California experienced a tremendous population increase in the 1940s and 1950s, with a land-speculation/development boom never witnessed before in the nation. Ranch land and orchards in the Los Angeles and San Francisco basins were converted into residential tracts seemingly overnight.
As a result of this growth, the traditional purpose and structure of local government in California also underwent significant change. The reasons included the speculative nature of development away from existing urban centers; increased mobility due to reliance on automobiles; and developers seeking the most expeditious, economical means of providing basic services and facilities such as water, roads, fire protection and sewers. The answer to these criteria was often the use of special districts.
Prior to that era, special districts in California had been mostly agricultural. However, that orientation changed drastically and hundreds of special districts were formed to provide urban-type services as they became necessary.
As special districts became the local government of suburbia, municipalities suffered. Many cities experienced a deteriorating revenue base. Major industry and commerce withdrew and a residue population of lower economic status remained.
Cities began grabbing whatever territory they could annex. Because of the restrictive nature of California's annexation statutes, often the territory cities could annex was undeveloped and beyond developing suburbia. This type of annexation added fuel to the development spiral, because it led to further premature, unplanned development, irregular city boundaries and of agricultural lands.
During the late 1950s and early 1960s, the results of this era of growth became evident as California's agricultural industry dwindled and core cities sought state assistance in correcting blighted conditions.
State officials became concerned about the misuse of resources and the resulting growth and complexity of local government institutions. In 1958, in response to these concerns, Gov. Edmund G. Brown Sr. appointed a commission of academics and local and state officials to examine causes and effects of these related happenings, and to formulate solutions for restraining and correcting the situation.
In 1961, the Legislature formed the California Boundary Commission, organized at the state level and given review and comment authority only over the boundaries of city annexations and incorporations.
The functioning of this commission was unsatisfactory from the beginning. It was unable to understand and analyze the various and complex local issues surrounding numerous city annexations, it offered no handle on special districts and its "Review and Comment" was not enough authority to change trends.
In response to the ineffectiveness of the Boundary Commission, the Assembly held several lengthy hearings during 1961-62. All segments of local government participated in this study and the following principles were developed.
To preserve the essence of “home rule," the problem had to be dealt with at the local county level. Whatever institution was formed had to have decisive, regulatory power in order to realistically have a beneficial effect.
Local answers to the problems of urban sprawl and proliferation of local agencies within each county required equal participation by the county and the cities because only then would workable, practical solutions be derived.
These principles became the cornerstone of the Knox/Nisbet Act, enacted in 1963 creating a Local Agency Formation Commission (LAFCO) in each county in the state except San Francisco.
The act, and its successor, the Cortese/Knox Local Government Reorganization Act of 1985, represent a unique California experiment in rationalizing growth and development through local control of the formation, expansion and alteration of agencies within each county.
Shortly after LAFCOs' creation, Gov. Brown summarized their potential when he heralded the Commissions as California's "test of the capacity of local government to deal effectively with urban growth.”