HomeMy WebLinkAbout05/24/1994, - OPEN SPACE PLAN IMPLEMENTATION MEETING DATE:
��, I� Ii71ilU��' Ci�l city of
sari ���s osispo -5--2- 54- f 54
COUNCIL AGENDAREPORT" ITEM NUMBER:
FROM: John Dunn, City Administrative Office
SUBJECT: OPEN SPACE PLAN IMPLE
CAO RECOMMENDATION
Approve program for soliciting community interest in adopting a City property transfer tax in
order to begin implementing the recently adopted open space element of the General Plan.
DISCUSSION
In follow-up to the Council's adoption of the open space element on January .18, 1994, key
staff members recently met to discuss our next steps in implementing the policies-and programs
set forth in this plan. Two basic approaches emerged from this discussion:
■ Comprehensive approach
■ Do something now approach
The following describes each of these approaches and summarizes the advantages and
disadvantages of each:
Comprehensive Approach
There are a number of programs established in the open space element which outline the work
activities ahead of us in achieving our overall goal of protecting the open spaces identified in
the plan. Basic strategies include relying upon our planning policies and working with the
County to honor them; protecting open space as a condition of development; and acquiring
open space, either through easements or outright purchases. The plan provides a number of
criteria that should be followed in determining properties that should be protected through
acquisition versus other methods.
Under the "comprehensive" approach, we would analyze each of the programs set forth in the
plan, and working with the Parks and Recreation Commission, develop priorities in assigning
specific activities and tasks. These recommendations would then be submitted for Council
approval, and work would begin in accordance with the program priorities and resource
allocations approved by the Council. One of the key elements of this overall workscope would
be the identification of specific properties - using the criteria set forth in the plan - that are
strong candidates for protection through acquisition along with a specific financing plan that
would identify revenue sources as well as evaluate the use of debt financing vs pay-as-you-go
funding strategies.
■ Advantages of this approach. Experience from other cities shows us that the most
successful open space acquisition plans proceed from clearly defined purchase
objectives. Without being able to answer the question "what open space do we have
to buy and how do. we pay for it?", it can be very difficult to generate community
'"h� ' 11111�����U�► ill city of sar. ITS OBISpo
COUNCIL AGENDA REPORT
support for the new resources (and potential debt financing) that will be required to
implement a meaningful acquisition program.
■ Disadvantages of this approach. Realistically, it will take 18 to 24 months to.
complete this work effort given current resources, other high priority planning activities
underway, and the time that will be necessary to accommodate the public review and
community participation process. During this process, we may .lose whatever
momentum we may have at this point in implementing at least some program
components of the open space plan. Further, we would' lose up to two years of
whatever new revenue source we might be able to put in place, as well as any key
opportunities for purchase that might come our way during this period.
Do Something Now Approach
As part of the open space element preparation and review process, a financing plan was
developed which identified strategies that the City might use in protecting open space. While
the plan stressed that there are a number of strategies that should be used in protecting open
space before acquisition is used, it did present a number of options available to the City in
financing those selectedproperties that might best be protected through purchase. One of these
is the implementation of a local property transfer tax that would augment the General Fund's
ability to acquire open space.
Provided in Attachment A is a fact sheet on this revenue source which was formally introduced
to the Council by the Revenue Task Force as part of the Strategic Budget Direction Workshop
held in March of 1993 in conjunction with the 1993-95 Financial Plan process. If set at a rate
of$4.40 per $1,000 of value, this revenue source under "normal" conditions would generate
about $800,000 annually, which could support debt service on an open space acquisition
program of about $11 million.
Rather than waiting 18 to 24 months to begin a financing program, the Council could
implement this new revenue program at this time, setting aside the proceeds for open space
acquisition purposes. As discussed in the attached fact sheet, the enabling ordinance itself
cannot formally earmark these revenues solely for open space purposes (this would require
two-thirds voter approval); but the Council can by policy allocate them for this purpose.
■ Advantages of this approach. We would take a significant step forward in our
commitment to open space acquisition right away. Although we may not know the
specifics of what our acquisition strategies and financing program should be, we know
one thing clearly: it will require more ongoing resources than we are currently making
available - which is zero. From this perspective, it is a low risk implementation
program, since the likelihood that we will be generating more than we will ultimately
need is very remote. This will also allow us to build-up funds on an interim basis for
ultimate acquisitions, and provide us with the means to meet any unique purchase
opportunities that may come our way during the next two years. It is important to note
that the "do something now" approach would not replace the "comprehensive"
approach; they would go forward concurrently. The "do something now" approach
FIs OBISpo
�� ►`� city of sar _
COUNCIL. AGENDA REPORT
simply starts us on the road to implementation sooner than the "comprehensive"
approach.
N Disadvantages of this approach. As discussed above, the most successful open space
financing plans are based on clearly understood purchase objectives which have
significant community support. Until these specific purchase objectives been developed
and community support for them achieved, it may be premature to implement a
financing program. We could be perceived as purchasing the cart before we have a
horse. On the other hand, if we're pretty sure that we need to prepare for and
accelerate our purchase of property for open space preservation purposes, then it is wise
to start as soon as possible, and not defer an essential activity.
Community Review Program
Before submitting this item for Council decision-making, we recommend holding a community
forum on the advantages and disadvantages of these two basic approaches. In addition to
general advertising, notices would be sent to a broad range of City advisory bodies and
community groups informing them of this forum. Additionally, this notice would indicate our
willingness to meet further with any advisory body or community group at their convenience.
A listing of prospective advisory bodies and community organizations that would receive this
notice is provided in Attachment B. After this community review period, we anticipate
returning to Council in mid-July with a staff recommendation on this item.
SUMMARY
Each of these two approaches has advantages and disadvantages. Fundamentally, it is a choice
between making a major commitment i�L this area now (let's get on with.what we know we
want to do) versus making a more cautious, deliberate choice (not taking any substantial action
on open space acquisition until there's a fully developed, specific program). Ultimately, this
is the Council's policy choice. However, we believe that the community review program
outlined in this report will assist the Council in making this decision, and accordingly, it is our
recommendation to proceed and to accurately report the results of this process to the Council
by mid-July.
ATTACHMENTS
A. Property transfer tax fact sheet
B. Prospective notice recipients
0sw0L0WM;.cAa
At-tav,, iment A_
PROPERTY TRANSFER TAX FACT SHEET
What is a property transfer tax?
This is a tax resulting from the transfer of real property ownership based on the value of the
property.
Is this tax in place at this time?
Yes. Section 11901 of the Revenue and Taxation Code (RTC) establishes a statewide property
transfer tax at the rate of $1.10 per $1,000 of value (or $275 on a property with a transfer
value of$250,000).
T3llio pays this tax?
Both the buyer and the seller are jointly liable for payment of the tax; however, it is customary
for this tax to be paid by the buyer.
TT,lto'currently receives the revenue?
The County and incorporated cities share equally in the tax revenues - in essence, 'each has its
own -rate equal to $0.55 per $1,000. In the unincorporated areas, the County receives all
transfer revenues at the 51.10 per $1,000 rate.
Can cities increase their tax rale?
Yes. Cities are allowed to set their own rate separately from the provisions of RTC Section
11901. In this case, the County would retain the entire proceeds from the $1.10 rate specified
in this section.
Have any other cities adopted their oivn property transfer taxes?
Yes. At least 22 cities in 10 counties have adopted their own property transfer tax rates. Rates
range from $1.10 per $1,000 in Torrance to $10.00 per $1,000 in Berkeley.
How much revenue would an increase ge,terate?
This depends on two key factors:
■ The value of property transferred annually.
■ The tax rate established by the City.
For comparison purposes, the following is a summary of property transfer tax revenues
received by the City over the past five years at the current rate of $0.55 per $1,000, and the
amount that would have been received at rates ranging from $2.20 per $1,000 to $10.00 per
$1,000.
Actual Revenues @ Revenues @ Revenues @ Revenues @ Revenues @
Revenues S2.20/S1,000 53.30/S1,000 S4.40/S1,000 55.00/$19000 $10.00/S1,000
1992-93 S 69,600 S 278,600 S 417,600 S 556,800 S 632,700 $1,265,400
1991-92 68,400 273,600 410,400 547,200 621,800 1,243,600
1990-91 94,300 377,200 565,800 758,200 864,350 1,728,700
1989-90 137,800 551,200 826,800 1,102,800 1,252,700 2,505,400
1988-89 136,700 546,800 820,200 1,093,600 1,242,700 2,485,400
Attachment—g
Open Space Financing Forum
PROSPECTIVE NOTICE RECIPIENTS
City Advisory Bodies
Business Improvement Association
Environmental Quality Task Force
Parks and Recreation Commission
Planning Commission
Community Groups
Building Industry Association of the Central Coast
Business Coalition
Chamber of Commerce of San Luis Obispo
Citizens Planning Alliance
ECOSLO
Foothills Neighborhood Association
Land Conservancy of San Luis Obispo County
League of Women Voters
Residents for Quality Neighborhoods
San Luis Drive Neighbors
San Luis Obispo Association of Manufacturers and Distributors
San Luis Obispo Board of Realtors Association -
San Luis Obispo Property Owners Association
Sierra Club
Other identified groups desiring a presentation/discussion
TRiat authority is required to increase this tax for the City?
If the revenues will be used for general purposes, Council approval is required. If the revenues
will be used for a special purpose, two-thirds voter approval is required.
How can these revenues be used?
These revenues can be used for any legitimate government purpose - street maintenance, parks,
recreation, police, or fire. They can be formally earmarked; however, as.noted above, this
would require two-thirds voter approval. If designating the use of these revenues is desirable,
the Council could allocate them by policy to a special purpose such as parks and open space.
For example, the 1993-95 Financial Plan includes severalpolicies regarding the allocation of
General Fund revenues. However, the implementing ordinance itself could not eannark them
without two-thirds voter approval.
Miy is this an appropriate Cityfunding source?
The City's real property transfer tax will be paid by the buyers of San Luis Obispo properties.
As such, it is an appropriate way for new residents to pay their fair share of the amenities that
have already been provided by existing residents. For properties changing hands through local
buyers, the transfer tax reflects the enhancement of property values by the facilities and
programs that the City provides.
How would these revenues be collected?
The County could continue to collect these revenues for us. Although this would require a
formal agreement with the County, initial discussions with them have been favorable.
Mien could an increase be effective?
Theoretically, an increase could be implemented immediately upon Council approval.
However, an effective date that is 120 to 180 days from the date of adoption is recommended
in order to ensure a smooth transition for the County, businesses directly involved in
processing property transfers such as escrow, title and lending companies, and any individuals
or companies with properties currently in escrow.
Are there any other implementation issues?
No. There has recently been a court case against the City of Los Angeles for increasing the
city property transfer tax. The court decided in favor of the City of Los Angeles, and this
ruling was subsequently upheld, at the appellate court level. This appellate court decision,
along with another case addressing this same issue, was taken to the Supreme Court, where
review of both cases was denied. Accordingly, there is no longer a legal basis for delaying
implementation of property transfer tax.
1'112
AGENDA
SAN LU=S O S=SPO COUNTY
C 2 TY COUNC=LS '
SPECIAL JOINT CITY COUNCIL MEETING
WEDNESDAY, SEPTEMBER 27, 1995; 7:00 P.M.
MORRO BAY COMMUNITY CENTER
1001 KENNEDY WAY, MORRO BAY, CA
MOMENT OF SILENCE
PLEDGE OF ALLEGIANCE
WELCOME AND OPENING REMARKS
PUBLIC COMMENT PERIOD - Members of the audience wishing to address the
Joint City Councils may do so at this time. When recognized by Mayor
Yates, please come forward to the podium and state your name and address
for the record. Comments are limited to three minutes; the Public Comment
Period will be limited to thirty minutes.
WRITTEN STATEMENT
A-1 STATEMENT OF PURPOSE (No action required)
NEW BUSINESS
B-1 DISCUSSION OF PROPERTY TAX SPLIT BETWEEN CITIES AND THE COUNTY
B-2 DISCUSSION OF SAN LUIS OBISPO COUNTY POLICIES REGARDING PROPERTY TAX
AND SALES TAX IMPACTS ON CITY ANNEXATIONS
B-3 DISCUSSION OF NEED FOR JOINT PLANNING AGREEMENT BETWEEN CITIES AND THE
COUNTY FOR AREAS SURROUNDING CITIES (GREENBELT, NON-URBAN SPACE
SEPARATIONS)
B-4 JPA AND CITY/COUNTY MEMBERSHIP
B-5 PRESENTATION ON WASTE MANAGEMENT SYSTEMS AND JPA
B-6 ANNUAL MEETINGS
ADJOURNMENT
1
Date �NoA,�tion
STATEMENT OF PURPOSE
By the Mayors of San Luis Obispo County
The Mayors of San Luis Obispo County's seven cities have called our Councils and staffs
together as representatives of the citizens that live within the city limits of our respective cities.
Furthermore, we are representing our citizens as taxpayers within the boundaries of San Luis Obispo
County.
We live in increasingly strained social times, and many of our citizens live in economic distress.
Our cities have structural imbalances like inadequate housing, traffic congestion, roads in need of
repair and understaffed public safety departments. These imbalances are due,in large part, to impacts
that have originations outside our city limits.
Our cities are on the cutting edge in effectively managing our available resources, trying to
maintain, at minimum, respectful levels of service to everyone to everyone who wants to live, do
business or recreate in San Luis Obispo County.
This evening, we feel the need to meet and discuss issues that we hold as common to all of our
cities-citizens.
The questions are: Can cities afford to provide municipal services to annexing areas, when the
County refuses to cooperate in sharing tax revenues from the areas wishing to annex to a given city? Is
the method in which property taxes are divided between the Cities and County fair?
The County receives roughly twice the amount of property taxes collected within our cities boundaries
than do our respective cities.
Our seven cities are well prepared to meet the goals of accountability and responsibility in the
delivery of services to our citizens. However,the growth allowed in the unincorporated areas without
full responsibility for services and traffic impacts cause our cities to express for our citizens a growing
dissatisfaction in the trend.
We recognize our County's LAFCO has become a vital organ of an overall County plan to
perpetuate the trend of unincorporated areas' growth in population. The County, because of its funding
woes, encourages districts to be formed. Initially,these areas form only road assessment districts,
followed by fire, water and sewer districts. Unfortunately,the County does not pass thru all revenues
associated with the growth of the District so they may one day incorporate. This encourages
development that impacts on the incorporated cities, since the newly developed areas end up using city
services not being provided by the Districts. Best examples are Shandon, Nipomo, Los Osos and
Heritage ranch.
So the Cities are here this evening to make a best effort to articulate the problems, educate one
another, review some numbers and begin a solution process that balances revenues with services
provided.
We are aimed at fairness and ultimately what is in the best interests of the citizens living within
both the unincorporated and incorporated areas of the County.