Council sends detailed questions to LAFCO on San Fernando Valley secession proposal

The Los Angeles City Council on June 20 adopted a packet of staff and city attorney reports that raise legal and fiscal questions about a proposal to form a separate San Fernando Valley city and asked the Local Agency Formation Commission (LAFCO) to address those issues.

Councilwoman Misakowski, chair of the ad hoc committee on the Valley reorganization, said the reports do not take a position for or against secession but “raise questions about inconsistencies in the various proposals, questions on some ... legal uncertainties, and areas which need further explanation and exploration.”

The council's action formally transmits the ad hoc committee's compilation — prepared by city staff, the city attorney's office, and other departments — to LAFCO and directs the city’s reviewers to press for answers. The motion was approved on a roll call marked “10 ayes.”

Why it matters: The reports identify legal obstacles and open questions that could affect whether a Valley city could be implemented and what fiscal impacts would follow for both a new Valley city and the remaining City of Los Angeles. The city has a LAFCO deadline of July 2 to submit issues it wants considered in LAFCO’s comprehensive fiscal analysis.

Key issues raised

- Applicability of Proposition 218. Fred Merkin of the City Attorney’s Office told the council there is “tremendous uncertainty in the law as to whether or not that particular constitutional provision would apply to this form of governmental reorganization,” referring to the 1996 amendment governing voter approval for new or increased local taxes. City staff said opinions differ and LAFCO will need to weigh the risk that the amendment could require voter approval for revenues that would fund a new city.

- Regional districts and municipal powers. The applicant’s May 14 proposal would create regional districts to assume major municipal functions such as water and power. City staff advised that LAFCO likely lacks authority to create entities that remove core municipal powers from the City of Los Angeles and that such a transfer could conflict with the city’s constitutional home-rule authority to run municipal utilities.

- Rate-setting authority. Staff concluded that LAFCO cannot set utility rates for the Valley; rate-setting is a municipal function of the City of Los Angeles. The report asked how rates would be set if the regional-district concept is not viable.

- Service contracts and “umbilical cord” concerns. The city flagged the proposal’s reliance on long-term service contracts between Los Angeles and a new Valley city, noting that contracts are consensual and cannot be compelled, and that state law limits mandatory city obligations to the balance of the fiscal year in which an incorporation occurs.

- Revenue neutrality and service impacts. Staff reiterated the principle that Los Angeles must not suffer fiscal harm from a reorganization and questioned several deviations from revenue-neutral assumptions in the applicant’s materials. The city also said LAFCO’s analysis so far has focused on staffing and needs for the proposed Valley city but has not adequately studied service impacts on the City of Los Angeles — a statutory requirement, the reports say.

Public comments and council debate

Jeff Brane, president of Valley Vote and a pro-secession speaker, told the council that the Valley’s proposal could be implemented without tax increases and urged cooperation to protect residents and employees during any transition. He said the Valley plan envisioned keeping the Department of Water and Power (DWP) intact to serve both jurisdictions.

Several council members said the goal of the city’s review is not to oppose the petitioners but to make sure the record and modeling are complete so voters and LAFCO have the information needed to judge viability and impacts. Council members also noted that some disputes could end up in court and that LAFCO — not the council — is the agency charged with preparing the final proposal for the ballot.

Next steps

The council adopted the city staff and city attorney reports as the city’s formal response to LAFCO and recorded its list of questions and legal concerns. The packet will be part of the record LAFCO uses to prepare its comprehensive fiscal analysis; city staff emphasized LAFCO must study impacts on the remainder city as well as the proposed Valley city. The city’s formal submission to LAFCO was due July 2, per the timeline cited in the meeting.

Vote and formal action

Councilwoman Misakowski moved to adopt the ad hoc committee communication incorporating the Office of Research/ORS and city attorney reports as the official city position for LAFCO; the vote was recorded as 10 ayes and the motion passed.