LAFCo is required to determine the sphere of influence of each city and special district; the sphere of influence is a plan for the probable physical boundaries and service area of a city or district.

In order to establish an appropriate sphere for an agency, LAFCo must have adequate information on present and future service needs in the area and the capabilities of the agency to meet those needs. To this purpose, the Cortese-Knox-Hertzberg Act requires LAFCo to prepare Municipal Service Reviews prior to establishing or updating spheres of influence.