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HomeMy WebLinkAboutMINUTES - 08032004 - C.11 �= TO: BOARD OF SUPERVISORS Contra .�' , ` FROM: JOHN SWEETEN, County Administrator �f,,,. �ql ., Costa DATE: JULY 15, 2004 ) County SUBJECT: RESPONSE TO GRAND JURY REPORT NO, 0403, ENTITLED"CITY REDEVELOPMENT TAKES$90 MILLION ANNUALLY FROM CONTRA COSTA COUNTY FIRE DISTRICT" SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: APPROVE response to Grand Jury Report No. 0403, entitled "City Redevelopment Takes$10 Million Annually from Contra Costa County Fire District", and DIRECT the Clerk of the Board to forward the response to the Superior Court no later than August 4, 2004, BACKGROUND: The 2003/2004 Grand Jury filed the above-referenced report on May 6, 2004,which was reviewed by the Board of Supervisors and subsequently referred to the County Administrator, Contra Costa County Fire District, and Auditor-Controller, who jointly prepared the attached response that clearly specifies: A. Whether the finding or recommendation is accepted or will be implemented; B. If a recommendation is accepted, a statement as to who will be responsible for implementation and a definite target date; C. A delineation of the constraints if a recommendation is accepted but cannot be implemented within a six-month period; and D. The reason for not accepting or adopting a finding or recommendation. t` CONTINUED ON ATTACHMENT: YES SIGNATURE: Y - --------` �yIECOMMENDATION OF COUNTY ADMINISTRATOR RECO E DATION OF BOARD COMMITTEE .,_APPROVE OTHER SIGNATURES): =. --- �. - __ -------- --=l`-`=o---- ------------------ Z;': �'=� ==�--- `..� ACTION OF BOAR O AUGUST 03 z 2404 APPROVE AS RECOMMENDED XX OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN XX UNANIMOUS(ABSENT NONE ) AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES: SHOWN. ABSENT: ABSTAIN: ATTESTED: AUGUST 63, 2004 CONTACT: JULIE ENEA(925)335-11277 JOHN SWEETEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: BOARD OF SUPERVISORS MEMBERS PRESIDING JUDGE OF THE GRAND JURY GRAND JURY FOREMAN COUNTY ADMINISTRATOR CONTRA COSTA COUNTY FIRE PROTECTION DISTRICT CHIEF AUDITOR-CONTROLLER " BY i�L' "' ,DEPUTY .d' BOARD OF SUPERVISORS RESPONSE TO GRAND JURY REPORT NO. 0403: CITY REDEVELOPMENT TAKES $10 MILLION ANNUALLY FROM CONTRA COSTA COUNTY FIDE DISTRICT FINDINGS 1. An RDA is a separate legal entity with its own revenue, budget, staff and power to issue debt and condemn property. Response: Agree. 2. Once an RDA is established, nearly the entire increase in property tax revenues goes directly to the RDA and not to the usual service agencies, such as schools, community colleges, libraries, fire departments, water and flood control districts, parks, etc. Response: Agree, with the clarification that once an "RDA project"is established, nearly the entire increase in property tax revenues from within the "project area" goes directly to the RDA. Also note that while the additional allocation of tax increment is redirected to the RDA, the usual service agencies may receive a pass- through payment from the RDA, as provided by agreement or under law, which would reduce the net impact of their losses. 3. Any increases in property taxes, as a result of increased property valuation within the RDA boundary, are not allocated to the taxing agencies until the RDA goes out of existence. Response: Agree, with the same clarification made in response to Finding No. 2. The property tax growth or increment is only redirected for growth within an "RDA project area", not for growth throughout the entire jurisdiction. Note that the same pass-through exception that applied in Finding No. 2, above, would also apply to the property tax increment. 4. An RDA cannot go out of existence as long as it has debt. To date, none has gone out of existence in Contra Costa County. Response: Agree, with the clarification that RDAs have statutory time limits after which time, the agency has no authority to act pursuant to the RDA plan except to retire debt and to enforce existing contracts or other obligations. Furthermore, there are additional statutory deadlines for establishing and retiring debt that prohibit an RDA from existing indefinitely. 5. The Fire District gets approximately 90% of its revenue from property tax as stated in its Budget Presentation FY 2003-04 dated June 9, 2003. Total revenue budget for Fire District FY 2003-04 is $74,666,532.00. City Redevelopment Takes $10 Million Annually from CCC Fire District July 15, 2004 Board of Supervisors Response to Grand Jury Report No. 0403 Page 2 Response: Partially disagree. The County's Finance System as of June 11, 2004 shows that for fiscal year 2003104, the District realized revenues of approximately$70 million, of which $67 million(-955/6) was from property taxes and$1.9 million(-3%) was from RDA non-property tax pass-through. 6. This year the Fire District is losing property tax dollars to eight(8) separate city redevelopment agencies. The agencies are as follows: Property Taxes allocated Amount lost to Percentage Property Location to the Fire District city RDAs Lost to RDA Pittsburg $7,575,391.31 $4,648,363.88 61.4% San Pablo 2,298,199.25 1,650,476.19 71.8% Concord 12,633,383.30 1,473,439.91 11.7% Antioch 11,208,677.23 871,807.90 7.8% Clayton 1,969,405.69 521,072.04 26.5% Pleasant Hill 4,447,958.13 442,198.69 9.9% Walnut Creek 12,009,496.36 288,913.40 2.4% Lafayette 5,190,782.89 204,800.42 3.9% ---------------------- --------------------------------- ------------------------ ----------------- Total $57,337,562.53 $10,101,072.41 17.6% Thus, in the fiscal year 2003-2004, the Fire District is losing $10,101,072.41, which is 17.6% of the $57.3 million property taxes allocated to the Fire District from within the municipal RDAs boundary. Response: Partially disagree. The finding implies that the District loses $10.1 million in revenues to city RDA projects. The amounts shown do not reflect offsets resulting from pass-throughs as described in the County's response to Findings No. 2, 5, and 7. As of June 11, 2004, fiscal year 2003/04 RDA pass-throughs to the District from city RDA projects totaled$1.4 million, thereby reducing District losses to$8.6 million or 14.3% of the RDA project growth increment for all city RDA projects in the District. 7. To date, the Fire District has not been included in any redevelopment agency project, although it does receive an RDA pass-through that in fiscal year 2003-2004 amounted to approximately$1.16 million dollars. A pass-through is a small portion of the tax increment revenue from an RDA project that goes to a special district, either by agreement or by law. City Redevelopment Takes $10 Million Annually from CCC Fine District July 15, 2004 Board of Supervisors Response to Grand Jury Deport No. 0403 Page 3 Response. Partially disagree. A pass-through is a payment to a taxing jurisdiction that is equal to part or all of the tax increment redirected to an RDA project. Pass- throughs are not limited to special districts nor can one generalize that they are small amounts. Actual pass-through revenues received by the Fire District for fiscal year 2003104 as of June 11, 2004 from all RDA projects within the District total nearly$1.9 million. The amount of the pass-through is determined by agreement or by law. Prior to 1994, pass-through amounts were negotiated by the RDA and each affected taxing jurisdiction. In 1994, however, legislation was passed that established speck formulae for calculating the pass-through amounts. Most RDA plans affecting the Fire District were established prior to 1994 and were, thus, negotiated. Although the Fire District has not been included as an RDA project, RDA-related agreements have included one-time funds in the amount of$3.3 million for construction of a fire station in Pittsburg. 8. The City of Pittsburg's RDA takes over$4.6 million dollars (61.4%) away from the Fire District. The City of San Pablo has the Fire district's busiest single engine fire company and it takes a bigger percentage (71.8%), or over$1.6 million of tax dollars from the Fire District. Response: Partially disagree, again, noting the pass-through exception. The actual tax loss to the Fire District net of the pass-through amounts for the cities of Pittsburg and San Pablo were$3.8 million (51Y*) and$1.5 million (67/), respectively. 9. The Fire District is aware that it has lost ten million dollars to the city redevelopment agencies. This amount would be sufficient to staff six operating fire companies. Response: Partially disagree. In fiscal year 2003/04, the Fire District lost$8.6 million in revenue due to city RDA plans. This amount would almost be sufficient to staff five operating fire companies. 10. The Fire District has repeatedly requested to be included in redevelopment project planning. The RDA frequently requires added services from the Fire District because the RDA projects often result in taller buildings and denser population concentrations. Response: Agree. CONCLUSIONS 1. Redevelopment agencies take allocated property tax dollars away from the Fire District, which could use these tax dollars for the services it renders to the public. 2. Any increase in assessed valuation and added property tax dollars in a redevelopment area are lost to the Fire District for as long as the RDA exists, usually 25 to 40 years. 3. Citizens paying property taxes are unaware of the dollars that go directly to the RDAs bypassing the Fire District they believe they are funding. City Redevelopment Takes $10 Million Annually from CCC Fire District July 15, 2004 Board of Supervisors Response to Grand Jury Report No. 0403 Page 4 j RECOMMENDATIONS The 2003-2004 Contra Costa County Grand Jury recommends that: 1. When presenting its annual budget to the County Board of Supervisors, the Fire District specifically list losses to each RDA which affect its revenue. Just as an employee's paycheck reports grass earnings, deductions, and net revenue, so should the Fire District budget reflect the deductions to its property tax income due to the RDAs. Response: Will be implemented for fiscal year 2005106. The District currently tracks this data and can provide it to the Board during annual budget deliberations. 2. Should the Fire District become aware that an RDA intends to extend its life through increase of additional bonds, the Fire District prepare a financial analysis of the tax revenue impact such lengthening of the time would have on the Fire District's revenues. Response: Has been implemented. At any time the Board of Supervisors is notified of a proposed change in the terms of an RDA pian affecting the County or a Board- governed agency, County staff thoroughly analyzes the impacts of the proposed changes prior to any agreement to modified terms. The Board of Supervisors has previously registered objections to RDA plan amendments and new RDA plans that the Board considered not justified or not in the best interest of the County or Board- governed districts. 3. This financial analysis be made available to the public and the press. Response: Will be implemented for future RDA plan extensions. Staff analyses on future RDA plans will be made available to the public and the press upon written request. 4. The Fire District be vigilant when a new RDA area is proposed and speak out to defend its source of revenue or seek to be included in the RDA project. Response: Has been implemented As stated in the County's response to Recommendation No. 2, the Board of Supervisors, as the governing body of the Fire District, has previously registered objections to RDA plan amendments and new RDA plans that the Board considered not justified or not in the best interest of the District. The Fire Chief has met with City and County representatives to seek inclusion in RDA projects, however, the District cannot compel an RDA to include it in RDA plans or projects. 5. The Fire District inform the public in as many ways as possible how much money is being diverted and what it could provide in additional services if those dollars were not lost to the RDAs. Response: Has substantially been implemented. The Fire District will continue to seek to inform the public on the impacts the RDAs have on the District's services City Redevelopment Takes $10 Million Annually from CCC Fire District July 15, 2004 Board of Supervisors Response to Grand Jury Report No. 0403 Page 5 through practical means such as annual budget presentations and other regular public meetings. 6. The Fire District keep an accumulative record of the dollars last annually to better inform both the public, the municipal RDAs and the Board of Supervisors of the vast amount of money that is being lost over time to RDAs. Response: Has been implemented. The Fire District already tracks the annual lasses of property tax revenues to all RDAs within the Fire District. The District will share this information with the Board of Supervisors during annual budget deliberations (see County's response to Recommendation No. ?). 7. The Fire District coordinate its public information efforts with other service agencies similarly impacted by the existence of RDAs. Response: Requires further analysis. While there are other service agencies impacted by RDAs, the similarities with the Fire District are unknown. This recommendation will be examined in detail, the results of which should be available within six months.