SUBJECT CARMEL VALLEY INCORPORATION PROPOSAL

							                                                                                         AGENDA
                                                                                          ITEM
                                                                                          NO. 2
LAFCO of Monterey County _______________________________________________________________
                                                 LOCAL AGENCY FORMATION COMMISSION
                                                 P.O. Box 1369              132 W. Gabilan Street, Suite 102
                                                 Salinas, CA 93902                       Salinas, CA 93901
                                                 Telephone (831) 754-5838               Fax (831) 754-5831

KATE McKENNA, AICP
Executive Officer


DATE:               January 24, 2005

TO:                 Members of the Formation Commission

FROM:               Kate McKenna, AICP, LAFCO Executive Officer

SUBJECT:            CARMEL VALLEY INCORPORATION PROPOSAL
                    (LAFCO FILE NO. 03-10)

SUMMARY OF RECOMMENDATIONS:

It is recommended that the Commission:

    1. Receive staff report;
    2. Receive public comment;
    3. Re-affirm the Commission’s direction to staff to undertake preparation of an Initial
       Study, to re-issue the Request for Proposals for consultant assistance, and to return a
       consultant contract and proponent payment agreement to the Commission for
       approval at the earliest possible date, and
    4. Continue hearing to March 28, 2005.

EXECUTIVE OFFICER’S REPORT:

This report addresses the appropriate level of environmental review for the incorporation
proposal, and provides information about other tasks underway.

California Environmental Quality Act Compliance

As lead agency, the Commission is required to determine the appropriate level of
environmental review for the incorporation proposal. In July 2004, the Commission directed
staff to seek consultant proposals to prepare an Initial Study. The Initial Study will provide
information to assist the Commission in determining the need for a Negative Declaration or
an Environmental Impact Report.

Two proposals to prepare an Initial Study were received in September. Incorporation
proponents objected to the Initial Study cost, requested that proposals be sought from a larger
consultant pool, and also suggested alternatives such as using a prior environmental
document or issuing a Categorical Exemption. On December 6, the Commission requested
that staff research the environmental determinations of other LAFCO agencies.
Staff has researched incorporation proposals of the past five years in California. All
proposals found in this period were determined by Local Agency Formation Commissions
(LAFCOs) to need a Negative Declaration or an Environmental Impact Report. None were
issued a Categorical Exemption. A chart (Attachment A) identifies the researched agencies
and the types of required environmental documentation. The chart also includes
environmental research for two older incorporation proposals in the region; although beyond
the five-year horizon of the survey, they are of local interest.

Most of the surveyed agencies determined that Negative Declarations were appropriate for
their incorporation proposals. Examples include the Cities of Oakley (Contra Costa
LAFCO), Aliso Viejo, Laguna Woods and Rancho Santa Margarita (Orange LAFCO) and
Goleta (Santa Barbara LAFCO). A Negative Declaration was also issued for a Castro Valley
incorporation proposal that was ultimately defeated at the polls (Alameda LAFCO). Initial
Studies were prepared for all of these proposals, finding no potentially significant impacts
which could not be mitigated.

Environmental Impact Reports have been required for Rancho Cordova and Elk Grove
(Sacramento LAFCO). An Environmental Impact Report is being prepared for the proposed
incorporation of El Dorado Hills (El Dorado LAFCO). The Sacramento LAFCO now
routinely requires Environmental Impact Reports on incorporations, following expensive and
time-consuming legal challenges to a Negative Declaration originally issued for the Citrus
Heights annexation in 1997.

Past incorporation efforts in the Monterey Bay region, although not recent, are of interest as
background information. One of these was the proposed incorporation of Pebble Beach in
1989. LAFCO of Monterey County prepared an Initial Study and determined a need for the
preparation of an Environmental Impact Report. The proponents did not go forward with the
proposal. An Initial Study was also prepared in the early 1990s for the incorporation effort
of the Aptos area (Santa Cruz LAFCO). That Commission determined a need for an
Environmental Impact Report, a decision that was challenged and upheld in court.
However, the Aptos incorporation proponents did not proceed with the application.

Staff has investigated the feasibility of updating a prior environmental document (the
County’s Carmel Valley Master Plan Environmental Impact Report, 1985) and circulating it
as a Subsequent Environmental Impact Report. Some valuable baseline data were obtained
as part of the County’s recent work on a draft General Plan and Environmental Impact
Report. However, discussions with County staff reveal the difficulty of isolating the
information needed for Carmel Valley, as the draft General Plan and environmental
document focused on the County as a whole. LAFCO staff does not recommend this strategy
due to the age of the Master Plan environmental document and the costs that would be
involved in obtaining the required information. Also, there is no supporting evidence at this
point to require an Environmental Impact Report.

Recent correspondence from proponents (Attachment B) presents a case for a Categorical
Exemption. A Categorical Exemption is technically possible under §15320 of the California
Environmental Quality Act (changes in the organization or reorganization of local
governmental agencies where the changes do not change the geographical area in which
previously existing powers are exercised). However, such exemptions should not be
employed where there is significant public controversy, as the threshold for challenge is
extremely low.

The interests of the Commission and public are best served and defended by continuing to
require the preparation of an Initial Study for this proposal. The Initial Study process will
identify and analyze the potential environmental impacts associated with the proposal, and
guide the Commission’s eventual determination of a Negative Declaration or the need for an
Environmental Impact Report. This position is consistent with advice provided by one of
the consultants for the proponents (Braitman and Associates, July 26, 2004) who
recommended proceeding with a Negative Declaration or subsequent use of a prior
environmental document.

Staff is recommending that the Commission reaffirm its earlier decisions to undertake the
preparation of an Initial Study, to direct staff to re-issue the Request for Proposals for
consultant assistance in preparing the Initial Study, and to direct staff to return a consultant
contract and proponent payment agreement for approval by the Commission at the earliest
possible date.

Fiscal Analysis

The public review draft of the Comprehensive Fiscal Analysis was released by LAFCO on
January 3, 2005. Findings were presented by the consultants at the Commission’s December
2004 meeting. The report and presentation are available on the LAFCO website. The report
will be revised in coming months to reflect the results of revenue neutrality discussions.

Revenue Neutrality

Now that the draft fiscal report is available, revenue neutrality discussions will begin
between the County of Monterey and the incorporation proponents. LAFCO staff are
organizing the initial meeting to be held in mid-February. The expected timeframe for
negotiations and agreements is about 3 months.

Service Plan

Preparation of a required Service Plan for the incorporation proposal is underway. A
progress report was presented by the consultant at the December 2004 meeting. The
consultant is now meeting with key districts to discuss her initial research and analysis. A
public review draft is expected in February.

Respectfully submitted,



Kristina Berry, AICP
Senior LAFCO Analyst
                           ATTACHMENT A
                  ENVIRONMENTAL REQUIREMENTS FOR
                      INCORPORATION PROPOSALS
                             (1999-2005)

   Local Agency     New Jurisdiction   Incorporation Date      Environmental
    Formation                                                    Document
   Commission
Alameda            Castro Valley       Defeated at polls     Negative Declaration
Contra Costa       City of Oakley      July 1, 1999          Negative Declaration
El Dorado          El Dorado Hills     Proposal in process   Environmental
                                                             Impact Report In
                                                             Preparation
Orange             Aliso Viejo         July 1, 2001          Negative Declaration
Orange             Laguna Woods        March 24, 1999        Negative Declaration
Orange             Rancho Santa        January 1, 2000       Negative Declaration
                   Margarita
Riverside          Menifee             Proposal in process   RFP for Initial Study
                                                             in Process
Riverside          Wildomar            Proposal has not
                                       been applied for,
                                       Initial Fiscal
                                       Analysis prepared
Sacramento         Rancho Cordova      July 1, 2004          Environmental
                                                             Impact Report
Sacramento         Elk Grove           July 1, 2000          Environmental
                                                             Impact Report
Santa Barbara      Goleta              February 1, 2002      Negative Declaration


Monterey           Pebble Beach        Did not proceed       Environmental
                                       (1989)                Impact Report
                                                             Required
Santa Cruz         Aptos               Did not proceed       Requirement for
                                       (1990)                Environmental
                                                             Impact Report was
                                                             Upheld by Court