Local Agency Formation Commissions (LAFCOs) were established in California in 1963 with the primary mandate of promoting “orderly and efficient development” through the regulation of local government boundaries and functions. Local Agency Formation Commissions are regional planning commissions that regulate land use by determining whether a city’s boundaries can expand. Their role was to prevent urban sprawl, protect agricultural land, and ensure efficient service delivery by overseeing the creation, expansion, or dissolution of cities and special districts.

There are 58 of these independent agencies within California (one for each county) and they regulate the boundaries of cities and special districts that provide services. Any city that wishes to expand must receive LAFCO approval. As a planning agency, a LAFCO determines and updates the sphere of influence of each city and special district.

The law that initially established Local Agency Formation Commissions (LAFCOs) in California was the Knox-Nisbet Act of 1963. Over time, the legal framework governing LAFCOs has evolved, with significant amendments and updates incorporated through subsequent legislation. The most recent and comprehensive update is the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000, which codified many of the existing practices and expanded LAFCOs’ powers in some areas.

LAFCOs role was to prevent urban sprawl, protect agricultural land, and ensure efficient service delivery by overseeing the creation, expansion, or dissolution of cities and special districts. While these goals remain important, the housing landscape in California has drastically changed since the 1960s. The state is now facing a severe housing shortage and affordability crisis, with a dire need for all types of housing, both market-rate and affordable. This new reality necessitates a reevaluation of LAFCOs’ role and a potential reform of their mandate and practices.

There are several criticisms of LAFCOs. First, the term urban sprawl is undefined and leads to an anti-housing bias even if property is adjacent or surrounded by city boundaries. Second, the focus on “fiscal neutrality” often prioritizes projects that generate high property tax revenue such as commercial developments, over housing projects with lower returns. Third, often times agricultural preservation comes at the expense of housing production even in areas where agricultural operations conflict with people and can’t be run productively. Without balancing these priorities with housing production, LAFCOs are hindering the production of much-needed housing and exacerbating the existing crisis.

Lengthy and complex review processes within LAFCOs can add significant delays and costs to housing projects, discouraging developers, especially those focused on affordable housing. This can lead to missed opportunities to increase the housing supply and address the affordability issue.

To promote all types of housing, both market-rate and affordable, LAFCOs should undergo significant reforms. Here are some potential recommendations:

1. Prioritize Housing Production: LAFCOs should explicitly include the promotion of housing production as a key component of their mandate. This should be reflected in their decision-making processes and evaluation criteria for proposals.
2. Balance Housing and Agriculture: LAFCOs should be tasked with balancing the need for housing development with the preservation of productive agricultural land. This might involve prioritizing infill development and redevelopment within existing urban areas, incentivizing compact and efficient development patterns, and encouraging agricultural land preservation through innovative approaches like land trusts or transfer of development rights.
3. Performance Metrics: Establishing clear performance metrics related to housing production and agricultural land preservation would allow for better evaluation of LAFCOs’ effectiveness and incentivize them to achieve these goals.
4. State Oversight: The state could play a more active role in overseeing LAFCOs, providing guidance, technical assistance, and ensuring their decisions align with statewide housing and agricultural policies.
5. Local Collaboration and Coordination: LAFCOs should work collaboratively with local agencies to promote housing production and address the housing crisis such that local agencies can meet their RHNA goals.
6. Streamline Processes: The review and approval processes within LAFCOs should be streamlined to reduce delays and costs associated with housing projects. This could involve setting clearer guidelines, establishing timelines for decision-making, and promoting greater transparency.
7. Increase Transparency and Accountability: LAFCOs should ensure greater transparency in their decision-making processes and criteria. They should also be held accountable for their decisions and their impact on housing production.

By adopting these reforms, LAFCOs can evolve to meet the current housing challenges in California. They can continue to play a crucial role in promoting planned and sustainable growth while also contributing to the urgent need for increased housing production.