HomeMy WebLinkAbout09/18/2001, C7 - AGREEMENTS WITH THE COUNTY OF SAN LUIS OBISPO REGARDING PROPERTY-TAX REVENUES FROM THE CREEKSIDE _J
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CITY OF SAN LUIS OBISPO
FROM: John Mandeville, Community Development Director
Prepared By: John Shoals, Associate Planne�
SUBJECT: AGREEMENTS WITH THE COUNTY OF SAN LUIS OBISPO
REGARDING PROPERTY-TAX REVENUES FROM THE CREEKSIDE
AND CANNON ANNEXATIONS IN THE AIRPORT AREA;
ANNEXATION NOS. 66 & 67: City File Nos. ANNX 209-99 AND 148-00.
CAO RECOMMENDATION
1. Adopt Resolution "A" accepting the negotiated exchange of property-tax revenue and
annual property-tax increment for the Creekside Annexation; and
2. Adopt Resolution "B" accepting the negotiated exchange of property-tax revenue and
annual property-tax increment for the Cannon Annexation.
DISCUSSION
Creekside Annexation
On November 21, 2000, the City Council recommended to the Local Agency Formation
Commission (LAFCo) that the 6-acre Creekside annexation area (ANNX 209-99) at 4101-4115
Broad Street be annexed to the City of San Luis Obispo (Attachment#1, Vicinity Map).
Cannon Annexation
On July 10, 2001, the City Council recommended to the LAFCo that the 7.1-acre Cannon
annexation area (ANNX 148-00) at 4041 Broad Street be annexed to the City of San Luis Obispo
(Attachment#1, Vicinity Map).
Tax Share Agreements
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). Staff has negotiated a draft agreement for both annexation areas..
The Creekside agreement is included as Attachment 2 and the Cannon agreement as Attachment
3. The Board is scheduled to consider both agreements on September 20, 2001. The draft
agreements follow an overall City-County agreement for Airport Area annexations that was
approved by both agencies in 1998. Under that "master" tax exchange agreement, for
nonresidential development, the County would receive all property taxes from present and future
development and the City would receive all sales taxes.
Council Agenda Report
ANNX 209-99 and 148-00:Tax Sharing Agreements
Page 2
FISCAL IMPACT
As discussed in greater detail below, there should be no adverse fiscal impacts associated with
the proposed annexations based on the results of past fiscal impact studies, the current City-
County"master"tax exchange agreement and the City's interim airport area infrastructure fees.
Background: Requirement for Tax Exchange Agreement in Annexation Areas
Under State law, cities and counties must agree on a revenue division ("tax exchange") before an
annexation can be completed. If they do not reach agreement within a 60-day period, the
annexation process cannot be concluded.
However, State law does not provide any specific guidelines for tax exchange agreements. As
such, these can be negotiated by cities and counties in one of two ways: case-by-case
negotiations or through a"master"tax exchange agreement. There are a number of advantages to
a "master" agreement, including consistency in approach, stability in city-county fiscal
relationships, ability to evaluate fiscal impacts in a comprehensive rather than piecemeal fashion,
savings in staff time and smoother processing due to the required 60-day agreement period.
In April 1996, following detailed cost-revenue analyses for both agencies, the City and the
County (along with the Cities of Arroyo Grande, Grover Beach and Morro Bay) agreed upon the
following general approach in exchanging tax revenues in annexation areas:
Residential Properties. The City receives 34% of the share that the County would otherwise
receive from the incremental property tax revenues after annexation (or about 9% of the total
increment). The County retains all of the base property tax revenues received by them before the
annexation.
Non-Residential Properties. The County retains their full share of all current and incremental
property tax revenues. The City receives all current and future sales tax revenues.
While the City receives limited property tax revenues under this approach, past fiscal analyses
have shown that this is more than offset by sales tax and other City revenues, especially since it
includes both current as well as future sales tax revenues.
Airport Area: Operating Costs and Revenues
The City and County specifically approved this tax exchange approach for the entire Airport
Area in October 1998. This is especially notable since significant sales tax revenues are already
being generated in the Airport Area, and these will be transferred to the City upon annexation.
Council Agenda Report
ANNX 209-99 and 148-00:Tax Sharing Agreements
Page 3
Benefits of this Approach: Depending on the specific circumstances, this may not appear to be
advantageous to the City on a case-by-case basis. However, our fiscal analyses have shown that
as a whole, annexation under this approach is fiscally beneficial to the City, largely due to the
strength of current as well as projected sales tax revenues in the area. For the airport areas as
whole, the latest analysis (1998) shows that the annual "net" fiscal benefit to the City—after
adjusting for new service costs—is about $450,000 immediately after annexation; and about
$750,000 annually upon build-out. This analysis is based on the current "master" tax exchange
agreement.
Airport Area Infrastructure Costs
The fiscal analysis performed in 1998 was based on operating costs and revenues. Infrastructure
improvement costs and financing are separately being evaluated as part of the Airport Area
Specific Plan in accordance with City policy that new development should pay its fair share of
the costs of public facilities needed to serve it. This plan is currently under preparation. In the
interim, the Council approved interim infrastructure fees for water, sewer, transportation and
storm drainage improvements of$26, 236 per acre. Michael F. Cannon has agreed to pay these
fees for the Cannon Annexation.
The infrastructures fees for the Creekside Annexation are $15,538 per acre. This project has
different infrastructure fees because the City did not increase the fees until November 16, 1999
and projects with an application deemed complete by December 1, 1999 were allowed to pay the
older fees. The Creekside Annexation application was filed with the City in November of 1999.
The applicants (Ball; Ball, Williams and Senn) have agreed to pay these fees for the Creekside
Annexation.
ALTERNATIVES
1. Deny the tax exchange agreements and direct staff to renegotiate with the County of San
Luis Obispo. Under this alternative, the LAFCo could not take final action on the
proposed annexations.
2. Continue action with direction to staff.
ATTACHMENTS:
1. Vicinity Map
2. Draft resolution approving the Creekside Annexation tax-sharing agreement
3. Draft resolution approving the Cannon Annexation tax-sharing agreement
JShoals/CC/Creekside and Cannon Tax Share
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ATTACHMENT 1
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VICINITY MAP
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CREEKSIDE AND CANNON ANNEXATIONS
COUNTY FILES: ANNEXATION NOS. 66 AND 67 l�
CITY FILES: ANNX 209-99 AND 148-00
ATTACHMENT 2
RESOLUTION NO. (2001 Series)
A RESOLUTION OF THE CITY COUNCIL OF SAN LUIS OBISPO
ACCEPTING A NEGOTIATED EXCHANGE OF PROPERTY TAX REVENUE AND
ANNUAL TAX INCREMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO
AND THE CITY OF SAN LUIS OBISPO FOR THE CREEKSIDE ANNEXATION
(LAFCo Application# 66)
(City File No. Annx/PD/ER 209-99)
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. 66 to the City of San Luis Obispo; and
WHEREAS, the negotiating parties, to wit: Assistant Administrative Officer, County of
San Luis Obispo, and Assistant City Administrative Officer, 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.
ATTACHMENT 2
Resolution No. (2001 Se. mss)
ANNX209-99: Creekside Annexation Tax Exchange
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) No annual tax increment shall be transferred from the County of San Luis Obispo
to the City of San Luis Obispo.
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 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.
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 , 2001.
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APP VED:
✓1
Jeffrey G. Jorgensen, City Attorney
JShoals/CC/ANNX209-00(TaxShaze)
Attachment 3
RESOLUTION NO. (2001 Series)
A RESOLUTION OF THE CITY COUNCIL OF SAN LUIS OBISPO
ACCEPTING A NEGOTIATED EXCHANGE OF PROPERTY TAX REVENUE AND
ANNUAL TAX INCREMENT BETWEEN THE COUNTY OF SAN LUIS OBISPO
AND THE CITY OF SAN LUIS OBISPO FOR THE CANNON ANNEXATION
(LAFCo Application#67)
(City File No. Annx/PD/ER 148-00)
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. 67 to the City of San Luis Obispo; and
WHEREAS, the negotiating parties, to wit: Assistant Administrative Officer, County of
San Luis Obispo, and Assistant City Administrative Officer, 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.
Resolution No. (2001 Setas Attachment 3
ANNX148-00: Cannon Annexation Tax Exchange
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) No annual tax increment shall be transferred from the County of San Luis Obispo
to the City of San Luis Obispo.
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 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.
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 , 2001.
Mayor Allen Settle
ATTEST:
Lee Price, City Clerk
APP ED:
01
Jeffrey G. Jorgensen, City Attorney