By the end of World War II in 1945, California was home to 140 United States military bases. With the war over, that meant the new influx of federal money kept right on going through the Cold War era of the 1950s. Those military bucks helped power a period of economic growth that saw the state quickly sprouting new cities, roadways, and what came to be called suburban sprawl.
With rapid growth rolling forward in largely haphazard fashion, by the end of the 1950s the need for some sort of oversight or control had grown urgent. In his 1959 inaugural address, California’s 32nd governor, Edmund G. “Pat” Brown, announced the formation of what he called the Governor's Commission on Metropolitan Problems, to get a handle on the “often inefficient, costly, and confusing” machinations of local government, in which “necessary services are rendered by overlapping and competing agencies.”
By 1963, the Commission had come up with a set of recommendations that became codified as law when the legislature passed the Knox-Nisbet Act—combining similar bills by Contra Costa state Assembly Member John T. Knox and San Bernardino Senator Eugene G. Nisbet—to create the first Local Agency Formation Commissions.
What Exactly is a ‘LAFCO,’ Anyway?
The new commissions were immediately established in 57 of the state’s 58 counties. Only San Francisco didn’t have one, largely because the boundaries of the city and county there are the same, making potential conflicts more unlikely.
Known by the rather amusing acronym LAFCO, these then-new county-level agencies were charged with overseeing and approving the creation of new cities and other local government entities, such as special districts for water, fire and other services. LAFCOs also review changes to boundaries of cities and special districts, to maintain some sort of order in the organization of government functions.
“Agency boundaries are often unrelated to one another and sometimes overlap in a seemingly random manner, often leading to higher service costs to the taxpayer and general confusion regarding service area boundaries,” according to the California Association of Local Agency Formation Commissions, known as CALAFCO.
Under California state law, the legislature must approve any changes to city or district boundaries. Since the 1963 law, the legislature delegated that authority to LAFCOs. No “local agency”—that is, a city or other type of district—may alter its boundary lines without going through LAFCO first, not even by voter initiative.
Not only are LAFCOs the regulatory watchdog that must approve or reject any proposed change to a local entity’s boundary, they also act as planning commissions, identifying where future boundaries may end up. What LAFCOs do not do, and are barred under state law from doing, is making specific decisions on how land should be used. They do not get involved with designing subdivisions, or deciding on whether parcels of land should be developed or not. But by regulating city and district boundaries, their broad influence over land-use decisions is substantial.
Boundary Issues: The Reason We Have LAFCOs
Why are boundaries so important? Because the boundaries of a city or district determine which governing body can levy taxes on its residents and businesses. In addition, only the governing body of a specific, boundary-defined district can regulate public works, such as water distribution or recreational facilities. And perhaps most important, boundaries determine who gets to make land-use decisions. A city council can approve developments only within the boundaries of its own city, for example, and not in county-controlled territory.
When do cities and districts change their boundaries? According to a 2013 “guide” to LAFCOs produced by the state Senate Committee on Government and Finance, LAFCOs are specifically responsible for oversight of the following types of boundary changes: annexations and detachments, city incorporations and disincorporations, formations and dissolutions of special districts, mergers between cities or districts, and reorganization that may involve two or more of those changes.
The exceptions are school and community college districts, as well as special tax districts known as “Mello-Roos” districts, which are created to fund specific infrastructure projects. The state legislature maintains control over regulating those districts.
It is also important to note that while each county has a LAFCO (San Francisco, the last holdout, added one in 2000), a LAFCO is not a county agency. County supervisors typically occupy seats on LAFCO boards, but a board of supervisors has no authority over a county’s LAFCO.
Maximizing the efficiency of local government services is job one for LAFCOs. A couple of recent examples happened in Santa Cruz County, where in 2017, the LAFCO recommended the elimination of one of the county’s 10 water districts, which had fallen into disuse. But four years later, that district’s boundaries were still on the books.
Then in 2021, the Santa Cruz LAFCO recommended that two of the county’s four parks and recreation districts shut down by the end of the year, mainly due to inactivity and revenue shortfalls.
LAFCO Laws Evolve Over Four Decades
LAFCOs also hold responsibility for protecting agricultural land and open space from development, making sure that new building takes place in urban and suburban areas, as far away from agricultural land as possible.
At the same time, preventing “misuse of land resources” was the original motivation behind the Knox-Nisbet Act, and that means controlling “sprawl,” which CALAFCO defines as “irregular and disorganized growth occurring without apparent design or plan.”
The creation of county LAFCOs in 1963, however, failed to quell the seemingly uncontrollable proliferation of special districts throughout California cities and counties. The legislature quickly spotted this problem, and in 1965 passed the District Reorganization Act, which established specific procedures for the reorganization of special districts, including when one district annexes part of another, or when two special districts merge, or for that matter, when special districts dissolve.
The new rules meant new powers for LAFCOs. Now, not only would these commissions oversee the formation of special districts, they would have their hands in just about every aspect of any change made to a district.
Though the makeup of LAFCO boards can vary, they were, and remain, usually composed of two members of the county board of supervisors, as well as two members of city councils within the county, and two from special districts. Plus, in most cases, at least one seat is reserved for a member of the general public who has all of the same powers as the elected officials on the board.
In 1977, the state legislature passed the Municipal Organization Act, with the purpose of further promoting “orderly growth and development.” LAFCOs were now responsible for implementing three separate laws, even though they sometimes conflicted or duplicated each other. So in 1981, CALAFCO formed a subcommittee to write a new law that would combine the three pieces of legislation, smoothing out the loose ends and rough edges.
The CALAFCO subcommittee finally signed off on a draft in January of 1984. Assemblymember Dominic Cortese, who had previously served as a Santa Clara County supervisor and LAFCO member, sponsored the legislation, taking up the cause in February of 1984.
It took until 1985 to enact the bill—now known as the Cortese-Knox Local Government Reorganization Act, or L-GRA. Knox was no longer in the legislature, but Cortese added his name as a tribute to Knox’s efforts as the originator of the LAFCO concept.
A New Law in 2000 Gives LAFCOs Additional Powers
In 1997, Robert Hertzberg—an assemblymember from the San Fernando Valley—authored a bill that created another entity, the Commission on Local Governance for the 21st Century. The commission’s purpose: to investigate how local governments are organized and come up with recommendations for how to streamline and improve their operation.
In 2000, the commission produced its report, Growth Within Bounds. The group’s number one recommendation? Reform LAFCO policies and procedures.
The commissioners were not impressed with the Local Government Reorganization Act, stating that “the law is a composite of three previous procedural statutes that were not substantially modified when combined, nor have they been since. Consequently, policies are often unclear and procedures are cumbersome and uncertain. Moreover, LAFCOs are viewed by many local officials as biased and non-responsive to local development needs.”
It was immediately evident that more changes to LAFCO operations were coming—and so they did, with a new L-GRA. This one became the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, with Hertzberg—who as of 2021 was state Senate Majority Leader—getting his name in the bill’s title as the force behind the Commission on Local Governance.
The new law gave LAFCOs a new level of independence and power, granting them the unilateral authority to “approve or disapprove with or without amendment, wholly, partially or conditionally” the formation of new special districts and cities, as well as the other types of boundary changes listed above in this article. The 2000 legislation expanded LAFCOs’ powers into other areas as well, giving them authority to study government agencies and make recommendations for improving their efficiency.
The Cortese-Knox-Hertzberg Act of 2000 remains the governing legislation for LAFCOs statewide, more than two decades after it became law.