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Approve a Tax Exchange Agreement between Solano County and the City of Suisun City related to the planned annexation of the Highway 12/Pennsylvania Ave Buzz Oates development project; Delegate authority to the County Administrator to sign the agreement, including any necessary minor technical adjustments with County Counsel concurrence; and Adopt a resolution delegating authority to the County Administrator to finalize tax exchange negotiations on behalf of special districts affected by a proposed jurisdictional change when the jurisdictional change will result in a tax revenue exchange of less than $10,000
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Published Notice Required? Yes ____ No _X_
Public Hearing Required? Yes ____ No _X_
DEPARTMENTAL RECOMMENDATION:
The County Administrator’s Office recommends that the Board of Supervisors:
1. Approve a Tax Exchange Agreement between Solano County and the City of Suisun City related to the planned annexation of the Highway 12/Pennsylvania Ave Buzz Oates development project; and
2. Delegate authority to the County Administrator to sign the agreement, including any necessary minor technical adjustments with County Counsel concurrence; and
3. Adopt a resolution delegating authority to the County Administrator to finalize tax exchange negotiations on behalf of special districts affected by a proposed jurisdictional change when the jurisdictional change will result in a tax revenue exchange of less than $10,000.
SUMMARY:
The City of Suisun City (City) is proposing to annex an approximately 162-acre site referred to as the Highway 12 Logistics Center Annexation Area, located at the northwest corner of Cordelia Road and Pennsylvania Ave, bounded by State Highway 12 to the north and the Union Pacific Railroad to the east, within the City’s Sphere of Influence. The City, in coordination with the landowner/developer, Buzz Oats Construction Inc., is proposing a warehouse and logistics center spanning 700,000 to 1,300,000 square feet of industrial development.
Buzz Oats submitted a planning entitlement application for development to the City in 2021. The City acting as the lead agency prepared an Environmental Impact Report (EIR) for the project. The City Planning Commission held a public hearing in July 2024 and subsequently on November 19, 2024, the City Council held a public hearing and voted to certify the Final EIR, approve a City General Plan Amendment, and approve the annexation application for submittal to the Solano Local Agency Formation Commission (LAFCo).
Under state law, a prerequisite for LAFCo to process a duly submitted annexation application is an agreement between the annexing city and county regarding the allocation of property taxes on parcels to be annexed. City and County staff have engaged in negotiations and reached tentative agreement (Attachment A) on a Tax Exchange Agreement specific to the Highway 12/Pennsylvania Ave Buzz Oates development project.
Under the proposed Tax Exchange Agreement, after required allocations to schools through the Education Revenue Augmentation Fund (ERAF), the County would receive 70% of the affected General Fund and Accumulated Capital Outlay property tax revenues and the City would receive 30%. Additionally, the County would receive 25% of sales tax and transient occupancy tax revenues generated by the development. Further the agreement provides direct funding to the Suisun Fire Protection District. The Tax Exchange Agreement was approved by the City Council on September 15, 2026. It is recommended that the Board of Supervisors approve the agreement.
In addition to Tax Exchange Agreement on the Highway 12/Pennsylvania Ave Buzz Oates development project, it is recommended the Board consider adopting a resolution, delegating authority to the County Administrator to finalize small-value tax exchange negotiations under Revenue and Tax Code section 99(b)(5), which requires the County to negotiate any exchange of property-tax revenue on behalf of special districts when those districts annex territory, merge, dissolve, or are otherwise affected by a jurisdictional change, when such a jurisdictional change will result in a tax revenue exchange of $10,000 or less. This delegated authority will reduce the administrative burden on small-value exchanges on behalf of special districts. (Attachment B).
FINANCIAL IMPACT:
Assuming development occurs, staff anticipates that the tax exchange agreement will generate approximately $250,000 annually for the County which is further anticipated to cover County costs associated with the new development. The City’s annual $25,000 payment to the Suisun Fire Protection District will be subject to Consumer Price Index inflationary adjustments and will commence following issuance of the first certificate of occupancy.
The delegation of authority resolution is intended to reduce administrative burden for small-value exchanges on behalf of special districts.
Costs associated with preparing the Tax Exchange Agreement, the delegation of authority resolution, and this agenda item are nominal and absorbed within existing appropriations.
DISCUSSION:
The Highway 12/Pennsylvania Ave Buzz Oates development project is approximately 162 acres and would include 700,000 to 1,300,000 square feet of industrial development. Because the property would be annexed into the City of Suisun City, the City and County must agree on how certain tax revenues generated by the property will be divided after annexation as there currently is no master property tax transfer agreement. The prior 2000 master property tax transfer agreement was rescinded by the Board of Supervisors in 2024.
Under the proposed Tax Exchange Agreement, after required allocations to schools through the Education Revenue Augmentation Fund (ERAF), the County would receive 70% of the affected General Fund and Accumulated Capital Outlay property tax revenues and the City would receive 30%. Additionally, the County would receive 25% of sales tax and transient occupancy tax revenues generated by the development.
After annexation, the City would become responsible for providing fire protection and road services to the area. Accordingly, the agreement also assigns 100% of property tax revenue currently allocated to the Suisun Fire Protection District and County Road District to the City. However, to help offset the loss of revenue to the Suisun Fire Protection District, the City agrees to pay the District $25,000 annually, (adjusted for inflation) following the issuance of the first certification of occupancy for the project.
Separately, Revenue and Taxation Code section 99(b)(5) requires the County to negotiate any exchange of property tax revenue on behalf of special districts when those districts annex territory, merge, dissolve, or are otherwise affected by a jurisdictional change. Finalization of the tax-exchange negotiation is a prerequisite to LAFCo considering approval of the jurisdictional change. The Solano County Auditor-Controller determines what, if any, property-tax revenue generated within the affected territory is subject to jurisdictional change. Special districts in Solano County typically receive no or a very small apportionment of ad valorem property tax. When a jurisdictional change will result in a property-tax revenue impact of $10,000 or less, staff recommends delegating authority to the County Administrator to finalize negotiations on behalf of the affected special districts, reducing administrative burden while preserving the statutory negotiation process.
ALTERNATIVES:
The Board may decline to adopt the resolution authorizing execution of the Tax Exchange Agreement or direct staff to continue negotiations. The Board could also decline to adopt the delegation of authority resolution. These alternatives are not recommended because an agreement addressing the allocation of property tax revenues is necessary for LAFCo to process the proposed annexation, and retaining each small-value special district negotiation for Board action would increase administrative burden.
OTHER AGENCY INVOLVEMENT:
The City of Suisun City and the County reached tentative agreement on the Property Tax Exchange Agreement.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION