Excerpts from

WHAT’S SO SPECIAL ABOUT SPECIAL DISTRICTS?

A Citizen’s Guide to Special Districts in California

Senate Publication 583-S

WHAT’S A SPECIAL DISTRICT?

State law defines a special district as “any agency of the state for the local performance of governmental or proprietary functions within limited boundaries” (Government Code §1627 [d]). In plain language, a special district is a separate local governmental agency formed to provide local services.

Inadequate tax bases and competing demands for existing taxes make it hard for cities and counties to provide all the services their citizens desire. When residents or landowners want new services or higher levels of existing services, they can form a district to pay for them. Fire districts, irrigation districts, and pest abatement districts exist today because taxpayers were willing to pay for public services they wanted. Special districts localize the costs and benefits of public services. Special districts allow local citizens to obtain the services they want, at a price they are willing to pay.

Special districts deliver highly diverse services including water, closed-captioned television, mosquito abatement, and fire protection. Some special districts can serve just a single purpose, such as sewage treatment. Others address a multiplicity of needs, as in the case of community service districts, which can offer up to 15 different services. District service areas can range from a single city block to vast areas, which cross city and county lines. For example, the Metropolitan Water District of Southern California serves 15 million people in over 52,000 square miles of six counties, while County Service area #9 in Los Angeles County serves only 32.8 acres.

Special districts enjoy the same governing powers as other local governments. They can enter into contracts, employ workers, and acquire real property. They can also issue debt and some can charge fees for their services. A political scientist would say that special districts have corporate powers but rarely police powers. “Corporate power” is the ability to “do things,” like constructing public works projects such as dams and sewers. It’s the power to deliver recreation programs and garbage collection. It’s also the power to tax and raise money in other ways to pay for these projects and services. The “police power” is different; it’s the ability to regulate behavior. Governments that make rules and enforce them are using their police powers: zoning property, requiring business licenses, or setting speed limits. Special districts rarely have police powers. Instead, they usually build public facilities and provide services. When special districts do have police powers, they are usually related to some corporate powers. Banning alcohol from a park district’s picnic area is one example.

WHAT A SPECIAL DISTRICT IS NOT

Now that we understand what special districts are, let’s examine what special districts are not.

Special districts are not state government.

Special districts are local agencies, which provide public services to specific communities. Special districts are autonomous government entities and are accountable only to the voters or land owners they serve. Special districts are, however, overseen by the state in several ways. For example, special districts must submit annual financial reports to the State Controller. Districts must also follow state laws pertaining to public health, bonded indebtedness, record keeping, and elections.

Special districts are not city or county government.

Cities and counties are general-purpose governments. Cities and counties must perform a broad array of services to protect the health, safety, and welfare of all their citizens. Special districts are limited-purpose local governments. Special districts provide only those services their citizens’ desire. Certain types of special districts, however, require that the city council or county supervisors serve as their governing boards.

Special districts are not school districts.

School districts exist throughout the state and provide one service – education. Special districts provide a variety of public services, excluding education. In addition, school districts are financed primarily by the state, whereas special districts rely primarily on local revenues. Also, unlike school districts, special districts must be formed by a Local Agency Formation Commission.

Special districts are not “Mello-Roos” districts or benefit assessment districts.

California law allows cities, counties, school districts, and many special districts to establish Mello-Roos districts and benefit assessment districts to finance public works and public services. Mello-Roos districts and benefit assessment districts are solely financing mechanisms and do not perform service delivery. Special districts use financing mechanisms to provide public services.

Special districts are not redevelopment agencies.

Redevelopment agencies are formed locally to eliminate blight through public/private improvements and economic development. Special districts do not exist to eliminate blight. Special districts provide public services and infrastructure to communities, but they are not in the business of economic development.

HISTORY OF SPECIAL DISTRICTS IN CALIFORNIA

Like hula-hoops, martinis, and freeways, special districts were elevated to an art form in California. Special districts first arose in California to meet the water needs of farmers in the San Joaquin Valley. Frustrated by an inconsistent water supply and widely varying prices, farmers in Stanislaus County organized themselves and established the Turlock Irrigation District under the Wright Act of 1887. The Wright Act allowed a majority of residents in an area to form a pubic entity for water delivery, and finance its operation through bond sales. The Turlock Irrigation District enabled San Joaquin Valley farmers to intensify and diversify their agricultural activities.

Following the development of districts such as the Turlock Irrigation District, new water district formation shifted away from rural, agricultural lands, towards water deficient communities in urban areas. In the early 1900s, water districts were primarily located in northern and central California. After 1950, they spread to southern California to satisfy a growing demand for urbanization.

In this century, special districts have increased dramatically in both number and scope. The prosperity that followed World War II increased the demand for services and, consequently, special districts. The decade after the war saw a dramatic expansion in district activities such as fire protection, sanitation, and water supply. Mosquito abatement districts, though first formed in 1915, multiplied to combat diseases inadvertently imported by returning soldiers. Hospital districts arose in 1945 due to a statewide shortage of hospital beds. Population growth in unincorporated areas spurred development of recreation and park districts. Created to address individual service needs, special districts grew to encompass multiple needs as well. The Municipal Utility District Act of 1921 allowed special districts to diversify and address multiple needs ranging from water, power, transportation, and telephone service, as well as “all things necessary and convenient” (Public Utility Code §12801).

There are currently over 4,000 special districts in California. At the last count in 1987, the U.S. Census Bureau catalogued 29,532 special districts in America.

STATUTORY AUTHORITY FOR SPECIAL DISTRICTS

Special districts operate either under a principal or a special act. A “principal act” is a generic statute that applies to all special districts of that type. For example, the Fire Protection Law of 1987 in the state Health and Safety Code governs all fire districts. There are approximately 50 principal law statutes which can be used anywhere in the state to create a special district.

Occasionally, circumstances fail to fit into the general conditions anticipated by a principal act. In those cases, the Legislature may create a special act district tailored to the unique needs of a specific area. Districts, which are regional in nature, have specific governing board requirements, provide unique services, or need special financing, necessitate special laws for formation. Districts formed under a special act include: The Humboldt Bay Harbor Conservation District, the San Diego Port Authority, and the Alameda County Water District. There are approximately 175 such districts throughout the state.

TYPES OF SPECIAL DISTRICTS

Special district services are as diverse as the communities they serve. The most common type of special district in California is the County Service Area, while districts with unique functions include the separation of grade and the bridge and highway authority. One way of understanding districts is to look at their various contrasting features:

§ Single function versus multi-function.

§ Enterprise versus non-enterprise.

§ Dependent versus independent.

SINGLE FUNCTION VERSUS MULTI-FUNCTION DISTRICTS

Single function districts provide only one service such as water, sewage, or fire protection. The Happy Camp Cemetery District in Siskiyou County is an example of a single function special district. The only service that the 260 public cemetery districts can provide is cemeteries.

Multi-function districts provide two or more services. County Service Areas (CSAs), for example, provide a variety of services such as extended police protection, enhanced library facilities, parks, and television translator services. A CSA may provide any service that a county can provide. Some multi-function districts, however, only offer a few of their authorized services. For example, the Copper Cove Rocky Road Community Service District in Butte County is authorized under the Community Service District Law to provide up to 16 services and yet it offers only street construction and maintenance. The powers that a district is authorized to use but does not currently employ are called latent powers.

ENTERPRISE VERSUS NON-ENTERPRISE DISTRICTS

Enterprise districts render services that are run like a business enterprise. Enterprise districts provide services that are received by specific beneficiaries. For example, hospital districts charge room fees paid by the patient only and not the other residents of the district. Water districts charge water rates to their customers. Virtually all water, waste, and hospital districts are enterprise districts.

Non-enterprise districts provide services that don’t lend themselves to fees. Consequently, non-enterprise districts cannot charge user fees for their services. Activities such as fire protection and mosquito abatement benefit the entire community, not just individual citizens. No direct cost/benefit relationship exists in the services provided by non-enterprise districts. Non-enterprise districts rely overwhelming on property taxes for their operational expenses. Services usually provided by non-enterprise districts include fire protection, parks and recreation, cemetery, and police protection.

DEPENDENT VERSUS INDEPENDENT DISTRICTS

Dependent districts are governed by existing legislative bodies (either a city council or a county board of supervisors). The Marin County Open Space District, which is governed by the Marin County Board of Supervisors, is a dependent district.

Independent districts are governed by a separate board of directors elected by the districts’ own voters. Governing boards vary with the size and nature of the district. Most districts have five-member governing boards. Other governing boards vary from 3 to 11 members. The Metropolitan Water District of Southern California, which has 52 board members, is unique.

The board is usually chosen by majority vote within the district, but electoral qualification can be based on land ownership. Many independent districts have a professional manager, similar to a city manager, to assist the elected board members with the technical aspects of their duties. Different types of independent special districts include most library districts, recreation and park districts, and memorial districts.

Special districts sometimes fail to conform to strict dependent and independent categories. For example, local health districts have their governing bodies appointed by the city council and county board of supervisors. Districts, which have governing bodies appointed by a city council and/or board of supervisors, are considered to be independent districts.

FUNDING OF SPECIAL DISTRICTS

Special district generate revenue from several sources. Some collect fees to fund their activities, while other rely on property tax revenues.

OPERATION AND MAINTENANCE FUNDING

Enterprise districts rely on non-tax revenues, such as user and standby fees. Since enterprise districts’ costs are directly related to the services provided, it is easy for enterprise districts to recoup their costs by collecting fees. For example utility districts sell the electricity they produce to the district residents. Revenues generated by enterprise districts in 1988-89 were over $6 billion.

Non-enterprise districts usually do not bill the beneficiaries of their services. Non-enterprise districts rely primarily on property taxes to pay for their operation and maintenance costs. Tax revenues used by non-enterprise districts come through regular property tax allocations and through the Special District Augmentation Fund.

The Special District Augmentation Fund (SDAF) was created in 1978 to alleviate Proposition 13’s severe limits on property tax revenues. With the tax generating ability of local government curtailed, many special districts were left with deficits. Prior to Proposition 13 (1977-78), special districts received $945 million from property taxes. In 1978-79, their funds were cut to $532 million.

Responding to this financial hardship, the Legislature formed the SDAF to provide a supplemental income for special districts. The money in the SDAF is appropriated to counties based on a formula outlined in the state law. County allocations range from $30,300 in Amador County to $146 million in Los Angeles County. County supervisors, in turn, allocate the SDAF money to districts within their county. County supervisors have complete discretion over the allocation of their SDAF, but usually base their decisions on the priority of the service provided and financial need.

CAPITAL IMPROVEMENT FUNDING

Both enterprise and non-enterprise districts can issue general obligation bonds to pay for capital improvements. These bonds can pay for a new dam or purchase a new library building. Special districts’ general obligation bonds are backed by property taxes and require 2/3 voter approval. Special districts can also use revenue bonds, paid from user fees. Revenue bonds don’t necessarily need voter approval.

ADVANTAGES AND DISADVANTAGES OF SPECIAL DISTRICTS

Many people disagree over the usefulness of special districts. Before you make up your own mind, consider these arguments.

ADVANTAGES:

· Special districts tailor services to citizen demand.

Cities and counties must protect their residents’ health, safety, and welfare and thus must provide many services, regardless of citizen demand. Special districts, however, only provide the services desired by the community.

· Special districts link costs to benefits.

General-purpose local governments, such as cities and counties, tax their residents to pay for public services. The services that taxpayers receive are not related to the amount of taxes they pay. In a special district, only those who benefit from district services pay for them. Those who do not benefit do not pay.

· Special districts are responsive to their constituencies.

Because special districts are usually smaller and less populated than counties and cities, they can be more responsive to their constituents. Small groups of citizens can be quite effective in influencing special districts’ decisions.

DISADVANTAGES:

· Special districts can lead to inefficiency.

Many special districts provide the same services that cities and counties provide. Overlapping jurisdictions can create competition and conflict between special districts, and also between districts and general-purpose governments. In addition, when areas incorporate, Local Agency Formation Commissions do not dissolve the special districts within the new city boundaries, which may result in duplicating services.

· Special districts can hinder regional planning.

Numerous special districts can hamper planning efforts. For example, it can be difficult to organize the various water, sewer, and irrigation services in one region to provide an optimal and equal level of services for all residents. Since many special districts have independent and autonomous governing boards, there is no single agency that can guarantee a coordination of efforts.

· Special districts can lessen accountability.

The multiplicity of limited purpose special districts can make it harder for citizens to gather information. For example, a county’s unincorporated area might have a large number of special districts providing public services. Furthermore, the narrow and technical nature of district activities often results in special districts with low visibility unless a crisis arises. Special district elections typically have very low voter turnout. Although some view low voter turnout as a sign of voter satisfaction, representative democracy requires broad participation to survive.

COMMON QUESTIONS ABOUT SPECIAL DISTRICTS

Now that you have a basic understanding of special districts, you may have some specific questions you’d like answered. Here are some of the most frequently asked questions.

1. How do I find out if I live in a special district?

The easiest way to find out if you live in a special district is to call your Local Agency Formation Commission. This office exists in every county and is responsible for forming and dissolving all of the special districts within that county. For non-enterprise districts, you may also consult the property tax bill that comes from the county tax collector. Your tax bill lists the names of the local agencies that receive your taxes. If a special district is on that list, then your property is inside that district’s boundaries.

2. How can I form a special district?

District formation has four steps: application, review and approval, public hearing, and an election. A district formation begins when registered voters in the proposed district file an application with the Local Agency Formation Commission (LAFCO). A city council or county board of supervisors may also begin formation procedures by adopting a resolution. The application must detail the proposed district boundaries, services to be provided, facilities to be obtained or improved, and financing options. The LAFCO then reviews the application. If LAFCO disapproves of the proposed formation, then the proposal stops. If LAFCO approves of the proposal, its resolution authorizes the next two steps. The third step involves a public hearing to measure protests, usually conducted by the board of supervisors. In the absence of protests by a majority of citizens, the fourth step is an election. State law allows some districts to be formed without an election if there is little or no opposition of the project at the protest hearing.

3. How do I dissolve a special district?

District dissolution also begins with a petition of registered voters or landowners in the district. Dissolution is easier if the district’s governing board has not met, has not provided the designated services, or has no funding available for operation. After the applicants submit their petition, the LAFCO holds public hearings. LAFCO’s disapproval stops a proposed dissolution; approval triggers a second public hearing by the county board of supervisors to measure protests. An election occurs only when there is a significant protest.

4. How do I add or detach land from an existing special district?

District annexations and detachments generally follow the same steps: application, LAFCO review, and a public hearing. Elections occur only when there is significant public protest. A special district may also initiate the annexation or detachment petition.

5. Who picks a district’s governing board?

About 2/3 of our special districts are “independent,” that is, they have independently elected or appointed boards of directors. The other districts are “dependent” districts because they depend on another local government to control them; usually a city council or a county board of supervisors. In most independent districts, registered voters elect the governing boards. In a few types of special districts, the landowners vote. Most governing boards have five members who serve staggered four-year terms.

6. How can I find out who runs a special district?

The easiest way is to call the district directly and ask who serves on the district’s governing board. You can find the telephone number in the white pages of your telephone book. Also, your County Clerk keeps a formal “Roster of Public Agencies” which lists all special districts and the names and addresses of the members of the districts’ governing boards. Ask your County Clerk for a copy of your county’s “Roster of Public Agencies.”

7. Can special districts tax me without my consent?

No. Proposition 13 limited property taxes to 1% of property value. Special districts often get a share of these revenues. If a special district wants additional taxes, Proposition 13 and state law require them to get 2/3-voter approval before they can levy “special taxes.” To pass a general obligation bond that raises property taxes also requires a 2/3-voter approval.

8. But what about assessments? Aren’t they like taxes?

Not really. Special districts charge assessments to pay for pubic works like sewers, parks, water systems, and sometimes fire suppression. Landowners pay assessments only for the projects that directly benefit their property. The amount of the assessment must be related to the benefit they receive. Proposition 13 does not apply to assessments. The California Constitution does not require elections before special districts can levy assessments. State law, however, requires voter approval for a few types of assessments.

9. Suppose I don’t like what a special district is doing. Who can help me?

Special districts are autonomous local governments. They’re responsible for their own governing boards and to the voters who elect them. If you suspect criminal activity, call your District Attorney or County Grand Jury. If you think that your district has violated the Brown Act or the Public Records Act, those laws spell out your remedies. If you think a district has broken the Fair Political Practices Act, then call the state’s Fair Political Practices Commission at (916) 322-5660. But our best advice is to talk to the district directly. Call or write to the district’s general manager or go to the next meeting of the district’s governing board.

10. Why are special districts so invisible to the public?

Special districts often escape wide public attention because their functions are usually narrow and technical. Special districts, however, must conform to democratic safeguards such as the Brown Act, the Public Records Act, and the Political Reform Act. Furthermore, special districts are subject to initiative, referendum, and recall procedures. For more information on access to government meetings and documents, the Senate Local Government Committee has produced citizen guides to the Brown Act and the Public Records Act. These two reference books can be obtained through the Senate Publications Office.

11. Where can I get more information about special districts in my area?

The following organizations can give you more information on special districts:

· Local Agency Formation commission (LAFCO)

· County Board of Supervisors

· City Council

· California Special Districts Association

· Association of California Water Agencies

· California Association of Sanitation Agencies

For more detailed information about the number and types of special districts in the state, you may contact the Office of the State Controller. The Controller’s office produces an annual report on districts titled, “Financial Transactions Concerning Special Districts of California.” You can find copies of this report in many major libraries.

CURRENT TRENDS IN SPECIAL DISTRICTS

As you are now aware, special districts are a highly diverse form of local government. Although it is difficult to generalize about themes affecting special districts, here are some general trends:

· Formation. Since the 1980s, newly formed special districts have been primarily enterprise districts. Proposition 13’s limits on property taxes force special districts to fund themselves in other ways such as through user fees. Community service districts have become increasingly popular due to their flexibility, broad range of services, and ability to generate user fees.

· Cooperation. Special districts are overcoming their sense of isolation and forming associations to discuss common problems and ways to improve service. Some groups represent special districts in a single county. Butte, San Diego, and Ventura counties have groups like this. Other organizations such as the California Special District Association, the Association of California Water Agencies, and the California Mosquito and Vector Control Association serve special districts across the state. Special district associations also exist on the national level.

· Finance. In the spirit of cooperation, special districts are engaging in joint financial ventures. Special districts with overlapping jurisdictions are investing in common capital improvement projects. Districts are also pooling their funds for risk management and insurance purposes.

· Visibility. Acknowledging low levels of citizen awareness, special districts are mounting information campaigns to educate the public. Special districts want citizens to view them as legitimate forms of local government; a viable alternative to cities and counties, and corporations in some instances. Districts publish brochures, pamphlets and informational materials to help increase citizen awareness.