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The Local Agency Formation Commission was created by the California Legislature in 1963 to discourage urban sprawl and encourage the orderly formation and development of local government agencies. 

There is a LAFCO in each county in California. San Luis Obispo LAFCO is a seven-member Commission comprised of two city council members (chosen by the City Mayors), two county supervisor members (chosen by the Board of Supervisors), two special district members (chosen by Independent Special District Selection Committee), and one public member (chosen by the members of the Commission). San Luis Obispo LAFCO currently serves 53 local government agencies with 7 cities and 35 special districts and 11 dependent special districts (districts under the county Board of Supervisors).

LAFCO's are responsible for evaluating annexations, the formation of districts, and the incorporation of cities. LAFCOs also establish a sphere of influence for each jurisdiction that plans for future growth of a jurisdiction.

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