                       TO BE PUBLISHED IN THE OFFICIAL REPORTS


                            OFFICE OF THE ATTORNEY GENERAL

                                      State of California


                                      DANIEL E. LUNGREN

                                        Attorney General


                          ______________________________________

                  OPINION            :
                                     :          No. 94-401
                  of                 :
                                     :          August 31, 1994
        DANIEL E. LUNGREN            :
           Attorney General          :
                                     :
        ANTHONY S. Da VIGO           :
        Deputy Attorney General      :
                                     :
______________________________________________________________________________


          THE HONORABLE RICHARD K. RAINEY, MEMBER OF THE CALIFORNIA
STATE ASSEMBLY, has requested an opinion on the following question:

                May a Local Agency Formation Commission approve the continuation of a county
service area within territory to be annexed by a city even though the level of services provided in
the area will be the same as the level of services provided by the city to its other residents?

                                          CONCLUSION

                 A Local Agency Formation Commission may approve the continuation of a county
service area within territory to be annexed by a city even though the level of services provided in
the area will be the same as the level of the services provided by the city to its other residents, but
only when the commission finds that (1) discontinuation would deprive the area of services needed
to ensure the health, safety, or welfare of the residents and (2) continuation would not affect the
ability of the city to provide any services.

                                            ANALYSIS

                We are requested to consider the relationship between two statutory schemes in
determining whether the requirements of the one may be waived under the terms of the other when
certain conditions are present. Specifically, may a Local Agency Formation Commission
("LAFCO") approve the annexation of territory by a city if the territory is part of a community
service area providing the same level of services as received by the city's residents and the territory
is to continue to be served by the community service area? We conclude that the LAFCO may
approve the annexation if it is able to make certain requisite findings with respect to the services
provided to the area's residents.




                                                  1.                                           94-401

               A.      The County Service Area Law

                The County Service Area Law (Gov. Code, §§ 25210.1-25211.33)1 was enacted by
the Legislature in order to provide for the growing needs of development in unincorporated areas
of the state. (Byers v. Board of Supervisors (1968) 262 Cal.App.2d 148, 153; 65 Ops.Cal.Atty.Gen.
176, 177 (1982); 57 Ops.Cal.Atty.Gen. 423, 424-425 (1974).) Section 25210.1 states:

               "The Legislature hereby finds and declares that unprecedented growth in the
       unincorporated areas of a great many counties of California, particularly since 1940,
       has created many new and difficult problems of government. As a result of large
       population growth and intensive residential, commercial and industrial development
       in such areas, extended governmental services are needed in such areas.

              "The Legislature recognizes the duty of counties as instrumentalities of State
       Government to adequately meet the needs of such areas for extended governmental
       services and also recognizes that such areas should pay for the extended services
       which are provided.

               "The residents and property owners of such areas are entitled to have made
       available to them reasonable alternative methods of providing or securing the
       extended services they require and to choose among the alternatives a method best
       suited to their local circumstances.

               "It is the purpose of this chapter to provide an additional alternative method
       for the furnishing of extended governmental services within such areas adequate to
       meet the needs of such areas and to provide for the levy of taxes within such areas
       in an amount sufficient to pay for extended services provided or additional extended
       services to be provided."

County service areas may be established to provide, among other services, police protection, fire
protection, water, road maintenance, libraries, and park facilities. (§§ 25210.4, 25210.4a.) A county
service area may consist of all or part of a county's unincorporated area, and with the consent of a
city all or any part of its territory. (§§ 25210.10, 25210.10a.) The services may be funded by the
imposition of special taxes, service charges, and connection charges. (§§ 25210.6-25210.9c.)

               In City of Santa Barbara v. County of Santa Barbara (1979) 94 Cal.App.3d 277, 287,
the court described the purposes of the County Service Area Law as follows:

               "In our view the passage of the County Service Area Law was a legislative
       response to increasing inequities between residents of incorporated and
       unincorporated areas respecting the rendition and receipt of various municipal type
       services. (See Stone, The County Service Area Law: Meaning of Extended
       Services, (1976), supra, at pp. 9-37.) As an alternative to other methods of obtaining
       correlation between cost burdens and service benefits, such as annexation,
       incorporation or the creation of special districts, provision was made for county
       service areas. And, while not requiring unincorporated territories to otherwise
       change their status, provision was also made whereby a consistent state policy
       against subsidization of one group of taxpayers by another might be satisfied.
       [Citations.]"

   1
    Unidentified section references herein are to the Government Code.

                                                 2.                                             94-401

              B.      The Cortese-Knox Local Government Reorganization Act of 1985

                Under the general terms of the Cortese-Knox Local Government Reorganization Act
of 1985 (§§ 56000-57550), a LAFCO must approve any changes of organization by cities and
special districts. Section 56375 provides in part:

               "The commission shall have all of the following powers and duties subject
       to any limitations upon its jurisdiction set forth in this part:

              "(a) To review and approve or disapprove with or without amendment,
       wholly, partially, or conditionally, proposals for changes of organization or
       reorganization. . . ."

A "change of organization" is defined in section 56021:

              "`Change of organization' means any of the following:

              "(a) A city incorporation.

              "(b) A district formation.

              "(c) An annexation to, or detachment from, a city or district.

              "(d) A disincorporation of a city.

              "(e) A district dissolution.

              "(f) A consolidation of cities or special districts.

              "(g) A merger or establishment of a subsidiary district."

A "reorganization" is defined in section 56073 as follows: "`Reorganization' means two or more
changes of organization initiated in a single proposal."

              The purposes to be served by requiring the approval of a LAFCO for any changes of
organization made by cities and special districts are set forth in section 56001:

               "The Legislature finds and declares that it is the policy of the state to
       encourage orderly growth and development which are essential to the social, fiscal,
       and economic well-being of the state. The Legislature recognizes that the logical
       formation and determination of local agency boundaries is an important factor in
       promoting orderly development. Therefore, the Legislature further finds and
       declares that this policy should be effected by the logical formation and modification
       of the boundaries of local agencies.

               "The Legislature recognized that urban population densities and intensive
       residential, commercial, and industrial development necessitate a broad spectrum and
       high level of community services and controls. The Legislature also recognizes that
       when areas become urbanized to the extent that they need the full range of
       community services, priorities are required to be established regarding the type and
       levels of services that the residents of an urban community need and desire; that
       community service priorities be established by weighing the total community service

                                                 3.                                             94-401

       needs against the total financial resources available for securing community services;
       and that those community service priorities are required to reflect local
       circumstances, conditions, and limited financial resources. The Legislature finds and
       declares that a single governmental agency, rather than several limited purpose
       agencies, is in many cases better able to assess and be accountable for community
       service needs and financial resources and, therefore, is the best mechanism for
       establishing community service priorities."

               C.      A City's Annexation of County Service Area Territory

               Section 25210.90 provides in part:

               "Whenever any territory in a county service area is included within a city by
       reason of incorporation, annexation or otherwise that territory shall be automatically
       excluded from the county service area upon the effective date of its inclusion in the
       city, whether or not such inclusion within a city occurs before or after the completion
       of the formation of the county service area . . . ."

Accordingly, as would be expected, a county service area is normally discontinued when its territory
is annexed by a city.

                 However, as previously indicated, a county service area may serve part or all of a
city's territory. Section 25210.10a provides:

                "All or any part of a city may be included in the formation of a county service
       area if a resolution of consent adopted by a majority vote of the membership of the
       city legislative body is filed with the clerk of the board of supervisors before the
       board adopts its resolution of intention."

More importantly for purposes of the question presented, subdivision (p) of section 56375 authorizes
a LAFCO to allow the continuation of a county service area when the territory is annexed by a city
if certain conditions are met. Under section 56375, subdivision (p), a LAFCO is authorized:

               "To waive the application of Section 25210.90 . . . if it finds the application
       would deprive an area of a service needed to ensure the health, safety, or welfare of
       the residents of the area and if it finds that the waiver would not affect the ability of
       a city to provide any service. However, within 60 days of the inclusion of the
       territory within the city, the legislative body may adopt a resolution nullifying the
       waiver."

                Hence, although a county service area is normally discontinued for any territory
annexed by a city (§ 25210.90), it may continue to exist after annexation if two conditions are met.
First, would discontinuation of the county service area "deprive [the] area of a service needed to
insure the health, safety, or welfare of the residents of the area"? Second, would continuation of the
county service area "not affect the ability of [the] city to provide any service"?

                 We view these two questions as distinctly different from the question of the level of
services provided by a county service area in comparison to that provided by a city. The issue of
the level of services is more appropriately addressed when creation of a county service area is being
considered. As stated in City of Santa Barbara v. County of Santa Barbara, supra,94 Cal.App.3d
277, 287-288:


                                                  4.                                               94-401

                ". . . The decision whether to create a county service area is not related to any
        consideration of existing tax revenues or the source of those revenues, but is a
        function solely of a factual determination whether specified services or the level of
        those services are being provided throughout the county on a uniform basis both
        within and without cities. How the service area will be financed once it is formed
        is a separate question, one to be resolved subsequently to formation and one upon the
        answer to which creation of the service area does not depend. Rather than approach
        the question of fairness among various taxpayers in a vacuum where the predictable
        result will be nothing other than confusion, the County Service Area Law
        contemplates resolution of inequity based on consideration of specific factual
        settings which are subject to relatively simple illustration and is no more nor less
        than one of several means of arriving at a just result in equating tax burdens with
        service benefits. And, while in the broad sense the statute is not compulsory in its
        operation, nor indeed self-executing, it is mandatory in its application upon an
        appropriate affirmative showing of disparity in the receipt of services by one group
        as opposed to another." (Fn. omitted.)

The level of services may thus be evaluated at the time a county service area is created.

               Of course, what the level of services are in an existing county service area and in an
annexing city's jurisdiction may tangentially relate to the issues of whether discontinuation of the
county service area might deprive the area residents of a needed service or whether continuation
might affect the ability of the city to provide a particular service. Obviously, the level of services
between the two will either be equal or unequal both before and after annexation. All that we
conclude here is that the focus of subdivision (p) of section 56375 is upon considerations other than
quantifying the level of services in the county service area and in the annexing city to determine
whether they are equal.

                For example, we are advised that this request for our opinion was prompted by the
proposal of a county to establish a county service area entirely within unincorporated territory in
order to provide extended services equal to those furnished in the adjoining cities and that one of
the cities may thereafter annex part of that territory. While a consideration of the level of services
provided may be appropriate in determining whether to form the county service area in the first
instance, such consideration is not dispositive in determining whether the county service area should
thereafter be continued in the territory annexed by the city.

                In other words, the residents in the proposed county service area need not be
receiving a different level of services than that received by other city residents in order to have the
county service area continued. The mere fact that both groups would receive the same level of
services if the county service area is continued does not answer the question of whether
discontinuation would "deprive" the area of a needed service.

                What the LAFCO must decide is whether the city would be in the financial condition
and have the physical resources to provide necessary services in the annexed territory. If not, then
discontinuation of the county service area might well deprive the area of services needed to ensure
the health, safety, or welfare of the residents and continuation would not affect the ability of the city
to provide the services.

                In answer to the question presented, therefore, we conclude that a LAFCO may
approve the continuation of a county service area within territory to be annexed by a city even
though the level of services provided in the area will be the same as the level of services provided
by the city to its other residents, but only when the LAFCO finds that (1) discontinuation would

                                                   5.                                               94-401

deprive the area of services needed to ensure the health, safety, or welfare of the residents and (2)
continuation would not affect the ability of the city to provide any services.

                                              *****




                                                 6.                                          94-401

