HomeMy WebLinkAboutMINUTES - 10011996 - D4 TO: BOARD OF SUPERVISORS Cont ra
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FROM: Phil Batchelor, County Administrator " `Y
County
DATE: October 1, 1996 s'... ....
SUBJECT: Report on Issues Related to the Unocal Annexation to Rodeo-Hercules Fire
Protection District
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION(S):
CONSIDER reports from the County Administrator and County Counsel on various issues related to
the Unocal Annexation to Rodeo-Hercules Fire Protection District.
BACKGROUND/REASON(S) FOR RECOMMENDATION(S):
On September 24, 1996, the Board of Supervisors considered a proposed property tax transfer
agreement related to the subject Unocal annexation. The discussion about the tax transfer
agreement and the annexation resulted in the Board requesting staff to provide further information
on several issues discussed below.
CONTINUED ON ATTACHMENT: _)!�YES SIGNATURE: G
RECOMMENDATION OF COUNTY ADMINISTRATOR—RECOMMENDATION OF OARD COMMITTEE
APPROVE —OTHER
SIGNATURE(S):
ACTION OF BOARD ON_ n o f-ryh t-r 1 1 Q Q 6, APPROVED AS RECOMMENDED X OTHER X
Following Board discussion of the above matter, IT IS BY THE BOARD
ORDERED that'-the report from the County Administrator, County Counsel ,
is ACCEPTED and Resolution No. 96/486 , determining the property tax
transfer for the Unocal Annexation to the Rodeo-Hercules Fire Protection
District is ADOPTED.
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A
_UNANIMOUS(ABSENT 1 TRUE AND CORRECT COPY OF AN
AYES: NOES: ACTION TAKEN AND ENTERED
ABSENT: ABSTAIN: ON MINUTES OF THE BOARD OF
SUPERVISORS ON THE DATE SHOWN.
Contact:Terry McGraw,336-1066
ATTESTED October 1 , 1 9 9 6
PHIL BATCHELOR,CLERK OF
THE BOARD OF SUPERVISORS
cc: County Administrator ANCOUNTY ADMINISTRATOR
Auditor-Controller
LAFCO
Rodeo-Hercules Fire Protection District BY J ,DEPUTY
Issues and Discussion
Issue: County General Fund Revenue loss under the proposed tax transfer agreement.
Discussion: The proposed property tax transfer agreement is based on the master property tax
agreement between the County, the Central Contra Costa Sanitary District and the East
Bay Municipal Utility District. The agreement was approved by the parties in 1981 and
has since been adopted as a master agreement for annexations involving the Contra
Costa Water District, the Mt. View Sanitary District and the West County Wastewater
District.
The formula in the master agreement gives an annexing district its proportionate share
of the incremental property tax, equivalent to that district's share in surrounding tax rate
areas. Since schools are legally exempt from the tax transfer process, the
representative increment factor is reduced.
In areas where Rodeo-Hercules Fire currently provides service, the District typically
receives approximately 14% of the increment. Applying the master agreement to this
annexation will give the District an increment factor of about 10%.
The transfer of increment to the District results in a reduction in the factor of all entities
in the tax rate area(s), with the exception of schools. The estimated effect of the
formula on Rodeo-Hercules Fire and the County General Fund is illustrated below:
• Current assessed value (AV) of the annexation area is $518,439,071.
• If the AV increases by the legal annual limit of 2%, the increase would be
$10,368,781 in 1997-98 (.02 x$518,439,071)
• The AV increase would generate $103,688 in incremental property tax revenue
(.01 x $10,368,781)
• The District's share of the increment would be $10,524 (.1015 x $103,688)
• The County General Fund increment factor would be reduced from .247 to .184
• The difference of .063 (.247 - .184) would result in an increment loss of$6,532
• The County General Fund loss would be $6,532 plus growth after the first year;
e.g., assuming a 2% growth for 1998-99, the loss would be $6,663
Issue: Why is the County a party to an agreement that results in a loss to the County General
Fund?
Discussion: Because Proposition 13 limited the total amount of property tax to 1% of AV, the only
way a district can annex and receive property tax revenue is by the transfer of tax from
the agencies serving the area (excluding schools).
The master property tax transfer agreement was the result of a compromise among the
various affected agencies that recognized the fact that, without an agreement, there
would be no annexations. In most cases, the annexations were necessary to enable
development to occur.
The negative aspect of losing future property tax revenue is somewhat mitigated by the
fact that, in most cases (although, not in this case), the annexation results in
development which substantially increases AV and property tax revenue. The net
effect being that, although the County receives a reduced share of the increment, the
total revenue from the affected territory of the annexation is significantly higher than
before the annexation.
Issue: Analysis of the Davis report regarding the cost to Rodeo-Hercules Fire District of
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providing fire services to Unocal.
Discussion: The Davis report does not provide information about the cost impacts on Rodeo-
Hercules Fire of annexing the Unocal area to the District.
Although not identified in the Davis report, there will be some costs associated with
providing fire services to Unocal, as indicated by the District. The District estimates a
one-time cost of$4,000 and an annual cost of approximately $16,000.
Attached is a memorandum (Attachment A) from the District regarding the cost/benefit
issues of the annexation and the rationale for committing District resources in excess of
the anticipated tax revenue that will result from the annexation.
Issue: Legal analysis regarding the necessity to negotiate a property tax transfer agreement.
Discussion: Attached is a memorandum (Attachment B) from County Counsel regarding the tax
tra-:�3fer issue.
Issue: Relationship of the Unocal Refinery Land Use Permit to the proposed annexation.
Discussion: Attached is a memorandum (Attachment C) from County Counsel regarding the land
use permit issue.
Condition No. 83 of the land use permit requires Unocal to work with Rodeo-Hercules
Fire and Contra Costa County Fire to develop a fire services delivery plan. The
condition further states that"If such a study suggests that fire services could be
improved by annexation of Unocal to a fire district, Unocal agrees at the discretion of
the Board of Supervisors, to annex its facility to either Rodeo-Hercules Fire Protection
District or the Contra Costa County Fire Protection District or a substitute district."
The study recommends that the Rodeo-Hercules Fire District annex Unocal to
"enhance the District's readiness for providing protection services to the refinery."
In considering the effects of Condition No. 83 on the annexation, it appears that fire
services would be improved by the annexation of Unocal to a fire district. However,
what is not clear is whether the condition can preclude annexation initiated by the
District rather than Unocal.
The proposed Unocal annexation to the Rodeo-Hercules Fire Protection District is scheduled to be
considered by LAFCO on October 9, 1996. LAFCO will not act on the annexation application without
resolution of the property tax transfer issue.
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09-26-1996 02:11PM FROM TO 96461353 P.02
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i MEMORANDUM
TO: Tenvnce McGraw,Deputy County Administrator
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CC: Victor J.Westmau,County Counsel; Silvana,March*Asst.County Counsel
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FROM: Pedro Jimenez,Chief,Rodeo-Hercules Fire Protection District
Scott W. Gordon,Esq., Counsel to the District
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DATE: September 26, 1996
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R&- Response to,your request for information concerning cost of providing services to
Unocal Refinery
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Terry.
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This memorandum is in response to your request for information concerning the District's
! anticipated costs for providing services to the Unocal Refinery process areas as a result of the
pending annexation request currently before LAFCO. As a result of the Board of Supervisors'
discussion on Scptcmbrs 24th concerning this matter,we feel it important that we provide you
with information concerning the District's cost of providing services to Unocal,since we will
most definitely incur costs and we are therefore desirous of achieving a fair and equitable tax
increment transfer pursuant to Revenue&Taxation Code§99.01.
i Anticipated Service Costs
In addition-to providing emergency response services to Unocal on an as-needed basis,
i the annexation of the Unocal Refinery process unit areas will involve the District providing new
and expanded services for the refinery areas. For instance,we will be undertaking District
training for Unocal personnel periodically on implementation of joint command;for plan check
and permit review services with respect to Refinery operations and equipment;compliance and
safety investigations;low and high angle rescue; and firetincident investigations.
We have undertaken a very conservative estimate of the anticipated cost to provide
additional services,based upon the increased administrative and staff time involved in
establishing programs,conducting necessary training sessions,meeting requirements, and man
hours involved in ongoing inspection and compliance work for the Refinery. At a minimum,the
District initially anticipates incurring increased costs of approximately$16,000 per year based on
man hours needed to provide additional services to Unocal. The Distdot ultimately will need the
addition of at least one additional District fire service professional when and if available tax
monies are sufficient to meet that obligation.
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Initrtal Cost Esdmates For District Services To Unocal
Under the current practice,Unocal maintains an in-house health and safety department,
which includes fire service delivery. Upon annexation,Unocal would retain the in-house health
and safety function,but the District will provide direct oversight and independent safety
compliance services in connection with the refinery operations.In addition,the District will
provide plan check services for all permits,authorizations and approvals.The District's plan
check ordinance authorizes the District to charge Unocal for its out of pocket expense in
connection with the review process,including independent experts or consultants,but the District
will incur administrative and staff expenses which will need to be provided for. The plan check
function covers a wide range of activities involving building permit applications for tanks,
structures and the like.,
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Based on current conditions,we anticipate the following recurring annual expenses for
compliance inspection and permit review services to Unocal:
Verification inspections,program audits,plan checks/reviews:
$13,520.00 per year initially commencing fisca11996-97
AB 2185 related inspection and compliance program costs:
$2,600.00 per year,initially commencing fiscal 1996-97
Additionally,we expect to incur start-up expense with respect to initial verification and audit of
existing refinery safety programs,inspection and monitoring regimens,training programs and
command structures. The estimate of this cost is based on a three to four week effort with
follow-up,conservatively estimated at 15 hours per week.
! Estimated cost•$4,000.
Administrative staff time is assessed at the rate of$65.00 per hour.
An additional fire service professional is estimated to cost between$75,000 and$80,000
per year in fiscal 1996 dollars,including benefits. This figure would of course be subject to
periodic adjustment based upon meet and confer processes.
The Tax Transfer Is Necessary and Appropriate in Order to Provide Fire Protection
,C.�rveces.
In providing services to Unocal,the District's cost of providing services are properly paid
for in significant part by the levy of property taxes within the Unocal tax rate area. But for the
unique fact that Unocal is outside of any fire service jurisdiction,Unocal would already be
paying a€'ire service share of property tax revenues that is currently being spent on other
programs and agencies unrelated to fire service. While we understand there has been some
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concern expressed at the Board level about a"loss"of County General Fund revenues as a result
of the tax transfer,the reality is that there is no"loss"because there should be a fire service
i component of Unocal's property tax revenues now as is the case in other tax rate areas.
As an example,in the neighboring Rodeo tax rate area,the District property tax levy is
14.571/6 of the 1%-ad valorem property tax rate. In the new Unocal tax rate area,the District's
percentage will be:100/a,because it will be eased into the existing group of agencies levying taxes
in the area. In order to accommodate the addition of the fire service taxing entity, each of the
other involved agencies exclusive of school districts is required to give up a small percentage of
their increment in order to provide for a fire service levy. This analysis would hold true
regardless of whether we were discussing the Rodeo-Hercules Fire Protection District,the
County Fire Protection District,or some other fine service district.
' The Costs and.Benefits of Providing Services to Unocal.
The District's Board of Directors,in reaching the decision to petition for annexation of
Unocal,considered the matter for well over a year,and discussed it at regularly scheduled Board
meetings in the past eight months on a successive meeting basis. The public and interested
' parties have been noticed of each of these meeting dates, and have been offered substantial
information regarding the proposal to annex Unocal,and the purpose and benefits of such a
proposal.
Y hie citizens of Rodeo and Hercules are strongly in favor of annexing Unocal to the
Rodeo-Hercules Fire Protection District,to ensure that there is more than adequate local
participation in regulation of Unocal. The Rodeo-Hercules Fire Protection District enjoys a fine
reputation in the Hercules/Rodeo community,because we provide expert and reliable services.
In fact,our District firefighters and staff have bew commended for our exemplary response to
prior incidents at the Unocal Refinery in particular. As a result,there is overwhelming sentiment
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in the Rodeo-Hercules community for the refinery to be subject to the District's regulatory
control, for purposes of compliance inspections,safety checks,permit reviews,and emergency
response.
In reaching its policy decision to annex Unocal,the Board of Directors has also
considered that in the near term after the annexation is completed,the anticipated property tax
increment revenues will not entirely suffice to cover the District's increased administrative costs
for providing these services. However,the District also knows that over time,Ws condition will
be expected to balance out and that the District's cost of services can and will in fact be met,and
more importantly that the periodic growth and assessed valuation will ultimately result in the
ability to provide at least one additional fire service professional to provide more full time
services to Unocal. As you and the Board undoubtedly are well aware;the Unocal Refinery,
being juxtaposed its an area in close proximity to residences,schools and other uses presents a
challenge to public officials charged with providing services to protect public health and safety.
Our Board of Directors is committed to providing tough regulatory services to the Unocal
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Refinery,in order to better.assure the public that this large industrial facility isin fact being
closely regulated,and that every health and safety precaution necessary is being implemented to
protect public bealth and safety.
iven that reality and the importance of public assurance and awareness that health and
safety services are being provided,we think it imperative that the Board recognize the cost of
providing services to Unocal are reasonable and necessary,and that the minimal adjustment to
the County's General Fund take in the Unocal tax rate area should be accommodated pursuant to
Revenue and Taxadon:Code§99.41 to provide the District with needed revenues.
Consistency with Other Special District Annexations.
Finally,in entering into the tax exchange understanding pursuant to Revenue and
Taxation Code§99.01,we followed the formula adopted by this very Board of Supervisors in
some other annexations involving special districts providing services where they hadn't
previously been provided It would seem unfair and therefore not reasonable for the Board to
take a different approach in this instance,when it has authorized the tax increment transfer and
adjustment in the tax rate areas in prior annexations.
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TOTAL P.05
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ATTA CI1/hamA-) g
COUNTY COUNSEL'S OFFICE ry D� Y
CONTRA COSTA COUNTY
651 Pine Street, 9th Floor
Martinez CA 94553
(510) 335-1833
Fax (510) 646-1078
To: Terry McGraw
Deputy County Administrator
From: Dennis Grave
Deputy County Cou
Date: September 27, 96
Re: Property tax redistribution for the Unocal annexation
This is to answer several questions regarding the redistribution of
property taxes upon the proposed annexation of the Unocal property to the
Rodeo-Hercules Fire Protection District.
1. Is a property tax exchange agreement required?
Yes. (R+TC Sec. 99(a)(1),(b), 99.01(a).)
2. Who negotiates?
Except as next noted regarding the Rodeo-Hercules Fire District, the
Board of Supervisors negotiates on behalf of the County and any districts that
now receive any property taxes from the area. Assuming it desires to negotiate
on its own behalf, the governing Board of the Fire District is entitled to do so.
(R+TC Sec. 99(b)(5), 99.01(x)(3).)
3. What amount is subject to negotiation?
The annual tax increment, which is the amount attributable to annual
future assessed value growth. (R+TC Sec. 99.01(a)(2).) The base tax currently
distributed among local agencies in the area to be annexed is not subject to
negotiation or redistribution. (Id.)
4. Must the Board of Supervisors and governing Board of the District reach
agreement before an annexation proposal can be heard by LAFCO?
Yes. (R+TC Sec. 99(b)(6), 99.01(a)(1),(3); Greenwood Addition
Homeowners Association v City of San Marino, 14 CA 4th 1360 [1993].)
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5. What happens if the Board of Supervisors and governing Board of the
District cannot reach agreement?
If one or more parties refuse to negotiate, a writ of mandate action might
be filed to force the parties to negotiate. (R+TC Sec. 99(b)(4), CCP Sec. 1085,
1086.) While a Court might order the parties to negotiate, a court cannot dictate
how the parties must resolve the negotiations, ie., cannot force the parties to
actually agree on some particular distribution of the annual tax increment.
(Greenwood Addition Homeowners Association v City of San Marino, supra, 14
CA 4th 1360.) As already indicated, the annexation proposal cannot be acted
upon by LAFCO unless the parties have reached an agreement. (Id.)
c-ptxunocal.dot
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A -rrAC,,1 r7CILI T c
COUNTY COUNSEL ' S OFFICE
CONTRA COSTA COUNTY
MARTINEZ, CALIFORNIA
Date: September 26, 1996
To: Board of Supervisors
From: Victor J. Westman, County Counsel
By: Silvano B. Marchesi, Ass't County Counsel
Re: Report on Issues Related to Unocal Annexation to Rodeo-Hercules Fire
Protection District (October 1, 1996)
At its meeting of September 24, 1996, the Board raised a question about a condition of
approval in the Unocal Refinery Land Use Permit (LUP # 2038-93). Attached is a copy of
Condition No. 83, relating to fire services.
We have been advised by the LAFCO Executive Officer that the application for
annexation of Unocal to the Rodeo-Hercules Fire Protection District was initiated by the District.
Attachment
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82. Within three years of the effective date of this permit, Unocal shall eliminate all
chlorine use within its Rodeo facility, substituting current chlorine operations.with a
new technology.
83. Unocal wili work the Rodeo-Hercules Fire Protection District and the Contra Costa
County Fire Protection District to develop a fire services delivery plan which addresses
fire service needs in the region, particularly involving its refinery. If such a study
suggests that fire services could be improved by annexation of Unocal to a fire district,
Unocal agrees at the discretion of the Board of Supervisors, to annex its facility to
either Rodeo-Hercules Fire Protection District or the Contra Costa County Fire
Protection District or a substitute district.
84. Unocal agrees to contribute one-half the cost of the hazardous material response
vehicle and of the necessary training and equipment to that fire protection district
which makes the vehicle available to the Unocal facility, at the discretion of the Board
of Supervisors.
ADVISORY NOTES
PLEASE NOTE ADVISORY NOTES ARE ATTACHED TO THE CONDITIONS OF APPROVAL BUT
ARE NOT A PART OF THE CONDITIONS OF APPROVAL, ADVISORY NOTES ARE PROVIDED
FOR THE PURPOSE OF INFORMING THE APPLICANT OF ADDITIONAL ORDINANCE
REQUIREMENTS THAT MUST BE MET IN ORDER TO PROCEED WITH DEVELOPMENT.
A. The applicant will be requested to comply with the requirements of the County Building
Inspection Department. Building permits are required prior to the construction of most
structures.
B. The Building Inspection Department will require building permits and compliance with
Title 24 requirements for construction trailers which are larger than single wide, or
which are occupied by clerical, project management or engineering personnel.
C. The applicant will be required to comply with the requirements of the
Bridge/Thoroughfare Fee Ordinance for the Hercules/Rodeo/Crockett Area of Benefit
as adopted by the Board of Supervisors.
D. The applicant shall be required to comply with all rules, regulations, and procedures of
the National Pollutant Discharge Elimination Systems (NPDES) for municipal,
construction and industrial activities as promulgated by the California State Water
Resources Control Board, or any of its Regional Water Quality Control Boards (San
Francisco Bay - Region II or Central Valley - Region V).
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THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA
PASSED by the following vote of the Board of Supervisors on October 1 1996.
AYES: Supervisors Rogers, Bishop, DeSaulnier, Torlakson and Smith
NOES: None
ABSENT: None
ABSTAIN: None
RESOLUTION NO. 96/ 486
Subject: Determination of Property Tax Transfer )
for the Unocal Annexation to the Rodeo- )
Hercules Fire Protection District )
(LAFC 96-23) )
WHEREAS, Section 99.01 of the Revenue and Taxation Code provides that a jurisdictional
change resulting from a special district providing one or more services to an area where such
services have not been previously provided shall not become effective if one or more affected
special districts involved in the property tax exchange negotiation fails to adopt a resolution
agreeing to a transfer of incremental property tax; and
WHEREAS,with the exception of the annexing district, the Board of Supervisors shall determine
the property tax exchange for each affected district that fails to adopt a resolution agreeing to a
property tax transfer; and
WHEREAS,the subject annexation to Rodeo-Hercules Fire Protection District (R-HFPD) proposes
annexation of territory which results in the provision of services not previously provided and no
resolution has been adopted by the Board of Supervisors and R-HFPD agreeing to property tax
exchange; and
WHEREAS,in the absence of a master agreement for property tax exchange between the County
and R-HFPD, the County and R-HFPD have agreed that the property tax exchange agreement for
this annexation will be in accordance with the terms of an existing master agreement b�::ween the
County and the Central Contra Costa Sanitary District and the East Bay Municipal Utility District;
and
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WHEREAS, the formula in the agreement between the County and the Central Contra Costa
Sanitary District and the East Bay Municipal Utility District has been used as a model in
innumerable similar annexations which results in the annexing district receiving its proportionate
share of the incremental property tax, equivalent to that district's share in surrounding tax rate
areas, but reduced because school districts are exempt by law from the tax transfer process.
THEREFORE, IT IS BY THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY
RESOLVED that the property tax increment allocation factors for the affected agencies in the area
of the Unocal Annexation to the Rodeo-Hercules Fire Protection District(LAFC 96-23) for the fiscal
year for which the State Board of Equalization makes the tax rate area changes for this
jurisdictional change shall be in accordance with the above master agreement. Said factors shall
apply in subsequent years unless changed by the mutual agreement of affected agencies and
subsequent jurisdictional changes. Such increment tax allocation factors apply to affected territory
as submitted or revised by the Local Agency Formation Commission. This resolution does not
change in the affected district's right to collect taxes for existing bonded indebtedness.
I hereby certify that this is a true and correct copy of
an action taken and entered on the minutes of the
Board of Supervisors on the date shown.
ATTESTED: nc-tnhc r 1 r 1996
PHIL BATCHELOR, Clerk of the Board
upervi o s and County Administrator
BY S Deputy
cc: County Administrator
Auditor-Controller
LAFCO
Rodeo-Hercules Fire Prevention District
RESOLUTION NO. 961 486