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Adopt a resolution rescinding Resolution 2000-72 and authorize the termination of the Master Property Tax Agreement with the seven cities
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Published Notice Required? Yes ____ No _X _
Public Hearing Required? Yes ____ No _X _
DEPARTMENTAL RECOMMENDATION:
It is recommended that the Board of Supervisors:
1. Adopt a resolution rescinding Resolution 2000-72 and authorizing the termination of the Master Property Tax Agreement with the seven cities; and
2. Direct the County Administrator to begin negotiations with the seven cities on a new master agreement for tax revenue sharing in response to future city annexations.
SUMMARY:
On April 4, 2000, your Board adopted Resolution 2000-72 authorizing the execution of a Master Property Tax Transfer Agreement (“Agreement’) for allocations of property tax between the County of Solano and the seven cities in the county upon jurisdictional change pursuant to Revenue & Taxation Code section 99(d). The Agreement has not been modified nor reviewed in the 24 years since its adoption. Revenue & Taxation Code does allows for a master property tax transfer agreement, but it is not a requirement. Staff is recommending that the current Agreement be terminated, and future annexations be addressed on a case by case basis until a new master tax agreement can be negotiated among the parties.
FINANCIAL IMPACT:
The cost associated with preparing this item is included in the FY2024/25 Working Budget. Any future annexations would be subject to the terms of a subsequently negotiated property tax transfer agreement.
DISCUSSION:
Revenue and Taxation (R&T) Code section 99 requires that before a jurisdictional change such as a city annexation of territory can occur, the affected local public agencies must come to an agreement regarding the amount of property tax to be exchanged. This section establishes a process when an application for annexation is filed with LAFCO, LAFCO requests the County Assessor provide the County Auditor-Controller a report that identifies the assessed valuation of the property subject to the annexation and that the County Auditor shall then estimate the amount of property tax generated by the property subject to the annexation and what proportion of that amount of property tax is attributable to each affected jurisdiction, including what amount of the tax revenue is subject to negotiation. This code section allows for a master agreement to be used by all jurisdictions or to negotiate a separate tax agreement by a city and county for a specific annexation. The code section also requires that a resolution approving a negotiated property tax agreement be submitted to LAFCO by both the county and city before a certificate of filing can be accepted and LAFCO can deem an annexation application complete for purposes of processing. Consistent with these requirements, the County and the seven cities negotiated the existing Master Property Tax Transfer Agreement which was approved by this Board pursuant to Resolution 2000-72 on April 4, 2000.
The Agreement has not been modified in the 24 years since its adoption nor has the fiscal impact related to the transfer of service responsibility caused by the annexations been reviewed periodically as is the case in other counties that rely upon master tax exchange agreements.
There is no clause in the current Agreement that outlines the process for making changes; however, it does state that it may be terminated upon ninety (90) days’ notice though such termination will not impact any annexations that were completed prior to the date of termination. Staff is recommending that the Board adopt the resolution rescinding approval of the Agreement and direct the County Administrator to meet with the cities to begin negotiations on an updated agreement. Until such time as a new version is brought forward for the Board’s approval, individual annexation requests can be addressed on a case by case basis.
ALTERNATIVES:
The Board could choose not to adopt the resolution and allow the current Master Agreement to remain; however, this is not recommended since this Agreement has not been updated since it was first executed.
OTHER AGENCY INVOLVEMENT:
County Counsel was consulted in the preparation of this item and the termination of the Agreement.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION