WHAT IS INVOLVED IN IRVINE'S ANNEXATION BID FOR EL TORO? - 2nd Report

The following agenda report to the Irvine City council for its January 13, 1998 meeting summarizes the roadblocks and timetable for annexation of the airport and jail.

COUNCIL MEETING DATE: JANUARY 13, 1998

TITLE: ANNEXATION OF MCAS EL TORO & JAMES A. MUSICK BRANCH JAIL

RECOMMENDED ACTION

1. Receive staff report. 2. Receive public input. 3. City Council discussion. 4. Designate a tax transfer negotiating team consisting of the City Manager, two City Council members and the City Attorney. 5. Initiate tax transfer negotiations with the County of Orange using the 1980 Master Property Tax Transfer Agreement. 6. Direct staff to select a consultant to prepare urban service plans and environmental documents, and as needed, seek additional consultant assistance to comply with the Local Agency Formation Commission annexation process.

COMMISSION/ADVISORY BOARD RECOMMENDATION

Commission review not required.

EXECUTIVE SUMMARY

On November 25, 1997, the City Council directed staff to proceed with the annexation of MCAS El Toro, and provided flexibility in determining whether or not to combine the annexation requests for both MCAS El Toro and the James A. Musick Branch Jail. This report outlines the issues, process and schedules for proceeding with these annexations.

Before an annexation request can be filed with the Local Agency Formation Commission (LAFCO), the City would have to complete the following steps: (1) prezoning of the property, (2) a municipal services plan, (3) a fiscal impact report, and (4) environmental documentation. All of this information would be part of the City’s resolution of application, which initiates the annexation process. The annexation process also includes the requirement to negotiate a property tax transfer agreement with the County before an application can be considered by LAFCO. This means that the annexation request may not be considered by LAFCO if the County is unwilling to come to terms with the City. In this case, the City may have to pursue legal means to compel the County to negotiate a tax transfer. Subsequent to the LAFCO hearing, a protest of the annexation may be filed by the Department of the Navy and/or Marines residing on the base who are registered to vote. A protest and subsequent vote may stop the annexation even after approval by LAFCO.

Annexation of the Musick Branch Jail would also be commenced with the filing of a resolution of application. However, since the land use issues are substantially different from the redevelopment of MCAS El Toro and the landowners are different, staff believes that the annexation proposals should proceed separately. Ownership of the 100-acre Musick site causes an additional complication, in that even if LAFCO were to approve the annexation, a subsequent protest by the County as the sole land owner can effectively cause the annexation to fail.

As noted in the November 25, 1997 staff report, the County’s interim policy on annexations states that the County will oppose annexations which impact regional facilities necessary for core business functions. Future airport sites and county jails fit within the definition of "core business functions." However, the County’s input on the annexation request is one of many factors considered by LAFCO as part of its decision-making process. The Board of Supervisors does not vote on the annexation request, but it does have two out of seven votes on LAFCO.

STATEMENT OF THE ISSUES

Issue 1: Resolution of Application

The filing of a resolution of application with LAFCO would start the "annexation clock". According to state law, a resolution of application includes a description of the nature of the proposal, a legal description of the property, and the reasons for the proposal. In addition to the resolution, the City must submit a plan for providing urban services. LAFCO staff has indicated that, since the property is presently being used as a jet fighter base, and after closure, it will be developed for civilian uses, the property must be prezoned for a future use. Due to the urban service issues associated with the annexation and the reuse planning underway by the El Toro Reuse Planning Authority (ETRPA) and the County, an environmental impact report (EIR) will be requested by LAFCO to assist with the compilation of information and the environmental analysis. The City can use the ETRPA non-aviation plan as its proposal for prezoning the property. This will require the City to work with ETRPA to structure the plan according to Irvine’s general plan and zoning requirements. ETRPA is scheduled to adopt a preferred non-aviation plan in April, 1998. A fiscal impact analysis, along with technical studies for noise, traffic and air quality will accompany this plan. ETRPA’s work program does not include a plan for providing services and the preparation of an EIR.

In the November 25, 1997, staff report, several alternatives were outlined for the preparation of an EIR. These included the preparation of an EIR by LAFCO on the ETRPA non-aviation plan; the non-aviation plan being analyzed as an alternative in the County’s aviation master plan EIR; or the non-aviation plan being analyzed in an EIR prepared by ETPRA or the City. The City would be interested in selecting the EIR consultant, defining the scope of work and guiding the environmental analysis. This cannot occur if the County or LAFCO prepares the EIR. ETRPA’s purpose is to undertake planning for the reuse of MCAS El Toro. ETPRA is clearly not an individual municipality, and does not have enumerated powers to pursue annexations. Therefore, the EIR to support a City annexation should not be prepared by ETRPA, but by the City.

Staff believes that the most effective use of the time needed to complete the ETRPA non-aviation plan would be for the City to contract with a consultant to immediately commence the preparation of an EIR for the annexation. While the ETRPA non-aviation plan will not be completed until April 1998, much of the information used to prepare an EIR in the south-central Orange County area is generic. Additionally, the consultant can start with the preparation of a services plan and undertake the review of the County’s 1996 reuse plan EIR and the City’s EIR for the 440 acres of MCAS El Toro in the City. These plans would constitute alternatives to the ETRPA non-aviation plan. Such alternatives must be analyzed by the City’s EIR since these are both previously adopted plans covering the same property. This approach will eliminate a significant amount of "down time" if the City were to wait for the completion of the ETRPA plan before starting the environmental work. Therefore, the City may be able to submit a resolution of application within approximately five to six months of the completion of the ETRPA plan. A proposed annexation schedule is included on pages 5 and 6 of this report.

Earlier submittal of a resolution of application is not practical. LAFCO staff has indicated, there would be no chance for the application to be considered by LAFCO because the existing General Plan designation is not an accurate depiction of the future of the base. The base will cease to function as a military facility as of July, 1999, and plans for both non-aviation and aviation uses are presently underway to convert the base to civilian uses. Issue 2: Tax Transfer Agreement

Before LAFCO can set for hearing the City’s resolution of application, a property tax transfer must be negotiated with the County. Unfortunately, state law does not require the County to agree to any specific formula. The County recently refused to reach agreement with another city, thereby preventing the annexation request from being heard by LAFCO.

The City of Irvine entered into a Master Property Tax Agreement with the County in 1980. The agreement embodies the historic tax distribution ratio between the City and County of 18% to 82%. This ratio typically applies to undeveloped property as defined by the agreement. Developed property may require the negotiation of a different tax transfer agreement. Pursuant to the agreement, the City is required to notify the County of its intent to apply the agreement’s tax transfer ratio before the filing of a resolution of application for the annexation. The agreement provides that, in certain instances, the LAFCO Executive Officer can make a determination of whether property is developed or undeveloped for the purpose of determining the tax transfer ratio. However, there is no requirement for the Executive Officer to make the determination because LAFCO is not a party to the 1980 agreement between the City and the County. It should be noted that the schedule outlined below assumes that the City and the County can successfully conclude a mutually acceptable property tax exchange using the 1980 Master Property Tax Transfer Agreement.

If the City is unsuccessful in reaching an accord with the County, the City may have to seek legal intervention to arrive at a satisfactory property tax exchange. If legal intervention is necessary in an attempt to enforce the existing agreement, a superior court determination could take an additional six to nine months. This could delay the filing of a resolution of application with LAFCO to March, 1999.

In the event that the City and County cannot reach an accord using the 1980 Master Property Tax Agreement, the parties could also avail themselves of the provisions of Senate Bill (SB) 466, which was an attempt by the 1997 State Legislature to help the parties to an annexation request better define their property tax needs through the assistance of a mediator, and then if needed, an arbitrator. However, SB 466 cannot be invoked until a resolution of application has been filed and accepted by LAFCO. SB 466 would give the parties 60 days to negotiate a mutually acceptable property tax exchange. If they were not successful, an additional 30 days is provided to work with a mediator to resolve the differences, and a subsequent 30 days to work with an arbitrator if an impasse still exists. However, even with the new law, a tax transfer exchange still cannot be unilaterally imposed by the arbitrator. Another problem with SB 466 is that a court would not be able to compel a mutually acceptable property tax exchange because the provisions of SB 466 are permissive as opposed to being mandatory.

Staff believes that the City should begin the tax transfer negotiation process in early 1998. Since negotiations with the County will likely be extensive, staff recommends that the City Council designate the City Manager to head a negotiating team to include two members of the City Council and the City Attorney to meet with their County counterparts.

Issue 3: MCAS El Toro Annexation Schedule

Provided below is a simplified annexation schedule to provide a framework for the annexation process. All time frames proposed are in keeping with an accelerated decision-making schedule. Not included are potential delays which may result from legal intervention, the discretion of either LAFCO or its staff, the use of SB 466 to negotiate a property tax exchange, or additional proceedings/meetings required to complete Irvine’s General Plan, zoning and EIR certification for the property.

Action Time Frame

Initiation of tax transfer negotiation January 1998 process.

Consultant begins preparation of services February 1998 plan and background work for environmental documentation.

Completion of ETRPA non-aviation and April 1998 technical studies for traffic noise, and air quality. Start of EIR for plan services and annexation. Start of land regulations preparation by ETRPA. Start of converting ETRPA non-aviation plan to Irvine General Plan & Zoning

Completion of tax transfer negotiation with June 1998 County.

Completion of ETRPA land use regulations for July 1998 non-aviation plan; completion of conversion of non-aviation plan to Irvine General Plan & Zoning

Release of draft EIR for 45 day review. August 1998 Public meetings/hearings on general plan amendment, August - September 1998 zone change and EIR certification – Finance, Transportation, and Planning Commissions and City Council.

Filing of Resolution of Application with LAFCO September - October 1998 including general plan, prezoning, proposed services plan and certified EIR.

Application accepted as complete by LAFCO October - November 1998 Executive Officer.

LAFCO hearing -- potential continuance for January-February 1999 additional hearing(s); decision of approval; (approval) or Proceedings or denial. terminated; potential refile, February 2000 (denial)

Conducting authority (City of Irvine) public hearing February - March 1999 and protest. â Approval of proposal (no significant voter or land- April 1999 owner protest) – annexation completed. or Majority protest of landowners or voters; no Proceedings terminated; election vote. Potential to refile in April 2000 or Call for election (substantial voter or landowner June 1999 protest) and voters approve; annexation completed. or Call for election (substantial voter or landowner Proceedings terminated; protest) and voters oppose. potential to refile in June 2000

Issue 4: James A. Musick Branch Jail

Annexation of the Musick Jail to the City would add approximately 100 acres of land owned by the County. The site consists of row crops and buildings housing up to 1200 low and medium security inmates. The County has approved plans to expand the jail to 7000+ beds and to also house maximum security inmates. The cities of Irvine and Lake Forest oppose the expansion plans and have challenged the legal validity of the expansion plan EIR prepared by the County. The Superior Court has upheld this challenge, and the court is now considering the scope of a remedial order.

If annexed to the City, the jail site would become like any other County facility wholly located within a city (e.g., Mason Regional Park, the Theo Lacy Branch Jail and the Dana Point Harbor). Generally, the County will maintain control over the facility’s use and development, and will not be subject to the City’s planning and zoning authority. Therefore, annexation of the Musick Jail site will not directly impact the City’s ability to stop the expansion plans. However, the change in jurisdiction may provide additional leverage for the City to work more closely with the County to address land use compatibility issues by maintaining the present status and capacity of the Musick Jail; or to close it altogether in favor of another site in a remote area.

The importance of this issue can be surfaced through the preparation of environmental documentation to show that alternate sites to Musick can be developed with fewer environmental and public policy impacts. The new environmental documentation prepared to support an annexation request can address alternate sites in a more comprehensive manner than did the County EIR. It can clearly define a new preferred project of either closing Musick entirely or maintaining its present status. However, it should be noted that the LAFCO process cannot affect the selection of an alternative. Additionally, pursuant to state law, LAFCO must consider the position taken by the landowner regarding the annexation during the hearing. It is one of a number of criteria considered by LAFCO in its decision-making process. As the sole land owner, the County can effectively stop the annexation from occurring if it protests a LAFCO action to approve the annexation at the conducting authority (City of Irvine) hearing.

Staff believes that the City should proceed with the annexation if it wishes to bring political attention and increase community awareness of its efforts to find an alternate jail site. The election of a new sheriff, and changes to priorities which may result from the 1998 supervisorial election, may enhance the City’s chances of annexing the site, and potentially influencing the expansion plans. The simplest and most expeditious way of proceeding would be by filing a resolution of application with LAFCO, which proposes to maintain the site as a low to medium security facility. The accompanying environmental documentation would cover the in-depth analysis for alternate sites which can be used to meet the need to house a growing inmate population into the next century.

The annexation process should commence by a request from the City that the County abide by the 1980 Master Tax Transfer Agreement. This would satisfy the state law requirement for a negotiated property tax transfer before LAFCO can hear the annexation request, and if Musick is closed, it would provide the tax distribution for redevelopment. If a property tax transfer exchange cannot be negotiated under the 1980 agreement, the parties can use the provisions of SB 466, as discussed above. The LAFCO processing schedule noted below assumes that the property tax exchange can be concluded using the 1980 agreement. If SB 466 is used, the property tax exchange discussion can take up to 150 days after the LAFCO resolution of application is accepted for filing.

Differences in the ownership, size, future land use, service plans, environmental impacts and tax transfer requirements have led staff to conclude that the annexations of MCAS El Toro and the Musick Jail site should be processed separately. However, the preparation of the service plan and the environmental documentation can and should be prepared by the same consultant(s) to take advantage of economies of scale which result from familiarity with the area, its land use issues and the commonality of the background environmental work. Staff believes that while no prezoning of the Musick property will be required by LAFCO, since the proposal would be to maintain the site in its present capacity, a supplemental or focused EIR will be required to develop an alternate site to meet future needs. This EIR can be completed within six months, allowing the City to file the resolution of application by July, 1998.

Issue 5: James A. Musick Branch Jail Annexation Schedule

Provided below is a simplified annexation schedule as a framework for the annexation process. All time frames proposed are in keeping with an accelerated decision-making schedule. Not included are potential delays which may result from legal intervention, the discretion of either LAFCO or its staff, or the use of SB 466 to negotiate a tax transfer exchange.

Action Time Frame

Initiation of tax transfer negotiation process. January 1998

Consultant begins preparation of services plan February 1998 and either a supplemental EIR or focused EIR.

Completion of tax transfer agreement with May 1998 County.

Release of draft supplemental or focused EIR on June 1998 maintaining facility in its present state along with examination of alternate sites for 30 day review.

Public meetings on Draft EIR and alternate site June – July 1998 analysis and EIR certification – Planning Commission and City Council.

Filing of Resolution of Application with LAFCO July 1998 including services plan, alternate site analysis and certified EIR.

Application accepted as complete by LAFCO August 1998 Executive Officer.

LAFCO hearing; decision of approval or denial. September 1998 (approved) or Proceedings terminated; potential to refile in September 1999 (denial)

Conducting authority (City of Irvine) public November 1998 hearing and protest. â Approval of proposal (no landowner protest) – December 1998 annexation completed. or Call for election (landowner protests) – Proceedings terminated; landowner votes to disapprove. potential to refile in December 1999 ALTERNATIVES CONSIDERED

Information in this report has been prepared in response to City Council direction provided on November 25, 1997, when the Council voted to proceed with the annexation of MCAS El Toro and the Musick Branch Jail site. Alternatives internal to the pursuit of these annexations are included in this report.

FINANCIAL IMPACT

Since neither the annexation of MCAS El Toro, nor the Musick Branch Jail site is included in the City’s budget for FY 97-98, funding is presently unavailable for the preparation of a plan of services and environmental documentation Staff estimates the consultant cost for these work efforts at $100,000 for the MCAS El Toro annexation and $50,000 for the Musick Jail site annexation, resulting in a total cost of $150,000 over a twelve-month period.

Since this will be a new midyear activity, only $100,000 will be needed this fiscal year, with the balance to be requested in the 1998-99 budget. Currently, there is $100,000 budgeted for consultant services to prepare an EIR in conjunction with the prezoning and annexation of the northern sphere of influence. If the Council wishes to proceed with the annexations of MCAS El Toro and Musick Jail, staff would redirect the funds allocated for the annexation of the northern sphere. Annexation of the northern sphere has been delayed due to ongoing work on the General Plan update and the adjustment of the southern boundary. Therefore, even if the northern sphere annexation effort were to commence this fiscal year, it is unlikely that more than approximately $40,000 would be needed before July.

Staff plans to return to the Council in February with a midyear budget adjustment since development activity is significantly higher than projected. If desired, the Council could reallocate the allowable portion of additional revenues received to the annexation of the northern sphere of influence.

Protecting the City’s interests regarding the reuse of MCAS El Toro has been identified as a top priority in the City’s Strategic Business Plan. A similar priority was established when the City filed a lawsuit to challenge the Musick expansion plans. Therefore, staff recommends allocation of funds for this work effort from the FY 96-97 carryover.

Report prepared by: Peter Hersh, Manager of Land Use Policy Programs, City of Irvine

Reviewed by: Sheri Vander Dussen, Director of Community Development

First report on annexation from City of Irvine

Political spin on annexation from the Orange County Business Journal