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HomeMy WebLinkAboutAgenda Statement 1984/11/27 Item 10 COUNCIL AGENDA STATEMENT Item 10 Meeting Date 11/27/84 ITEM TITLE: Resolution //0;2_, - Approving Master Property Tax Transfer Agreement With the County of San Diego SUBMITTED BY: City Manager (4/5ths Vote: Yes No x ) BACKGROUND The City, along with most but not all other cities in the County, entered into a Master Property Tax Transfer Agreement with San Diego County four years ago. That agreement, which just expired November 1 , 1984, allocates the property tax revenues between the City and the County and special districts whenever an annexation occurs in accordance with Section 99 of the Revenue and Taxation Code. Over the past several months, a committee representing the cities, including the City Managers of Chula Vista, El Cajon, Escondido and the Financial Services Director for the City of San Diego, has negotiated with County representatives to develop a new agreement. Such an agreement is designed to cover routine annexations and would not cover major annexations nor dissolutions of special districts. RECOMMENDATION: Adopt resolution approving agreement. BOARDS/COMMISSIONS RECOMMENDATION: N.A. DISCUSSION The proposed Master Property Transfer Tax Agreement represents an improvement over the existing agreement. The two agreements are the same in the sense that the annexed property's annual tax increment (the annual property tax revenue increase each year) would be the same under either agreement. The City would receive 41% of the property tax increment portion accruing to the County and special districts in either case. The proposed agreement is an improvement over the current one in that the base property tax revenues are adjusted in the same way as the annual tax increment, with 41% of the pooled property tax revenue accruing to Chula Vista. In the agreement that just expired, there is no base property tax revenue transferred to the City on undeveloped property and only 17.5% of the County's and detaching special districts' base property tax revenue on developed property tax would be obtained by the City. So, under the new agreement the City receives revenue from the property tax base compared to little or no revenueunder the previous agreement, and receives the same amount of the annual tax increment as it did previously. Another modification in the existing agreement is that the exceptions to the master property tax agreement have been expanded to include not only a nuclear generation plant and the East Otav Mesa area, but also those proposals which have an assessed value of $35 million or more on the current equalized tax rolls or where proposals having existing commercial development which generated retail sales of $10 million or more in the preceding twelve months. As applied to Chula Vista, the only areas which have assessed value in excess of $35 million, which potentially might be annexed into Chula Vista in the future, would be Bonita and Montgomery. The transfer or split of property tax revenue in those cases would then be separately negotiated outside the proposed agreement. Also, commercial centers that generate retail sales of $10 million or more would also be excluded from routine application of this agreement. This probably would be beneficial , since the sales tax revenue accruing to the City from such an annexation would greatly outweigh any property Form A-113 (Rev. 11/79) Page Two, Item 10 Meeting Date 11/27/84 tax revenue that might be lost by negotiating a different split in the property tax revenue with the County, even if they received all of it. A summary of the major elements of the old and proposed agreements are outlined in Attachment A. The term of the agreement runs to April 1 , 1988, although it is automatically extended unless the City of Chula Vista provides three months notice of intent to terminate the agreement. In such a case, it would be terminated just as to Chula Vista and would not affect the agreement as it pertains to other cities in the County. In summary, the proposed master property tax transfer agreement is financially more advantageous to the cities, and it establishes a simpler formula for transferring property tax revenues when property annexes into a city. It also is more in line with the split of these revenues as agreed upon in other counties throughout the state which were surveyed by the negotiating committees of the cities and the County. The County Board of Supervisors acted to approve this agreement on November 20, 1984. FISCAL IMPACT While specific dollar amounts cannot be readily projected, in general this agreement will prove to be beneficial to the City in routine annexations of property into its City limits. JDG:mab by 'Lilo Cy Cc t noo! of Chula Vista, C, ,`ornia Dated //y of 7-