysis?
Yes. Street sweeping is incorporated into cost estimates. Trash collection is assumed to be
revenue neutral, since the cost of this service is paid through user/franchise fees. Tree
trimming will be provided through the Home Owners' Association.
35. The report ignores increased maintenance needs to existing City streets outside
of the project area. Development will certainly increase usage of these streets
and,therefore,increase costs,to the city. With or without annexation,this is a
real cost that needs consideration.
New residents will increase usage of City streets,however,the fiscal impact is minimal and
was not included because the impacts to City streets will occur with or without annexation.
Also,as noted in response to question 29,not included was the likely additional sales tax
revenue generated for the City by new residents shopping at existing City businesses.
Water
36. Water service revenues were not included in this analysis. Why not?
Water is such a key decision-making item for the City,it should be the subject of
its own independent study.
It was assumed that water capital and operating costs are 100%revenue offset by the user,
which is consistent with current City policy.
Police
37. If the City's adopted ratio of 1.2 officers per thousand is applied to the
population estimated to be living in the Hearthside Homes development,then it
would appear that three(3) new officers would be required. The report .
discusses the need for only two(2) new officers. How was the police requirement
determined?
The ratio of police officers to population is only one of several criteria evaluated by the City
police department to determine the number of additional police officers needed as a result of
new development. Other criteria include development densities and average household
income. Understanding that development design factors influence the number of calls for
police assistance,the department has analyzed historical data based on calls for service and
has established"calls for service"formulas for low, medium and high-density developments.
Separate calculations are performed for the number of expected calls for each of the densities
gAcommdev\nowak\BCannex\199gstn.doc 48 January 5,1999
planned for a new development. Because of the design and density of this development,
fewer than average calls are expected,resulting in the need for only two(2)new officers to
serve the area.
38. After the first four years,the report increases police costs by 8% per year, but
only a 1% increase in tax revenues will occur. How can the revenues keep-up
with the increased costs?
An 8%increase in police costs for the area of possible annexation represents approximately a
$20,000 increase per year. A 1%increase on all recurring revenues represents a$13,000 to
$14,000 increase per year. It should be noted that a 1%increase was assumed for only one
fiscal year.
39. Is the development planned to be a gated community? If so, do you need as
many police officers? Is private security service an option?
Hearthside Homes has stated they intend to enclose approximately one-half of the project
with guard gates. This could, in fact,help to reduce the number of calls for police assistance.
As noted in the response to question no. 34,the Police Department has already taken into
consideration the low-density housing planned for this project in preparing its estimate for
the number of police officers that will be necessary to add to the force. Private security may
certainly be an option for added protection for the gated community within the project,but
City police would still be required to respond to criminal calls.
40. The study assumes that even without annexation the City will incur additional
police costs. Why?
If Bolsa Chica develops as an unincorporated area,the County Sheriff's Department will
have primary responsibility to respond to requests for law enforcement from the new
residents. However,the City Police Department will serve as"back-up"to the Sheriff. In
addition, some police responses to calls from Bolsa Chica residents while working, shopping,
or playing within the City can be anticipated.
Fire/Ambulance
41. The report shows the added annual,recurring cost for ambulance service to be
$250,000. Revenues from transport fees are projected at only$124,000 annually.
How will the City pay for the difference?
The income of$124,000 reflects only the fees projected to be generated by new residents
living within Bolsa Chica. In actuality,additional income will be generated from calls made
from other areas to which the new ambulance will respond. In addition,the purchase of a
fourth ambulance will provide the City with an opportunity to expand its' ambulance service
outside the City,which would further increase the revenue projected in this report.
The City of Huntington Beach currently owns and operates three ambulances. These three
vehicles are not able to service all calls for ambulance transport within the City,and the City
obtains assistance from a private ambulance company to respond to the overflow calls. The
overflow calls are not sufficient in number to warrant the purchase of a fourth ambulance at
g:\commdev\nowak\13Cannex\199gstn.doc 49 January 5,1999
this time. However, if Bolsa Chica were annexed and anticipated calls from new residents
added to this workload,a fourth ambulance will be required and its' purchase financially
justified.
The City has also been investigating the possibility of serving,by contract,the
unincorporated areas of Sunset and Surfside Colony. Again,these areas alone do not
generate sufficient calls to create the need for a fourth ambulance vehicle. However,when
added to the expected additional calls if Bolsa Chica is annexed,the possibility of contracting
to provide this service becomes very real. Such a contract would further reduce any shortfall
between ambulance operational costs and revenues.
42. Page 14 of the report shows that the City will pay $1 million to relocate a fire
station. Why is the City paying this cost: why not require this of the developer?
The Hoffman report assumes the need to build a new fire station. This report
says that no new station is needed, just relocation of an existing one. If
annexation did not occur and fire service were to be provided by the Orange
County Fire Authority rather than by the City,would OCFA still need to build a
new station?Is relocation of the station needed if Bolsa Chica does not develop?
If Bolsa Chica were developed but not annexed into the City,the Orange County Fire
Authority (OCFA)would be responsible for the provision of fire protection service to the
new homes and residents. The OCFA levies a tax on all properties within their boundaries,
including Bolsa Chica,to fund fire service operations.
Because there are no fire facilities in this unincorporated area, unless OCFA entered into a
specific agreement to obtain fire services from the City,a new station would have to be
constructed and land acquired for the new facility. Understanding the inefficiencies and
added cost associated with this alternative,the OCFA entered into discussions with the City
of Huntington Beach which led to the development of a tri-party agreement on fire provision.
It is intended that the tri-party fire agreement be implemented if Bolsa Chica is developed but
not annexed into the City.
The tri-party agreement recognizes that Huntington Beach already has fire facilities under
operation in the surrounding areas and that the most efficient method to provide fire service
to Bolsa Chica is to contract with the City. However,the City Fire Department has
determined that the current location of Fire Station No. 8 is not conducive to providing
adequate first-in and back-up fire response to Bolsa Chica. In addition,relocation of Fire
Station No. 8 would allow the City to better serve other neighborhoods already within the
municipal boundaries, by more equitably spreading response areas among the fire stations in
this portion of the City. For this reason,relocation of Station 8 has been and continues to be
part of the City's long-range goals to improve fire services.
The tri-party agreement establishes a method for funding an anticipated station relocation
cost of$3.5 million. The agreement provides that Hearthside Homes will make a capital
contribution of$2,800,000 to the Orange County Fire Authority. The OCFA will,in turn,
transfer$1.25 million to the City to assist in the relocation cost for Fire Station No.8. The
agreement further provides that 80%of OCFA taxes will be transferred to the City. This
gAcommdev\nowak\BCannex\199gstn.doc 50 January 5,1999
money is to be used toward both station relocation and operational costs for Fire Station
No.8.
If annexation occurs prior to development,the City will assume all fire service responsibility
for Bolsa Chica. To project the fiscal impact of annexation,the report assumes a slightly
different funding scenario for the relocation of Fire Station No. 8. The report assumes that if
Bolsa Chica is annexed into the City prior to development,a total Hearthside Homes cash
contribution of$2.5 million will be made directly to the City toward the fire station
relocation cost(vs. $1.25 transferred from OCFA). Additionally,because the City will
assume all fire service responsibility upon annexation,the report assumes that 100%of the
OCFA taxes(vs. 80%without annexation)will be transferred to the City. As with the tri-
party agreement, it is assumed that the OCFA tax revenue will be used for both relocation
and operational expenses related to Fire Station No. 8. However, because tax revenue is
generated annually and grows as a revenue source as homes are built,the report assumes that
$1 million in relocation costs will be initially be paid from the general fund,to be repaid at a
later date from OCFA taxes.
Parks and Recreation
43. Annexation may have an impact on the accessibility of potable water.How would
this affect the ability of the County to construct the planned Harriet Wieder
regional park? Would annexation affect the funding for the park's construction?
Annexation of the part of Bolsa Chica that is planned to be developed by the County as a
regional park would enable the park property to access water resources from the City. This
should increase the ability of the County to expedite construction.
Annexation of this area would not affect funding for construction of the park. Even though
the park would be incorporated into the municipal boundary of Huntington Beach, it will
remain in the ownership of the County,and will be developed as a regional park and a
County-funded project.
The latest available County estimate of first-phase park development cost is$1.7 million.
The County's 1998-1999 FY budget includes the approximately$1.2 million carried over
from the 1997-98 budget. The County's park development budget has been declining in
recent years due to the diversion of revenue to the State and toward bankruptcy reduction,
and due to extraordinary harbor dredging and storm damage repair costs during the last two
years.
Completion of development of the linear park also requires dedication of land currently
owned by Hearthside Homes. Dedication of this property is related to final development
entitlements,and will not likely occur until/unless Hearthside Homes receives grading and
building permits for development on the Bolsa Chica Mesa from the County or, if annexed,
from the City.
g:\commdev\nowak\BCannex\199gstn.doc 51 January 5,1999
44. The Hearthside Homes development is planned to meet County park standards
of 2.5 acres per thousand residents. The City standard requires five(5)acres
per thousand residents. Mitigation for"loss" of park space should occur.
The original Hearthside Homes plan for development was designed to meet the County park
standard of 2.5 acres per one-thousand residents. During the public review process the
project was revised to expand the community park and to decrease housing units. Although
there are no final,approved plans, current plans provide for a 19-acre community park that
includes 2 acres of wetland preservation and 17 acres of passive and active turf areas,and
picnic and playground areas. If the entire 17 acres were"credited"to the development,the
resulting ratio would be approximately 6 acres per one thousand residents.
45. The projected costs for community services appear to be based on the premise
that residents of the new development will have to go to other City parks and
schoolyards for their recreational needs,but the project plans include play fields
and other recreational facilities. Also, Ocean View School District officials have
expressed a desire to construct a new elementary school within the development
area. This would affect the need to upgrade playing fields at other nearby
schools.
Without final design plans for the park,and absent a legal commitment for public sports
fields,it is prudent to assume that improvement of the sports facilities at nearby schools will
nonetheless be required. Likewise,we cannot assume in this study that a new elementary
school, which was not identified in the project EIR, will be constructed in the project area. If
the construction of park facilities and/or a new school in Bolsa Chica reduce or eliminate the
need to improve other sites,the projected surplus after annexation would increase.
46. What assumptions were used to determine estimated costs for senior services?
Based on current seniors to total population percentage, staff estimates that,at any one time,
the Bolsa Chica development will be approximately 3.3 seniors who will require case
management services from the Senior Outreach Program. The current cost in the 1998/99
city budget for delivering senior.outreach services is$883 per person,per year(3.3 x$883.00
=$2,914.00 per year). Senior outreach services are currently funded from the City's General
Fund.
47. On page 25 the comment is made that "Community Services...has expressed
concern that annexation at a later date prohibits the City from influencing
planning of the park..." Is there any possible park planning role for the City?
If Bolsa Chica is annexed prior to development,the City will have the opportunity to develop
a working relationship with the project developer.Although the City will be obligated to
maintain consistency with specifics of the Development Agreement,park plans will be
processed through the City. For instance,the location and size of the planned park may not
change, but the developer should work with the City on final design issues, and input from
City staff could lead to alteration of park functions,plant and hardscape materials and/or
design.
g:\commdev\nowak\BCannex\199gstn.doc 52 January 5,1999
48. The report indicates that recreation facilities can be increased by using school
sites. Which sites?
The school fields that will be a part of the Bolsa Chica mitigation for sports fields
improvements are Marina High School,Meadowview Elementary,and Havenview
Elementary.
Coun -Hearthside Homes Development A reement
49. If Bolsa Chica is annexed into the City,City development standards should be
applied to any new development. Will the City enter into an agreement with
Hearthside Homes to address issues of grading,setbacks,landscaping,etc. Does
the City have tool(s)to affect changes to the Hearthside Homes Development
Agreement with the County,or is the City required to meet all the obligations of
the County cited in that agreement if Bolsa Chica is annexed into Huntington
Beach? Isn't the existence of the Hearthside Homes-County Development
Agreement,and its' applicability to the City after annexation,a disincentive to
annexation?
As discussed in the report and the City's legal opinion(Attachment 2 of the Report),the
California Government Code provides that any Development Agreement entered into by the
County related to unincorporated territory that is subsequently annexed into a City"shall
remain valid for the duration of the agreement..."(GC Section 65865.3).
The Development Agreement between Hearthside Homes and the County of Orange
references the project approved by the County Board,which is designed to County standards.
The City may therefore not unilaterally impose its development standards on the new
development. A pre-annexation agreement provides a tool for the City and the developer to
negotiate changes that may be feasible to bring the project design closer to City standards
prior to annexation,but,as noted in the response to question number 8, changes must be
agreed to by both the developer and the City.
Whether or not the Development Agreement is a disincentive to annexation depends upon the
perceived balance between the benefits and obligations defined by the Agreement. The
Development Agreement creates obligations for both parties—the County and the developer
are each obligated to specific responsibilities. The Agreement also transfers benefits to each
party, in the form of development rights to Hearthside Homes and public facilities and
exactions to the County. If Bolsa Chica is annexed,the City will generally"inherit"both the
obligations and the benefits that accrue to the County through the Agreement. If it is
annexed prior to development,the City has an opportunity to negotiate changes,to the extent
that both parties can agree. If it is annexed after development,the City has lost this
opportunity. If the City Council determines that it wishes to pursue the possibility of
annexation, a thorough analysis of the Development Agreement will be undertaken.
gAcommdev\nowak\13Cannex\199gstn.doc 53 January 5,1999
50. The opinion from Gail Hutton (item C-3)suggests that if an annexation proposal
was initiated by petition of the City,the Hearthside Homes Development
Agreement applies to the City unless the City finds that its application would be
injurious to the health,safety,and welfare of City residents. Doesn't this show
that the City does have some power to prevent the developer from annexing and
implementing the Development Agreement if the City feels that the development
is injurious.
The City Attorney's Office responded to this question in a Request for Legal Services dated
September 23, 1998. It is included as Attachment 3 to this Report, and reads as follows:
"The short answer to this question is yes. Under certain conditions,the City does have some
power to revise or suspend the Development Agreement for health and safety reasons. This
issue was more fully discussed in our memorandum to Melanie Fallon dated
March 27, 1998."
Affordable Housing
51. Affordable housing should be addressed in the annexation process. What will
the City do to incorporate affordable housing into the potential development?
As part of a pre-annexation agreement the City of Huntington Beach and the landowner could
agree to incorporate provisions for affordable housing for the entire Bolsa Chica. The
Development Agreement and Specific Plan adopted by the County of Orange do not prohibit
affordable housing as part of the project.
If the area remains in the County,the City will not be involved in the incorporation of
affordable housing into the potential development.
Miscellaneous
52. Who is property owner.David Farrar(listed on pg. 4)? What parcel does he
own?
David Farrar is an attorney who serves as a trustee for the transfer of ownership from the
Metropolitan Water District to the Bolsa Chica Land Trust and ultimately to the State Lands
Commission.
gAcvmmdev\nowak\BCannex\199gstn.doc 54 January 5,1999
Section 7
Pros & Cons of Annexation
x
01 ME now"M
Fiscal Impacts/ Annexation will result in A natural disaster could ®Annexation would result in a
Revenues to City positive fiscal impact. require emergency funds positive fiscal impact, and will
beyond reasonable help to ensure control on basic
expenditures for service in the maintenance(weeds,rubbish)
annexed area,and the City and security of the Bolsa Chica.
would assume liability for the
Bolsa Chica aevclopment.
Regional Park Annexation will insure water to Annexation will insure water to
regional park. regional park.
Local Parks Annexation will allow dialogue
between City and developer
regarding park design.
Wetlands Provides official jurisdictional Provides official jurisdictional
Restoration standing with the state/federal standing with the state/federal
government to participate in government to participate in
restoration plan. restoration plan.
Control Over Annexation provides limited Refusing to participate in
Development control over development,due annexation process at this time
to existing Development may slow,or even halt
Agreement. Pre-annexation development plans, if City can
agreement may provide refuse water service and
opportunity to negotiate some developer is unable to obtain
changes to development plans. water from another source.
Infrastructure Pre-annexation agreement Annexation will create the
Impacts provides forum for negotiation potential for some additional
of payment to City from costs for infrastructure
developer to cover (including liability).
extraordinary impacts to City
infrastructure.
Schools School has agreement with School has agreement with
Hearthside Homes that is not Hearthside Homes that is not
affected by the annexation affected by the annexation
* "Without development"assumes that the Bolsa Chica Mesa is purchased by a state or federal agency for habitat preservation.
55
P: 4
Air
C
process. process.
Library Service Library development fees will City/County agreement If annexed without development,
increase capital funds for provides for library revenue the City should still receive a
libraries if annexation occurs transfer to City without percentage of the Library
annexation District Tax,etc.
Public Safety Additional OCFA revenues Police would not be required The City should receive 100%of Annexation of lowlands
(100%vs. 80%)available to to respond to calls from new the Orange County Fire Service would require additional oil
City if annexation occurs. Pre- residents: however,would be revenues. Annexation without inspection services.
annexation agreement could expected to provide development would enable the Corresponding new oil
result in additional capital . secondary,back-up service. City to provide minimal services revenues will eventually
funding($2.5 million vs. $ 1.25 No need for annexation to while obtaining revenues. decline to equal less than
million). receive 80%of OCFA funds costs,and will continue to
and$1.25 million capital decline.
funding,pursuant to
City/County/OCFA
agreement.
Development Pre-annexation agreement may Project as approved by
Standards provide mechanism to negotiate County,and protected by
changes to development to more Development Agreement,will
closely comply with City not be consistent with City
standards. standards.
Community Identity New residents who feel that New residents, if annexed into I Bolsa Chica is perceived as a
they are part of the City more City,may make more valuable resource that should be
likely to participate in demands on City services,due a part of Huntington Beach as a
civic/community affairs. to higher expectations as City passive open space benefit.
residents.
* "Without development"assumes that the Bolsa Chica Mesa is purchased by a state or federal agency for habitat preservation.
56
r
Section 8
Attachments
1. City Attorney Memo re: LAFCO/Law
2. City Attorney Opinion re: DA
3. City Attorney's Response to Question No. 45
4. Public Comments and Responses
Attachment 1:
City Attorney Memo re: LAFCO/Law
H
4 CITY OF HUNTINGTON @EACH
INTER-DEPARTMENT COMMUNICATION
MUPlT1NGTON{EACH
TO: Honorable Mayor Dettloff and
Members of the City Council
FROM: Gail Hutton, City Attorney
DATE: March 31, 1998
SUBJECT: Annexation of Bolsa Chica
RLS 98-148
INDEX: Annexation; Bolsa Chica; LAFCO; Municipal Organization
ISSUE
Can the City refuse to accept the annexation of the Bolsa Chica?
ANSWER
Not in a direct manner;however,the annexation process is very complex, and an annexation may
not be completed for many reasons,or stopped through indirect means,as discussed below.
DISCUSSION
Introduction
This memorandum is intended to answer the above-referenced question,and provide the City
Council with a general overview of the law of annexation.)
The Cortese-Knox Act
The Cortese-Knox Local Government Reorganization Act, Cal. Gov't Code §§56000 et seq.,
went into effect on January 1, 1986 (hereinafter referred to as"the Act;"all citations herein are to
the California Government Code,unless otherwise stated). The Act unified into one statutory
scheme the three major laws which governed local agency boundary changes. These laws were:
the Knox-Nisbet Act of 1963,which established local agency formation commissions(LAFCOs)
in each county,and gave them regulatory authority over local agency boundary changes;the
District Reorganization Act of 1965,which combined the separate laws governing special
Most of the material in this memorandum is taken from the Califonia Municipal Law Handbook,and Longtin's
California Land Use,-2d Edition. We gratefully acknowledge the assistance of these sources in providing this
information.
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VsA-MMemos:Annex
districts into a°single statute;-and the-Municipal Organization Act-of 1977 whiclilconsolidated
the laws governing city incorporation and annexation. Fallbrook Sanitary District v San Diego
Local Agency Formation Commission, 208 Cal. App. 3d 753, 758,256 Cal.Rptr. 590(1989).
Purpose of the Act
The basic purpose of the Act was to unify the procedures for implementing any local government
boundary changes. The statutory changes made during the consolidation were largely non-
substantive,therefore cases decided under the repealed acts are still authoritative.
Role of LAFCO
LAFCOs (local agency formation commissions)have been described as the "watchdog" which
the legislature has established to guard against duplication of services that result from the
indiscriminate formation of new local agencies or the haphazard annexation of territory to
existing local agencies. Timberidge Enterprises, Inc. v. City of Santa Rosa, 86 Cal. App. 3d 873,
844, 150 Cal.Rptr. 606 (1978). Any incorporation of a city,formation of a special district,
annexation or exclusion of territory to a city or district,disincorporation,dissolution,
consolidation or merger or establishment of a subsidiary district must be approved by the
LAFCO. (§56021, §56375.) A"reorganization"is any two or more changes of organization
initiated in a single proposal. (§56073.)
LAFCO Guidelines
The intent of the Act is for each LAFCO to establish policies and exercise its powers in a manner
that encourages and provides for planned,well-ordered,efficient urban development patterns. ..
The preservation of open-space is listed as a specific concern of each LAFCO. (§56300.)
Among the stated legislative purposes for the creation of LAFCOs are: to discourage urban
sprawl and to encourage orderly formation and development of new local agencies. (§56301.)
LAFCO Powers
A LAFCO is a creature of statute,hence it enjoys only those powers expressly granted by the
legislature or those powers which are necessarily implied in order to effectuate powers expressly
provided for. Nevertheless,LAFCO's delegated powers are formidable. Tillie Lewis Foods v
City of Pittsburgh, 52 Cal. App. 3d 983, 999, 124 Cal. Rptr. 698 (1975).
The powers and duties of LAFCOs are enumerated in§§ 56133,56365, 56425,and 56825 et seq.
The most significant of these powers are to:
1) approve or disapprove all boundary change proposals.
2) impose conditions on any boundary changes.
3) initiate proposals for consolidation of districts, dissolution,merger or establishment of
a subsidiary district.
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4) review and approve request of cities and districts to provide new or extended services
outside their jurisdictional boundaries.
5) adopt spheres of influence for each local agency.
LAFCOs have broad powers to approve or disapprove,wholly or partially,with or without
conditions, any annexations or other changes of organizations initiated either by citizens or by
local agencies. (§56375(a).) As of July 1, 1994,LAFCOs have the power to initiate certain
changes of organization affecting special districts. (§56375(a).)
A LAFCO has extensive powers to impose conditions on any changes of organization. The type
of conditions are listed in§§56843 and 57844. Most of the conditions are of a fiscal nature
concerning the transfer of taxes, service fees,or assessments. A LAFCO also may impose any
conditions not specifically enumerated,but necessary or incidental to the conditions specified.
(§56844(v).) The LAFCO can make any additions or deletions to a proposal which do not
materially alter the general nature of the proposal. Malibu Committee for Incorporation v Los
Angeles County,222 Cal. App. 3d 397,271 Cal.Rptr. 505 (1990);Fallbrook Sanitary District v
San Diego Local Agency Formation Commission,208 Cal.App. 3d 753,765,256 Cal. Rptr. 590
(1989).
A LAFCO may also conditionally approve a change of organization or reorganization subject to
certification by the California Coastal Commission of an amendment to the local coastal program.
of a city or county. (§56844-1.)
Spheres of Influence
A sphere of influence is a plan for the probable physical boundaries and service area of a local
agency. (§56076.) A LAFCO must adopt a sphere of influence for each city, county service area
and district or special district within the county,except for school districts,community college
districts, special assessment districts, improvement districts and Mello-Roos Act community
facilities districts. (§§56425(a), 56054,56036.) The proposed sphere of influence is one of the
factors the LAFCO must consider in adopting any changes of organization. (§56425(c).)
LAFCO may not approve a proposed incorporation unless it finds the proposal consistent with
the spheres of influence of affected agencies. (§56365.1.) All LAFCO determinations on
changes of organization must be consistent with the spheres of influence of affected agencies.
(§56375.5.)
Among the factors the LAFCO considers in determining a sphere of influence is the present and
planned uses in the area,the need for public facilities and services,the present capacity of public
facilities and services, and the existence of any social or economic community interest which
may be relevant to the agency. (§56425.)
Any citizen or local agency may file a written request with the LAFCO requesting changes to
any sphere of influence adopted by the LAFCO. Any changes to a sphere of influence
determination may only take place upon notice and a public hearing. (§56428.) The LAFCO
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4/s:4-98,Mcmos:Annex
may approve or disapprove the request wholly,partially or conditionally with or without
amendment. (§56428(e).)
With limited exceptions a city or district is prohibited from providing new or extended service
outside of its jurisdictional boundaries without prior written LAFCO approval. LAFCO may
authorize a city or district to provide new or extended service outside its boundaries, but within
its sphere of influence in anticipation of a later change in organization. (§56133.)
LAFCO Proceedings in General
The procedures applicable to each LAFCO proceeding vary in accordance with the type of
proposal for change or organization. A few general characteristics are noteworthy. (§56650 et
seq.).
LAFCO hearings are primarily for the purpose of gathering information. (§56840.) The LAFCO
has broad discretion to approve'or disapprove a proposal based upon the evidence presented at
the hearings. (§§56107, 56375 and 56851.) However,in reviewing a proposal,the LAFCO must
consider the factors listed in§56841.
LAFCO determinations are often deemed"projects" within the meaning of the California
Environmental Quality Act(CEQA). Bozung v Local Agency Formation Commission, 13 Cal.
3d 263, 118 Cal.Rptr. 249, 529 P.2d 1017 (1975); City ofAgoura Hills v. Local Agency
Formation Commission, 198 Cal.App.3d 480,243 Cal.Rptr. 740 (1988).
LAFCO acts in a quasi-legislative capacity when it exercises its discretion in making
determinations on proposals. City of Santa Cruiv. Local Agency Formation Commission of
Santa Cruz County,76 Cal.App. 3d 381,387, 142 Cal. Rptr. 873 (1978). This means a
LAFCO's decision is likely to be upheld as long as statutory procedures are followed and any
substantial evidence supports the LAFCO determination. Technical noncompliance with certain
statutory procedures will not invalidate the affected proceeding. (§56107.) See City ofAgoura
Hills v. Local Agency Formation Commission, 198 Cal. App.3d 480, 492,243 Cal. Rptr. 740
(1988).
Annexation is a"change of organization" subject to the Act. (§56021.) Annexation adds
territory to a city or district. (§§56017, 56033.) As with incorporation,the procedures are
specifically governed by statute.
A proposal for a boundary change is initiated by application to a LAFCO either by a resolution
adopted by the governing body of an affected local agency, or a petition signed by a specified
number of individuals. (§§56650, 56800, 56014 and 56700.)
Commission proceedings are deemed initiated on the date a petition or resolution of application
is accepted for filing by the commission's executive officer issuing a certificate of filing.
0§56651 and 56828.) For contents of the application,see §§56652, 56654 and 56655. For
contents of a petition,see §56700 and for.contents of an agency resolution,see §56800. In
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4/s:4-98Memos:Annex
addition,an application by an agercy must include a plan for providing scrvizes to the territory
to be annexed. (§§55800 and-56653.)
Upon issuing a certificate of filing for an application,the executive officer must set the matter for
a noticed public hearing before the commission, and the hearing must commence within 90 days
of the issuance of the certificate of filing. (§56828.)
Registered Voter and Landowner Petitions
A petition may be either a registered voter petition or a landowner petition. (§56704.) A
registered voter petition is to be signed by electors registered to vote in the territory for which the
annexation or other boundary change is proposed. ( §§56704, 56707, 56071 and 56014.) A
landowner petition is to be signed by owners of land in the territory for which the annexation or
other boundary change is proposed,as shown on the latest county assessment roll. (§§56704,
56708, 56048 and 56015.)
Different minimum signature requirements exist for petitions for different types of boundary
changes. (§§56750-56762.) Although a petition for an annexation of territory to a city or a
registered voter district can be signed by either a registered voter or landowner, a petition for
annexation of territory to a landowner-voter district can be signed only by landowners in the
territory to be annexed. (§56755(b).)
Within 30 days of receiving a petition,the executive officer of the commission must determine if
the number of signatures is as required by statute for the boundary change in question and either
give notice of any insufficiency to the chief petitioners or issue a certificate of sufficiency.
(§56706.)
Property Tax Exchange
A prerequisite to the issuance of the executive officer's certificate of filing of an application is
that all local agencies which would have their services areas or responsibilities altered by a
boundary change, other than a district formation or incorporation,must agree upon the division
of the property tax revenues generated in the territory subject to the change. (Rev. & Tax. Code
§99(b)(6).) Upon receiving an application,the commission executive officer provides notice to
the county auditor and assessor,in order to initiate the property tax exchange agreement
procedure. (Rev. & Tax. Code §99(b).) If the service area or responsibility of a special district or
county service area would be affected by the proposed boundary change, the county board of
supervisors,rather than the district's governing board,negotiates on behalf of the district. (Rev.
& Tax. Code §§99(b)(5) and 2215.) The property tax exchange procedure has been expedited in
many counties by the adoption of a master property tax exchange agreement,which typically
controls the division of property taxes for most boundary changes. (Rev. and Tax. Code §99(d).)
In a city annexation proceeding,the city and county have 30 days within which to negotiate a
property tax agreement. However,the city and county are not required to reach agreement for
the transfer of property tax revenues. Further, such property tax agreement must be reached after
expiration of the 30-day negotiation period,and a certificate of filing is void that is issued with
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4/s:4-98Memos:Annex
respect to a petition presented more than 60 days after the last signature was affixed. (71 Ops.
Cal. Att'y Gen. 344 (1988).)
The plain language of Rev. & Tax. Code §99 and 71 Ops. Cal. Att'v Gen. 344 (1988) dictate the
conclusion that a city is required to negotiate a property tax revenue exchange during a
mandatory 30-day negotiation period, but is not required to reach agreement. In the absence of
such an agreement, LAFCO is prohibited from issuing a certificate of filing,which is a
precondition to LAFCO's hearing on an application for annexation. Greenwood Addition
Homeowners Assn v. City of San Marino, 14 Cal.App.4th 1360, 18 Cal.Rptr.2d 350 (1993).
The failure of a city and county to reach a property tax agreement deprives LAFCO of
jurisdiction to continue annexation proceedings. There is no statutory duty on the city to reach a
property tax agreement,but it is likely that the city can be required to negotiate in good faith.
Greenwood Addition Homeowners Assn v. City of San Marino, 14 Cal.App.4th 1360, 1377, 18
Cal. Rptr. 2d 350 (1993). .
Notice of LAFCO Hearing
Upon issuing a certificate of filing for any proposal except those where 100%of the landowners
in the affected territory have consented,the LAFCO executive officer must set the proposal for a
public hearing before the commission and provide notice of the hearing by publication,mailing
and posting. (§§56828, 56834-56837 and 56150-56159.)
Public Hearing Requirement
When a proposal has the written consent of 100% of the landowners of the affected territory and
the district or city whose boundaries would be changed by the proposal,a boundary change may,
in the commission's discretion,be conducted without notice and public hearing by either the
commission or the conducting authority(usually the annexing agency). (§§56836(a)and 56837.)
For other than such 100%consent proposals,the commission must hold a noticed public hearing.
(§56836(b).) At the public hearing,the commission must receive any oral or written protests,
objections,or evidence and consider the report of the executive officer and any plan for
providing services which has been filed by an annexing agency. (§56840(b).)
When acting on a proposal,the commission must consider a number of factors,including
population,population density,land area and use,proximity to other populated areas,the
likelihood of significant growth in the area,the need for organized community services,present
costs and adequacy of governmental services,the probable effect of the boundary change on cost
and adequacy of services in the area,the effect of the proposed action on adjacent areas,the .
effect of the proposed action on the local governmental structure of the county,the conformity of
the proposal with any adopted commission policies regarding orderly and efficient patterns of
urban development, the effect of the proposal on maintaining the physical and economic integrity
of agricultural land,the new boundary lines that would be created by the proposal, consistency of
the proposal with city or county general and specific plans, the comments of any affected local
agency, and any local agency's sphere of influence which may be applicable. (§56841.)
When a proposal could reasonably be expected to result in the conversion of open-space to uses
other than open-space, the commission must consider that the policies of the state are to guide
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4/s:4-98Memos:Annex
a
development away from prime agricultural lands where such would be consistent with orderly
and efficient development and to encourage development of vacant and non-prime agricultural
lands within the boundaries or sphere of a local agency before approving proposals that would
foster development of open-space land outside an agency's boundary or sphere. (§56377.)
"Prime agricultural land" is defined as land not developed for a use other than agriculture and
which meets any of a number of specific criteria specified in(§56064.)
Consideration of Spheres of Influence of Affected Agencies
LAFCO determinations regarding an annexation or other boundary change proposal must be
consistent with any spheres of influence(§56076)which contain the territory that is the subject
of the proposal. (§§56377.5 and 56014.) A sphere of influence must be adopted for most local
agencies in a county. (§56425(a).)
The Court of Appeals has held that an annexation could not be approved until a sphere of
influence is adopted for each local agency which might include the subject territory in its sphere.
Resources Defense Fund v. LAFCO, 138 Cal.App. 3d 987,989, 188 Cal. Rptr. 499 (1983).
Although the legislature responded to Resources Defense Fund with certain temporary legislative
exceptions to the decision,the time for allowing the exceptions has lapsed. (§56426(a)-(c).)
Thus, §56426(a) and Resources Defense Fund may be interpreted to preclude annexations when
the territory to be annexed is located where an agency lacking an adopted sphere might
encompass the territory if a sphere were adopted.
In addition to the requirement that LAFCO determinations must be consistent with the spheres of
affected agencies,the Act specifically precludes an annexation(or other proposal)where the
boundary change is intended to provide facilities or services(e.g., sewer,water, streets, flood
control and drainage,fire protection)to agricultural land annexed as part of the development
process,unless a sphere has been adopted for all annexing agencies that would provide such
services to the land. (§56426(d)and(e).) In this context,agricultural land is defined as land --
currently used for commercial agricultural production,land left fallow under a crop rotation
program,or land enrolled in an agricultural subsidy or set-aside program. (§56016.)
Conditions Imposed on Boundary Change Proposals
When approving a proposal,the commission has extensive powers to impose conditions,most of
which relate to financial matters concerning the affected local agencies. (§§56844, 56843(a)and
56375(a).) Conditions imposed by the commission take precedence over any inconsistent
provisions of§57300 et seq.,which are the statutory terms and conditions governing the effect of
a boundary change. (§57302.) However, a LAFCO's conditions cannot directly regulate land
use,property development, or subdivision requirements. (§§56844 and 56375(a).) Also, a
LAFCO cannot impose any condition on an annexing agency regarding road standards or
maintenance,requiring improvement of a public facility not owned by the agency or, in the case
of an annexing city,requiring the provision of services to the annexing territory unless the
territory is within the city's sphere of influence or unless the condition could mitigate effects
directly resulting from the annexation. (§§56376 and 56376.5.) Further, a LAFCO can require
an annexing city to prezone territory to be annexed,but the commission cannot specify how or in
what manner the territory shall be prezoned. (§56375(a).)
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4/s:4-98Memos:Annex
A condition imposed by a LAFCO will rarely provide a basis for invalidating a completed
boundary change. Once a boundary change is completed by the executive officer's filing of the
certificate of completion,the typical effect of a failure to fulfill a condition would only be to
provide a cause of action for enforcement of the condition for the agency the condition was
intended to benefit. (§§56844, 56122 and 56102- 57107.) A completed boundary change
cannot be invalidated except by a timely quo warranto action filed by the State Attorney General
or a timely Code of Civil Procedure §860 et seq. validating action by an interested party in which
it can be demonstrated that the complaining party was substantially prejudiced because the
commission or conducting authority failed in a significant way to follow the mandatory
procedures of the Act(e.g.,failed to provide a mandatory notice) or because the commission or a
conducting authority made a material statutorily required determination that was not supported
by some substantial evidence. See §§56102-56107 and Hills for Everyone v. LAFCO, 105 Cal.
App. 3d 461,469, 164.Cal.Rptr.420(1980). Since a LAFCO's condition would seldom be
vulnerable for failing to follow some statutorily required procedures or make some statutorily
required determination,it is quite unlikely that a challenge relating to a condition could
successfully invalidate a completed boundary change. Also, short statutes of limitation and
periodic validating acts insulate boundary changes from legal attack.
Accordingly,if the performance of a condition is important to the operation of an affected
agency,the commission should be careful to structure the approved proposal so that the
performance would be a condition precedent to the conduct of proceedings by the conducting
authority or the executive officer's filing of the certificate.of completion and so that there is
sufficient time for the condition to be fulfilled prior to the conducting authority proceedings.
(§56843(b).) ,
The imposition of a building permit fee,in Orange County or any city therein,for constructing
bridges and major thoroughfares is not to be considered direct regulation of land use,property
development, or subdivision requirements, for purposes of conditions imposed by LAFCO.
(§56844(s).)
Constraints on Boundary Changes
Although a LAFCO has very broad legislative power to approve(wholly,partially, or with
modifications)a variety of boundary changes for most local agencies and to impose a number of
conditions when doing so,as discussed above,there are a number of express legislative
constraints on that power. These constraints include:
1) Contiguity of Territory to be Annexed: Except for a few very specialized situations
(see, e.g., §§56111, 56111.5 and 56114),territory to be annexed to a city must be contiguous to
the city boundary and must be entirely within the county. (§§56110 and 56031.) However, a
"cherry-stem" annexation is not permitted where the territory to be annexed is contiguous only
by virtue of a strip of 300 or more feet in length less than 200 feet wide(exclusive of highways).
(§56031(b).)
8
VSA-98Memos:Annex
2) State Tide Lands and Submerged Lands: State-owned tide lands or submerged lands
are not subject to annexation to a city except as approved by the state Lands Commission and in
accordance with a special procedure. (§56108.)
3) Creation of"Islands"Upon Annexation: Territory cannot be annexed to a city if the
annexation would create an unincorporated pocket surrounded by the city or the city and the
Pacific Ocean. (§56109.) However,a LAFCO can waive this restriction if precluding the
annexation because of the restriction would be detrimental to the orderly growth of the
community and the territory that would become the "island" could not reasonably be annexed to
another city or incorporated as a new city. (§56375(o).)
Mandatory LAFCO Approval of Certain Annexations to Cities
Upon receiving a proper application by resolution, a LAFCO must approve an annexation to a
city if the territory to be annexed meets the following criteria:
1) It is contiguous to the annexing city and surrounded or substantially surrounded by the
city or by that city and a county boundary or the Pacific Ocean.
2) It is substantially developed or developing,
3) It is not prime agricultural land, as defined in § 56064,
4) It is designated for urban growth by the general plan of the city,and
5) It is not within the sphere of influence of another city. (§56375(a)(1).)
Upon receiving a proper application by resolution, a LAFCO also must approve an annexation to
a city if the territory to be annexed meets the following criteria:
1) It is contiguous to the annexing city,
2) It is not prime agricultural land as defined by §56064,
3) It is located within an urban service area(§56080)which has been delineated and
adopted by the commission,and
4) It is designated for urban growth by the general plan of the city,. (§56375(a)(2).)
LAFCO Determinations,Findings and Decisions-Resolution Making Determinations
After concluding its hearing on a proposal,the commission must adopt a"resolution making
determinations"which approves or disapproves the proposal,wholly or partially. (§§56851,
56852 and 56375(a).) The resolution must determine whether the territory in question is legally
inhabited or uninhabited,specify any terms or conditions to apply to the proposal, designate the
conducting authority and direct it to initiate proceedings, and make any statutorily required
findings and determinations applicable for the proposal. (§§56851, 56852, 56843(a),56844,
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4/sA-98MemosAAnnex
56375(b)and-(fl:)"Such findings and'determinations would,for example,be any findings
required under the California Environmental Quality Act(CEQA) (see Pub. Res. Code §21081
and 14 Cal. Admin. Code §§15096(h), 15091)a determination as to whether any election to be
held would be only in the territory to be annexed or in both the annexing agency and the territory
to be annexed. (See §56849.)
Because of LAFCO acts quasi-legislatively, it need make only those findings and determinations
specifically required by statute,rather than the more extensive findings required in quasi-judicial
proceedings such as approvals of zoning variances. City of Santa Cruz v. LAFCO, 76 Cal. App.
3d 381, 387, 142 Cal. Rptr. 873 (1978). Accordingly,the stringent findings requirements set
forth by the Supreme Court in Topanga Association for a Scenic Community v. Los Angeles, 11
Cal. 3d 506, 113 Cal.Rptr. 836 (1974),are not applicable to LAFCO decisions. City of Santa
Cruz v. LAFCO, 76 Cal.App. 3d 381, 390, 142 Cal. Rptr. 873 (1978). Although it can be argued
that a quasi-legislative act should not have to be supported by evidence in the record,the
legislature has specified that there must be substantial evidence in the record to support a
LAFCO determination. (§56107.) See, also, 14 Cal.Admin. Code §15091(b),requiring
substantial evidence to support CEQA findings.
"Island"Annexations
In order to clean up the many pockets of unincorporated territory("islands')resulting from the
reluctance of the residents of some areas to be annexed as city boundaries grew,the legislature
adopted former §35224.5 to remove the possibility of residents`vetoing"an annexation through
their protests or votes, if a commission made certain findings. After considerable litigation,
largely fostered by the ambiguities of the law,the legislature substantially changed the findings
that would allow an"island"annexation and added a provision allowing protests to terminate the
proposal. The reported appellate cases on"island"annexations were based on annexations
occurring prior to these changes and thus offer little assistance on interpreting the current law.
The law presently allows"island"annexations for a period expiring January 1, 1988,provided
that the island in question was not created after January 1, 1978 (§56113(a)), and provided the
LAFCO makes the following findings regarding the territory proposed for island annexation:
1) It does not exceed 75.acres in area,that area constitutes the entire island, and the
island does not constitute a part of an unincorporated area which is more than 100 acres in size,
2) It is surrounded or substantially surrounded in either of the following ways:
A) Surrounded, or substantially surrounded,by the city to which annexation is
proposed or by the city and a county boundary or the Pacific Ocean,
B) Surrounded by the city to which annexation is proposed and adjacent cities,
3) It is not prime agricultural land, as defined by §56064,
4) It will benefit from the annexation or is receiving benefits from the annexing city,and
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5) It is substantially developed or developing. (§56375(d).)
The substantially developed or developing finding is to be based upon one or more of the
following factors:
1) The availability of public utility services,
2) The presence of public improvements,
3) The presence of physical improvements upon the parcel or parcels within the area.
(§56475(d)(3).)
If the foregoing findings are made,the annexing city,as conducting authority(§56029(a)),holds
a noticed public hearing,receives protests and takes the following action:
1) For an inhabited island,either terminates the proposal due to a protest of 50%or more
of the registered voters in the area,or orders the annexation;
Fcr.pm uninhabited island, either terminates the proposal due to a protest of the owners
of$0%or more of the assessed value of land in the area,or orders the annexation. (§§57080(b)
and 56112.)
In neither case is an election possible. (§§56112 and 57080(b).) Also,the conducting authority
acts ministerially, i.e.,cannot exercise discretion to disapprove,condition or limit the proposal.
(§§56112 and 57080(b).) If an island annexation is to be proposed by resolution of a public
agency,the agency must first conduct a noticed"prehearing"at which any affected landowner
has the right to be heard on the proposal. (§56801.)
Effect of LAFCO Action
LAFCO disapproval terminates the proposal,and no proposal involving the same or substantially
the same territory can be initiated for one year after disapproval,unless the LAFCO waives the
limitation upon a finding that the limitation is detrimental to the public interest. (§§56855 and
56851.) The determinations of the commission as specified in a resolution approving a proposal,
including the commission's determinations as to boundaries of the affected territory, are final and
conclusive unless changed by the commission pursuant to an application for reconsideration.
(§56857.)
Reconsideration
If a LAFCO has not disapproved a proposal and the conducting authority has not taken final
action on the proposal, any interested person may apply for reconsideration for the purpose of
obtaining any desired modification of the commission's decision. (§56857.) Such a request
suspends any conducting authority action until LAFCO acts on the request. (§56857.) Within 60
days of the application for reconsideration,the commission must either:
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1) Without further notice and Bearing,deny or approve the application in whole or in
part, or
2) Provide for notice and hearing upon the application in the same manner as for the
original proposal,prior to denying or approving the application. (§56857.)
If,pursuant to an application for reconsideration,a commission approves any addition, deletion,
amendment, or revision of its resolution making determinations,the proceedings for the change
of organization or reorganization shall be taken in compliance with that addition, deletion,
amendment,or revision. (§56858.)
Conducting Authority Proceedings
Upon the commission's adoption of a resolution approving a proposal,the LAFCO executive
officer must mail a copy of the resolution to the conducting authority. (§56853(c).) Except for
the final filings to complete a boundary change,the conducting authority is responsible for the
boundary change procedures after LAFCO approval,which are termed"proceedings"or
"conducting authority proceedings." (See §§56067 and 57000-57179.)
The conducting authority is designated by LAFCO in its resolution approving a proposal.
(§§56375(f)and 56852.) The agency to be designated as conducting authority depends upon the
type of proposal. In the case of a change of organization,the city council of a city whose
boundaries would be changed by a proposed annexation or detachment,or the governing board of
a district whose boundaries would be changed by a proposed annexation or detachment is to be
designated as the conducting authority. The board of supervisors of the county is to be
designated the conducting authority for a reorganization,unless the commission chooses instead
to designate the city council of a city when an annexation to or detachment from the city is a part
of the reorganization. (§56029(d)(5)and(e).) In the case of a reorganization involving only
annexations to or detachments from districts,the commission also can elect to designate,instead
of the Board of Supervisors,the governing body of a district for which an annexation or
detachment is proposed as part of the reorganization. (§56029(d)(5)and(f).)
In addition to designating the body that is to be the conducting authority,the LAFCO resolution
approving a proposal directs the authority to conduct proceedings in compliance with the ,
LAFCO resolution,including any conditions imposed therein. (§56852.) If the conducting
authority fails or refuses to initiate its proceedings with 60 days of the adoption of the
commission's resolution,the board of supervisors of the county is required to assume jurisdiction
and conduct and complete the proceedings. (§§57005 and 57006.)
Except for 100%consent proposals where LAFCO has authorized the boundary change without
notice or hearing,within 35 days of the commission's resolution approving the proposal the clerk
of the conducting authority must set the matter for public hearing and provided notice in the
statutorily prescribed manner. (§§57002, 56150-56159.) The date of the hearing must be not
less than 15 nor more than 60 days after the notice. (§57002(a).) Once the notice of hearing is
provided by the clerk of the conducting authority,jurisdiction of the proceedings is acquired by
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the legislative body(governing board)of the conducting authority a:id no conflicting proposal
can be acted upon by the commission until the completion of proceedings. (§57003.)
Conducting Authority Notice of Hearing
The-notice provided by the clerk of the conducting authority must be published in a newspaper
circulated in the affected area and mailed to LAFCO and each affected city,the county,each
affected district,the chief petitioners(if any),those requesting special notice, and the landowners
in an improvement district if their land is to be formed into, annexed to, or detached from the
improvement district. (§57025.) For required contents of the notice, see §57026.
When the proposed annexation consists of 75 acres or less,the city must mail notice of the
conducting authority hearing to each landowner within the territory affected. (§56261.)
The time limits for notice of hearing,imposed by §§56106 and 57002,are directory rather than
mandatory, and a minor defect in giving such notice of hearing does not necessarily invalidate
reorganization proceedings. The Court of Appeal has stated that although the notice requirement
of§56106 may appear to be mandatory,other provisions which determine that no organization
shall be invalidated because of procedural defects that do not adversely and substantially affect
the rights of any person, are controlling where no exception from §56107 is noted within the
language of§56106. Mitchell v. City oflndio, 196 Cal.App. 3d 881,242 Cal. Rptr. 235 (1987).
Protests,Habitation Determination,Registered Voter and Landowner Voter Districts
By legal definition,the commission determines that territory which is the subject of a boundary
change is inhabited if there are 12 or more registered voters residing in the territory. (§§56046,
56852(a)and 56375(b).) Any protest filed must state whether it is made by a landowner or
registered voter. (§57051.) If the protest is made by a landowner,it must provide the name and
address of the owner of the land affected and the street address, or other description, sufficient to
identify the land. (§57051.) If the protest is made by a registered voter,it must provide the name
and address of the registered voter as it appears on the affidavit of registration. (§57051.)
For purposes of the Act, districts are divided into two types: registered voter districts and
landowner voter districts. (§§56072 and 56050.) Registered voter districts,which are the most
common,are districts for which the principal act provides that registered voters residing within
the district are entitled to vote for the election of district officers, incurring of bonded
indebtedness, or any other district matter. (§56072.) Landowner voter districts are districts for
which the principal act provides that owners of land within the district are entitled to vote for the
election of district officers,the incurring of bonded indebtedness, or any other district matter.
(§56050.)
Depending upon whether a district is a registered voter or landowner voter district and whether or
not it is inhabited, different provisions may apply as to the type and number of protests requiring
an election on the proposal:
A city may enforce an annexation agreement executed by the city and a landowner of
unincorporated property which requires the landowner,as a condition of receiving city sewer
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services;-to waiveIis•right-to protest-the annexation of the`property to the city when such
becomes legally permissible. (76 Ops. Cal. Att'y Gen. 222 (1993).)
The Court of Appeal has held that the right to protest a proposed annexation of uninhabited land
based on a percentage of assessed value does not violate equal protection despite the disparity
among owners of assessed values due to Prop. 13. Because the land was uninhabited and no
right to vote in elections was at issue,the constitutionality of the statutory scheme was reviewed
under the rational relationship standard,rather than the strict scrutiny standard. Broadmoor
Police Protection Dist. v San Mateo Local Agency Formation Comm'?, 26 Cal.App.4th 304,31
Cal. Rptr. 2d 536 (1994).
Conducting Authority Hearing,Discretion,Determination of Protests,
and Adoption of Resolution
At the conducting authority hearing,the LAFCO"resolution making determinations"is
summarized,and the conducting authority hears and receives any oral or written protests,
objections or evidence. (§57050.) Upon the conclusion of the conducting authority hearing,the
conducting authority must determine the number of written protests(§57052) and,within 30
days of the close of the hearing,adopt a resolution specifying its findings on the protests and
stating its decision on any matters within its discretion. (See§§57075-57080.) Except for two
unusual situations,the conducting authority has no power to change the boundaries established
by LAFCO for a proposal. (§§57053, 56036(a)(6)and 57075 et seq.) The two exceptions are the
exclusion of land that would not be benefited from the improvements in an improvement district
formation or annexation and the exclusion of land that would be benefited upon an improvement
district detachment,when the improvement district formation,annexation or detachment is
required by a LAFCO condition imposed on another proposal. (§§57053 and 56036(a)(6).)
The conducting authority for an annexation to a city does not have discretion to disapprove the
proposal or submit it to an election. (§§57075 and 57080.) When a conducting authority does
not exercise its discretion to disapprove a proposal(e.g.,for a district annexation)or does not
have the discretion to disapprove a proposal or submit it to an election(e.g.,for a city
annexation),the conducting authority acts ministerially to count protests and take the steps
specified in§§57075 et seq.for the proposal in question. When the conducting authority does
not have discretion or chooses not to exercise its discretion to disapprove a proposal or submit it
to an election,the conducting authority implements the following ministerial procedures in the
case of the proposals most frequently encountered.
For an annexation of inhabited territory(§56046)to a city or registered voter district,the
conducting authority must:
1) Terminate the proposal if protests have been filed by 50%or more of the registered
voters residing in the territory to be annexed(§§57075(a)(1)and 57078(b)),or
2) Order the annexation subject to confirmation by a majority of those voting(§57125)
in the territory to be annexed* if protests are filed by:
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A) At least 25 percent but less than 50 percent of registered voters residing in the
territory to be annexed,or
B) At least 25 percent of the number of owners of land,who also own at least 25
percent of the assessed value of land in the territory to be annexed,or
3) Order the annexation without an election if the protests are insufficient to satisfy the
criteria of(1)or(2)above. (§§57075(a)(2)and(3).
For an annexation of uninhabited territory(§56046)to a city or registered voter district,only
landowner protests are applicable and an election is not an option. In such annexations,the
conducting authority must:
1) Terminate the proposal if protests are filed by landowners owning 50 percent or more
of the assessed value of land in the territory to be annexed(§§57075(b)(1)and 57078(a)),or
2) Order the annexation(§57075(b)(2)).
In the case of annexations of inhabited territory to cities of more than 100,000 population in the
County of Los Angeles, special protest provisions apply in lieu of the foregoing. (See §57075.5.)
In the case of"island"annexations to cities,the protest provisions and ministerial conducting
authority action have been previously set forth above. An election cannot be held for an"island"
annexation. (§§56112 and 57080(b).)
For conducting authority action upon determination of protests for an annexation of territory to a
landowner voter district, see §57076.
Conducting Authority Resolution
Any conducting authority resolution ordering a change of organization or a reorganization shall
contain all of the following:
1) A statement that the action is being taken pursuant to Title 5,the Division 2 of he
Gov't Code,
2) A statement of the type of change of organization or reorganization being acted on,
3) A description of the exterior boundaries of the territory for each change of
organization or reorganization approved by the commission,
4) The name or names of any new or consolidated city or district,
5) All of the terms and conditions upon the change of organization or reorganization,as . _.
approved by the commission,
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6) 'The reasons for the change of organization or reorganization,
7) A statement as to whether the regular county assessment roll or another assessment
roll will be used for taxes and assessments in the territory,
8) A statement that the affected territory will or will not be taxed for existing general
bonded indebtedness of any agency whose boundaries are changed,and
9) Any other matter which the conducting authority deems material. (§57082.)
If the boundary change is ordered subject to confirmation of the voters,the conducting authority
resolution must also:
1) Call,provide for,and give notice of a special election or elections upon that question,
2) Designate the affected territory within which the special election or elections shall be
held(see §§56849 and 56850),
3) Fix a date of election,
4) Provide for the question or questions to be submitted to the voters,
5) Designate precincts and polling places,.
6) State any terms or conditions applicable to the change of organization or
reorganization,as specified by LAFCO,
7) State the vote required for confirmation of the change of organization or
reorganization,
8) Contain any other matters necessary to call,provide for,and give notice of the special
election or elections and to provide for the conduct and the canvass of returns of the election,as
determined by the conducting authority. (§57100(a).)
Elections
The clerk of the agency conducting the election must give notice of the election in the manner
specified in the act, and the notice must contain the information listed above. (§§57130 and
57131.) Notice must also be provided to the LAFCO executive officer,who must draft an
impartial analysis to be included in the voter's materials and submit the analysis for commission
approval. (§57144.) Before approving the analysis submitted by the executive officer,the
commission may make such modifications as it deems appropriate. (§57144.)
The conducting authority may also propose the adoption of a special tax,which would become
effective only if approved by two-thirds of the votes cast in an election in the taxing agency.
(§50077(c).)
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After an election is held on the question of confirming a boundary change,the conducting
authority must declare by resolution the total number of votes cast in the election and the number
of votes for and against confirming the boundary change. (§57175.) If the boundary change is
approved by a majority of the votes cast,the conducting authority must also adopt a resolution
confirming its previous resolution,which ordered the proposed boundary change subject to
election. (§57176.) If a majority of the votes cast are against confirming the boundary change,
the conducting authority must adopt a resolution terminating the proposed boundary change.
(§57179.) Either a resolution confirming or terminating the proposed boundary change must be
filed with the LAFCO executive officer. (§§57176 and 57179.)
The California Supreme Court has held that§57103,which provides that only residents of a
proposed city have the right to vote on the issue of incorporation, is constitutionally valid. It
does not deny equal protection to residents of the remaining unincorporated areas of the county
even though such county residents will lose certain discretionary revenues as a result of the
incorporation. Board of Supervisors v Local Agency Formation Comm'n of Sacramento County,
3 Cal. 4th 903, 13 Cal. Rptr.2d 245 (1992).
Additionally,the Court of Appeal has held that§57075,allowing the reorganization of a local
district without voter confirmation under certain conditions,did not violate equal protection. The
section did not disenfranchise voters but simply conditioned the right to vote on a particular issue
on a certain percentage of protests evidencing that a substantial number of voters were concerned
about the proposal. Oxnard Harbor Dist. v. Local Agency Formation Comm'n 16 Cal. App.4th
259, 19 Cal. Rptr. 2d 819 (1993).
Limitation on New Proposals Similar to Terminated Proposals
If a proposed annexation or detachment(or combination of such boundary changes)is terminated
by majority protest or upon failure to gain approval by the voters,no substantially similar
proposal for a change of organization or-reorganization of the same or substantially the same
territory may be filed with the commission within one year after the date of adoption of the
conducting authority resolution terminating the proposal. (§§57090, 56021(c) and 56073.) The
commission,however,can waive this limitation if it determines that enforcement of the
limitation would be detrimental to the public interest. (§57090(b).)
Conducting Authority Compliance With LAFCO Resolution; Certificate of Completion
Immediately after adoption of a resolution ordering a boundary change without election or a
resolution confirming an order for a boundary change after voter approval,the clerk of the
conducting authority must transmit a certified copy of the resolution to the LAFCO executive
officer. (§57200(a).) The executive officer must examine the conducting authority resolution to
determine whether it is in compliance with the boundaries and any modifications and conditions
specified by the commission in its resolution making determinations. (§57200(b).) If the
conducting authority resolution ordering the boundary change is determined not to be in
compliance with the commission's resolution,the executive officer must specify in writing the
points of noncompliance and return the resolution to the conducting authority for modification to
bring the proposal into compliance with the commission's resolution. (§57200(b)(1).)
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If the conducting authority resolution ordering the boundary change is determined to be in
compliance,the executive officer must prepare and execute a certificate of completion
(§57200(b)(2))which must contain the following for an annexation or detachment proposal:
1) The name of each local agency for which the boundary is changed and the county
within which it is located,
2) A statement of each type of change of organization or reorganization ordered,
3) A description of the boundaries of any territory affected by the boundary change;the
description may be made by reference to a map and legal description showing the boundaries
attached to the certificate,
4) Any terms and conditions of the boundary change,
5) The date of adoption of a resolution ordering a boundary change without an election,
or the date of adoption of a resolution confirming an order for a boundary change after voter
approval. (§57201.)
The LAFCO executive officer must record the certificate of completion with the county recorder
of all counties in which all or part of the territory included in the boundary change is located and
file the certificate with the clerk of each local agency subject to the boundary change. (§57203.)
After recordation of the certificate of completion,the executive officer must file the boundary
description from the certificate of completion with the county surveyor. (§57203.) The executive
officer must also file a statement of boundary change with the state Board of Equalization,the
county assessor and the county auditor,which must contain the following:
1) A certified copy of the conducting authority resolution ordering the boundary change,
2) A legal description and map or plat indicating the boundaries,as changed,
3) The date of execution of the certificate of completion,
4) A statement as to whether the affected territory will be taxed for any existing bonded
indebtedness or contractual obligations. (§§57204 and 54900-54902.)
In addition, for any city boundary change,the executive officer must,within 30 days after the
recordation of the certificate of completion with the county recorder,file a notice with the
Secretary of State briefly describing the boundary change. (§57205.) Notwithstanding this
requirement,the act provides that failure to file this notice within the time specified shall not
affect the completion of proceedings nor the effective date of the boundary change. (§57205.)
Effective Date of a Boundary Change
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A LAFCO is empowered to set the effective date of a boundary change when adopting its
resolution approving a proposal. (§§56375(a), 56844(p)and 57202(a).) However,the date
chosen cannot be:
1) Earlier than the date of execution of the certificate of completion, or
2) Later than one year after the date of execution of the certificate of completion.
(§57202(a).)
The boundary change is complete from the date of the executive officer's execution of the
certificate of completion and effective from the date specified by the commission in its resolution
approving the proposal. (§§57202(b), 56375(a), 56844(p) and 57082(e).) If the commission
specified no effective date in its resolution,the effective date of the boundary change is the date
the certificate of completion is filed with the county recorder and, if filed with the recorder of
more than one county,the date of the last such recordation. (§57202(c).)
Effect of Completed Boundary Changes
When territory is annexed to a city or other local agency,the control of the annexing agency is
extended to the annexed territory upon the effective date of an annexation, and the newly
annexed territory and all inhabitants thereof have the same rights,duties and obligations as any
other territory and inhabitants of the annexing agency. (§57325.)
Unless the commission has provided otherwise in its resolution approving a proposal
(§§56852(a) and 56375(n)), any part of a county service area encompassing'territory annexed to
a city is automatically excluded from the service area upon the effective date of the annexation.
(§25210.90.) However,the excluded territory remains liable for any bonded debt existing upon
the effective date of the annexation. (§25210.90.)
Upon the effective date of a detachment from a local agency,the detached territory and
inhabitants therein cease to be subject to the jurisdiction of the agency and have none of the
rights or duties of the territory and inhabitants of the agency. (§57350.) However,detached
territory remains liable for bonded debt(§§57354 and 57351),unless a LAFCO condition has
excused the debt without impairing the security or rights of the bondholders. (See §§56844(c),
(d), 56121, 56122 and Morro Hills Community Services Dist. v. Board of Supervisors, 78 Cal.
App. 3d 765, 775-778, 144 Cal.Rptr. 778 (1978).
Thus,upon annexation,the county's control ceases and the annexing city exercises land use and
other police power control over its new territory. Such control,however,is subject to any vested
rights of a property owner in the annexed territory. After the effective date of annexation,the
annexing city is obligated to provide services to the annexed territory(e.g.,police services).
Whenever any territory being served by a county free library is annexed to a city not served by
the library, the board of supervisors must order the county free library to continue to serve the
territory until the end of the fiscal year or years for which a tax has been levied upon the property
of the annexed territory for the support of the county free library. (Educ. Code §19114.)
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Cities are required to honor development•agreements-between a landowner and'a county,when
territory is annexed to a city,under certain conditions. A city may revise or suspend such
agreements only for health and safety reasons. (§65865.3.) Building permits issued by counties
remain valid in newly incorporated cities and newly annexed areas. (Health&Safety Code
§19829.)
Taxation
Any special taxes or charges(see, e.g., §§50077,50078,53973 and 53978)imposed by the
annexing agency should apply to the annexed territory. (§57325;see also §50077(b).) Also,the
Act specifically provides that annexed territory becomes liable for the annexing agency's bonded
debt and is to be subject to any taxes necessary to retire the bonds. (§57328;see also
Metropolitan Water District v Dorf, 98 Cal.App. 3d 109, 115-116, 159 Cal.Rptr. 211 (1979).
However,the annexing agency's collection of any property tax"override"for voter-approved
annexations and any special assessments cannot occur until the next tax year(July 1 through -
June 30) after the calendar year in which the statement of boundary changes and map or plat is
filed with the county assessor and state Board of Equalization. (§§54902, 54902.1 and 54903;
see also Rev. & Tax. Code §99(a)(1), (b)(8)and 97(a).)
Upon incorporation of a new city,the Local Agency Formation Commission may impose as
conditions of incorporation: (a)the levying of assessments or the approval by the voters of
general or special taxes; and(b)the continuation of any previously authorized charge,fee,
assessment, or tax by a successor agency. (§56844.)
State Funds Distributed to Cities on Basis of Population
When unincorporated territory is annexed to a city,it often results in a population increase to the
city. Because certain fees and taxes collected by the state and distributed back to cities are paid
to cities in accordance with population ratios,it becomes important to determine the numerical
population increase and the effective date thereof. For example,for purposes of motor vehicle
license fee distributions,the State Controller must ascertain the population in accordance with
Rev. & Tax Code §11001 et seq. Also,the allocations from the state to cities from the cigarette
tax fund are determined in a similar manner. (Rev. & Tax Code §30462.) As a further example,
"gas tax"funds are-apportioned monthly to cities from the highway users' tax fund in
accordance with a population formula which is affected by annexations. (Streets&Highways
Code §2106 et seq.)
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County Highways
Upon annexation of territory to a city,all right,title and interest of the county,including the
underlying fee where owned by the county,to a county highway within the annexed territory
vests in the city and the highway becomes a city street. (Streets&Highways Code §989. An
exception to this rule,however, exists for the annexation of territory containing part of a county
highway which extends into the annexing city where the highway was established within the city
pursuant to Streets&Highways Code §§17 20-1732. In such a case,the highway remains a _
county highway upon annexation unless the board of supervisors adopts a resolution
relinquishing that part of the highway to the city. (Streets&Highways Code §§1725 and 1731.)
Clarifying legislation now provides that,under specified conditions, a county road or highway
which has been accepted into the county road system becomes a city street upon the annexation
or incorporation of the territory containing the road or highway,notwithstanding the failure of
the city to take action specifically incorporating the street into its street system. ( §§57329 and
57385 and Streets&Highways Code §1806.)
A county's right,title and interest in a portion of a closed road lying within the boundaries of a
new city vested in the city upon its incorporation,even though the city had specifically rejected
including the road in its street system following incorporation. (Re-Open Rambla, Inc. v. County
of Los Angeles 39 Cal. App. 4th 1499,46 Cal.Rptr.2d 822 (1995).)
Assessment Districts
The effect of annexation of territory on improvement assessment,districts within the territory
annexed can be quite confusing. The legal effect thereof may be dependent on several factors,
including(1)whether the districts'territory is completely encompassed by the annexing city,(2)
whether the city is authorized to or capable of performing the district functions, and(3)whether
the district enabling act contains provisions governing the effect of a city annexation. As an
example,the Highway Lighting District Act(Streets&Highways Code 19000, et seq.), contains
special provisions for dissolution of an assessment district upon the annexation of the entire
district to a city. (Streets&Highways Code §§19270-19274.) On the other hand,if only a
portion of the district is included within a city by reason of annexation,such portion may be
withdrawn from the district and certain district revenues and obligations are apportioned.
(Streets&Highways Code §19290.)
CONCLUSION
As evidenced by the above discussion,the annexation process is very complex. Although a city
may not directly reject a proposed annexation,the process provides many opportunites for the
annexing city to object or challenge the proposal. Most particularly,as pointed out above,the
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city and county must agree to the division of property tax revenues,or the L'AFCO'loses
jurisdiction over the annexation proceeding.
Please contact me if you have any further questions regarding the annexation process.
GAIL HUTTON
City Attorney
c: Ray Silver, City Administrator
Mike Dolder,Acting Assistant City Administrator
Melanie Fallon,Acting Assistant City Administrator
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Attachment 2:
City Attorney Opinion re: DA
He
CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HUWWGTON BEACH
TO: Melanie Fallon,Director of Community Development ,
FROM: Gail Hutton,City Attorney
4.
DATE: March 27, 1998
SUBJECT: Annexation of Bolsa Chica-Effect of Koll Development Agreement
RLS 98-127
INDEX: Annexation; Zoning and Planning; Development Agreements
ISSUE
If the City annexes the Bolsa Chica mesa,what is the effect of the development agreement
adopted by the County of Orange concerning the Koll property?
ANSWER
It remains in effect subject to certain conditions as discussed below.
DISCUSSION
In most situations,cities are generally required to honor development agreements between a
landowner and a county when unincorporated territory is annexed to a city. Under certain
conditions,however, a city may revise or suspend such agreements for health and safety reasons.
The law governing this situation is found in.Section 65865.2 of the California Government Code,
which reads as follows:
§ 65865.3.. Newly incorporated city or.annexed area;validity of development
agreement entered into prior to incorporation or annexation;
duration of validity;modification or suspension of agreement;
application of section
(a)Except as otherwise provided in subdivisions (b)and(c), Section 65868,or
Section 65869.5,notwithstanding any other law,if a newly incorporated city or
newly annexed area comprises territory that was formerly unincorporated, any
development agreement entered into by the county prior to the effective date of
the incorporation or annexation shall remain valid for the duration of the -
_ 1
VsA-98Memos:98-127
agreement,,or-eight.years-from the-effective,date-of the incorporation,or,
annexation,whichever is earlier. The holder of the development agreement and
the city may agree that the development agreement shall remain valid for more
than eight years,provided that the longer period shall not exceed 15 years from
the effective date of the incorporation or annexation. The holder of the
development agreement and the city shall have the same rights and obligations
with respect to each other as if the property had remained in the unincorporated
territory of the county. t
(b) The city may modify or suspend the provisions of the development -
agreement if the city determines that the failure of the city to do so would place
the residents of the territory subject to the development agreement, or the
residents of the city,or both,in a condition dangerous to their health or safety,or
both.
(c) Except as otherwise provided in subdivision(d),this section applies to any
development agreement which meets all of the following requirements:
(1)the application for the agreement is submitted to the county prior to the date
that the first signature was affixed to the petition for incorporation or annexation
pursuant to Section 56704 or the adoption of the resolution pursuant to Section
56800,whichever occurs first.
(2) The county enters into the agreement with the applicant prior to the date of
the election on the question of incorporation or annexation, or,in the case of an
annexation without an election pursuant to Section 57075,prior to the date that
the conducting authority orders the annexation.
(3) The annexation proposal is initiated by the city. If the annexation proposal
is initiated by a petitioner other than the city,the development agreement is valid
unless the city adopts written findings that implementation of the development
agreement would create a condition injurious to the health,safety,or welfare of
city residents.
(d) This section does not apply to any territory subject to a development
agreement if that territory is incorporated and the effective date of the
incorporation is prior to January 1, 1987.
If you have any further questions,please contact me at your earliest convenience.
Hutton
City Attorney
- 2 ._
QsA-98Memos:98-127
Attachment 3:
City Attorneys
Response to Question No. 45
CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HU"NGTON BEACH
TO: Howard Zelefsky,Director of Planning
FROM: Gail Hutton,City Attorney
DATE: September 23, 1998
SUBJECT: Hearthside Homes Development Agreement
RLS 98-615
This memo is in response to the above referenced Request for Legal Services concerning
the Bolsa Chica Development Agreement.
The question posed by a member of the public reads as follows:
The opinion from Gail Hutton (item C-3) suggests that if an annexation
proposal was initiated by petition of the City, the Hearthside Homes
Development Agreement applies to the City unless the City finds that its
application would be injurious to the health, safety and welfare of City
residents. Doesn't this show that the City does have some power to
prevent the developer from annexing and implementing the Development
Agreement if the City feels that the development is injurious.
The short answer to this question is yes. Under certain conditions,the City does have
some power to revise or suspend the Development Agreement for health and safety
reasons. This issue was more fully discussed in our memorandum to Melanie Fallon
dated March 27, 1998 (copy attached).
Please contact me at your earliest convenience if you have any further questions.
Gail Hutton
City Attorney
Attachment: Memo dated March 27, 1998
g*98memos:bolsa
CITY OF HUNTINGTON , BEACH T
INTER-DEPARTMENT COMMUNICATION
M WINGTON SUCH
TO: Melanie Fallon,Director of Community Development
FROM: Gail Hutton, City Attorney
DATE: March 27, 1998
SUBJECT: Annexation of Bolsa Chica-Effect of Koll Development Agreement
RLS 98-127
INDEX: Annexation; Zoning and Planning; Development Agreements
ISSUE
If the City annexes the Bolsa Chica mesa,what is the effect of the development agreement
adopted by the County of Orange concerning the Koll property?
ANSWER
It remains in effect subject to certain conditions as discussed below.
DISCUSSION
In most situations, cities are generally required to honor development agreements between a
landowner and a county when unincorporated territory is annexed to a city. Under certain
conditions,however, a city may revise or suspend such agreements for health and safety reasons.
The law governing this situation is found in.Section 65865.2 of the California Government Code,
which reads as follows:
§ 65865.3. Newly incorporated city or-annexed area;validity of development
agreement entered into prior to incorporation or annexation;
duration of validity;modification or suspension of agreement;
application of section
(a)Except as otherwise provided in subdivisions (b)and(c), Section 65868, or
Section 65869.5,notwithstanding any other law,if a newly incorporated city or
newly annexed area comprises territory that was formerly unincorporated, any
development agreement entered into by the county prior to the effective date of
the incorporation or annexation shall remain valid for the duration of the
1
QsA- Memos:98-127
agreement, or eight years from the effective date of thQ incorporation or
annexation,whichever is earlier. The holder of the development agreement and
the city may agree that the development agreement shall remain valid for more
than eight years,provided that the longer period shall not exceed 15 years from
the effective date of the incorporation or annexation. The holder of the
development agreement and the city shall have the same rights and obligations
with respect to each other as if the property had remained in the unincorporated
territory of the county.
(b) The city may modify or suspend the provisions of the development _
agreement if the city determines that the failure of the city to do so would place
the residents of the territory subject to the development agreement, or the
residents of the city, or both, in a condition dangerous to their health or safety,or
both. =
(c) Except as otherwise provided in subdivision(d),this section applies to any
development agreement which meets all of the following requirements:
(1)the application for the agreement is submitted to the county prior to the date
that the first signature was axed to the petition for incorporation or annexation
pursuant to Section 56704 or the adoption of the resolution pursuant to Section
56800,whichever occurs first.
(2) The county enters into the agreement with the applicant prior to the date of
the election on the question of incorporation or annexation, or, in the case of an
annexation without an election pursuant to Section 57075,prior to the date that
the conducting authority orders the annexation.
(3) The annexation proposal is initiated by the city. If the annexation proposal
is initiated by a petitioner other than the city,the development agreement is valid
unless the city adopts written findings that implementation of the development
agreement would create a condition injurious to the health,safety, or welfare of
city residents.
(d) This section does not apply to any territory subject to a development
agreement if that territory is incorporated and the effective date of the
incorporation is prior to January 1, 1987.
If you have any further questions,please contact me at your earliest convenience.
aPHutton�Z�
-
City Attorney
2 -
41s:4-98Memos:98-127 4.
Attachment 4:
Public Comments and Responses
G. Victor Leipzig, Ph.D.
17461 Skyline Lane
Huntington Beach, CA 92647
(714) 848-5394 (Phone/FAX)
August 27, 1998
Wendy Nowak
Assistant Planner
2000 Main St.
Huntinqton Beach, CA 92648
Dear Ms. Nowak:
Thank you for the opportunity to comment on the Bolsa Chica
Annexation Study. Here are some comments and questions about the
report. .
Critique of fiscal impact analysis:
1. Community Development Department (p.13)
The report makes a minimal ($2,500 p.a.) estimate of the costs of
development to the Community Development Department. The Department
already has one person working substantial time on Bolsa Chica. With
annexation, how could that qo anywhere but up? Past experience would
suqqest the need to be one full-time planner--with benefits, $80,000-
100,000 per _year! It is difficult to believe that development fees
would fully off-set this expense.
2. Street maintenance (p.18)
The report ignores increased maintenance needs on existing City
streets outside of the project area. Development will certainly
increase usage of these streets and, therefore, increase costs to the
city. With or without annexation, this is a real cost that needs
consideration.
3. Water service (p.20)
"Water service revenues were not included in this analysis." Why
not? Revenues (and costs) of water service are City budget items; it
is vital that they be included in the fiscal analysis. Water is such
a key decision-making item for the City, it could be the subject of its
own independent study.
4. Post-buildout impacts (Exhibits 2 and 3)
Fiscal impact is estimated only for the first four years up until
buildout is complete. No projections are made for years five and
beyond. This leaves the reader with the impression that all future
years will have the same net fiscal impact as year four. Is this
impression what the authors wish to convey?
By way of contrast, the Hoffman report about County revenues
states explicitly that post-buildout revenues would decline due to loss
of revenues from the property transfer tax on new development.
5. Property tax without annexation (Exhibit 3)
Exhibit 3 shows some property tax revenue to the City even without
annexation. This suggests to me that parcels already within the City
nu aJ—G/ —7o V1 :VGY V 14— LC Ipd— I1J. / 1'i i54 Z3—�J 7'Y tom.VJ
have been included in the revenue analysis. Doesn't this approach
unnecessarily inflate' all`'revenue values, with or without annexation?
General comments/questions
1. The report refers several times (e.g. p.2) to the difference between
total costs versus marginal costs of annexation. But nowhere do the
authors fully explain the distinction they are making. Evidently, a
previous fiscal study was performed on the basis of total cost. How
did its conclusions differ?
2. Who is the property owner listed on p.4 as David Farrar? What
parcel does he own?
3. On p.25 is the comment: "Community Services. . .has expressed concern
that annexation at a later date prohibits the City from influencing
planning of park. . ." I see no prospect for the City to play such a
role under any -scenario. Is there any possible park planning role for
HB?
4. What is the status of BC mesa in HB General Plan? Is it "designated
for urban growth", to use a key phrase under LAFCO law? (See Attachment
1, p.9. )
Reference is made on p.10 to the County fiscal impact report by Stanley
R. Hoffman.
Questions about the Hoffman Report
1. Has the Hoffman Report been made available to City decision makers
and to the public?
2. The Hoffman Report assumes the need to build a new fire station.
McKinley report says that no new station is. needed (just relocation of
an existing one) . If annexation did not occur (and fire service were
to be provided by the OC Fire Authority rather than by HB) would OCFA
still need to build a new station?
3. My interpretation of the Hoffman Report is that development at Bolsa
Chica would create a significant negative fiscal impact for the County.
My conclusion is that the County has motivation to encourage annexation
in order to reduce County expenses.
In conclusion, I think that there are some important clarifications
that need to be made in the fiscal analysis before it can be a useful
guide to policy decision making. Furthermore, although fiscal impacts
are of great significance, there is a broad spectrum of non-fiscal
impacts that annexation and development at Bolsa Chica would bring.
Before the City decides on annexation, these need to be studied fully,
as well.
Sincerely yours,
Victor Leipzig
V .
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SEP-16-98 WED 11 :05 AM HUNTINGTON BEACH UHSD FAX N0, 714 963 7684 P. 02
Board of Trustees:
HUNTINGTON MAMMON--„.- Bonnie Bruce
Bonnie Castrey
(�( * HIGH SCHOOL DISTRICT Barbara Johnson
Curt Jones
10251 Yorktown Avenue• Huntington Beach, California 92646-2999 Michael Simons
`+ d� (714)9643339 FAX(714)963.7684 Susan J.Roper,Ed.D.,Superintendent of Schools
September 15, 1998
Ms Melanie Fallon
Community Development Director
City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Dear Ms Fallon:
thank you for asking the District to comment on the possibility of annexing the Bolsa Chica to
the City of Huntington Beach. As you may be aware,the District negotiated an agreement with
Koll Real Estate Group regarding the impact on high school facilities that would result from the
construction of new homes in the Bolsa Chica. That agreement has been recorded and would
continue in force subsequent to annexation. The agreement is consistent with the current General
Plan of the City of Huntington Beach.
As a result of the agreement on school facilities,the District has no position on the annexation of
the Bolsa.Chica-
Sincerely,
Susan J.Roper,Ed,D.
Superintendent
c: Board of 1'rustees
letters\Bolsa Chica annex
The mission of the HBUHSD is to educate all students in response to our diverse community expectations by ensuring relevant and
focused educational programs that,develop responsible,productive and creative individuals with a capacity jar leadership.
Sep 15 '98 15:29 P.02/06
r
HF,ARTHSIDE HOMES,INC.
September 15, 1998
Ms. Melanie Fallon
Assistant City Administrator and
Community Development Director
City of Huntington Beach
2000 Main Street
Huntington Beach,California 92648
Subject: City's Bolsa Chica Annexation Study
Dear Melanie:
In reply to your letter of September 2, 1998, please note that our comments on the Bolsa Chica
Annexation Study of July 29, 1998 were previously submitted to the City by Ed Mountford. I
have enclosed an additional copy for your personal records.
As to the pros and cons of the City's annexation.of our property, we believe the City's own
study--and our comments enclosed--speak for themselves on the financial and community benefits
afforded by our Warner Mesa community development plan, particularly in light of the fact that it
appears the City believes annexation of this property is ultimately inevitable.
Our Company is required to make business decisions on a daily basis to move our objectives
forward and commence construction of our plan. Candid,forthright and timely dialogue between
the City and the landowner must be commenced to assure that our mutual objectives will be met
and reach final conclusions as to whether or not annexation may be in each of our best interests.
As always, 1 am available by phone or personal meeting.
Sin rely,,
Lucy u
Executive ice President
LD:I
P.S. PIease note our new address: Califorinia Coastal Communities and Hearthside Homes are
both located(finally!)under the same roof: 6 Executive Circle, Suite 250,Irvine, CA 92614.
My direct dial No. is(949)250-7703.
6 EXECUTIVE CIRCLE, SUITE 250, IRVINE, CALIFORNIA 926.14 (949) 250-7700 PAX (949) 250-7705
Sep 15 '98 15:29 P.03/06
H ARTHS,DE HOMES
August 6, 1998
Ms. Melanie Fallon
Community Development Director
City of Huntington Beach
2000 Main Street
Huntington Beach, CA 92648
Dear Melanie:
The purpose of this letter is to provide .the City of Huntington Beach with
Hearthside Home's comments on the Bolsa Chica Annexation Study dated July,
29, 1998, 1 have organized our comments into two categories — general
comments concerning the report and then specific comments aimed at a
particular section of the report.
General Comments:
We commend your efforts to provide an objective analysis of the fiscal impacts to
the City in the case of annexation of the.unincorporated Bolsa Chica area. The
study methodology appears to be sound in terms of analyzing the City's marginal
cost to provide municipal services and recurring .revenues generated by the
development. With a couple of exceptions noted below, the report is a good
start, particularly in view of the fact that the affected landowners were not
consulted on this study and staff had to operate under a series of assumptions
regarding the development plan.
While I have specific questions concerning how some of the City costs cited in
the report were determined, what is more troubling, and to some extent
undermines the objectivity of the report, is the timing. of when certain costs are
incurred by the City. Based on my review of Exhibit 2 in Section 4, it appears
that the City's cost to provide certain services at build-out of the project are "front
loaded" into the first year of the project. For example, the cost of hiring an
additional police officer and other law enforcement support staff are shown to be
incurred by the City in the first year of the development. In other words, as soon
as the first few residents move into the development, the City immediately hires a
new police officer, a records clerk and crossing guard.
Clearly, front-loading costs presents an absolutely worst case assessment of the
cash flow. I certainly understand the desire on the part of staff to present a
conservative analysis to decision-makers. However, this approach carries
conservatism to an extreme and does not reflect the City's normal prudent
95 ARGONAUT, SUITE 200,ALISO VIEJO, CALIFORNIA 92656 (949)472-5800 FAX(949) 380-7124
Sep 15 '98 15:29 P.04/06
Ms. Melanie Fallon
Page 2
August 6, 1998
management practices. To present a more accurate and fair assessment of the
cost/revenue implications of annexation prior to development, the analysis should
assign the costs of a particular service to the project year in which the City
realistically believes these costs.will be incurred. - I believe that revising the cost
figures in Year 1 to more accurately reflect the City's true cost to provide services
will eliminate the first year deficit.
The second general comment.pertains to the revenue side of the equation. The
property values used in the report are taken from the County of Orange Fiscal
Impact Report, which contained housing prices from early 1997. As you know,
home prices have increased .dramatically over-the past year. Thus the revenue
figures used in the report are 20-25% lower than what exists today. I realize
housing prices are a moving target and staff used the best information available.
My only point on this issue is that the revenue figures reflected in your report are
also very conservative given the current market.and projections for the market
over the next few years.
Specific Comments:
Page 1, Section 1
The County general plan and zoning approvals for Warner Mesa are currently in
place and their validity is not contingent upon certification of the Local Coastal
Program (LCP). In 1996, the County amended the general plan to provide for
suburban development on the mesa as well as adopt planned community zoning
for the property. Those approvals were not challenged in court and are in effect
today. An LCP delegates to the local jurisdiction the,ability to issue coastal
development permits consistent with the LCP. The absence of a certified LCP
does not preclude development of the property. It means that the Coastal
Commission retains the authority to issue :permits for development. It is no
different than the situation that exists in Newport Beach where the City does not
have an LCP. Development is reviewed by the City and the Coastal Commission
issues the permits.
Page 14, Section 4—Police Department
The police department costs appear excessive. The residential development is
low density with private streets and gated.access to many of the neighborhoods.
To put this in perspective, we would appreciate knowing how many new police
officers have been hired by the City as a result of the Holly Seacliff development?
-2-
Sep 15 '98 15:30 P.05i06
Ms. Melanie Fallon
Page 3
August 6, 1998
Fire Protection
The fire protection discussion leads one to conclude that the new development
will cause the relocation of a City flee station. This is not the case. The
relocation of the fire station is driven by the need #d provide more efficient fire
protection coverage over the entire city regardless of the Warner Mesa
development. Furthermore, the $2.5 mullion ."fair share" capital contribution
referenced in the Letter of Understanding was based on the Orange County Fire
Authority having the obligation to serve the development not the City of
Huntington Beach.
Page 16— Community Services
Our development plan is not based on a:park standard of 2.5 acres per 1000
population as stated in the report. The.plan includes a 17-acre community park,
which exceeds the City's standard of 5 acres per 1000 population by three acres.
The park will include both active and passive uses. Since the projected costs for
community services appear to be based on the premise that residents of the new
development will have to go to other city parks and school-yards for their
recreational needs, this section needs to be revised. In reality, what is more
likely to occur is existing city residents will flock to Warner Mesa to use facilities
at the new park as well as the biking/hiking trails. Perhaps the report should
include a line item for the cost of the city reimbursing the homeowners
association for expenses related to maintaining facilities used by city residents.
Also, Ocean View School District officials have expressed a desire to construct a
new elementary school within the development area. This would affect the
discussion in this section as it relates to the need to upgrade playing fields at
other nearby schools.
Page 17—Public Works
A minor correction should be made in the. discussion on park and landscape
maintenance services. A landscaped .median is planned for a segment of the
Mesa Connector road(public road)from the intersection with Warner southerly to
the intersection of the collector road (public road). A public agency (either
County or City) will be responsible for maintaining the median. Therefore, the
City should include this cost in its analysis.
Page 20— Sales Tex
An attempt should be made to quantify the sales,tax revenue accruing to the City
treasury as a result of purchases by residents of the new development_ Granted
.3-
Sep 15 '98 15:30 P.05/0b
Ms. Melanie Fallon
Page 4
August 6, 1998
these revenues would flow to the City whether or not the development is ever
annexed, however, including it in the analysis would present a more accurate
picture of revenues.
That concludes our comments on the annexation 'study. If you have any
questions or need clarification on any of these comments, please call me at (949)
472-5860.
Sincerely,
HEARTHSIDE HOMES, INC.
Ed Mountford
Senior Vice President
EM:jm
Cc: Ray Pacini, CA Coastal Communities
Lucy Dunn, Hearthside Homes, Inc.
Dana Smith, LAFCO
Tom Mathews, County of Orange
-4-
`oJM} ORANGE COUNTY SANITATION DISTRICT
W O
i
l�
SEP 2 31998
September 17, 1998 DEPARTMENT OF
MA—MI.LAITY DEVELOPMENT
phone:
(714)962-2411
Melanie Fallon
mailing address: Community Development Director
P.O. Box 8127
Fountain Valley.CA City of Huntington Beach
92728-8127 Department of Community Development
street address: 2000 Main Street
10844 Ellis Avenue
Fountain Valley,CA Huntington Beach, CA 92648
92708-7018
SUBJECT: Evaluation of the Bolsa Chica Annexation
Member
Agencies This is in response to your notice dated September 8, 1998, regarding the
® Bolsa Chica Annexation Study.
Cities
Anaheim The Orange County Sanitation District operates the regional facilities in this
Brea area. Presently, planning is underway for a joint wastewater pump station to
Buena Park
Cypress serve portions of the City of Huntington Beach and Bolsa Chica development.
Fountain Valley If the City provides sewer service for the Bolsa Chica development, the pump
Fullerton
Garden Grove aU7
ned facility.
Huntington Beach
Irvine
La Habra
La Palma
Los Alamitos
Newport Beach
Orange
Placentia 'David A. LudWin, P.E.
Santa Ana Director of Engineering
Seal Beach g g
Stanton
Tustin
Villa Park DAL:JDH:jo
Yorba Linda ftdonWatal\wp.dta`eng\CITIES\Huntington Beach\Bolsa Chica Annexation eval.doc
County of Orange
c: D. Webb
unitary Districts
Costa Mesa
Midway City
Water Districts
Irvine Ranch
We$eeG 5012 -1310
"To Protect the Public Health and the Environment through Excellence in Wastewater Systems"
9-17-1998 3:SAPM FROM LAW OFFICES 213 622 OARS P. 2
L
0
j311
sa
a
L A N D T R U S T
OFFICERS
By Facsimile: (714) 374-1648
PAUL HORGAN
PRESIDENT September 17, 1998
JUANA MUELLER
VICE PRESIDENT
MARI,'NKA HORACK Melanie Fallon
SECRETARY Director of Community Development
NANCY DONAVEN City of Huntington Beach
TREASURER 2000 Main Street
BOARD O€DMECTORS Huntington Beach, CA 92648
CONNIE BOARDMAN Re: Bolsa (Mica Annexation Study
NANCY DONAVEN
SANDI GENTS
MARINKA HORACK Dear Ms. Fallon.
STAN KRUTSICK
BUCK MARRS.PHD I have the following Comments regarding the Bolsa Chica
KAREN NISRICKEL MURP
L)LEIiN fNLRPHY Annexation Study dated July29, 1998: The comments are
BUB WILLIAMS submitted on behalf of Bolsa Chica Land Trust.
ROBERT WINCHELL.PHD
)AN VANDERSLOOT.MD Initially, the Land Trust is unclear Concerning what Might
CO-FOUNDER be annexed. As the 880 acres of wetlands Were recently
ADVISORY COJNcIL acquired by the State of California, and in that 300 acres
are already part of a State Ecological Reserve, we believe
SENATOR AARA BOXER that the only land which might be annexed is the Bolsa
IMMEDIATE PAST MAYOR �
RALPH PHBA . Chica mesa. If this is the case there will be no oil
HUNTINGTON BEACH revenue available to the City upon annexation (as the
ROBERT SHELTON.(RUT) study predicts - paragraph 5 c, page 23).
GOVERNMENT RELATIONS
CONSULTANT)ANICEL.Kh:1-LUGG, CPA As to the annexation issue itself, It 2s unfortunate that
KELLOGG SUPPLY, INC. the City of Huntington Beach apparently is looking at the
WALTER W-NEIL,DIRECrOR issue solely in terms of whether an annexed Bolsa Chica
EXTERNAL APPAIRS.ARCO might bring revenue to the City. The City should have a
vINCE KONTN ,
EXECUTIVE FLUOR
broader perspective relative to the Bolsa Chica and
CORPORATION should be considering the value of a restored Bolsa Chic&
mesa versus a mesa denuded of trees and other vegetation
PAST PRESIDENTS and covered with houses and concrete. The former would be
NANCY 1)ONAVI N,1W..J"b of enormous value to the City; the latter would be-
CONNW DOARDMAN.19%-19%
FLOG:IF HORGAN.IM-1994 considered by many to be an eyesore, as well as damaging
CU•IUVNOLR to the adjacent wetlands. -
Although the Trust will continue to work to ensure that no
houses are built on the Solso Chica mesa, it also seems
LOCAL SPONSOR: GARDEN GROVE EDUCATION ASSOCIATION.
%0 W HUNTINGTON BEACH TOMORROW.ORANGE,COAST LEAGUE OF WOMEN VOTERS
NATIONAL SPONSORS: THE]ZAAK WALTON LEAGUE,THE NATIONAL AUDUBON SOCIETY,
THE NATURE CONSERVANCY,SIERRA CLUB.SVRPRIDER FOUNDATION
207 21 ST STREET 0 HUNTINGTON BEACH • CALIFORNIA 92649 • (714) 960-9939
9-17-1998 3:5APM FROM LAW OFFICES 213 622 OARS P. 3
Melanie Fallon
September 17, 1998
Page Two
that the development agreement between the owner and the County
of Orange improperly restricts the right of the City to
determine the nature and scope of any development on the Bolsa
Chica mesa. The City should be able to accept land such as the
mesa on its own terms, and not be dictated to by some other
governmental body who would, upon annexation, no longer be
involved with the land.
Pinally, if. the Bolsa Chica mesa were built, mould all City
residents be entitled to use any parks and other amenities
situated there? If not, the residents of Huntington Beach who
lived elsewhere would certainly (and reasonably) wonder why they
did not have such access.
In summary, we hope that the City re-thinks the concept of
"community development" as it relates to such precious places
like the Bolsa Chica mesa, and that it will work with Bolsa
Chica Land Trust to ensure that the Bolsa Chica mesa is acquired
for the benefit of the public.
Thank you for your attention to this letter_
ve tru yours,
G� -
PAUL HORGAN
President
BOLSA CHICA LAND TRUST
FAX 0 m**9:*WIEDER*1:*tti: PO1
L GE
Applipd Pr?1itic-a1$tratcgics for Business Harriett M. Wii:det
President
September 18, 1998
TO: Melanie Fallon. Community Development Director
ATTENTION: Wendy
SUBJECT: Bolen Chico Annexation Study
BY FAX: (714) 374-1540
It Is now 22 years since the subject of annexing the Solon Chien
lands from the County of Orange was on the agenda of the City Council
of Huntington Beach. I was the Mayor at that time and political
cgntroversy mired the decision to place these lands in the jurisdiction
that has the `sphere of Influence: the City of Huntington Beachl'
26 years later the City still doesn't have control and political
controversy Is once again preventing making decisions that are to the
benefit of the citizens and taxpayers of this city!
1 do want to congratulate the professional staff of the city for
undertaking the discussion of the benefits for annexation at this time;
BECAUSE:
1. Development Is Inevitable. It Is just a matter of when.
2. It Is ultimately financially beneficial to annex the property NOW,
rather than wait until after the new residents move inl
3.By taking action now, the City will have control over the
development and Its cost Impacts on the city.
4. The new schools; the new parks; the Nature Center as well as
new trails will accrue to the City not to the County.
S. The most significant factor, that at one time, was the most
Important Issue to address was: "THE RESTORATION OF THE
WETLANDS I" THIS IS A BENEFIT THE CITY WILL INHERIT
BECAUSE IT HAS BEEN RESOLVED.
"Pride In our town" by having the control of establishing an
edonomlc quality of life should be of primary concern. As the former
Mayor, as well as the former County Supervisor and as a 25 year
resident of Huntington Beach I hope that our professional city planners
will take the 'high road' and guide the elected officials to do "the right
thing."
6152 Eaglecrest Drive,Huntington Beach,CA 92648 • 714.969-0022 •Fax 714-536-2777•email:MHarriett®aul.cOm
09/21/1998 10:56 714-848-7581 GARY MAY ASSOCIATES PAGE 01
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GARY MAY ASSOCIATES PAGE 02 ,
20:oi 714-969-5516 RICHARD W BLATTER PAGE 01
••� . <;!kii.e.Hunriagum Beach.CA 92648.5569 Te1/F&x (714)969.3316 omul rwb92648;4+Aol.tom
Ms. Susan May
Vice President
Seacliff on the Greens Community Association
Huntington Beach,CA 92648
Subject: Bolsa Chica Annexation Study
Dear Susan,
In our meeting on Monday, September 14, 1998 you asked for a review of the subject
study and an opinion on annexation. The suspense for my review and input does not
allow time for coordination with other Masters Series Directors or with our membership.
The following are my recommendations and opinions.
I recommend that the City delay a decision to annex until after development is complete.
After development,the City will have better information on which to base the decision.
More accurate expenditure verses revenue data will be available and will contribute to
making a better decision. If implemented,this recommendation will considerably reduce
the risk to the City.
After development,residents of the newly developed Bolsa Chica will be in a position to
express their desire to be annexed or not be annexed. In addition,new residents will be
able to accurately state their needs for City services.
Potential City responsibility for wetland restoration,maintenance and meeting
environmental standards is a risk that the City should not assume prior to development.
After development,the City can make a more accurate assessment of the financial impact
verses benefit.
I hope my opinion has helped.
Sincerely,
/Richard W. Blatter
By fax(714)536-1256, 9/17/1998 ltr., 1 page.
S EP 2 51998
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RECEIVED
S E P 3 01998
irh`f1ir4 Iis f�eaN� DEPARTMENT OF
i &mAer o7`i vmwerce COMMUNITY DEVELOPMENT
September 25, 1998
Melanie Fallon
Assistant City Administrator
City of Huntington Beach
2000 Main Street
Huntington Beach,CA 92648
Dear Melanie:
Thank you for allowing the Huntington Beach Chamber of Commerce to comment on the Bolsa Chica
Annexation Study of July 29, 1998. As you are aware,the Chamber has steadfastly supported the Bolsa
Chica Planning Coalition for a balanced plan of limited development of 10%of this 1600 acre site and the
preservation and restoration of the remaining 90%of the site as the Bolsa Chica Wetlands,Harriet Wieder
Regional Park,public trails and open space.
Simply stated,the study finds that it is in the City's financial best interests to annex this property sooner
rather than later. The city has an opportunity to earn revenue during the build-out of the site that would
otherwise go to the County if annexation occurred after the new residents move into their new homes. The
long-term impact of waiting for development to occur in the County prior to annexation is financially
catastrophic.
Annexation also has the important effect of giving the City a perception of land use control over the site
that it never had before as a County island. Because annexation could not occur without the landowners'
consent,a final resolution of long-standing issues between the City and landowners would have to occur
prior to annexation. Perhaps the single most important reason why annexation is important is that it will
put to rest 30 years of divisive community battles over this property and focus instead on immediate
wetlands restoration,park and residential development and tourism opportunities that would benefit the
entire community.
The Chamber encourages continued dialogue between the City and landowners on this important issue.
Thank you for soliciting our input. Please keep us informed of your progress.
Sincerely,
- .tom
y Riddell,CCE
President
JR/cp
ECEfv
sc.4rrrrEx.wrn SEP 3 0 1993
2100 Main Street,Suite 200
Huntington Beach,CA 92648
714/536-8888
s5,cucir�c
(FAX)714/960-7654 �,.�,
Melanie Fallon
Director of Community Development
H.B. CA 92648
September 16,1998
Dear Melanie:
The Water Committee of the Bolsa Chica Land Trust is opposed to annexation solely for
the purpose of obtrusive development
The Staff was told on January 20th to return to the Council with a cost benefit study for
the Koll Bolsa Chica Development project AND the pros and cons of annexation.
The cost benefit study is done the cons are not noted as cons if mentioned at all
.The following is our list of"cons":
1. First the cost benefit in the study is faulty because there is no mention of the "long term
capital improvement: the cost of repairing streets, sewers,water, after the developer has
left town. The con here is the city has to realistically face the long term financial
responsibility of a residential project like this and it could bankrupt the city.
2. There is no call for a new Environmental Report (EIR)if there is an annexation. The
New EIR should be an EIR/EIS and not separated as the developer and the county did
with the existing EIR This Koll project is not a restoration project anymore. It is a
development project. There is no guarantee that the rights of Huntington Beach citizens
will be protected for future growth and quality of life.
The existing EIR says that Koll can get water from two sources.
A. They can drill their own wells. They did this and got brackish water.
B. They get it from the City. The city said No water.
C. Public works director 1992 has cons with the EIR(1) Inter-department communication
from Public Works to city planner dated.l2/I 1/1992(#1 included)
The public works director stated that
I a. The "EIR said the water facilities proposed for the Holly Seacliff will satisfy the Bolsa
Chica Development.' According to the public works Director said "THIS IS NOT THE
CASE" The 9 million gallon reservoir for Holly Seacliff would only satisfy Holly Seacliff.
. Bolsa Chica needs its own 9 million gallon reservoir for its development". He also
stated "The City's water distribution and supply are critically deficient " Things are more
desperte in 1998 than they were in 1992 when he made this assessment. The thousands of
new residents have put a bigger drain on the City's water supply. Mark Twain said it all
when he said" whiskey was made for drinking water was made to fight over." (#2 Article
by Senator Paul Simon from his book Tanned Out is included in appendex)
2 b. The Public Works communication says that the fiscal impact report in EIR/EIS
indicates that general fund revenues will be sufficient to provide maintenance for streets,
street lights, storm drains, landscaping and sewers.
Past operating funds have not been sufficient. Maintenance has not kept up with
deteriorating infrastructure and no capital replacement fund has been established.(1992)
These are reasons for the city to demand a new EIR
.3. Annexation prior to development generally transfers ALL land-use authority to the
annexing city. However in the case of the Bolsa Chica, there is already a Development
Agreement (DA) in place which limits the authority of the city to make land-use
development decisions. The DA is between the Koll Company and the County. We feel
the study should have recommended that the the viability of the DA in so far as the city is
concerned should be studied carefully by a qualified land use attorney.
4. LAFCO guidelines for annexation talks about "terms and conditions" Not mentioned
in the City's annexation study is the issue of turning over or supplying city services to the
developer i.e. water, sewer, police, fire, library, traffic on our streets. The study should
have included a fair market study of the cost to the city to supply i.e. water to this project
Any annexation agreement should include provisions that proper monetary compensations
be made to the city and the people of the city by the developer for their water services.
This is called by LAFCO "an equity buy-in.". If the city mandates a fiscal analysis it should
include start-up costs and one-time costs that come along later.
The city will not realize any revenue from this project for 5 years. The infrastructure is
falling apart now. The City needs start up costs if annexation is allowed(#3 LAFCO
proceedures included in appendex)
5. The study shows that the Bolsa Chica Project (BCP) has a different standard for police
per capita allowances than the city's requirement.. BCP says it needs 2 officers where the
city standard is 3 for every 2800 people..
6. The park requirement is less than the city requires.
7. If this is a gated community will the parks which they are getting credit for in the EIR
as open space be available to the citizens of the community . We're being asked to use
existing open space to mitigate for open space that should be within the project. This is
wrong.
8 There is a 4 year build out for this project. . A buildout time of 10 or twenty years
might be more realistic
9 Motor vehicle fees may be modified or reduced.thereby eleminating the revenue used in
the in the report as a pro for annexation..
10. Police are getting a 10%pay raise over three years. in salaries but the property tax
will only increase 1% a year Where will the increase in revenue needs come from?
11 There will be 10 miles of private roads in the project Is the city responsible for
maintaining these private roads?
12. Is the county getting out of providing services to projects?. Did Koll have to come to
the city for its services? This possibility wasn't mentioned in the study
13 HB has a lack of affordable housing. There is no mention of affordable housing for this
project. Why? It's the law.
14. MOA(Memorandum of Agreement)of 1990 between the County and the City In
1992 County terminated its participation in the 1990. Koll taking the project to the
County cost the city loss of controlling zoning in the project comparable to the city
zoning, loss of substantial developer fees and loss of property taxes. The development
plan now includes no industrial and minimal commercial development. Residential
development fees often offer a quick fix for a city's treasury,the long term costs of
providing services, police, fire, and infrastructure are not offset by the taxes they generate.
Inter-department communication from Public Works to city planner
dated.12/11/1992(MOA is no longer applicable and should be officially terminated by the
City. (#4 included in appendix)
15 Resolution#6159 Study does not mention this resolution. We request that this
resolution be terminated due to the fact that it is dated and no longer relevant. The city
should not be entering into annexation agreement "for the purposes of supplying municipal
services to the project for the benefit of the developer" as stated in the resolution.
The annexation of the Bolsa Chica 1990. appendix(#5 included in appendex)
18. The endangered species on the Mesa will be lost and the endangered species in the
wetlands will be destroyed by the domestic animals and the urban run-off from this
project. This is a serious omission in the study and should be duly noted.
In conclusion we feel that the citizens of BB will suffer a serious deterioration to their
quality of life if this annexation project is undertaken.
Our concerns over, traffic congestion, higher utility costs to subsidize growth, increase
air, water and noise pollution, crowding and congestion and overburdening of services and
facilities such as water sewer, streets, schools, library, police, fire, etc. far outweigh the
benefits of annexation. If annexation goes forward we should be very certain that the city
not" condone the socializing of the financing and the privatizing of the gain." As was
stated in the Huntington Beach Tomorrow newsletter.
Respectfully submitted
Eileen Murphy Bob Winchell Co Chairs
Committee members
Marinka Horack, Tom Logan, Dean Albright, Mary Jane Wiley, JacqueLahti, Rudy
Veitmeir, Bill Bernard,
Appendix
•
CITY OF HUNTINGTON REACH
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON$EACH
To: Laura Phillips From: Louis F. San3oval------ -
Associate Planner Director of Public Works
subject: BOLSA CHICA DRAFT EIR/EIS Date: December 11, 1992
Following are Public Work's comments on the subject draft EIR/EIS dated
August 1992. The comments are presented in four sections; "General",
"Water", "Transportation / Traffic", and "Fiscal Impact". Each comment
includes a discussion followed by a specific recommendation.
A. GENERAL
- C
Item 1 Discussion: Appendices C, D, H, and I are technical
reports which fall within the practice of Civil Engineering as
defined in Government Code Section 6731. As such, these appendices
must be prepared by, or under the direction of a registered civil
engineer (Government Code Section 6730) and must be signed by the
responsible individual, or individuals (Government Code Section
6735) . The draft EIR/EIS was apparently prepared with input from
qualified professionals. However, the document does not show the
signatures of the responsible, registered civil engineers. Without
the appropriate endorsements there is no assurance that the
document accurately represents the professional opinion of the
qualified individuals who provided the technical input.
Item 1 Recommendation: The final document should show the
appropriate endorsements of the registered civil engineers
responsible for the technical content of the report, within their
purview.
B. WATER
Item I Discussion: Section 4.15.2 of the EIR/EIS discusses water
supply in a very confusing way. It seems to say that the
facilities proposed by the Holly Seacliff Development will satisfy ' `
the demands of the Bolsa Chica project; That is not the case.
Water supply and distribution within the City is provided by a
network of reservoirs, booster stations and wells that are
interconnected. The nine million gallon reservoir proposed for the
Holly Seacliff project will satisfy the demand for that project
only. other improvements identified in the City's Water Master
Plan are needed to meet existing demands. The proposed Bolsa Chica
Development will create the need for additional storage and
booster facilities. Public Works estimates that the additional
demand would require an additional, nine million gallon reservoir
with appropriate booster facilities. The most efficient location
for the needed reservoir would most likely be in the southeast
portion of the City. The City's water distribution and supply
capabilities are critically deficient. The proposed project should
provide adequate facilities to completely offset the demand
Bolsa Chica EIR/EIS Response
December 11, 1992
created by the project.
Item 1 Recommendation: Section 4. 15.2 should be clarified to
describe the impact of the project, as discussed above. A
mitigation measure should be identified to offset the impact. eg,
"A nine million gallon water reservoir and booster station will be
constructed at a location to be identified by the City" .
C. TRANSPORTATION / TRAFFIC:
Item 1 Discussion: In "Transportation Component", page 3-1 the
Bolsa Chica Street Extension (cross gap connector) is introduced
and described in this part of the document. The description
mentions, but does not emphasize the regional nature of this road
connection, nor does it mention the Master Plan of Arterial
Highways (MPAH) and the history of that plan which included
consideration of the Bolsa Chica wetland area when the MPAH road
system was developed. The second paragraph uses the word "could"
to describe the potential for improved traffic circulation. That
description is misleading and untrue. In all tested scenarios, the
Bolsa Chica extension alternative provides superior traffic
circulation over an alternative road system without the extension.
Item 1 Recommendation: The last sentence of the above mentioned
paragraph should be amended to read "The Cross Gap Connector is
included in several alternatives, and the absence of that road is
also tested as an option. " This section should be clarified to
indicate the superiority, from a traffic circulation point of
view, of the cross gap connector alternative.
Item 2 Discussion: In "Existing Roadway Alternatives ---", page
3-63 , a statement in the second paragraph, right column is not
supported by a reference, and reads as follows: "The state
recently disclosed plans to expand PCH ---". Recent conversations
with CALTRANS representatives do not support that statement.
Item 2 Recommendation: Provide a reference for the above
discussion, or delete the comments.
Item 3 Discussion: In "Existing Roadway Alternatives ---" , page
3 .62 implies that widening of certain links would be an acceptable
alternative to the cross gap connector, but follows by indicating
that there would be substantial socioeconomic impacts associated
with loss of business and residences as a result of widening. This
section does not fairly represent the magnitude of the impacts of
widening certain links, in lieu of the cross gap connector.
Page 2 of 3
Bolsa Chica EIR/EIS Response
December 11, 1992
Item 3 Recommendation: Add discussion and quantification of the
impacts of widening certain links in lieu of the cross gap
connector.
Item 4 Discussion: In ."Circulation Element", page 4-5, there is
a reference to the Ellis Avenue extension to Bolsa Chica Street.
That extension was deleted from the MPAH (see Fig 4.10-4, page 4-
230) .
Item 4 Recommendation: Delete the above discussed reference to
Ellis Avenue.
Item 5 Discussion: Sections on "Air Quality", page 4-262, and
"Energy" , page 4-346 do not address the benefits to air quality
and fuel savings which would occur with the cross gap connector
alternative.
Item 5 Recommendation: Quantify and include discussions of air
quality and fuel consumption for the cross gap connector
alternative.
D. FISCAL IMPACT:
Item 1 Discussion: The fiscal impact report, Appendix L, seems to
indicate that general fund revenues will be sufficient to provide
maintenance for streets, street lights, storm drains, landscaping
and sewers. This conclusion is based on past operating costs for
these facilities. The error in the conclusion is that past
operating funds have not been sufficient. Maintenance has not kept
up with deteriorating infrastructure and no capitol replacement
fund has been established. General fund revenues will not
adequately support maintenance of these infrastructure elements.
Item 1 Recommendation: Discuss this shortfall in the EIR/EIS and
add a mitigation measure that would require the developer to
participate in the formation of a street lighting and landscape
maintenance district.
cc: Robert Eichblatt, City Engineer
Jeff Renna, Water Operations Manager
Jim Otterson, Traffic Engineer
Daryl Smith, Superintendent of Parks, Trees and Landscape
Steve May, Principal Engineer
LFS:REE:SWM:swm
Page 3 of 3
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Paul Simon,a fonner two-tetra U.S demand of their leadership actions reflect- �Ag��.may Go To War Over Water'
Senator from Illinois,now heads the ing vision,understanding and courage. ■ i
Public Policy Institute at Southern It is no exaggeration to say that the Twenty-two countries around the world are dependent on the flow
Illinois University;where he continues conflict between humanity's growing of water from other nations for much of their supply,a dependen-
to devote himse f to issues of vital thirst and the projected supply of us- cy which can lead to friction,escalating tensions or worse.Among
importance to our nation and the able,potable water could result in the the areas with the potential for armed conflict over water are:
world.Thefollowingnrticle—adapted most devastating natural disaster since India,Pakistan and Bangladesh—Already these nations face tensions
over nuclear explosions and other matters.Add the volatile factor of
from his new boot:. "Tapped Out,"to history has been recorded accurately, re all
how to sham water when underground sources are diminishing in all
be published nest month by Welcome unless something happens to stop it. three nations,and you have the potential for nuclear conflict
Rain Publishers—alerts us to an issue The world's popula- The Middle East—King Hus-
that could have serious implications tion of 5.9 billion will r f r sein of Jordan Says water is the
at home and elsewhere:the coming double in the next 50 to , one issue that"could drive
worldwide water shortage. 90 years,depending on - the nations of this region to
whose estimates you ac r war. Their shared—and
Y THE GIFT OF WATER ceps Our renewable wa ` MJDDLEEAST shrinking—water supply will
lead to greater cooperation
You nourish and sustain ter supply,however,is or to war.Israel's Prime Mm-
us and all living things." constant.Compounding ister Netanyahu observes-
These are the words used those grim realities is f: "Israel is headed toward a
in the baptismal rite in Lu- the fact that per capita - mess in water."Or worse.
theran services.But in our water consumption is Egypt—It's almost total-
world,increasing numbers rising twice as fast as ly dependent on the Nile,and
of people cannot assume they will be the world's population. 1 85%of that river's water
comes from Ethiopia.What
nourished and sustained.Within a few You do not have to be f happens when Ethiopia's
years,a water crisis ofcatastrophic pro- an Einstein to under- population doubles,which it
portions will explode on us—unless stand that we are headed toward a po- will,and Ethiopians demand more and more wateri)
amused citizens in this and other nations tential calamity. China—More than 300 large cities already face serious water
shortages.it will get much worse.Now will the world's largest dic-
B Y P A U L S I M 0 N tatorship respondP
COVER PHOTOGRAPH BY EDDIE ADAMS PACE s•AUGUST 23,1998•PARADE MADAME
Wally N'Dow ofGambia,whom the expensive to modify for major con- FLORIDA:
Los Angeles Tines describes as"the sumption purposes:seawater. Firefighters try
to turn back the
world's foremost specialist on cities," •California.Like most of the world, flames in
says bluntly:"In the past 50 years,na- California has water in abundance where Ormond Beach'
Wildfires flared
dons have gone to war over oil.In the people are not in abundance.Three- this summes—
the next 50,we are going to go to war fourths of its snow and rain fall in the the result of a
drought and a
over water.The risis point is going to northern part of the state,where one- heat wave.
be 15 to 20 years from now" third of the people live.Every official Below Former
Sen.Paul Simon
Nations fight over oil,but valuable as California water plan projects a huge tD,nl.> n
it is,there are substitutes foroil.There is gap between need and supply. r 4�• .
no substitute for water.We die quickly California's population will grow
without water,and no nation's leaders from 31 million today to some-
would hesitate to battle for adequate wa- where between 48 million and 60
ter supplies.A decade ago,U.S.intelli- million in less than 40 years. a"gence services identified 10 potential Symbolic of California's prob- It IS no exaggeration to say that the
flashpoints where war could break out lems is the story of Owens Lake. :. conflict between hUlnantty'S grOWing
over water.I no longer have access to Early in this century,Los Angeles-
that type of information since leaving the area water authorities understood thirst and the projected supply of
Senate,but I know the number is higher that they'd face problems as the usable water could result in disaster."
today and will be much higher a decade population grew,so they pur-
from now.At least 400 million people chased the third-largest body of --Pad Siff n
live in regions
with severe wa- The.W�rid's Grovnng Theist A What You Can Do
ter shortages. f3y 200,nearly half of:the world will have Insufficient water As much as There are no magical solutions to our water
By the year p r shortages,but simple,undramatic steps often
42%"could befacih- either water stress(h9tvirtg-asss than 1700 ctdlic rneters
2050,it will be vaflable per�iersonI'or scarcity(less than 1000 cubuameters per person) z, can tnalte a.huge difference in solving big prob-
4billion. ryt ' � ;� s - ,r S lams Here are some small things you can do to put
1995 WORLD POPULAi10N 5.7 biplon x 2050 WORLD POPULATION 9.4 6igron the focus on water issues in our communit .
There are -k izrr �,� y ,Y'
more than 200 •Write to your House member and to your
river basins in Senators urging that greater emphasis and
the world that qM= more appropriations be made for finding less-
rr :rr „ Scarcity 18 M •expensive ways to desalinate seawater..
are shared by at € w' 'rayr '� s Is Write a letter to the editor of your newspa-
least two coun- r` %' x; " per on water issues
tries.More than , •Ask your library to have a display of books on
a dozen nations �"`" _ " r , water;ask library officials to encourage chil-
get most of Rae i/'$sluotheptstsprp�orNoaafropapalm,an basedoaamedtmnpopu(adonprofecuon dren to make posters
their water from rivers that cross the bor _ • Suggest that your church,synagogue or
dersofnei borin countries which can £` %i mosque discussion group focuses on the wa-
g - /� ter issue at one of its meetings.
be viewed as hostile.Even when nations ✓�� �a •Let me know what you are doing.I can spread
are on the best of terms,like Canada and z kthe
�P the word to others Write:Paul Simon,Public
the U.S.,there are serious disagreements .• $ r ` Policy Institute,Dept.P,Southern Illinois Uni-
over water-sharing issues.While we and s+. rl =_ varsity,Carbondale,Ill.62901-4429.
our northern neighbor manage our prob-
lems without resorting to arms,who can a _ Department of Water and Power final-
say what will ha '.
ppen in the Middle East, .�`+ �� a F ,_� TEXAS:Bob ly agreed to begin a project to ensure
re where there a no water surpluses and �. ,a< " r BeaklOfarm y at ids that the air around the take meets federal
where the relationships between coun- _ pa+'!" Ennis in July. health standards by 2006.The lake will
tries are stormy. His corn, not be refilled,but 10 square miles may.
Although water sufficiency problems soy ean and
be covered with a few inches of water
are not nearly as severe in the United ' were ravaged to hold down the dust,according to a
States as in most nations,three of the by an extended Los Angeles Trines re
drought and per•
fastest-growing states—California, heat. •Florida.ln some ways,Florida's prob-
Texas and Florida—feel the squeeze on water in the state,Owens Lake.Today dards for air pollution.The Environ- lems are similar to California's:short-
water supplies and soon will face'major it is called Owens Dry Lake,because mental Protection Agency rates this area ages,despite water at its doorstep(a de-
difficulties.As of 1996,five of the 10 L.A.has sucked it dry.But the story the most polluted in the nation for dust salination process is in use,but it's in its
fastest-growing tides in the U.S.are in does not end there.When the wind particles.People in the area want Los An- infancy);mushrooming population,with
those states.It is significant that all three blows on a dry day,particulate matter geles to fill the lake again,but city offs- a larger rate of growth than California's
states,like many parts of the globe with from the"lake"is sent into the air to the cials say that would require 10 percent of but a much smaller body of land;and
serious shortages,have at theirdoorsteps point that,in some places,it is 20 times their water,something they cannot afford. problems with drainage and irrigation.
huge amounts of water that still are too as high as the maximum safety stars- Just last month,the Los Angeles continued
PARADE MAGAZINE•AUGUST 23.1998•PAGE a
RUNNING DRY/continued creased twice as fast as the population.As has be-
Florida developed a plan in 1995 for the state's five wa- come painfully apparent this year.Texas has a greater
ter-management districts.The foreword to the plan likelihood of suffering severe drought than most oth-
summarizes the situation:"In many areas of the state, er states.As of July,rainfall was at least 10 inches be-
the prospects for new...inexpensive,clean sources of low normal for the year in east Texas and 4 inches to
water no longer exist-"The report notes that there are 10 inches below normal in most of the rest of the state.
"both quality and quantity problems..It adds;•'Ninety: OnJuly23;President Clinton declared Texas a federal
percent of the state's population depends on ground- disaster area
water,and the groundwater is highly susceptible to These are not the only states to experience water
contamination from...municipal landfills,leaking un- difficulties.Virginia,North Carolina,Iowa,Okla-
derground storage tanks,hazardous waste dumps,sep- homa,New York and Michigan are just a few of the
tic tanks and agricultural pesticides" other states with ongoing problems.
•Texas.Part of the problem in Texas,as in many oth- What can be done to solve the water shortage?
erplaces,is the huge disparity in rainfall statewide.El Obviously,it's a complex and difficult issue.Once
Paso normally gets about 8 inches of rain a year,while we muster the political will to focus on it,these broad
the portion of the state along the Louisiana border re- areas should be addressed:
ceives 56 inches.Aquifers(underground water sources) 1)CONSERVATION.Conserving what we have is an im-
are being depleted.From 1930 to 1980,water use in- mediate step we can take.
e .
PROPOSITION 65
WARNING
A .Imported vinyl mini-blinds
'
rr r m
manufactured before June
chemical known to the
r tr
' "While water problems are not
State Im
r r
of ta
, as severe in the U.S.as they are
birth defects and other
eproductive harm. • in most nations,three of our
' fastest-growing states soon will
face major difficulties."
RECEIVE UP TO.$24 TOWARD --Paul Simon
REPLACEMENT OF YOUR VINYL MINI-BLINDS
$3.00 each for up to 8 blinds 2)DESALINATION.Efforts to convert seawater to us-
You quality for the rebate It you: able water are still in their infancy.These efforts must
• Own or rent a home in which children under age 6 are or may be present; be supported,and more must be begun.
• Replace vinyl mini-blinds that were bought before July 1,1996. 3)POLLUTION AND OVERPOPULATION.Both are big
To get your rebate: contributors to water shortages.
• Complete the claim form below; - Aduptedfrrmr the lxxrk'•Tug dOut,••byPuulSirruntobepdb-
• Enclose a 3-inch piece of one slat from each blind being replaced; fished nett montlt be Welcome Rain Publishers.
• Enclose the original register receipt identifying the replacement blinds you bought;
• Mail your claim form by February 1,1999. Water Is Llfe
Ownerstoperators of multi-family residential or commercial properties may obtain replacements for eligible virryl mini- More than 70%of the human body consists
blinds purchased between July 1,1992 and June 30.1996,by presenting original proof of purchase to their vendor, of water.It takes less than a 1%deficiency
_�_��___�_���____�_ in our body's water to make us thirsty.A5%
r , deficit causes a slight fever.An 8%shortage
I Official Replacement Vinyl Blinds Rebate Claim Form 1 causes the glands to stop producing saliva
and the skin to tram blue.A person cannot wage
with a 10%deficiency,and a 12%deficiency
city: State:_ Tap code: I brings death.
' Telephone: _._—_—_. Number of Rebates Claimed:__ (maximum of 8) � United Nations authorities note that 9500
I declare under penalty of perjury that the above information is true and correct.that the rebates I am seeking I children die every day from lack of water or,
are for purposes of replacing Imported vinyl blinds bought prior to July 1.199e.and that I five inlownloperate a I more frequently,from diseases caused by
residence where children under six are present or may be present. I polluted water.
Signature: MOW CalBlinds Rebate Program:
PO Box 2532.North Babylon,NY 11703 1
I_---- ---------------------------J PAGE B•AUGUST 23,1998-PARADE MAGAZINE
A GUIDE TO LAFCO PROCEDURES
FOR
CITY AND SPECIAL DISTRICT
CHANGES OF ORGANIZATION AND REORGANIZATION
Published by San Diego LAFCO:
Michael D. Ott
Executive Officer
Prepared by:
Joseph F. Convery
Local Governmental Analyst
1995
Pumose of LAFCO
Local agency formation commissions were created by state law in 1963 to encourage
the orderly formation of local government agencies, to preserve agricultural and open
space land, and to discourage urban sprawl. San Diego LAFCO has jurisdiction over
changes in local government organization occurring within San Diego County.
Proceedings for changes of organization of special districts or cities are subject to
LAFCO review, pursuant to the Cortese/Knox Local Government Reorganization Act of
1985 (Government Code Section 56000, et seq.).
Changes of organization mean any of the following:
• A city incorporation;
• A district formation;
• An annexation to, or detachment from, a city or district,
• A disincorporation of a city; -
• A district dissolution;
• A consolidation of cities or special districts;
• A merger or establishment of a subsidiary district;
• An authorization of a special district to exercise one of its latent powers or to
extend the area over which a latent power is exercised; or
• A reorganization involving two or more of the above-listed changes of
organization.
The following local government agencies are specifically excluded from LAFCO
jurisdiction:
• A school district or community college district;
• A special assessment district;
• An improvement district;
- 1 -
emission may require a final EIR/EIS before its action.
NOW, THEREFORE, the City Council of the City of Huntington
ach does hereby resolve as follows :
Section 1. That this proposal is made pursuant to the
rtese-Knox Local Government Reorganization Act of 1985,
vision 3, commencing with Section 56000 of the Government Code
the State of California
Section 2. That the nature of the proposed change of
ganization is for the annexation of the Bolsa Chica which is
rrently unincorporated and inhabited, to the City of
ntington Beach.
Section 3 . That said unincorporated and inhabited
.rritory be, and the same is hereby designated as "Bolsa Chica"
id boundaries of said affected territory are described in
:hibit A attached hereto.
Section 4 . That the reason for the proposed change of
:ganization is to provide full municipal services to an
zincorporated area which can only be served through and from j
ity territory. 10 .1
Section .5. That the City of Huntington Beach is hereby
asignated as the chief petitioner with regard to this 1 1
pplication and the mailing address of said petition -is as
ollows: 12
City Administrator
City of Huntington Beach 1 .
P.O. Box 190, 2000 Main Street
Huntington Beach, California 92648
Section 6. That the City of Huntington Beach does hereby 1
'equest that annexation proceedings be taken and commenced for a
1
-2-
change of organization in connection with the unincorporated
territory described in Exhibit A.
Section Z. That the City of Huntington Beach hereby
requests that its Sphere of Influence be adjusted to coincide
' with this proposed annexation.
Section -a. That the City of Huntington Beach hereby
requests that the Certificate of Annexation not be filed until
rthe Coastal Commission has issued its Certification of the Bolsa
Chica LCP.
Section 9. That the City of Huntington Beach is willing
to accept the property tax distribution which would result from
applying the formula contained in that certain Master Property
Tax Transfer Agreement between the County of Orange and the City
' of Huntington Beach dated October 28, 1980, with the
understanding that the territory is developed under the terms of
said master agreement.
PASSED AND ADOPTED by the City Council of the City of Huntington
Beach at a regular meeting thereof held on the 18th day of
IJune 1990 .
Mayor
ATTEST: APPROVED (�7 FORM:
6.0" s
I City Clerk City Attorney ;e ce—
REVI D AND APPROVED: INIT ATED PROVED:
! � S
City Administrator 1
RESOLUTION NO. 6159
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
HUNTINGTON BEACH REQUESTING PROCEEDINGS FOR THE
ANNEXATION OF CERTAIN UNINHABITED TERRITORY KNOWN AS
THE "BOLSA CHICA"
WHEREAS, the City of Huntington Beach desires to annex into
its boundaries certain unincorporated and uninhabited territory
described herein and identified as the Bolsa Chica at the
request of one of the major private landowners; and
The Bolsa Chica is an area of property of approximately
1, 600 acres located between Warner Avenue and Edwards Street and
the Pacific Coast Highway; and
The city desires to extend the full range of municipal
services to said territory in order to better serve the needs of
said property, its owners and future residents; and
The city desires this resolution to be deemed a resolution
of application proposing a change of organization pursuant to
the Cortese-Knox Local Government Reorganization Act of 1985,
Division 3 , commencing with Section 56000 of the Government Code
of the State of California; and
The city is in the process of adopting land uses and zoning
in the form of a Local `Coastal Program for the Bolsa Chica and a
joint Environmental Impact Report/Environment Impact Statement
is being prepared by the city analyzing the environmental
impacts of , among other things, the LCP and annexation actions;
and
There is a need for the State Lands Commission to approve of
its 300 acre parcel being annexed into the City of Huntington
Beach before LAFCO' s hearing on annexation and State Lands ;-"�
-I.-
12. The Commission hears the proposal on the noticed date and.time. . The hearing
may be continued for up to70 days. The Commission must consider number
of factors and policies in compliance with State law. Among the factors
considered by San Diego LAFCO in making its determination are: (56841)
A. Population, density, land area and land use, per capita assessed valuation,
topography, natural boundaries, drainage basins, proximity to populated
areas, likelihood of significant growth during next ten years;
B. Need for organized community services, present cost and adequacy of
government services and controls, probable future needs, probable effect
of change of organization and of alternative courses of action on the cost
and adequacy of services and controls in the area and adjacent areas;
C. The effect of the proposed action of alternative actions on adjacent areas,
on mutual social and economic interests, and on the local governmental
structure of the county;
D. Conformity of the proposal to Commission policies on providing planned,
orderly, efficient patterns of urban development, and with state policies and
priorities on conversion of open-space uses;
E. Effect of the proposal on maintaining the physical and economic integrity
of lands in an agricultural preserve in open-space uses;
F. Definiteness and certainty of the boundaries of the territory, the
nonconformance of proposed boundaries with lines of assessment and
ownership, the creation of islands or corridors of unincorporated territory,
and other similar matters affecting the proposed boundad.t TL
G. Conformity with appropriate city or county general and specific.plans; and
H. The sphere of influence of any agency which may be applicable to the
proposal being reviewed (see Section III for more about the adoption of
spheres of influence).
13. Within 35 days of the hearing the Commission will adopt a resolution of
determination taking the following actions:
A. Approve or deny with or without conditions or revisions to the proposal. If
denied, no new proposal can be made for one year unless waived by
LAFCO. If the proposal included incorporation or consolidation of a city,
no new proposal can be made for two years unless waived by LAFCO
(56851, 56855 & 57090);
- 7 -
change of organization in connection with the unincorporated
territory described in Exhibit A.
Section 7. That the City of Huntington Beach hereby
requests that its Sphere of Influence be adjusted to coincide
' with this proposed annexation.
Section 8. That the City of Huntington Beach hereby
requests that the Certificate of Annexation not be filed until
the Coastal Commission has issued its Certification of the Bolsa
Chica LCP.
Section 9 . That the City of Huntington Beach is willing
to accept the property tax distribution which would result from
applying the formula contained in that certain Master Property
Tax Transfer Agreement between the County of Orange and the City
of Huntington Beach dated October 28, 1980, with the
understanding that the territory is developed under the terms of.
said master agreement.
PASSED AND ADOPTED by the City Council of the City of Huntington
Beach at a regular meeting thereof held on the 18th day of
g Y
June 1990.
Mayor
ATTF,,ST: APPROVED TO FORM:
6�" s
City Clerk City Attorney G�-
REVI ED AND APPROV1: INITIATED N PROVED:
City Administrator
ZONING INDEX MAP
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HUNTINGTON BEACH
ORANGE COUNTY CALIFORNIA
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1
Res. No. 6159
STATE OF CALIFORNIA
COUNTY OF ORANGE ss:
CITY OF HUNTINGTON BEACH )
I, CONNIE BROCKWAY, the duly elected, qualified City
Clerk of the City of Huntington Beach, and ex-officio Clerk of the
City Council of said City, do hereby certify that the whole number of
members of the City Council of the City of Huntington Beach is seven;
that the foregoing resolution was passed and adopted by the affirmative
vote of at least a majority of all the members of said City Council
at a regular meeting thereof held on the 1$t_ day
Of .Tune 19_%L_, by the following vote:
AYES: Councilmembers:
MacAllister, Winchell, Green, Bannister
NOES: Councilmembers:
None
ABSENT: Councilmembers:
Mays, Silva
ABSTAIN: Erskine
i y Lien and ex-officieVLlerk
of the City Council of the City
of Huntington Beach, California
CITY ANNEXATIONS AND DETACHMENTS
Initiation of Proceedings
Proceedings for annexation to or detachment from a city may be initiated by petition or
resolution of the governing,body of any affected county, city or district (56650).
1. Initiation by Petition
A. A petition of application shall do all of the following (56700):
(1) State that the proposal is made pursuant to this part;
(2) State the nature of the proposal and list all proposed changes of
organization;
(3) Set forth a description of the boundaries of the affected territory
accompanied by a map showing the boundaries;
(4) Set forth any proposed terms and conditions;
(5) State the reason or reasons for the proposal;
(6) State whether the petition is signed by registered voters or owners
of land;
(7) Designate not to exceed three persons as chief petitioners, setting
forth their names and mailing addresses;
(8) Request that proceedings be taken for the proposal pursuant to this
part; and
(9) State whether the proposal is consistent with the spheres of
influence of any affected city or district.
B. Signature Requirements
(1) A petition for annexation to a city shall be signed by either of the
following (56753):
(a) not less than 5% of the number of registered voters residing
within the territory proposed to be annexed; or
• 11 -
9. In 1977 the County, Pa in response to a proposal by the City of
Huntington Beach, completed a feasibility study for a Linear Regional
Park in Bolsa Chica which would connect Huntington Central Park, the
Department of Fish and Game Ecological Reserve and Bolsa Chica State
Beach. It was conceptually proposed to extend along the Huntington
Mesa, across the lovland to, and possibly along, Bolsa Chica Mesa.
In 1985 the County conducted the Bolsa Chica Linear Regional Park
Boundary Study. The County is currently, undertaking a General
° Development Plan for the Linear Regional Park. The Bolsa Chica
Linear Regional Park was dedicated February 15, 1990.
10. In November 1988 the Bolsa Chica Planning Coalition (BCPC) was formed
to explore alternatives which would facilitate certification of an
LCP for Bolsa Chica. The members of the BCPC include::the County of
Orange, the City of Huntington Beach, the State Lands Commission, the
Amigos de Balsa Chica, and the major landowner, Signal Landmark.
11. The County recognizes that the Bolsa Chica Planning Coalition Concept
Plan provides for the restoration, creation, and/or preservation of
1,104.9 acres of wetlands, open space, buffers and environmentally
sensitive habitat areas (ESHAs). The County considers this
designated vetlands/open space/buff ers/ESHAs as a valuable regional
resource and intends to proceed to actively plan and implement a
program for wetland enhancement through development and
implementation of a LCP.
AGRBBHBNT
In consideration of the foregoing recitals, the parties agree to:
1. Facilitate the expeditious transition of Bolsa Chica LCP planning
from the County to the City.
A. ° The County and City recognize the need for continued
information sharing with the Bolsa Chica Planning Coalition.
° The'-County will provide assistance to the City for 120-180 day
period commending June 18, 1990 to jointly organize, schedule,
convene and operate BCPC staff meetings, Executive Committee
meetings, and support group meetings.
° No later than 180 days after June 18, 1990 the City and County
will establish a program for the orderly transition of all
responsibilities to organize, schedule, convene and operate
BCPC meetings.
B. ° The County will continue to fully participate in the BCPC,
through its existing membership until the LCP is certified by
the California Coastal Commission.
° To that end, the County will actively work in the development
of components addressing transportation/circulation, flood
control facilities, the Linear Regional Park, and wetlands
1
The County will provide assistance to the City for 120-180 day
period commencing June 18, 1990 to jointly organize, schedule,
convene, and operate Citizens Advisory Committee meetings.
° No later than 180 days after June 18, 1990 the City shall
fully assume all responsibilities to organize, schedule,
convene and operate Citizens Advisory Committee meetings,
except for the Linear Regional Park Citizens Advisory
Committee.
2. Maintain a cooperative working relationship during this transition
period and into the future. The City and County will establish
communications to keep one another advised at all times and at the
earliest possible date regarding matters which may arise. The City
and County contacts during this transition period are:
r _ -
City of Huntington Beach: County of Orange:
Jim Palin (536-5275) Ron Tippets (834-5394)
Mike Adams (536-5276) Rhonda Evans (834-5391)
3. Recognize and address regionally significant items set forth in this
. Memorandum of Agreement especially with respect to transportation/
circulation planning, the provision of flood control facilities, the
-► Linear Regional Park, and wetlands restoration planning efforts. The
. City of Huntington Beach LCP will address these regional items and
acknowledge the following commitments:
. A. TRANSPORTATION/CIRCULATION:
The County will continue HOCTAM modeling study with the
assistance of the City through its completion. The County
will then convey it to the City for incorporation into the LCP
and for use by the City in analyzing other projects within the
City.
° Th& City will secure, through dedications and/or development
project approvals, right-of-way and construction for all
public roads planned within the Bolsa Chica. Once
constructed, the City will assume maintenance of all such
roads.
B. FLOOD CONTROL:
° The "Project Report and Inundation Study for the East Garden
Grove-Wintersburg Channel (Facility C05) and Ocean View
Channel (Facility C06) Including Haster and West Street
Retarding Basins" is currently being prepared by the Orange
County Flood Control District:
° The City will require as a part of LCP conditions and
development project approvals, dedication of a flood control
easement and construction of flood control facilities by land
owners/project applicants to contain a 100-year storm event
within the Bolsa Chica study area boundary.
° The County will accept a flood control easement and
maintenance responsibility for constructed flood control
facilities.
C. LINEAR REGIONAL PARK:
° The County will complete the Linear Regional Park General
Development Plan (GDP) in close cooperation with the City,
coordinating said plan with the City's LCP.
° The City will coordinate - its LCP with County's GDP,
recognizing that land for the County park is envisioned to be
obtained by purchase, dedication in conjunction with
development approvals, or by other means.
° The City and County shall establish a cooperative design
review process for development projects adjacent to the Linear
Regional Park.
D. WETLAND RESTORATION:
° The County will maintain a lead role regarding the receipt and
implementation of the California Coastal Conservancy wetlands
restoration report.
° The City's LCP will recognize the Coastal Conservancy's
wetlands effort.
° The County will be responsible for inter-agency coordination
and citizens/public review and participation for Wetlands
restoration planning.
° The City will include the selected wetlands restoration plan
and alternatives in its EIR proposed for the City's LCP.
RESERVATION OF AUTHORITY
1. The parties to this HOA further agree to take whatever steps they may
deem necessary, including additional agreements or amendment to this
MOA, in order to fulfill the purpose of this HOA.
2. Notwithstanding any other provision of this document, it is
specifically understood by the parties that this is neither a
contractual agreement nor a delegation of modification of their
respective responsibilities under applicable provisions of law.
t,
AKENDKEW AND TERKruATION
This MOA may be .amended at any time in writing by agreement of the undersigned
parties to this MOA. Either party may, upon written notification of 60 days to
the other party, withdraw from the MOA effectively terminating that party's
participation in the MOA.
{ COUNTERPARTS
1 This MOA may be executed in counterparts, each of which shall be deemed an.
original, but all of which, taken together, shall constitute one and the same
instrument.
THEREFORE, the parties hereto have caused this MOA to be duly- executed on the
Drespective dates set forth opposite their signature.
i
i
I .
CM OF HUNTINGTON BEACH:
Date: BY
Tom Hays
Mayor
ATTEST:
Date:
City Clerk
APPROVED:
Date:
- —�
� hae� T. Uberuaga
City Administrator
APPROVED A FORM:
Date:
f* Gail Hutton
City Attorney
COUNTY OF ORANGE:
Date: By
Chairman, Board of Supervisors
SIGNED AND CERTIFIED THAT A COPY OF THIS
AGREEMENT HAS BEEN DELIVERED TO THE
CHAIRMAN OF THE BOARD:
Date: By
Linda D. Ruth
Clerk of the Board of Supervisors of
Orange County, California
APPROVED AS TO FORM:
ADRIAN KgYPER, COUNSEL
ORANGE UNTV'; CALIFORNIA
BY
epyt
CHICA
E. COUNCIL
>3 ($000)
NO CAPITAL REPLACEMENT/5% INFLATION I 1 I I 1 I I I I ( I I
(YEAR IYEAR IYEAR (YEAR IYEAR (YEAR (YEAR IYEAR IYEAR (YEAR IYEAR IYEAR IYEAR
nds of Dollars) - 1 1 I 2 ( 3 I 4 I 5 I 6 1 7 1 8 1 9 1 10 1 11 1 12 ( 13
11993-94 I199 95 11995-96 11996-97 11997-98 11998-99 11999-00 12000-01 12001-02 12002-03 12003-04 (2004-05 12005-06
I I t I I I I I I I I I I
i I I I I I I I I I I I I
GENERAL/ROAD FUND COSTS I S1,477 I $2,164 I S2,802 I $3,371 I $4,408 I $5,846 I S6,331 I S6,455 I $6,433 I $6,412 1 $6,391 I $6,370 1 $6,370
lL INFLATION I SO ( $108 ( $140 I $169 I $220 I $292 ( 2317 I $323 I $322 ( $321 I $320 I $319 I $319
I I I I I I I I I I I I I
EQUIPMENT/FACILITY REPLACEMENT I I I I I I I 1 ( I I ( I
40/RESIDENT/YEAR: 2.53/DU) I $305 1 $610 I S915 I $1,220 I $1,525 I $1,830 I $2,135 1 $2,440 1 $2,745 I S3,050 I $3,050 I $3,050 i $3,050
I I I I I I i I I I I I I
i i I I I I I I I f I I i
VISED ANNUAL COST I $1,782 I $2,882 I $3,857 I $4,760 ( $6,153 I $7,968 I $8,783 I S9,218 ( $9,500 I $9,783 I $9,761 I $9,739 ( S9,739
I I I I I I I l i I I I I
I i I I I I I I I I I I i
'AUSSIG ONGOING REVENUES I $1,044 1 S2,172 I $3,323 I S4,289 1 S4,918 I S5,686 1 $6,490 1 S6,614 I $6,587 I $6,587 I $6,587 I $6,587 I $6,587
I I I I I I I I i I I I I
VENUE/COST RATIO 1 0.59 i 0.75 ( 0.86 1 0.90 I 0.80 I 0.71 1 0.74 1 0.72 1 0.69 I 0.67 1 0.67 1 0.68 1 0.68
GOING SURPLUS/(DEFICIT) 1 ($738)1 ($710)1 ($534)I ($471)I($1,235)I($2,282)1($2,293)I ($2,604)I ($2,913)I ($3,196)I ($3,174)I ($3,152)I ($3,152)
c SURPLUS/(DEFICIT) I ($738)1($1,448)I(S1,982)1($2,453)1($3,688)1(55,971)1(S8,263)1($10,867)1(S13,779)1($16,975)1(S20,149)1($23,300)1($26,452)
city sakes, this analysis assumes 375 homes built per year
irst 10 years. It is our belief that the cumulative deficit
inue to increase if this analysis were extended through
0-year project life cycle.
J
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Nuntin9ton Beach Tomorrow,Inc.
P.O.Box 865
Huntington Beach,CA 92648
Phone(714)536-4183
Fax(714)960-1642 '
Email HBTomonow@aol.com
RECEIVED
November 30, 1998
NOV 3`0 1998
DEPARTMENT OF PLANNING
H.B. City Council Sub-Committee on the Bolsa Chica
2000 Main Street
Huntington Beach, CA 92648
Dear Chairman Sullivan and members of the Committee,
We would first like to apologize for not getting this letter to you earlier, but thank you for
the opportunity to provide input.
Recent projects before the Planning Commission and the City Council have officials
pondering whether growth is good regardless of the long-range costs or the birth-right
of future generations.
The question before you about annexation is not just about economics. The question is
should the City favor or oppose annexation?
A good response to this might be that a community's image is important to its economic
well-being. The best places to live, work, and visit are those places that are willing to
uphold their standards in the face of pressure to allow development to lessen standards
which impact the quality of life of existing residents.
We must ask the Committee why we are going through a process which is dominated
by cost benefit analysis?
KolI's project, notwithstanding lawsuits to which HBT is a party, has been approved by
the County and enjoys the benefits of a development agreement. This agreement
provides little to the City. In fact, the development agreement prohibits much of the
monetary gain that now is being portrayed as some kind of financial windfall for the
City.
We ask what has changed?
Koll's position on this issue has not changed. The County has not granted any kind of
authority to the City to share planning and any income. Public sentiment still remains
opposed to development. And the City Council majority remains the same as it was
before the election.
What also has not changed are the impacts to this community, the wetlands, and the
Mesa as it pertains to:
• Traffic and Circulation
• Loss of Open Space
• Parks
• Schools
• Crime
• Fire and Medical aid
• Wetlands habitat
• Our Shoreline
• Wildlife
Our letter can only mention a few of the impacts that will continue in perpetuity if
development is allowed—whether or not the City completes annexation.
We believe these impacts carry much more weight, and are far more important, than
the development fee revenues that may be received as a result of annexation.
Sincerely,
Sally Graham
President, HBT
xc: City Council
Media
y ° � � 3 . � :® � �
�;
BOLSA CHICA PRINCIPLES
ADOPTED BY THE HUNTINGTON BEACH CITY COUNCIL
ON NOVEMBER 7, 1994
I. The Bolsa Chica project should be a financial benefit to the City of Huntington Beach.
Any development plan for the Bolsa Chica must articulate how Fire, Police, Recreation
and Library service delivery to Bols2 Chica over the next 20 years will be accomplished.
Services should be delivered with the least cost to Bolsa Chica residents and the least
impact to the citizens of Huntington Beach.
2. The Bolsa Chica project must be responsible for guaranteed restoration of the wetland,
including 2 comprehensive maintenance and operation plan.
3. The Bolsa Chica project should be a balanced community with a mix of land uses that
minimizes vehicle miles traveled and impacts to city services.
4. The Bolsa Chica project should not exceed the Ciry's infrastructure and service
capacity for:
streets
Water
public s2fety
libraries
schools
p2r'1`!recre2tion
sewerage
cultural 2ctivities
other city services
S. _The Bolsa Chica- project should be consistent %with. the City of Huntington Beach
General Plan.
6. The Bolsa Chica project development standards should be the same as the City, of
Huntington Beach standards including:
lot size
height
design standards
open space
park dedication
• city soil remediation standards
7. The Bolsa Chica project should reflect a compatible building density and type with
neighboring City residences.
S. The mesa-lowland relationship should be maintained through careful site planning of
open space, parks, trails, ecological reserves or other open space amenities.
9. The natural topography of the mesa should be maintained by limiting grading,
terracing or other similar methods. The bluff face should be preserved and protected
with a significant open space setback area. Existing mature trees on-site should be
preserved rather than replaced. Mesa development should minimize impacts to
wetlands.
10. The City desires the most environmentally sensitive restoration of the -.vetland.
Restoration should be accomplished through an adaptive management approach.
11. The Bolsa Chica project should preserve and restore on-site historically significant
structures and incorporate them into the site planning of the property.
12. The Bolsa Chica project should preserve cultural artifacts in designated open space
areas that have been determined to be archaeologically and historically significant.
13. The Bolsa Chica project should be designed as if it would ultimately be annexed to the
City of Huntington Beach.
14. Once the LCP and Development Agreement have been approved, the City should be
responsible for building plan review, approval, inspection services and other "permit
processing" aspects of implementing project entitlements. The City should also be
responsible for the collection of fees to cover the costs of such services.
15. The Wintersburg Flood Control Channel should be improved in order to provide an
enhanced drainage system and flood control.
16. A tidal inlet should have no impact to beach; public recreation or be detrimental to
public safety, health or welfare.
17. The Bolsa Chica project should be designed to minimize all risks from seismic
conditions_ .
i�`Y�
�� � a� � r ,
r ti� s r rs� �''F � ;r �
� F
CITY OF HUNTINGTON BEACH
SUMMARY OF BOLSA CHICA COASTAL ISSUES
8130195
1. Conservation Easement. A conservation easement should be placed over the entire
restoration area to protect it from future use as anything other than wetland restoration
uses. (The conservation easement should be required to protect the lowland restoration
areas, even if federal permits are not sought, are sought and not granted, or if the
property is acquired by a federal agency.)
2. Mesa Top Buffer. The Bolsa Chica Local Coastal Plan should include an open space
buffer, on top of the mesa(along the bluff edge),to protect the bluff and wetlands
restoration area from the areas designated for development. The buffer should be of
sufficient width to accommodate passive recreational uses (such as bicycle and/or
pedestrian trails,benches and vista overlooks) similar to those planned for the Harriett
M. Wieder Regional Park(which runs,parallel to the Bolsa Chica Mesa, along the length
of the Huntington Mesa at the southern most edge of the Bolsa Chica area).
3. Wetland Restoration Plan. The restoration plan proposed in the LCP is a well-
balanced plan which provides a valuable combination of habitats and will provide winter
eco-tourism opportunities to the City. Implementation of the restoration plan should be
careful to ensure that the tidal inlet is designed in a manner which will have no adverse
impact to the beach,public recreation or be detrimental to public safety,health or
welfare; that site planning of open space,parks,trails, ecological reserves or other open
space amenities maintain the relationship between mesa upland and lowland areas; and
that the natural topography of the mesa and bluff faces are maintained by limiting of
grading,terracing or other similar methods.
4. Mesa Top Roadway, The LCP should incorporate a buffer by a mesa top roadway
which runs roughly parallel to the recommended bluff top buffer and separates the buffer
from development areas. The mesa roadway would serve as a distinct boundary between
areas designated for development and public open space areas and would provide public
access opportunities to public open space areas while providing additional separation
from development and protection to the wetland restoration area.
5. Cultural/Historical Memorialization, The LCP should include memorialization of
the cultural and historical resources found in the Bolsa Chica. Memorialization should
be provided through interpretive signage and displays which depict the Bolsa Chica's
history of oil production,use by Native Americans and the significance of the site during
World War II;these elements should be incorporated into vista overlooks and small
kiosks provided along the buffer.
6. Compatibility with Existing Los Patos Development The LCP should designate
the Bolsa Chica areas,adjacent to the City,to a compatible land use and zoning that is of
similar density,type and scale to existing development along Los Patos Avenue.
7. Product Type. The LCP should reflect the same percentage of single and multi-family
units that exists in the immediate project vicinity which is not less than 66.66%single
family.
3
02-22-99 08:33ANI FROM III TO CITY CLERK P02
F'eb 21 99 08: 33p M. Wedemetser, MS, OTR-HCN 714/377-UbJ,4 ,-• --
Win P.WedemeVer,MS,UN,BCN
410 Lv:,«,er Av►tlua 103
tLuntington 130ch CA 92649-4255
Phuric)F x 714.377-0031
Pager 714.517-5.57
E-mail,<mniam(�uherof{�ce.co�»-
February 21, 1999 n
Members of the Citv Council
2000 Main Street
Huntington Beach California 92648
RE' Annexation of the Bolsa Chico Mesa
Tear Council Members Bauer, Dettloff, Harman and Sullivan,
I am unable to attend the Council Meeting Monday,, February 22, 1999, tivhen you
are exivoted to discuss annexation of the Bolsa Chica Mesa. My absence does riot
slgd-ufy ,apathy.
The preservation of this natural resource becomes ever more important as the
density of this city increases, Please consider very carefully any decisions you
make: support the efforts of the Solsa Chica Land Trust by doing everything in
your power to prevent development on the Bolsa Chica Mesa.
Sincerely,
Miriam Wedemeyer
2-22-1999 2: 13PM FROM LAW OFFICES 213 622 044S P. 1
o sa
I - -
L A N D T R U
01-TICERS February 22, 1999
PAUL HORGAN
PRESIDENT To: Mayor Peter Green and
JUANA MUELLER Huntington Beach City Council Cry
VICE PRESIDENT 77-"'1
MARINKA HOkACK Fax: (714) 374-1557
SECRETARY
NANCY DONAVEN
TREASURER From: Paul Horgan
Bolsa Chica Land Trust
BOARD OF DIRECTORS
>
CONNIE BOARDMAN Re: Bolsa Chica Annexation Study
NANCY DONAVEN
SANDI GENIS item D-DA/ February 22, 1999
MARINKA HOPACK
STAN KRUTSICK
BUCK MARRS,PHD Dear Mayor.Green and Councilmembers:
KAREN MERICKEL
EILEEN MURPHY
BOB WILLIAMS This note confirms the following:
ROBERT WINCHE;LL,PHD
JAN VANDERSLOOT,MD
CO-FOUNDER 1. The proposed annexation is based on the fallacious assumption
ADVISORY COUNCIL that the Bolsa Chica mesa will inevitably be developed. The proposed
annexation is further based, in the Trust's view, upon questionable
SENATOR BARBARA BOXER financial benefits to the City in the event of such development.
RALPH BALDER,
IMMF�DIATE PAST MAYOR
HUNTINGTON BEACH 2, The City , in considering the issue of annexation, has not placed a
ROBERT SHELTON,(RET)
GOVERNMENT RELATIONS value upon an alternative to development- a Bolsa Chica
CONSULTANT nature/wilderness park- and the benefits such a park would provide
SANICE L.KELLOGG, CEO
KELLOGG SUPPLY. INC. to City residents and to others.
WALTER W.NEIL,DIRECTOR
EXTERNAL AFFAIRS,ARCO
VINCE KONTNY,(RET) 3. Based on the above, the 4,700 members of Bolsa Chica Land Trust
EXECUTIVE FLUOR do not support annexation, as proposed.Annexation will provide
CORPORATION water to the developer, which, in turn, may well ensure development
PAST PUPAIDENTS of Bolsa Chica. This would be an -immeasurable loss to the current
NANCY DONAVFN 19*.1"A
CONNIr;00AXDMAN,1994-1"6 residents of Huntington Beach and to future generations.
FLOS,91P.MORGAN,1992.1994
co+0vNO2R
R ectftilly,
6z&t
Paul Horgan
PH/PC
oenms LOCAL SPONSORS: GARDEN GROVE EDUCATION ASSOCIATION
HUNTINGTON BEACH TOMORROW,ORANGE COAST LEAGUE OF WOMEN VOTERS
NATIONAL SPONSORS, THE IZAAK WALTON LEAGUE.THE NATIONAL AUDUBON SOCIETY.
THE NATURE CONSERVANCY,SIERRA CLUB,SURFRIDER FOUNDATION
207 21ST STREET - HUNTINQ'ON B"WH - CALIFORN 8 - (714) 960-9919
0)
FEE-21-99 SUM 09 :59 PM DMR DESIGNS 8187984602 P. O1
51
To: Cormie Brockway, City Clerk
City of Huntington Beach
From: Jolm Scandt
q�J
Subject-, Bolsa Chica. Aimexatron Conunents for the Record
]Date: February 22, 1999
Attached i.s a letter to the Mayor that I wm.1d like to have entered into the record for
the City Council's session. on the Bolsa. C',- i a.imexa.tion. I tui.derstand the session
will be held today at. 5:00 p,tn. Your assistance is most appreciated, if you have any
qutstij -s t,oa tnciy call .rne at (714)846 4835.
FEE-21-99 SUN 09 :59 PM DMR DESIGNS 8187984602 P. 02
mop February 22, 1999
The Honorable Mayor Peter Green
City of Huntington Beach.
2000 Main Street
Huntington Beach, CA 92648
Dear Mayor Green:
I am writing to express my support for the annexation of the twincorpoiw d": ol.s
,
e J3 a
Chica mesa and wetlands by the City of Huntington Beach, As aresideat1w� #
-.9 lives
within a charter of a mile of this area, T Nrvwit to see rapid restoration of wetlands
and no development on the mesa.
The Bolsa Chica area is located outside the City lit-nits, which gives the City no
jurisdictional standing in the wetlands restoration or land use authority over the
mesa development. There i.sno assurance that the City's interests will be considered
in the restoration decisions made by federal and state agencies. Any residential
development on the mesa .may not meet the same standards as the surrowiding
Huntington Beach neighborhoods because the Counh, of Orange is the land use
authority.
Annexation of the Bolsa Chica mesa would turn the City of Huntington. Beach into
the land use authority for the proposed HeaAiside Homes project. While the City
would not be able to block the housing development entirely, annexation will enable
the City to impose the smie standards that are applied to other new housing projects
in Huntington Beach. These standardstnay include larger parks and open space than
allowed by the County and other elements to make the development more
Ible w (b e n
compat with e ecologically sensitive wetlands. Ann xatio could potentially
save the City millions of dollars that would otherwise have to be spent providing
1
services to an unincorporated mesa. This savings would allow the Same level of fre,
police, and emergency services to be continued throughout the City and would fund
needed infrastructure improvements and park Maintenance and upgrades,
The annexation of the lowlands will give the City jurisdictional standing with other
federal and state agencies on the Bolsa Chica Wetlands Steering Committee, This
Corninittee is charged with tn.aking the unpoilant wetlands restoration decisions.
FAD-21-99 SUN 10 :00 PM DMR DESIGNS 8187984602
li
Jurisdictional standing on. this Conunittee will enable our City to exert influence
over the :restoration of the wetlands, which are unportant to the quality of the C'i.ty's
envirorunent and are a major draw for tourism..
i
i
In addition to being a concerned resident, I am active in envirolunental hatters as I
chair the City's Environmental Board and serve on the Bolsa Chica Wetlands
Restoration Technical Committee, Annexation is a sensible approach that is in the
best interests of this corzutruzri.ty's environment. As an infolxz�ed and concerned
ci.t.izet11 I urge the City Council to take the necessary steps to awlex the Bolsa Chica
wetlands and mesa.
r y,
i
,f
John.E. Scandura
17492 Valeworth Ci_j.cle
Hurtti.ngton Beach., C,A. 92649 I
i
i
I
it
r
0 J CITY OF HUNTINGTON BEACH
INTER-DEPARTMENT COMMUNICATION
HUNTINGTON BEACH
To: Mayor and City Council Members
Via: Ray Silver, City Administrator
From: Melanie Fallon, Assistant City Administrattbor � 6 ,-,/— _
Date: February 22, 1999
Subject: Late Communications for RCA CD99-11 and CD-16
The following attached items are submitted to the City Council as late communication for RCA
CD99-16 and CD 99-11:
A. Staff would like to correct a typographical error located on page three of RCA CD99-16(b-.16)
B. Staff also is submitting copies of the PowerPoint presentations for RCA CD 99-11
and CD 99-16.
Attachments
t,3""
V C1 CAI
w..
�v >
BOLSA CHICA ANNEXATION
STUDY
CITY OF HUNTINGTON BEACH
FEBRUARY 22,1999
1 '
STUDY PURPOSE
The purpose of this report is to
review major costs and/or
benefits that could occur if the
i-707porated area of Bolsa
Chica were to be annexed into
the City of Huntington Beach
3
PRESENTERS
ANNEXATION PROCEDURES AND STUDY ASSUMPTIONS — 2'
Laurie McKinley,Senior Partner/MNA Consulting
FISCAL STUDY FINDINGS _r ;', f7)
Dan Miller Prindpa//RSGAssociates
...'
_ � 1
ANNEXATION POSSIBILITIES
■ BEFORE, DURING,OR AFTER DEVELOPMENT
■COMPREHENSIVE(ALL AT ONCE),OR PHASED
■WHOLE OR PART
9
ANNEXATION PROCESS
■INITIATION
■LAFCO HEARING
■CONDUCTING AUTHORITY HEARING
(PROTEST PROVISIONS)
5
TYPES OF ANNEXATIONS
■UNINHABITED
■INHABITED
6
UNINHABITED ANNEXATION
■INITIATION
—AFFECTED AGENCY RESOLUTION
—PROPERTY OWNER PETITION(5%)
in LAFCO HEARING
■CONDUCTING AUTHORITY PROTEST
HEARING
—LANDOWNER PROTEST(50%)
INHABITED ANNEXATION
■ INITIATION
—AFFECTED AGENCY RESOLUTION
—PROPERTY OWNER PETITION(5%)
—REGISTERED VOTER PETITION(5%)
■ LAFCO HEARING
■ CONDUCTING AUTHORITY PROTEST HEARING
—LANDOWNER PROTEST
■25%+...election
—REGISTERED VOTER PROTEST
■25%...election
■50%...termination 8
DEVELOPMENT ASSUMPTIONS
■OCTOBER 1997 COUNTY FISCAL STUDY
■ 1,203 RESIDENTIAL UNITS
—1,023 SINGLE FAMILY
—180 MULTI-FAMILY
i E FOUR-YEAR BUILDOUT
I ■ BUILDOUT POPULATION: 2,887
■ASSESSED VALUES
—CURRENT: $21.3 million
—PROJECTED: $512.3 million
1 9
3
SCENARIO A:
ANNEXATION PRIOR TO DEVELOPMENT
KEYASSUMPTIONS
EXPENDITURES
■ GENERAL GOVERNMENT
-ADMINISTRATION
-ANIMAL CONTROL
-COUNTY PROPERTY TAX COLLECTION CHARGES
■ COMMUNITY DEVELOPMENT
■ PUBLIC SAFETY
- POLICE DEPARTMENT
-FIRE PROTECTION
■ LIBRARY SERVICES
■ COMMUNITY SERVICES
10
SCENARIO A:
ANNEXATION PRIOR TO,DEVELOPMENT
KEYASSUMP77ONS
EXPENDITURES
■ PUBLIC WORKS
-WATER AND WASTEWATER SERVICES
-PARK&LANDSCAPE MAINTENANCE SERVICES
-TIDAL INLET
■ CONTINGENCY
■ ROAD MAINTENANCE
-STREET MAINTENANCE
- BIKE TRAIL MAINTENANCE
u
SCENARIO A:
ANNEXATION PRIOR TO DEVELOPMENT
KEYASSUMPTIONS
REVENUES
■ TAXES ■ FRANCHISE FEES
- PROPERTY TAX ■DEVELOPMENT RELATED
- PROPERTY TRANSFER TAX FEES
-UTILITY USERS TAX LIBRARY COMMUNITY
-SALES TAXES ENRICHMENT&
-TRANSIENT OCCUPANCY DEVELOPMENT FEES
TAX -LAND USE PLANNING,
■ STATE SUBVENTIONS REGULATION&INSPECTION
• - MOTOR VEHICLE FEES FEES
- DEVELOPMENT IMPACT FEES
12
SCENARIO A:
ANNEXATION PRIOR TO DEVELOPMENT
KEYASSUMP77ONS
REVENUES
■ OTHER REVENUES
— PARAMEDIC&AMBULANCE TRANSPORT FEES
— FINES&FORFEITURES
—OIL EXTRACTION TAX
— MISCELLANEOUS REVENUES
■ INTEREST
■ ROAD FUND
13
PROPERTY TAX DISTRIBUTION
BASIC 1%TAX LEVY
The City also City
receives a 4.93%
tax override $0.156
beyond the
$0.156 from the
base 1%Property
Tax rate.
14
CURRENT BOLSA CHICA
(UNINCORPORATED)
PROPERTY TAX DISTRIBUTION
The City
does not
currently county
receive uur ry Not
Property $&0172
Taxes from
Solsa Chlca. -
15
POTENTIAL BOLSA CHICA
PROPERTY TAX DISTRIBUTION
WITH ANNEXATION
. - The Citys - 0dt
potential (CRY)$0.0LU
Property Tax
rate in Bolsa
Chica is$0.1637, (CRY)
plus the tax _
override for a
total of$0111 0ss6
The Property
Tax rate In the
rest of the City
(including the tax
override)is
$0.2053.
16
SCENARIO A:
ANNEXATION BEFORE DEVELOPMENT
SUMMARY FINDINGS
YEAR 1 YEAR 2 YEAR 3 YEAR 4
Revenues $1,128,914 .$2,615,516 $3,124,976 $2,157,793
Expenditures 1,603,856 2,431,521 2,608,561 971,175
Annual Surplus
(Shortfall) (474,941) 183,995 516,415 1,186,618 _
Total ($474,941) ($290,946) $225,468 $1,412,087
17
SCENARIO B:
NO ANNEXATION
KEYASSUMP77ONS
EXPENDITURES REVENUES
■ LAW ENFORCEMENT ■ LIBRARY AGREEMENT
■ LIBRARY SERVICES —TAXES: 70.5%
■ COMMUNITY SERVICES — FEES: $300/UNIT($100
COUNTY,$200 HEARTHSIDE
■ FIRE HOMES)
■ FIRE AGREEMENT
—TAXES: 80%
— FEES: $1.2 MILLION
to
i
SCENARIO B:
NO ANNEXATION.
SUMMARY FINDINGS
YEAR 1 YEAR 2 YEAR 3 YEAR 4
Revenues $416,686 $1,615,791 $621,256 $731,559
Expenditures 1,379,187 2,201,455 2,230,090 564,310
Annual Surplus
(Shortfall) (962,500) (585,664) (1,608,834) 167,249
Total ($962,500)($1,648,164)($3,156,998) ($2,989,749)
19
SCENARIO C:
ANNEXATION AFTER DEVELOPMENT
KEYASSUMP77ONS
EXPENDITURES REVENUES
■ANNEXATION IN YEAR 5 ■"LOST REVENUES"
—CONTINUANCE OF —PROPERTY TAX
COSTS FROM FIRST TRANSFERS
FOUR YEARS OF —UTILITY USERS TAX
DEVELOPMENT W/OUT —CITY OVER-RIDE TAX
ANNEXATION,WITH —OIL EXTRACTION TAX
ADDED EXPENDITURES
FOR WASTEWATER
MAINTENANCE&
OTHER MISC COSTS
20
SCENARIO C:
ANNEXATION AFTER DEVELOPMENT
SUMMARY FINDINGS
YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8
Revenue $731,559 $1,272,435 $1,286,636 $1,314,874 $1,339,166
Expendit
ures 564,310 1,111,044 1,021,228 1,075,341 1,132,633
Annual Surplus
(shortfall) 167,249 161,391 26S,408 239,534 206,533
Total ($2,989,749)($2,828,358)($Z562,951)($2,323,417)($2,116,884)
21
SCENARIO D:
ANNEXATION WITHOUT DEVELOPMENT
KEYASSUMP77ONS
■ NO DEVELOPMENT
■ REVENUES
—PROPERTY TAX REVENUE
—OIL EXTRATION TAX REVENUE
■EXPENDITURES
—MINIMAL DEMAND FOR SERVICE-ALL
BUT FIRE INSPECTION ABSORBED IN
EXISTING BUDGETS
22
SCENARIO D:
ANNEXATION WITHOUT DEVELOPMENT
SUMMARY FINDINGS
YEAR 1 YEAR 2 YEAR 3 YEAR 4
Revenues $158,999 $151,980 $143,988 $136,720
Expenditures 144,606 118,146 124,895 131,410
Annual Surplus
(Shortfall) 14,393 33,834 19,094 5,310
Total $14,393 $48,227 $67,320 $72,630
23
STUDY CONCLUSION
IN EACH SCENARIO EXAMINED,
ANNEXATION CREATES A BENEFICAL
FISCAL IMPACT TO THE CITY;
HOWEVER, THE CITY OBTAINS THE
GREATEST BENEFITS IF ANNEXATION
OCCURS PRIOR TO DEVELOPMENT.
24
I
.. V
i
BOLSA CHICA SUB-COMMITTEE
ON JANUARY 7, 1999,THE COUNCIL SUBCOMMITTEE
MADE THE FOLLOWING MOTIONS TO THE CITY
COUNCIL:
MOTION 1•
Move that the Bolsa Chica Subcommittee recommend to
the City Council that they direct the City Administrator
to develop a strategy that could result in annexing the
Bolsa Chica to the City of Huntington Beach prior to
development of homes in the Bolsa Chica.
2s
BOLSA CHICA SUB-COMMITTEE
MOTION 2:
Also move that the Bolsa Chica Subcommittee
recommend to the City Council that they direct the City
Administrator to consult with the City Council to
establish those parameters which should be addressed
in any negotiation of a pre-annexation agreement for
the Bolsa Chica.
u
GOALS TO BE ACHIEVED IN A
PRE-ANNEXATION AGREEMENT
■FIRE
—FUNDING FOR CAPITAL IMPROVEMENTS
—RESPONSE TIME
—ACCESS TO DEVELOPMENT
■PUBLIC WORKS
—WATER SUPPLY&STORAGE CAPACITY
I —WASTEWATER NEEDS
—TRAFFIC CIRCULATION/SAFETY&PARKING
27
9
GOALS TO BE ACHIEVED IN A
PRE-ANNEXATION AGREEMENT
■COMMUNITY SERVICES
—PARK DESIGN STANDARDS&FUNDING
FOR SERVICE/MAINTNENACE COSTS
■POLICE
—LEVEL OF SERVICE
—RESPONSE TIME
■ LIBRARY
—LEVEL OF SERVICE
—PROPERTY TAX ALLOCATION 2
GOALS TO BE ACHIEVED IN A
PRE-ANNEXATION AGREEMENT
■PLANNING
—COMPATIBILITY W/SURROUNDING USES
—DEVELOPMENT STANDARDS THAT ARE
ACCEPTABLE TO THE CITY
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RECOMMENDED ACTIONS
SUBCOMMITTEE RECOMMENDATIONS
1. "Receive and file the Bolsa Chica Annexation Study
dated January 7,1999"and
2. "Direct the City Administrator to develop a strategy
that could result in annexing the Bolsa Chica to the City
of Huntington Beach prior to development of homes in
the Bolsa Chica"and
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I
RECOMMENDED ACTIONS
ADDITIONAL STAFF RECOMMENDATIONS
3. 'Direct the City Administrator to consult with the City
Council to establish those parameters which should be
addressed in any negotiation of a pre-annexation
agreement for the Boise Chica'and
4. 'Authorize Staff to begin pre-annexation agreement
discussions with Hearthside Homes based on the
negotiation strategy presented on pages 4 - 6 of the
February 22,1999 RCA'and
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RECOMMENDED ACTIONS
5. 'Authorize Staff to communicate with all property
owners within the Boise Chica regarding the
possibility of annexation into the City of Huntington
Beach"and
6. "Provide the City Council with a status report at a
subsequent date addressing additional issues which
are not related to the property owned by Hearthside
Homes.'
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PUBLIC UTILITIES COMMISSION
PROCEEDINGS
APPLICATION OF
SOUTHERN CALIFORNIA
R COMPANY(SCWC)
TO PROVIDE SERVICES TO THE
BOLSA CHICA PLANNED COMMUNITY
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ROLE OF THE PUC
■ REGULATE PRIVATE UTILITIES LIKE SCWC
■ DETERMINE SERVICE BOUNDARIES FOR
PRIVATE UTILITIES
-CONSIDER REQUESTS TO EXTEND SERVICE
TERRITORY
PURPOSE IS SIMILAR TO LAFCO'S ROLE FOR
PUBLIC ENTITIES
-EVALUATE&DETERMINE PUBLIC CONVENIENCE
AND NECESSITY
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THE SCWC APPLICATIONS
■WATER SERVICE
-EXTENSION OF SCWC'S WEST ORANGE
COUNTY SYSTEM
-6.75-MILE PIPELINE FROM CITY OF
CYPRESS
■WASTEWATER SERVICE
-COLLECTION AND PUMPING
PROTEST OF THE APPLICATIONS
■CITY FILED PROTESTS WITH PUC IN
DECEMBER 1998
■CITY BECAME AN"INTERESTED
PARTY"
■CITY INVITED TO"PREHEARING
CONFERENCE"
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1
PREHEARING CONFERENCE
jI ■ PURPOSE IS TO CLARIFY ISSUES AND DEAL
WITH PROCEDURAL MATTERS
—FEBRUARY 25,1999
—COMMISSIONER HENRY M.DUQUE
—ADMINISTRATIVE LAW JUDGE JOHN B.WEISS
■ INVITED CITY TO FILE A PREHEARING
CONFERENCE STATEMENT
■ FOUR QUESTIONS ADDRESSED TO CITY
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PREHEARING CONF. STATEMENT
■TO ADDRESS SCHEDULING AND IDENTIFY
i ISSUES
■ FILED CITY'S STATEMENT ON FEBRUARY 19,
1999
—INFORMED PUC OF ANNEXATION STUDY
—REQUESTED 60-DAY CONTINUANCE TO
NEGOTIATE PRE-ANNEXATION ISSUES
—IDENTIFIED ADDITIONAL ISSUES FOR PUC TO
CONSIDER
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STAFF RECOMMENDATION
MOTION
Approve the responses prepared by Staff to the four
questions asked by the PUC in the February 2,1999
assigned commissioner's ruling noticing pre-hearing
conference.
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