Regular members Roy Curless, Richard "Bud" Leonard, Marty McClelland, Kevin McKenny, Mary Beth Wolford, Supervisors Bonnie Neely & Roger Rodoni, and Alternate members Pat Whitchurch and Bob McPherson: (appointed following action on agenda item 5A).

Kirk Girard, Director Community Development Services; Kirk Gothier, Staff; Carolyn Ruth, Deputy County Counsel; Sharyn Lodes, Clerk

THE MOTION WAS MADE (LEONARD/CURLESS) to approve the Minutes from the March 22, 2006 meeting.

THE MOTION PASSED BY A VOTE OF 7-0

Kirk Gothier explained the process used to solicit nominees and conduct interviews. Commissioners Neely, Curless and Leonard served as the interview panel to review all of the nominee applications and interview Bob McPherson and Robert Green on April 28, 2006. The interview panel recommended appointing Bob McPherson as the Alternate Public member because he is a highly educated scientist and educator with an interest in supporting LAFCo’s efforts.

THE MOTION WAS MADE (NEELY/RODONI) to appoint Bob McPherson as the Alternate Public Member.

THE MOTION PASSED BY THE VOTE 7-0

Kirk Gothier reviewed the results of the City Selection Committee and District election to appoint LAFCo representatives. The City Selection Committee met on April 27, 2006 and appointed Commissioner Mary Beth Wolford, City of Eureka, to serve as a regular voting member and Pat Whitchurch, City of Fortuna, to serve the remainder of Commissioner Wolford’s term as the Alternate City member.

On May 9, 2006 staff tallied the District votes and found that Kevin McKenny had received the most votes and was elected to serve as a regular voting member. Because there was a tie for second with equal votes for Virginia Graziani and J. Bruce Rupp, staff initiated a run-off vote to determine the alternate member representative. The run-off vote will continue until June 19, 2006.

BY ORDER OF THE CHAIR, this report was received and filed, then staff was directed to send letters of appreciation to Commissioners Shelton and Strickland.

Kirk Gothier reviewed the history of funding since the adoption of AB 2838 and explained that LAFCo was in a good position to complete the Municipal Service Review (MSR) and Sphere of Influence Report (SIR) updates. The County has completed much of the service work and compiled GIS data as part of the General Plan Update. Local agencies, while struggling financially, have also contributed to this effort to varying degrees, and remain committed to completing this important work. The draft final budget would provide additional funding, in concert with the Prop 50 coordinated infrastructure planning effort, to help complete all needed MSR and Sphere updates.

Kirk Girard explained the working relationship between the proposed mandate and the Prop 50 grant-funded infrastructure planning work. While the first 3 of 9 written determinations the Commission must make in preparing MSRs to update Spheres of Influence include capital and facilities planning work, the remaining 6 determinations relate to cost avoidance opportunities, rate restructuring, shared facilities, government structure options, management efficiencies and local accountability and governance options that are solely the responsibility of LAFCo. Consequently, the Prop 50 grant funded infrastructure planning work will not secure all of the information needed in order to prepare MSRs and update Spheres of Influence.

The Prop 50 grant funds provide a unique opportunity for completing all of the MSR work necessary to update Spheres of Influence at the lowest possible cost by taking advantage of an informed consultant with the knowledge necessary to complete this additional work. Because there has been concern expressed about the appropriation formula set by State law to distribute costs, an option to consider would be using special service fees and giving local agencies the choice of continuing to prepare their MSRs without consulting or LAFCo staff assistance. Another option would be entering into an agreement with the Commission to pay for having the consultant and LAFCo staff help complete the work. Staff would work with each local agency that expresses an interest in having staff prepare an individualized, detailed scope of work. This option would enable LAFCo to maintain a net budget and agency appropriations at last year’s level by balancing the increased consultant/staffing costs with special service fee revenues.

Because the level of specificity in MSRs and SIRs is a policy decision determined by local LAFCOs, Humboldt County could determine how much detail is required in these reports.

The Commission and staff discussed the scope of work to be completed in the proposed alternative final budget, and how special service fees could be used to establish a placeholder for those agencies wanting to establish an agreement to have the consultant and staff complete the MSR/SIR work, without increasing the net budget or appropriations beyond last year’s budget.

Mayor John Campbell: Explained that the City of Fortuna has initiated a major General Plan Update, it is on schedule, and he anticipates adoption of a Plan Update in April of 2007. He referenced an email from City Manager Duane Rigge which raised concerns about duplication of effort, recommended an alternative funding process, and agreed to share the information that they collect as part of their General Plan Update effort.

Chairman McClelland noted the Commission had received letters from Humboldt Bay MWD, Manila CSD, Humboldt CSD, and McKinleyville CSD, as well as emails from Duane Rigge and Kirk Gothier related to the budget.

Virginia Grazianni: Redway CSD Board Member, questioned the urgency of the work and the 500% increase in costs. She also questioned the timeframe for the increased costs and how the additional consultant costs fit in with the Prop 50 grant-funded work.

Kirk Gothier explained that the consultant costs were a one-time cost and that the Staffing costs would decrease as the MSR/SIR work is completed. Kirk Girard explained that the RFQ work will not collect all the information needed to complete the MSRs/SIRs for local agencies.

Commissioner McKenny explained that his proposal to add staff was to help the smaller districts with clerical support to help type and edit MSRs. He did not envision a Senior Planner level of effort. He also asked if District Boards had received follow-up contacts since 2001 on the status of their MSR/SIR work.

Kirk Gothier explained that MSR/SIR analysis work required a Senior Planner level of effort. He also explained that staff had prepared MSR/SIR budget progress reports for every meeting since the adoption of AB 2838, that all agendas were mailed to local cities and districts, and that the progress reports had been distributed at least twice a year to all local agencies as part of the annual budget hearings.

Tom Marking: Manager of the McKinleyville CSD, expressed concerns about MSRs going beyond LAFCo’s focus. The proposed budget appears to be a planning function, focused primarily on supporting the County in updating the General Plan. The McKinleyville CSD has cooperated in giving MSR templates back to the County with GIS data. They have not been contacted since 2001. This is not a LAFCo function because they have no plans for boundary changes.

Carrol Rische: Manager of the Humboldt Bay MWD, supports infrastructure planning and believes in local agencies cooperating in getting this important work completed. She also believes it needs to be linked to the General Plan Update and supports the Prop 50 coordinated infrastructure planning effort.

However, she needs to understand the work and costs and is frustrated with the lack of articulation of what will get done. An MOU was supposed to be forthcoming as part of the Prop 50 work, and she has not seen a draft to date. She was also very surprised to see that an RFQ for this work had been released. She believes the schedule and scope of work in the RFQ for 22 agencies is unrealistic, considering these agencies have not been consulted and brought into this process.

While she believes that it sounds good to have the consultant that completes the Prop 50 work also do some LAFCo work, she recommends not increasing the LAFCo budget until this work is completed. Additional LAFCo staff resources are also needed, especially for smaller agencies, but the level of help will be better determined next fiscal year.

Glenn Ziemer: Humboldt Fire District No. 1 Chief, expressed concern about the real world value of the MSR/SIR work. He acknowledged that the agencies had not completed this work but felt the Master Fire Plan included all the base data necessary for fire districts to prepare their draft MSRs. The budget should not be increased at this time. If local agencies do not complete their MSR/SIR drafts, a more intrusive approach could be considered later.

Tom Conlon: City of Arcata Community Development Director, expressed concern about the large cost increases. The City should not pay more to get other agencies work done more quickly. The focus is on helping smaller agencies, and cities and districts in the Eureka and McKinleyville areas. However, the City of Arcata seems to be carrying the County General Plan Update effort through the LAFCo process. Clarify what LAFCo agencies pay for as LAFCo services. All local agencies still have major financial concerns, irrespective of the Governor’s assurances about Proposition 1A.

Dendra Dengler: Manila CSD Board Member, expressed support for the issues raised in the McKinleyville CSD letter on the proposed budget increases. There are errors in the Manila CSD draft MSR and LAFCo needs to clarify the work that needs to be done. LAFCo should defer increasing the budget until the details are better described. She asked how apportionments were determined.

Kirk Gothier explained that the apportionments were set by State Law in a formula that is complex and very difficult to understand and calculate.

Mark Bryant: Humboldt CSD Manager, stated that he agreed with the comments made by the previous speakers and emphasized a need for all agencies to work together in completing their MSRs and SIRs.

The Commission and staff discussed the legal basis for using special service fees to give local agencies the option of paying for consultant and staff services, while maintaining the net LAFCo budget at last year’s level. Staff could prepare a more detailed scope of services for those agencies that opt in, and could establish clear roles and timelines.

Commissioner McKenny indicated this would be a good solution for local agencies because many were capable of completing their MSRs/SIRs and a letter could be sent to the smaller districts with another copy of the MSR template.

Commissioner Wolford supported clear timelines and recommended staff training sessions with local agencies.

The Commission then discussed the budget details with staff and asked for clarification about the special service fees, balancing revenues and the final net budget. Staff emphasized the importance of all local agencies working together to identify infrastructure and public service constraints, and prepare Municipal Service Reviews and Spheres of Influence reports that would identify the best way to deliver services to existing and planned development.

Chairman McClelland explained that the work for many agencies could be completed with confirmation from their Board that there are no boundary or sphere changes needed at this time, and no need to update their Sphere of Influence. For those agencies that do need Sphere updates, LAFCo needs to be involved in developing the scope of work and in the consultant selection process. The timing and cost of work in the current RFQ is overscoped, short, and unrealistic. The LAFCo work relies on much of the Prop 50 consultant work. Some agencies already have an updated General Plan and an adopted urban limit line, so there is no need or ability for LAFCo to insert itself into a service provision discussion with those agencies. Some agencies are in the process of updating their Plan and have done, or will do considerable MSR work and will share their information with LAFCo. Some cities, like Ferndale, do not have plans for changing their boundaries or Spheres and do not need a Sphere update at this time.

Kirk Girard explained that if LAFCo feels that MSR and Sphere updates are only triggered when an agency requests a boundary or sphere change, LAFCo could adopt a policy supporting that approach.

Chairman McClelland explained that some cities, like Fortuna, were actively reviewing infrastructure and development timing as part of their General Plan update and could need their Sphere updated. It was important to let them complete their process and not duplicate efforts. When the State reduced the County LAFCo funding burden and shifted it in part to all local agencies, the County General Plan burden shifted to other agencies through LAFCo.

Kirk Girard explained that, with the implementation of AB 2838, the State intended for LAFCo to play a lead role in better coordinating the efficient delivery of services by all local agencies. MSRs and SIRs would be prepared every five years to insure that this coordination happened. Efficient local services delivery and these reports are not shifting the burden of completing the County General Plan Update to cities and districts.

Commissioner McKenny questioned the increase in CALAFCo fees relative to other rural counties. Kirk Gothier explained that CALAFCo had granted Humboldt County exceptions to the higher fee for the past 2 years, but would no longer allow for a reduced fee. Kirk also emphasized that CALAFCo delivered many important services and that much of the information forwarded to all local agencies throughout the year comes from CALAFCo.

THE MOTION WAS MADE (Neely/McKenny) to adopt the alternative final budget with the special service fee option proposed by staff to provide local agencies with the option of paying for consultant and staff work on Municipal Service Reviews and Spheres of Influence updates, subject to LAFCo involvement in selecting the consultant, and with a final Net Budget to remain at last year's level of $35,132. Staff shall prepare a scope of work that identifies what staff will work on in fiscal year 2006-07 for those agencies that opt for staffing assistance in preparing their Municipal Service Reviews and Sphere of Influence updates. The scope of work prepared by staff shall be scheduled for Commission review at the July 26, 2006 meeting, and there shall be no expenditures until the Commission approves the scope of work.

THE MOTION PASSED BY THE VOTE 7-0

Kirk Gothier Reviewed the proposed meeting schedule in Attachment 6A-1.

THE MOTION WAS MADE (CURLESS/NEELY) to adopt the proposed meeting schedule for the 2006-07 fiscal year.

THE MOTION PASSED BY THE VOTE 7-0

Kirk Gothier indicated that the Budget Progress Report was discussed as part of Public Hearing Item 5C.

BY ORDER OF THE CHAIR, the budget and progress report was received and filed.

No one appeared before the Commission.