HomeMy WebLinkAboutItem 6a. Authorize a County Tax Exchange Agreement for Detachment #04 Slack Street and Hathway (Cal Poly Vista Meadows) Item 6a
Department: Community Development
Cost Center: 4003
For Agenda of: 4/29/2025
Placement: Consent
Estimated Time: N/A
FROM: Timmi Tway, Community Development Director
and Emily Jackson, Finance Director
Prepared By: Callie Taylor, Senior Planner
SUBJECT: AUTHORIZE A TAX EXCHANGE AGREEMENT WITH THE COUNTY OF
SAN LUIS OBISPO TO ADDRESS TAX TRANSFERS FROM SLACK
STREET AND HATHWAY DETACHMENT NO. 04 (CAL POLY VISTA
MEADOWS)
RECOMMENDATION
Adopt a Draft Resolution entitled, “A Resolution of the City Council of the City of San Luis
Obispo, California, accepting a negotiated exchange of Tax Revenue and annual tax
increment between the County of San Luis Obispo and the City of San Luis Obispo for
Detachment #04 (Slack Street and Hathway) from the City of San Luis Obispo .”
POLICY CONTEXT
With any change of jurisdictional boundary, a negotiated property tax agreement is
required to be approved by Resolution of the affected agencies, which in the case of
Detachment No. 04 includes the County of San Luis Obispo Board of Supervisors and
the City Council of the City of San Luis Obispo. This process adjusts the Tax Rate Areas
associated with the boundary changes of the City and involves the County
Auditor/Assessor and the State Board of Equalization. T his process must be completed
before the Local Agency Formation Commission (LAFCO) application for Detachment No.
04 can be considered by LAFCO, as required by Government Code Section 56810.
DISCUSSION
Background
On November 12, 2024, the City Council approved a street right-of-way abandonment on
Slack Street and initiation of a corresponding modification to the City limit line (i.e.,
detachment) in order to accommodate a faculty and staff housing project (known as Vista
Meadows) on the Cal Poly campus. A second detachment area on Hathway was included
with the detachment to adjust the City limit line to correct a historical boundary
inconsistency at APN 052-082-028, a property which is owned by Cal Poly University and
previously developed with campus recreation facilities. The subject areas of the
detachment application are shown in Attachment B and Figure 1 below. The Council
authorized staff to submit an application for detachment to the Local Agency Formation
Commission (LAFCO). The LAFCO detachment application was submitted by the City on
December 23, 2024, and is currently being processed.
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Item 6a
State law requires that jurisdictions affected by an annexation (in this c ase, the County,
and the City of San Luis Obispo) negotiate an exchange of the taxes paid in the
annexation area prior to LAFCO approval of the jurisdictional change.
On January 29, 2025, the County Auditor-Controller provided Notice of Allocation
Information pursuant to Revenue and Taxation Code §99(b)(3) for 5 -R-24 Detachment
No. 04 from the City of San Luis Obispo (Slack Street and Hathway). The Revenue and
Taxation Code requires that negotiations be concluded within 60 days, unless extended
by mutual agreement between the involved agencies for an additional 30 days, which the
County and the City have agreed to . The San Luis Obispo City Council is scheduled to
consider the tax exchange agreement on April 29, 2025, within the 90-day timeframe.
Tax Exchange History
In 1996, the City and County adopted a joint resolution, along with several other cities in
the County, to establish a county-wide policy regarding tax exchanges. The "master" tax
exchange agreement is based on two principles: (1) that the County should not "profit"
from annexations, nor should annexations result in a net fiscal loss to the County, and
(2), that tax exchange practices should not undermine good land use planning by
discouraging cities from pursuing logical and appropriate annexations. These principals
serve as the basis for most annexation discussions in the County of San Luis Obispo.
Detachment No. 04 Tax Agreement (Slack Street and Hathway)
The properties proposed for detachment with the current LAFCO application include
Slack Street right-of-way along the Cal Poly property frontage and Parcel No. 052-082-
028 on Hathway which is currently owned by the State of California. As State owned land,
both properties associated with the detachment are exempt from property taxation. The
City of San Luis Obispo is currently allocated 14.880123 percent of the property tax
generated in the subject property; however, as a State-owned property, no tax is
Figure 1: Location of Detachment: Slack Street and Hathway
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Item 6a
collected. As shown in the attached draft resolution, the City shall transfer the City’s
currently allocated percentage of property taxes generated in the subject property to the
County of San Luis Obispo.
The areas currently proposed for detachment will remain as State-owned property in
perpetuity and therefore do not have potential for current or future sales tax or property
tax revenues to either the City or the County. Parcel No. 052-082-028 on Hathway has
been developed with Cal Poly student recreational facilities for several decades, including
both indoor and outdoor sports courts and swimming pools. The Slack Street right-of-way
was approved for abandonment by the City in 2024 in order to facilitate the development
of the Vista Meadows faculty and staff housing near the northeast corner of Grand
Avenue. A detachment to adjust the City limit line was necessary in conjunction with the
right-of-way abandonment because the current City boundary line bisect s the new staff
housing development, and would create a property with dual jurisdiction if the City limit is
not adjusted. Cal Poly University will own the Vista Meadows land and housing units in
perpetuity and will lease the homes to faculty and staff. The homes will not be privately
owned, and therefore, will not provide any property tax revenues to the City or the County
regardless of jurisdiction.
Previous Council or Advisory Body Action
June 4, 2024: Applications to modify the City limit are referred to City Council for initiation
and early consideration prior to staff processing the application. At an initiation meeting,
the City Council authorized staff to proceed with processing the detachment app lication
to modify the City limit boundary to accommodate a new Cal Poly faculty and staff housing
development known as Vista Meadows, as well as other City limit clean -up areas as
needed to correct historical jurisdictional boundary crossings around Cal P oly.
September 25, 2024: The Planning Commission reviewed the request and made a
determination of General Plan conformity as well as a recommendation to the City Council
to approve abandonment of the public right-of-way and to initiate a detachment.
October 15, 2024: City Council adopted a “Resolution of Intention,” which set a public
hearing at Council for November 12, 2024 to consider a final “Resolution of Abandonment”
for portions of Slack Street.
November 12, 2024: City Council adopted a Resolution to Abandon portions of Slack
Street to accommodate Cal Poly faculty and staff housing and adopt ed a Resolution of
Detachment to adjust City limit boundaries near Cal Poly (STAB-0038-2024, ANNX-0219-
2024).
Public Engagement
At each step in the process for the street abandonment and detachment public hearings,
as well as for the current tax exchange agreement review, City staff provided all required
notifications in conformance with the Streets and Highways Code and Council noticing
policy, including lot postings, legal ads in the newspaper, and neighborhood mailings. For
review of the tax exchange agreement, the public has an opportunity to comment on this
item at or before the April 29, 2025 City Council meeting.
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Item 6a
CONCURRENCE
The negotiated tax exchange agreement has been r eviewed by the City Manager, City
Attorney, and all applicable City departments including the Finance Department to confirm
concurrence.
ENVIRONMENTAL REVIEW
The adjustment of City limits (detachment) at the proposed locations on Slack Street and
Hathway qualify for a Class 19 CEQA categorical exemption, which exempts annexations
containing existing public structures developed to the density allowed by the current
zoning. The Notice of Exemption was recorded and sent to Governor's Office of Planning
and Research (OPR) (SCH number 2025021086). The negotiated tax exchange
agreement is a component of the detachment process. Adoption of the resolution
accepting a tax exchange agreement with the County of San Luis Obispo addressing tax
transfers from the Slack Street and Hathway detachment areas (Attachment A) is
consistent with the Class 19 CEQA categorical exemption, would not result in any
physical changes to the environment, and does not require any supplemental or
subsequent environmental review.
FISCAL IMPACT
Budgeted: No Budget Year: 2024-25
Funding Identified: No
Fiscal Analysis:
Funding
Sources
Total Budget
Available
Current
Funding
Request
Remaining
Balance
Annual
Ongoing
Cost
General Fund N/A N/A N/A N/A
State
Federal
Fees
Other:
Total $0 $0 $0 $0
As State owned land, the Slack Street right-of-way along the Cal Poly property frontage
and Parcel No. 052-082-028 on Hathway are exempt from property taxation. The City of
San Luis Obispo is currently allocated a percent of the property tax generated from the
subject property; however, as a State -owned property, no tax is collected. As shown in
the attached draft resolution, the City shall transfer the City’s currently allocated
percentage (14.880123) of property taxes generated by the subject property to the County
of San Luis Obispo. As State owned land, no property tax will be collected, and therefore,
there is no fiscal impact from the negotiated tax exchange on the subject sites.
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Item 6a
ALTERNATIVES
The City Council may direct staff to re-open negotiations with the County with
specific negotiating parameters. The extended negotiating period for this annexation
will expire on April 30, 2025, and, as a State-owned property, there is no property tax
collected and therefore no fiscal impacts would result f rom an alternative agreement.
ATTACHMENTS
A - Draft Resolution Accepting County Tax Exchange for Detachment No. 04
B - Detachment No. 04 Slack Street and Hathway Location Map
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R ______
RESOLUTION NO. ________ (2025 SERIES)
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN LUIS
OBISPO, CALIFORNIA, ACCEPTING A NEGOTIATED EXCHANGE OF
TAX REVENUE AND ANNUAL TAX INCREMENT BETWEEN THE
COUNTY OF SAN LUIS OBISPO AND THE CITY OF SAN LUIS OBISPO
FOR DETACHMENT #04 (SLACK STREET AND HATHWAY) FROM THE
CITY OF SAN LUIS OBISPO
WHEREAS, the City of San Luis Obispo, a charter city and municipal corporation,
wishes to move forward with the detachment of the Slack Street and Hathway area; and
WHEREAS, in the case of a jurisdictional change other than a city incorporation or
district formation which will alter the service area or responsibility of a local agency,
Revenue and Taxation Code Section 99(a)(1) requires that the amount of property tax
revenue to be exchanged, if any, and the amount of annual tax increment to be
exchanged among the affected local agencies shall be determined by negotiation; and
WHEREAS, Revenue and Taxation Code Section 99(b)(6) requires that each local
agency, upon completion of negotiations, adopt resolutions whereby said local agencies
agree to accept the negotiated exchange of property tax revenues, if any, and annual tax
increment and requires that each local agency transmit a copy of each such resolution to
the Executive Officer of the Local Agency Formation Commission; and
WHEREAS, no later than the date on which the certificate of completion of the
jurisdictional change is recorded with the County Recorder, the Executive Officer shall
notify the County Auditor of the exchange of tax revenues by transmitting a copy of said
resolutions to him and the County Auditor shall thereafter make the appropriate
adjustments as required by law; and
WHEREAS, the properties being detached (Slack Street right-of-way and Hathway
Parcel No. 052-082-028) are currently owned by the State of California and/or consist of
existing right-of-way and are therefore exempt from property taxation; and
WHEREAS, the City of San Luis Obispo is currently allocated 14.880123 percent
of the property tax generated in the subject property; and
WHEREAS, the negotiations have taken place concerning the transfer of tax
revenues and annual tax increments between the County of San Luis Obispo and the City
of San Luis Obispo pursuant to Section 99(a)(1) for the jurisdictional change designated
as Detachment No. 04 from the City of San Luis Obispo (Slack Street and Hathway); and
WHEREAS, the negotiating parties, to wit: Lisa Howe, Division Manager, County
of San Luis Obispo, on behalf of the County and Emily Jackson, Finance Director, City of
San Luis Obispo, on behalf of the City have negotiated the exchange of tax revenue and
annual tax increments between such entities as hereinafter set forth; and
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Resolution No. _____ (2025 Series) Page 2
R ______
WHEREAS, it is in the public interest that such a negotiated exchange of tax
revenues and annual tax increments be consummated.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis
Obispo as follows:
SECTION 1. Agreement. The City Council agrees to accept the following
negotiated exchange of property tax revenues:
1. The City shall transfer the City’s currently allocated percent (14.880123) of
property taxes generated in the subject property to the County of San Luis
Obispo.
2. Annual tax increments shall be transferred from the City of San Luis Obispo to
the County of San Luis Obispo effective the roll year specified by the California
Board of Equalization, anticipated fiscal year 2025-26, after transfers to the
Educational Revenue Augmentation Fund (ERAF).
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Resolution No. _____ (2025 Series) Page 3
R ______
SECTION 2. Transmittal. The City Clerk is authorized and directed to transmit a
certified copy of the resolution to the Executive Officer of the San Luis Obispo Local
Agency Formation Commission, who shall then distribute copies in the manner prescribed
by law:
Upon motion of ___________, seconded by __________, and on the following roll
call vote:
AYES:
NOES:
ABSENT:
The foregoing resolution was adopted this _______ day of ___________ 2025.
___________________________
Mayor Erica A. Stewart
ATTEST:
__________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
___________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the
City of San Luis Obispo, California, on ______________________.
___________________________
Teresa Purrington
City Clerk
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