This report was posted on LA City's Website in on nearly unusable PDF files see http://www.lacity.org/oars/lafco/6-2001/ for an index of the PDF files. We have started to convert them to usable internet files (HTML)
CITY OF LOS ANGELES INTER-DEPARTMENTAL CORRESPONDENCE
Date: June 13, 2001 0220-03482-0000
To: The Mayor and The City Council
From: William T Fujioka, Director
Office of Administrative and Research Services
Subject: City Response To LAFCO Regarding Valley Secession Proposal And Initial Fiscal Analysis
The attached report has been prepared as the City's response to the Local Agency Formation Commission (LAFCO) regarding the Applicants' Reorganization Plan (ARP) and the Initial Fiscal Analysis (IFA) for the proposed special reorganization (secession) of the Valley area. LAFCO has given the City until July 2, 2001 to respond. Given the importance of this matter, we request that this file be expedited. The report is comprised of several parts:
1) OARS Executive Summary discussing: a summary of OARS findings and conclusions based on our analysis of the ARP and IFA; how we approached our analysis; and how the body of the report is organized; Attachments:
2) OARS review of major issues and conclusions about whether these issues have been sufficiently addressed by LAFCO to be able to make revenue neutrality and financial viability determinations; issues include:
Revenue neutrality calculations Apportionment methodologies Fiscal viability and start up costs to a new Valley city Transition costs to the remaining City
Division of debt
Employee relations issues Information technology issues Apportionment of non-debt liabilities
Apportionment of assets
Contracting for services with the remaining City Regional or joint governance
Compliance with accounting and auditing standards
3) Departmental comments and OARS notes regarding apportionment methodology used by LAFCO (and recommending more appropriate apportionment methodology tied to actual workload factors) - The comments and notes include factual corrections for accuracy and completeness from the IFA and/or the ARP regarding each City department. The OARS comments discuss specific revenue neutrality issues, transition costs for the remaining City of Los Angeles and start up costs for a new Valley city that were not included in the IFA or ARP;
4) Clarification questions submitted to LAFCO and responses received to date;
5) Independent consultant assessments of the intent of the State Legislature when creating the revenue neutrality laws, as well as issues raised in the IFA and ARP which should be considered by the City, LAFCO and a new Valley city; and
6) Copies of the IFA and ARP are submitted as part of the official Council file. (These documents were previously distributed to elected officials, City departments, ratings agencies and other interested parties.)
One of the primary principles upon which we have based our analysis is that the people in the remaining City of Los Angeles should not be harmed in any way y secession - meaning, no cuts in service level and no extra financial burdens to bear. The report transmits OARS', departments', and consultants' analysis and observations regarding the contents of the IFA and ARP; states where we believe additional work reeds to be done to accurately and realistically assess revenue neutrality and financial liability; and identifies potential impacts on both the new city and the remaining City of Los Angeles. The report represents an objective analysis based on factual information and does not take a stand "for' or "against" secession.
We also note that certain major assumptions in the IFA and ARP were directly contradictory (such as the provision of water and power services). In addition, portions of the ARP (such as the section on creating "reorganized governmental entities" to oversee regional services and assets) were so general and vague that neither we, nor LAFCO, would be able to do a genuine analysis. While we have tried to respond to both the ARP and the IFA, the inherent contradictions and generalities made it difficult. We believe that LAFCO should develop a consistent, realistic and thorough proposal for a new Valley city government, and that the City of Los Angeles should be given another opportunity to officially comment on the revised proposal. RECOMMENDATIONS:
1) That the attached response to LAFCO be authorized for release; and
2) That, after Council consideration, the file be sent forthwith to the Mayor and that the Mayor transmit the City's response to LAFCO to meet the July 2, 2001 due date.
FISCAL IMPACT STATEMENT
Releasing this informational response to LAFCO does not cause a specific General Fund impact. Existing General Fund budgeted and year-end report funds were used to fund salaries and expense costs spent in the production of the report. The financial impact of Valley secession cannot be determined at this time.
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