Nov. 17, 2009 — “You know you’re in trouble when all the lawyers show up,” said one member of the public attending the Lassen County Local Agency Formation Commission meeting on Monday, Nov. 9 when he noticed County Counsel Craig Settlemire, Susanville City Attorney Peter Talia and Susanville Community Development Director Bill Nebeker sitting in the gallery waiting for the meeting to begin.   

Actually, as it turned out, the lawyers weren’t attending the meeting to fight with each other. Rather they told the commission they were at the meeting to say they had nearly worked out an agreement regarding the sale of excess land located on Fairway Drive in a city island near the Diamond Mountain Golf Club and to answer any questions or address any concerns the commission might have.   

Anyone who’s bought or sold real estate can appreciate the complexity of some transactions. Because the property is owned by the city as part of a city island in the county, a number of additional issues arise such as tax assessments, tax sharing agreements and who will provide fire protection.   

John Benoit, LAFCO’s executive director, said the attorneys attended the meeting to discuss a “rather vague section” in the Cortese-Knox-Hertzberg Act regarding cities disposing of non-contiguous territory.   

“If it (the city-owned property) is not contiguous and it’s sold to a private party, upon the sale it becomes part of the county,” Benoit said. “When it ceases to be part of the city, the city council needs to adopt a resolution that it’s no longer part of the city, that’s it’s automatically detached and becomes part of the county.”   

He said the particular section of the act is very old and doesn’t address such transfers, and the law doesn’t mention special districts such as the Susan River Fire Protection District.   

“If the city detaches this parcel, it no longer has fire protection,” Benoit said because it would no larger be part of that district. “At the request of the city, we’re holding a discussion about, well, how we can do all this.”   

LAFCO, the government watchdog agency assigned with the responsibility of managing the territories of special districts, becomes involved because of the tax-sharing agreements.   

Benoit said he’d discussed the issue with state LAFCO officials, and the state association will try to have the law amended to deal with such transfers next year.   

“This only happens about once each decade,” Benoit said. “It’s not very common, but now it has happened here.”   

Nebeker asked if the fire district’s boundaries couldn’t simply be changed to include the 1.28-acre parcel without going through LAFCO. Benoit said LAFCO is the agency that establishes special district boundaries.   

Nebeker asked why the city would have to go through two different processes to accomplish the same act.   

Benoit said you could argue the necessary changes were implied when the property is detached from the city, but the law doesn’t say that.   

“So, we making the rules today,” Talia said.   

“That’s what we’re doing,” Benoit said.    

Commissioner Kurt Bonham, who also serves as Susanville’s mayor, said everything should happen simultaneously.   

Settlemire said when the city sells the property, it automatically detaches from the city and will revert back into county jurisdiction. He also said he saw no problems with the zoning or the county’s general plan for the area.   

He agreed the question was which agency will provide fire protection for the parcel and that LAFCO was the agency with that responsibility. He said the city detaching the property does not automatically transfer the property to a fire protection district.   

“I think that would require a LAFCO petition to actually annex the property back to the fire district,” Settlemire said.   

Settlemire also said negotiations would be required to resolve the tax-sharing issues, but some of those agreements would not require LAFCO approval because they happen automatically when the city sells the property.   

“The city would no longer be a player when it comes to taxes because they’re not providing any services anymore,” Settlemire said, “and you look at who the other players are. That would be the county, but since the fire districts are not involved until it’s annexed, that agreement is pretty easy to come by because the county essentially would be negotiating with itself” to assume the city’s portion of the tax pie.   

According to Settlemire, the fire district should probably receive the same tax allocation it receives from surrounding properties, especially since the area was part of the Susan River Fire Protection District before the city annexed the property for the golf course.   

Settlemire said he was drafting an agreement that would resolve the issues at the same time by anticipating the annexation by the fire district.   

“That’s what we’re working on,” Settlemire said, “but of course, it’s subject to approval by the board of supervisors” and the Susan River Fire Protection District.   

Settlemire said he hadn’t looked into whether the potential purchaser of the property could petition LAFCO prior to the sale in order to assure fire protection for the parcel.   

Bonham argued it would be easier to do the whole thing at one time so when the property actually sells, everything is already done.   

“I’d prefer to see this thing done ahead of time,” Bonham said, “so the buyer knows that he or she is truly getting property free and clear of any encumbrances and any black holes farther down the line because we don’t know what’s going to happen.”   

Benoit said the LAFCO process could be much shorter and easier if the fire district agreed in advance because its agreement would eliminate some legal requirements.   

Nebeker asked Benoit if the process could become effective upon the sale of the property.   

“Why would you want to wait?” Bonham said. “We’re selling that property. It’s already been decided.”   

Benoit said if all the parties could agree and work out the details, LAFCO could probably resolve the issues at its meeting in December.

Background

The city plans to sell property around the Diamond Mountain Golf Club to help pay off a loan taken out by the golf course’s previous operator using the golf course itself as collateral.    

The golf course is owned by the city and managed, maintained and run by a private operator under a long-term lease agreement.   

On May 6, the city council renegotiated the existing three-year lease with the golf course’s new operator. Under the new agreement, the city determined the sale of select parcels around the course would be the best way to retire the loan.   

On June 9, the Susanville Planning Commission approved a recommendation to divide this 1.28-acre parcel from the golf course so it could be sold as a lot for a single-family home — the first transaction approved under the new agreement.   

At that meeting, City Administrator Rob Hill said the most valuable piece of surplus land is the area surrounding and including the old clubhouse on Wingfield Road.