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Home My WebLink About03/07/2000, C5 - AGREEMENT WITH THE COUNTY OF SAN LUIS OBISPO CONCERNING PROPERTY-TAX REVENUES FROM THE NORTHWEST MARGARITA AREA ANNEXATION (LAFCO APPLICATION NO. 57, CITY APPLICATION NOS. 175-98 & 208-98). council "t°"`.`°"` Mar. 7, 00 j ac,Enba uEpoat C5N C I TY OF SAN LU IS O B I S P O FROM: Arnold B. Jonas, Community Development Direct Prepared By: Glen Matteson,Associate Planner VVV SUBJECT: AGREEMENT WITH THE COUNTY OF SAN LUIS OBISPO CONCERNING PROPERTY-TAX REVENUES FROM THE NORTHWEST MARGARITA AREA ANNEXATION(LAFCO APPLICATION NO. 57t CITY APPLICATION NOS. 175-98 & 208-98). CAO RECOMMENDATION Adopt a resolution accepting the negotiated exchange of property-tax revenues and annual property-tax increments for the Northwest Margarita Area Annexation, under which the City will receive one-third of the increased property taxes for the part of the area that is designated for residential use. DISCUSSION The Council took actions to approve this annexation in May 1998 and in January, March, and September of 1999 (attached vicinity map). Those actions included approving a draft Margarita Area Specific Plan, approving pre-annexation agreements with the owners, recommending that the Local Agency Formation Commission (LAFCo) approve the annexations, and adopting zoning consistent with the General Plan that will take effect upon annexation: California law requires the City and the County to agree on division of the property taxes from the territory proposed for annexation, which otherwise would go to the County (Revenue and Taxation Code, Section 99). City and County staff have negotiated draft agreements for presentation to the City Council and to the Board of Supervisors. The Board is scheduled to consider this item during the day on March 7. If the Board of Supervisors and the City Council take the recommended actions, the LAFCo hearing for the subject annexation is expected to be March 16. The County collects property taxes.and distributes them to itself, the school district, special districts, and for most land inside the city limits, to the City. Property tax revenues largely go to the County and the school district, though they are an important revenue source for the City. Annexation alone does not increase the total amount of property tax from a given parcel, nor does it affect the portion going to schools or most special districts. Therefore, the City and the County must agree on a division of their portion. The City and the County have previously approved general principles for property taxes, which provide for the following. • For residential properties, future revenues equal to revenues at the time of annexation are retained by the County, as are two-thirds of increased revenue, while one third of increased revenue that otherwise would go to the County goes instead to the City; • For commercial or industrial property, all property-tax revenues go to the County. (In exchange for this,the City receives all current and future sales tax revenues.) C5-1 Council Agenda Report—tax sharing agreement Page 2 The General Plan and the draft specific plan show about 53 percent of the annexation territory as open space (the hills) and about 47 percent for residential development (including development sites, streets, and creek corridors surrounded by development). The hills open space is to be dedicated in fee to the City concurrent with the annexation, and so will have no future property tax revenues. No commercial or industrial development is planned for this part of the Margarita Area. FISCAL IMPACT For 1999-2000, property tax from the territory to be annexed, which is subject to the proposed agreement, is about $7,700. Revenues and costs for the area will increase substantially over the next 15 years or so as the area develops. A fiscal study for the 1994 General Plan update showed that the City's general fund would remain fiscally healthy while annexing a combination of residential and commercial areas (Mundie & Associates, 1994). This has been happening and is proposed to continue. ALTERNATIVES The City and the County must agree on a revenue division before the annexation can be completed. State law says that if the City and the County do not reach agreement within a 60-day period (by May 7), the annexation process stops and would need to be re-initiated for the annexation to occur. Council may direct staff to pursue a different revenue-division formula, or may continue action for other reasons. Not approving the agreement within the interval set by State law would require re-filing the LAFCo applications and returning at some future meeting to resolve the matter. Attachments Draft resolution approving tax-sharing agreement Vicinity map masp\tax sharing CARI C5-2 RESOLUTION NO. (2000 Series) A RESOLUTION OF THE SAN LUIS OBISPO CITY COUNCIL ACCEPTING A NEGOTIATED EXCHANGE OF PROPERTY TAX REVENUE AND ANNUAL TAX INCREMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO AND THE CITY, FOR THE NORTHWEST MARGARITA AREA ANNEXATION (#57) 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,when a city is involved, the negotiations are conducted between the City Council and the Board of Supervisors of the County; and WHEREAS, when a special district is involved,the negotiations are conducted by the Board of Supervisors of the County on behalf of the district or districts, unless otherwise requested by said district or districts pursuant to Revenue and Taxation Code Section 99(b)(5); 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 property tax revenues by transmitting a copy of said resolution to the County Auditor, and the County Auditor shall thereafter make the appropriate adjustments as required by law; and WHEREAS,the negotiations have taken place concerning the transfer of property tax revenues and annual tax increment 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 Annexation No. 57 to the City of San Luis Obispo (Northwest Margarita Area Annexation); and WHEREAS,the negotiating parties,to wit: Lee Williams, County of San Luis Obispo, and Ken Hampian, City of San Luis Obispo, have negotiated the exchange of property tax revenue and annual tax increment between such entities as hereinafter set forth; and WHEREAS, it is in the public interest that such negotiated exchange of property tax revenues and annual tax increment be consummated. C5-3 Resolution No. (2000 Series) Page 2 NOW,THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo as follows: 1. That the recitals set forth above are true, correct, and valid. 2. That the City of San Luis Obispo agrees to accept the following negotiated exchange of base property tax revenues and annual tax increment: (a) No base property tax revenue shall be transferred from the County of San Luis Obispo to the City of San Luis Obispo. (b) Annual tax increment shall be transferred from the County of San Luis Obispo to the City of San Luis Obispo in the fiscal year 2001 - 2002 and each fiscal year thereafter in the amount of 12.2674399 percent, before Educational Revenue Augmentation Fund. (c) After the City portion is transferred, all annual tax increment for the County Road Fund shall be transferred to the County General Fund. 3. Upon receipt of a certified copy of this resolution and a copy of the recorded certificate of completion,the County Auditor shall make the appropriate adjustments to property tax revenues and annual tax increments as set forth above. 4. That the City Clerk is authorized and directed to transmit a certified copy of this 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. On motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was passed and adopted this—day of , 2000. Mayor Allen Settle ATTEST: Lee Price, City Clerk C5-4 Resolution No: (2000 Series) - Page 3 APPROVED: gen Cd. Attorney C5-5 ..5.•-•�'ya.. .. .ya.-a. •. r ' n.. l E�' A res' y+C. �, +. k} H.' s* 6� ,ate, n � � a s" ` 4t v�s•,3,.a,�y; �� 5 Yl'sk n n .•.p n � r .1 i 11i J"q ,>•i n p. na c y •:S:�v , 's Tn ter. .L. 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