MINUTES
Regular Meeting February 7, 2013

(These minutes are not intended to be a verbatim transcription of the proceedings and discussion associated with the business on the Commission’s agenda; rather, what follows is a summary of the order of business and general nature of testimony, Commission deliberation, and action taken.)

CALL TO ORDER/ROLL CALL
Chairman Baugh called the meeting to order at 9:00 am at the Shasta County Board of Supervisors Chambers in Redding, CA. Commissioners Day, Jones, Kehoe, Mathena and Morgan were present. Commissioner Haynes was absent. Executive Officer Amy Mickelson, Attorney Jim Underwood and Clerk Marissa Jackson were present as staff. Alternate Commissioner Farr was present as a member of the audience. Chairman Baugh welcomed incoming Commissioner John Day to the meeting.

PLEDGE OF ALLEGIANCE
Commissioner Day led the Pledge of Allegiance.

PUBLIC COMMENT
There was no public comment submitted.

NOTICED PUBLIC HEARINGS
Ms. Mickelson reported that the Anderson Cottonwood Irrigation District (ACID) had submitted an application for proposal to annex 19 parcels (approximately 88 acres) and to concurrently amend the District’s Sphere of Influence to include the affected area. The annexation was proposed because the properties have historically received services from ACID and have recently been determined to be outside District boundaries. The annexation would allow for continuation of historical services. This is an inhabited, non-100% consent application. Tax exchange agreements are in place and a negative declaration has been adopted by ACID. One comment was received by a property owner outside of the boundary and CalFire submitted a letter of support.

The public comment hearing was opened at 9:03 am.

ACID consultant Duane Miller, of DK Miller Engineering, reported that the project is a clean-up issue which brings everyone into compliance by placing current customers inside District boundaries.

The hearing closed at 9:06 am. By motion made (Kehoe) and seconded, the annexation was approved unanimously.

CONSENT CALENDAR
By motion made (Kehoe) and seconded (Day), the consent calendar was approved.

BUDGET AND FISCAL AFFAIRS
Ms. Mickelson reported that the LAFCO 2012-13 Budget is on track to end the year at or below budget. Expenditures are currently at 58%, some of which is due to increased expenses for specific proposals noted in legal, planning and publications line items. Revenue is tracking above expected due to an influx of paid proposal deposits and will offset the specific costs associated with those particular proposals. The significant amount of money owed by the Fall River Valley Community Services District (FRVCSD) remains as an overdue receivable for expenditures funded on their behalf. The unpaid invoices of more than $12,000 are scheduled to be sent to collection, or to potential recovery methods as determined by the Commission if acceptable payment arrangements are not made immediately. Payment has been discussed with the District on several occasions. A letter was received from them February 6, 2013 at 9:00 pm indicating that they are not prepared to pay at this time. As the cost-share participants that fund LAFCO are subsidizing the unpaid bill, Ms. Mickelson asked the Commission to provide direction.

Terry Briggs spoke as a ratepayer regarding FRVCSD’s bill, stating the District has concerns about the breakdown of expenses and requires an itemization.

Commissioner Baugh questioned how LAFCO can get to the end of the year considering the line items which are grossly over budget in regard to the FRVCSD unpaid invoice. Ms. Mickelson stated that reserve funds could be transferred and utilized to offset operating expenses, if necessary. If the reserves become inadequate, LAFCO can go to the Board of Supervisors and request a loan through the end of the fiscal year.

Commissioner Kehoe noted that FRVCSD’s letter requested additional time to pay the invoices, but did not specify a time frame. He stated that we need to request of them what kind of time frame they need, the specific issues they have with the billing statement and what their capacity to pay is, as well as alternatives they may have as far as a payment schedule. Commissioner Mathena would like to see this item on the March 7, 2013 agenda.

The mid-year budget was adopted by motion made (Kehoe) and seconded.

SPECIAL STUDIES AND REPORTS
Ms. Mickelson reported that the Gore/Steiner Annexation to ACID is moving forward and tax negotiations are underway. Mayers Memorial Hospital District annexation has been filed and tax agreements were adopted by Shasta and Modoc Counties. We received a letter from Modoc County dated February 5, 2013 indicating a rescission of the previously adopted revenue sharing resolution. Without those agreements from Modoc and Lassen, Mayers would need to modify the project boundaries to exclude areas outside of Shasta County.

The cemetery district Spheres of Influence are being completed, along with basic Municipal Services Reviews. South County Fire maps and Spheres of Influence are also very close to completion.

OPERATIONS & ADMINISTRATION
Ms. Mickelson provided some background regarding a policy decision made in 2002, after Cortese-Knox-Hertzberg took effect, specifying what types of agencies they would subject to a municipal services review (MSR). The following agencies were determined to be subject to the services review requirement: county, county service areas, cities, community services districts, water districts and fire protection districts. The Commission then determined that cemetery districts, health care districts, irrigation districts, mosquito abatement districts and resource conservation districts were not subject to a municipal services review; however they are subject to a sphere of influence determination. This historic decision was made ten years ago, just after the significant law revision. Other LAFCOs have not made this exemption.

The Mayers proposal, since it includes multiple counties, creates an obvious conflict between LAFCO policies as both Lassen and Modoc would require an MSR in order for the annexation to move forward. Ms. Mickelson agreed that the MSR is a vital tool and has questioned the exemption several times, but there has not yet been a pressing need to change policy and as such, the Commission has opted not to do that. She further advised that the Commission could opt to require MSRs for all of the previously exempted entities.

At minimum, the Executive Officer recommends a change in adopted policy to require health care districts to be subjected to Municipal Services Reviews. This change could be made by adding Health Care Districts to the list of agencies requiring a MSR and striking out health care districts in the sentence listing the exemptions. In addition, staff recommends adding the following (underlined) statement to adopted policy: Therefore, it is the position of Shasta LAFCO that these districts and the services they provide are not subject to municipal services reviews, unless deemed necessary by the Executive Officer in the course of completing a Sphere of Influence or Reorganization proposal. The proposed change to policy would allow for flexibility, yet would provide for an MSR requirement in situations where it was warranted.

If Shasta LAFCO does not require an MSR for the Mayers proposal, then Modoc and Lassen will not support the annexation. If it does go forward, Shasta LAFCO would need to assume that litigation would follow. She strongly recommended that the Commission require an MSR for Mayers and contract with a consultant due to the scope required of a health care district MSR. Commissioner Mathena concurred that the process is very complicated and a consultant specializing in health care districts was warranted.

Commissioner Kehoe asked for Mayer’s position on the matter. Ms. Mickelson responded that the District has not been contact with LAFCO regarding these issues.

Terry Briggs addressed the Commission inquiring as to how many MSRs had been completed since 2008. He also wanted to know why Mayers pursued their project and bothered other districts with it. Ms. Mickelson advised that the information is available on the LAFCO website and Commissioner Baugh stated that LAFCO cannot answer for the Hospital District.

Jan Lopez, as a member of the public, then distributed and read a three-page letter regarding MSR requirements for health care districts which she said she needed to bring to the Commission’s attention. She added that it is LAFCO’s responsibility to initiate general reviews and to recommend contracting out doesn’t feel right.

Matt Rees, CEO of Mayers Memorial Hospital District, then entered the meeting room. He asked for a six-month continuance on the annexation application as they are waiting to find out what will become of the ambulance service in Adin. A committee is looking at all of the options, one being the expansion of Mayers. They are also looking at forming a JPA in which case Mayers would not negotiate with the Counties, but the JPA for a zero sum tax agreement.

Ms. Mickelson cautioned the Commission that an extension was not on the agenda and that any action taken must be regarding MSR policy. It was determined that the issue will be brought back before the Commission at a future date.

COMMISSIONER ANNOUNCEMENTS
Commissioner Morgan announced that he has a new granddaughter who was born February 5th.

STAFF ANNOUNCEMENTS
Ms. Mickelson thanked Commissioner Farr for his service over the past two years, and for his presence in the audience as alternate. Ms. Mickelson also reminded the Commission that a special LAFCO meeting will be held on Thursday, March 7, 2013 at 9:00 am at City of Redding Council Chambers. She also noted that the LAFCO Offices will be closed February 11th and 18th.

ADJOURNMENT
There being no further business, Chairman Baugh adjourned the meeting at 9:49 am.

ATTEST:

Marissa Jackson 
Clerk to the Commission