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HomeMy WebLinkAboutMINUTES - 10011996 - D6 X, TO: BOARD OF SUPERVISORS . ' )fC )ntra Costa FROM: Phil Batchelor, County Administrator ; County COSTA,COUK�,G$' DATE: October 1, 1996 SUBJECT: Timing of Significant Dates Related to the Moraga and Orinda Fire Protection District Consolidation and Discussion of Property Tax Transfer Issue SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION RECOMMENDATION(S): ACKNOWLEDGE receipt of report from County Administrator regarding the timing of election and other significant dates related to the proposed consolidation of the Moraga and Orinda Fire Protection Districts. ACKNOWLEDGE receipt of report from Dennis Graves, Deputy County Counsel, regarding the determination of property tax transfer. BACKGROUND/REASON(S) FOR RECOMMENDATION(S): On September 24, 1996, the Board of Supervisors discussed the report of the County Administrator on issues related to the proposed consolidation of Moraga and Orinda Fire Protection Districts. One of the issues discussed had to do with the timing of the election proposed by the proponents of fire district consolidation. the Board of Supervisors requested the County Administrator to determine the timing of elections in 1997. CONTINUED ON ATTACHMENT: _YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR—RECOMMENDATION OF B9iARD COMMITTEE —APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED w OTHER x IT IS BY THE BOARD ORDERED that the above reports are ACCEPTED: AND Resolution No. 96/487 authorizing the property tax exchange for the consolidation of the Moraga and Orinda Fire Protection Districts is ADOPTED. VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A X 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,335-1055 cc: County Administrator ATTESTED October 1 , 1996 County Counsel PHIL BATCHELOR,CLERK OF Contra Costa Fire Protection District THE BOARD OF SUPERVISORS Moraga Fire Protection District AND NTY AD 1 TRATOR Orinda Fire Protection District Town of Moraga City of Orinda B DEPUTY United Professional Firefighters Local 1230 According to the Elections Division of the County Clerk's Office, as of September 26, 1996, there are no elections scheduled in 1997 until November 4. However, one or more entities could request a special election in March or June of 1997. Special elections could be held on March 4, 1997 or June 3, 1997. Presented below in chronological order are significant dates related to the Moraga and Orinda Fire District Consolidation: October 1, 1996 Report from County Counsel on property tax transfer issues. October 9, 1996 Consideration by LAFCO as to whether it can determine property tax transfer rather than the Board of Supervisors. October 15, 1996 Report from Contra Costa County Fire Chief on the provision of improved services, facilities and equipment in Orinda. November 20, 1996 Last LAFCO meeting in 1996. December 1, 1996 Deadline for completed boundary changes to be received by the State for changes to be effective in fiscal year 199711998. December 6, 1996 Deadline for filing election material with the Elections Division for March 4, 1997 special election. March 4, 1997 Special election. (If called) March 7, 1997 Deadline for filing election material with the Elections Division for June 3, 1997 special election June 3, 1997 Special election (if called) July 1, 1997 Proposed effective date for the consolidation of the Moraga and Orinda Fire Protection Districts. If the fire district issues are the only measures on the ballot in Moraga and Orinda, the cost to the fire districts would be approximately $27,000 and $31,000 respectively. If other issues are added to the ballot, the cost to the fire districts will be reduced. The Board, on September 24th, also requested a legal analysis of the issue of whether the Local Agency Formation Commission or the Board of Supervisors has the authority to determine the property tax exchange in the Moraga and Orinda Fire District consolidation proposal. In response to that request, Vic Westman, County Counsel, has provided the attached analysis of this issue. Also attached is a memorandum to LAFCO commissioners from Dennis Graves, LAFCO Counsel, which discusses the issue of legal authority to determine property tax transfer. 2 D- 6 THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA PASSED by the following vote of the Board of Supervisors on C)ct-nhpr 1 . 1996. AYES: Supervisors Rogers, Bishop, Torlakson and Smith NOES: None ABSENT: Supervisor DeSaulnier ABSTAIN: None RESOLUTION NO. 96/ 4 8 7 Subject: Determination of Property Tax ) Exchange for the Consolidation ) of the Moraga and Orinda Fire ) Protection Districts (LAFC 96-27) WHEREAS, Section 99 of the Revenue and Taxation Code provides that in the event of a jurisdictional change that would affect the service area or service responsibility of one or more special districts,the Board of Supervisors shall, on behalf of the district or districts, negotiate any exchange of property tax revenues; and WHEREAS, the consolidation of Moraga and Orinda Fire Protection Districts involves the proposed consolidation of the Moraga Fire Protection District (MFPO) and the Orinda Fire Protection District(OFPD) into a single new successor district proposed to be named the Moraga- Orinda Fire Protection District (M-OFPD) governed by a Board of Directors directly elected by divisions within the territory of the two districts; and WHEREAS, the consolidation is proposed to be conditional upon elections approving a fire flow tax in Orinda and approving the consolidation in Moraga and Orinda; and WHEREAS, total responsibility for the provision of fire protection services in the Moraga and Orinda areas would transfer from the County governed Moraga and Orinda Fire Protection Districts to the proposed new independent fire protection district; NOW, THEREFORE BE IT RESOLVED THAT THE BOARD OF SUPERVISORS OF CONTRA COSTA COUNTY DOES HEREBY DETERMINE that 100 percent of the property tax revenue accruing to the Moraga and Orinda Fire Protection Districts from the affected territory of the Consolidation of the Moraga and Orinda Fire Protection Districts shall be transferred to the proposed new Moraga-Orinda Fire Protection District upon the effective date of the consolidation. The terms of this property tax exchange agreement shall be effective for the fiscal year for which the State Board of Equalization makes the tax rate area changes for this jurisdictional change and shall apply in subsequent years unless changed by the mutual agreement of affected agencies or subsequent jurisdictional changes. This resolution does not change the property tax revenues accruing to other agencies servicing the subject territory or the affected agencies right to collect taxes for existing bonded indebtedness. The property tax exchange agreement discussed above shall apply to affected territory as submitted or revised by the Local Agency Formation Commission. 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: gG�e �� s PHIL BATCHELOR, Clerk of the Board o perviso nd County Administrator BY Deputy cc: County Administrator Auditor-Controller County Counsel City of Orinda Town of Moraga RESOLUTION NO. 96/ 4 8 7 COUNTY COUNSEL'S OFFICE CONTRA COSTA COUNTY MARTINEZ, CALIFORNIA Date: September 26, 1996 To: Board of Supervisors From: Victor J. Westman, County Counsel �"CK By: Kevin T. Kerr, Deputy County Counsel Re: Special Tax Election This responds to the Board of Supervisors' inquiry as to how soon a special tax measure may be voted upon. With respect to the proposed consolidation of the Moraga and Orinda Fire Protection Districts, the County Local Agency Formation Commission has conditioned the reorganization proposal on the passage of a special tax measure in the Orinda district. The next possible election in the County would be March 4, 1997. Elections Code section 1000 (b). In order for a special tax measure to be on the ballot at that time, the County Elections Department must be notified in writing about the measure 88 days before the election (that is, by December 6, 1996). The writing should consist of a resolution of the governing board, setting forth the exact form of the ballot measure. See Elections Code sections 10402 and 10403 (concerning consolidation of local elections). KTK\kv:df cc: County Elections Department 5a:orindafd.ele r COUNTY COUNSEL'S OFF/CE CONTRA COSTA COUNTY MARTINEZ, CALIFORNIA Date: September 26, 1996 To: Board of Superviso;,� From: Victor J. Westman, County Counsel Re: Determination and Allocation of Property Tax Revenues for the Proposed Consolidation of the Moraga and Orinda Fire Protection Districts At the Board of Supervisors' September 17, 1996 meeting, it considered a joint resolution adopted by the Boards of Fire Commissioners of the Moraga and Orinda Fire Protection Districts "recommending to the Board of Supervisors that an application be forwarded to the Contra Costa County Local Agency Formation Commission requesting reorganization of the" two said fire protection districts. At the time of the Board's consideration of this joint resolution, representatives of the two fire districts stated they were seeking the Board's support of the proposed reorganization but not that the Board of Supervisors be the "applicant" for it contrary to the above-quoted title of the joint resolution. At the September 24 meeting, the County Counsel was asked to be prepared to provide legal comments on several points concerning the reorganization proposal at the October 1, 1996 meeting. 1. Jurisdictional agency for determining property tax transfer. While the matter is not free from some doubt and ambiguity in the involved state statutes, I (as the County's Counsel) believe that the courts would be more inclined to find in the case of a legal dispute that the determination and approval of a property tax exchange for the above noted matter should be done by the County Auditor and the County's Local Agency Formation Commission pursuant to the provisions of Government Code section 56842 (copy attached). LAFCO's legal counsel (Dennis Graves) believes the better view is that the involved property tax transfer may be governed by the provisions of Revenue and Taxation Code sec. 99(b)(5) so as to be done by the Board of Supervisors. (a copy of§ 99 is attached.) While Revenue and Taxation Code Section 99 does contain general provisions in subsection (b)(5) as emphasized on the attached copy, it also specially provides in subsection (a)(3) that in the case of formation of a district, the auditor and the involved local agency formation commission, pursuant to Government Code section 56842, shall make the property tax revenue adjustment and allocation of property tax revenues for each local agency whose responsibilities will be altered by the formation. Given the express formation Board of Supervisors 2 September 26, 1996 provisions of these two statutes, I believe a more persuasive legal argument can be made that the specific language of R.&T.C. § 99(a)(3) concerning district formation (placing the responsibility on the Auditor and LAFCO for property tax transfer determinations for a new district) would prevail over the general (and arguably catch all) provision of subsection (b)(5) of section 99 of the Revenue and Taxation Code. In addition, subsection (a)(2) of Government Code section 56842 specifically provides "[i]f the proposal includes the formation of a district, ... the commission [LAFCO] shall determine the amount of property tax to be exchanged by the affected local agency ...". This is another express provision concerning formations which, accepting the general rule of statutory construction that the specific prevails over general, would require that R.&T.C. § 99(a)(3) govern in this situation. Finally, since only the property tax revenues of the two existing fire districts are to be transferred should a new district be formed, it is not clear what public policy would be served by first requiring the negotiation and consummation of a property tax exchange agreement between the two existing fire protection districts by their governing bodies (here the Board of Supervisors for both districts) where all the property taxes for both existing districts would go to the proposed new district. 2. Special Tax Election. At the Board's September 17 meeting there was some concern expressed that LAFCO's conditioning of this "consolidation" reorganization proposal upon the passage of a special tax election requiring a two thirds of voter approval may not be supported by legal authority. Government Code section 56844 lists most of the conditions which a county local agency formation commission may impose as part of its approval of a reorganization proposal. Subsection (s) of sec. 56844 provides that LAFCO's approval of a reorganization can include the condition that the voters approve a special tax. For this reason, the "consolidation" application filed with this County's Local Agency Formation Commission by the Cities of Moraga and Orinda proposing that the "consolidation" be conditioned on two thirds of the Orinda district's voters approving a special tax before a consolidation could occur, appears to be authorized. If you have any further questions concerning this matter, please advise. cc: Dennis Graves, LAFCO Legal Advisor Annamaria Perrella, LAFCO Executive Officer HADFOMMEMOSWWIREVENUE.WPD ENT CODE GOVERNMENT CODE §.56842 unissioa shall § 56841. Review of proposal; factors considered;•services of supervisors provided in Factors to be considered in the review of a proposal shall include, but not be limited -to, all of the following. litions of the (a) Population, population density; -land area and land use; per capita assessed valuation; topography, emission shall natural boundaries, and drainage basins; proximity to other populated areas; the likelihood of significant e commission growth in the area, and in adjacent incorporated and unincorporated areas, during the next 10 years. consolidation (b) Need for organized community services; the present cost and adequacy of governmental services bject agency, and controls in the area; probable future needs for those services and controls; probable effect of the inations upon proposed incorporation, formation, annexation, or exclusion and of alternative courses of action on the nmission may cost and adequacy of services and controls in the area and adjacent areas. is subdivision "Services," as used in this subdivision, refers to governmental services whether or not the services are services which would be provided by local agencies subject to this division, and includes the public ig more than facilities necessary to provide those services. committee to (c) The effect of the proposed action and of alternative actions, on adjacent areas, on mutual social and Stats-1986, c. economic interests, and on the local governmental structure of the county. A. 20, 1994.) 1 (d) The conformity of both the proposal and its anticipated effects with both the adopted commission policies on providing planned, orderly, efficient patterns of urban development, and the policies and priorities set forth in Section 56377. ng authority (e) The effect of'the proposal on maintaining the physical and economic integrity of agricultural lands, ;hment of a as defined by Section 56016. without an (f) The definiteness and certainty of the boundaries of the territory, the nonconformance of proposed boundaries NNith lines of assessment or ownership, the creation of islands or corridors of unincorporated authority to territory, and other similar matters affecting the proposed boundaries. ffected city. (g) Consistency with city or county general and specific plans. 7, eff. Sept. (h) The sphere of influence of any local agency which may be applicable to the proposal being reviewed. (i) The comments of any affected local agency. (Added by Stats.1985, c. 541, § 3, eff. Sept. 9, 1985, operative Jan. 1, 1956.) ,e specified. cifred in the Historical and Statutory Notes 1985 Legislation § 37 of that Act because of the veto of A.B. No. ICA on ►jections, or Amendment of this section by § 16 of Stats.1985, c. Sept. 28, 19&5. cer and the 1599, failed to become operative under the provisions of § 56842. Property tax revenues; proportional amounts for affected local agencies; determination; J�� application of section .�ad (1) If the proposal includes the incorporation of a city, as defined in Section 56043, * the commission shall determine the amount of property tax revenue to be exchanged by the affected local agency pursuant to this section and Section 56845. objection; ,W� If the proposal includes the formation of a district, as defined in Section 2215 of the Revenue and Taxation Code, the commission shall determine the amount of property tax * * * to be exchanged by the d proposed affected local agency pursuant to this section. e proposed (b) The commission shall notify the county auditor of the proposal and the services which the new ►ursuant to I jurisdiction proposes to assume within the area, and identify for the auditor the existing service providers resolution within the area subject to the proposal. urd no new j one year. (c) If the proposal would not transfer all of an affected agency's service responsibilities to the proposed i city or district, the commission and the county auditor shall do all of the following: pprove the i adopt any 1 (1) The county auditor shall determine the proportion that the amount of property tax revenue derived time of the ( by each affected local agency pursuant to subdivision (b) of Section 93 of the Revenue and Taxation Code I bears to the total amount of revenue from all sources, available for general purposes, received by each rich is the affected local agency in the prior fiscal year. For purposes of making this determination and the February i determination required by paragraph (3), "total amount of revenue from all sources available for general purposes" means the total amount of revenue which an affected local agency may use on a discretionary fended by basis for any purpose and does not include any of the following: (A) Revenue which, by statute, is required to be used for a specific purpose. Additions or changes indicated by underline; deletions .by asterisks § 56842 GOVERNMENT CODE a .(B) Revenue from fees, charges, or assessments which are levied to specifically offset the cost of particular services and do not exceed the cost reasonably borne in providing these services. (C) Revenue received from the federal government which is required to be used for a specific purpose. (2) The commission shall determine, based on information submitted by each affected local agency, an amount equal to the total net cost to each affected local agency during the prior fiscal year of providing those services which the new jurisdiction will assume within the area subject to the proposal. For purposes of this paragraph, "total net cost" means the total direct and indirect costs which were funded by general purpose revenues of the affected local agency and excludes any portion of the total cost which was funded by any revenues of that agency which are specified in subparagraphs (A), (B), and (C) of paragraph (1). (3) The commission shall multiply the amount determined pursuant to paragraph (2) for each affected local agency by the corresponding proportion determined pursuant to paragraph (1) to derive the amount of property tax revenue used to provide services by each affected local agency during the prior fiscal year within the area subject to the proposal. The county auditor shall adjust the amount described in the previous sentence by the annual tax increment according to the procedures set forth in Chapter 6 (commencing with Section 95) of Part 0.5 of Division 1 of the Revenue and Taxation Code, to the fiscal year in which the new city or district receives its initial allocation of property taxes. (4) For purposes of this subdivision, in any county in which, prior to the adoption of Article X111 A of the California Constitution, and continuing thereafter, a separate fund or funds were established consisting of revenues derived from the unincorporated area of the county and from which fund or funds services rendered in the unincorporated area have been paid, the amount of property tax revenues derived pursuant to paragraph (3), may, at the discretion of the commission, be transferred to the proposed city over a period not to exceed 12 fiscal years folloN6ng its incorporation. In determining whether the transfer of the amount of property tax revenues determined pursuant to paragraph (3) shall occur entirely within the fiscal year immediately following the incorporation of the proposed city or shall be phased in over a period not to exceed 12 full fiscal years following the incorporation, the commission shall consider each of the following: (A) The total amount of revenue from all sources available to the proposed city. (B) The fiscal impact of the proposed transfer on the transferring agency. (C) Any other relevant facts which interested parties to the exchange may present to the commission in written form. The decision of the commission shall be supported by written findings setting forth the basis for its decision. (d) If the proposal would transfer all of an affected agency's service responsibilities to the proposed city or district, the commission shall request the auditor to determine the property tax revenue generated for the affected service providers by tax rate area, or portion thereof, and transmit that information to the commission. (e) The executive officer shall notify the auditor of the amount determined pursuant to paragraph (3) of subdivision (c) or subdivision (d), as the case may be, and, where applicable, the period of time within which and the procedure by which the transfer of property tax revenues will be effected pursuant to paragraph (4) of subdivision (c), at the time the executive officer records a certificate of completion pursuant to Section 57203 for any proposal described in subdivision (a), and the auditor shall transfer that amount to the new jurisdiction. (f) The amendments to this section enacted during the 1985-86 Regular Session of the Legislature shall apply to any proposal described in subdivision (a) for which a certificate of completion is recorded with the county recorder on or after January 1, 1987. (g) For purposes of this section, "prior fiscal year" means the most recent fiscal year for which data on actual direct and indirect costs and revenues needed to perform the calculations required by this section are available preceding the fiscal year in which the commission approves by resolution the city's proposal to incorporate or the district's proposal to form. (h) An action brought by a city or district to contest any determinations of the county auditor or the commission with regard to the amount of property tax revenue to be exchanged by the affected local agency pursuant to this section shall be commenced within three years of the effective date of the city's incorporation or the district's formation. These actions may be brought by any city that incorporated or by any district that formed on or after January 1, 1986. (i) This section applies to any city that incorporated or district that formed on or after January 1, 1986. Additions or changes indicated by underline; deletions by asterisks * * * dT CODE GOVERNMENT CODE § 56842.2 the cost of (i) The calculations and procedures specified in this section shall be made prior to and shall be incorporated into the calculations specified in Section 66845. fie purpose. (Added by Stats.1985, c. 541, § 3, eff. Sept. 9, 1985, operative Jan. 1, 1986. Amended by Stats-1986, c. 956, § 1; Stats.1992, c.365(S.B.1406), § 1, eff.July 27, 1992; Stats.1992,c. 1369(A.B.3027),§ 2,eff.Oct. agency, an 27, 1992, operative Jan. 1, 1993.) f providing posal. For Historical and Statutory Notes 'ere funded 1986 Legislation year of providing those services which the new jurisdiction cost which will assume within the area subject to the proposal. and (C) of The 1986 amendment rewrote the section, which for- � p p° merly read: "(3) Multiply the amount determined pursuant to para- "(a) If the proposal includes the incorporation of a city, graph (2) for each affected local agency by the corre- ich affected as defined in Section 56043, or the formation of a district, sponding proportion determined pursuant to paragraph he amount as defined in Section 2215 of the Revenue and Taxation (1) to derive the amount of property tax revenue used to fiscal year Code, the commission shall, pursuant to the provisions of provide services by each affected local agency during the ibed in the subdivision (b), determine the amount of property tax prior fiscal year within the area subject to the proposal. Chapter 6 revenue to be exchanged by the affected local agency. "(c) Following the approval of a proposal subject to this the fiscal "(b) In making its determination as required by subdi- section,the executive officer shall notify the auditor of the vision (a), the commission shall do all of the following: amount determined in paragraph (3) of subdivision (b)." "(1) Request the county auditor to determine the pro- 1992 Legislation XIII A of portion that the amount of property tax revenue derived established by each affected local agency pursuant to subdivision (b) Stats.1992, c. 365 (S.B.1406), § 2 provides: :d or funds of Section 2237 of the Revenue and Taxation Code bears "All provisions of this act clarify and are declaratory of t revenues to the total amount of revenue from all sources, available existing law, and are not to be construed or given any red to the for general purposes, received by each affected local weight in any court of law as manifestations of any agency in the prior fiscal year. legislative intent to make any substantive change to exist. 2terminin �h (3) shall "( 2) Determine, based on information submitted by ing law" itv or shall each affected local agency, an amount equal to the total The 1992 amendment of this section by c. 1369 explicitly cost to each affected local agency during the prior fiscal amended the 1992 amendment of this section by c. 365. ,ommission Notes of Decisions Base year 4 2. Total net cost Carry-over funds 1 County should include indirect costs such as overhead Construction with other law Yz and support services in calculation of "total net cost" of ommission Total net cost 2 services to be allocated to new city, for purpose of deter- Total tax revenue 3 mining amount of property taxes collected by county Isis for its which would be allocated to city. City of Highland v. County of San Bernardino (App. 4 Dist. 1992) 6 Cal. W. Construction with other law Rptr2d 346, 4 Cal.AppAth 1174, rehearing denied and proposed Statute reallocating property tax revenues from fire modified, review denied. generated districts to county educational funds did not have to be 3. Total tax revenue 'illation to read in pari materia with statute governing reallocation in district reorganization proceedings, absent any ambiguity County properly excluded interest earned on property in statute requiring resort to doctrine of in pari materia to taxes when calculating its total property tax revenues, for raph (3)of ascertain legislative intent. San Miguel Consol. Fire Pro- purpose of determining allocation of portion of such reve- me within tection Dist. v. Davis (Weinberg) (App. 3 Dist. 1994)'30 nues to new city. City of Highland v. County of San irsuaCa1.Rptr.2d 343, 25 Cal.AppAth 134, rehearing denied, Bernardino (App. 4 Dist. 1992) 6 Cal.Rptr.2d 346, 4 Cal. 'ompletion review denied.ompl t to 4th 1174, rehearing denied and modified, review de- ��: msfer that 1. Carry-over funds IIn calculating the allocation of property tax revenues 4. Base year f when a city incorporates but does not assume all service In calculating portion of county's property tax revenues egislattlre responsibilities for its territory,the calculations are not to to be reallocated to new city, base year figure for tax ; recorded include funds carried over to the prior fiscal year from a transfer must be adjusted for increases in assessed values i previous year or funds derived from charges for licenses, taking place between base year and fust year of distribu- �h data on pets, and such services as law enforcement services tion. City of Highland v.County of San Bernardino(App. l furnished under contract to other governmental agencies. 4 Dist. 1992) 6 Ca1.Rptr2d 346, 4 Ca1.AppAth 1174, re- ns section 71 Ops.Atty.Gen. 286 (1988). hearing denied and modified, review denied. proposal § .56842.2. Property tax revenue determination; city incorporated in fiscal 1977-78 toe or the Any city which was incorporated during the 1977-78 fiscal year may apply to the commission for a cted local determination of the amount of property tax revenue to be exchanged by the affected local agency. The the city's >orated or commission shall make the determination within 120 days following the date of the application. The I commission shall make this determination in accordance with Section 54790.3 as if that section had not been repealed by Chapter 541 of the Statutes of 1985, provided that the commission shall reduce the y 1, 1986. amount determined pursuant to that section by the amount of the property tax revenues received by the Historical and Statutory Notes j amon' Sections 2 to 5 of Stats.1990, c. 404, provides: "(1) The date the Board of Supervisors of Shasta - Coun-"Sec. 2. Notwithstanding any other provision of law, ty notify the Secretary of State that a redevelopment ounty the allocation of property tax revenue in the 197940 fiscal agency has been formed by the City of Anderson. ppm ? year to the 1988,89 fiscal year,inclusive,in Shasta Coun- No. ty, as distributed as of July 1, 1989, shall be deemed "(2) July 1, 1993. ;I that correct,and no reductions or increases in apportionments "See, 4. The Board of Supervisors of Shasta County {' and shall be made from the 1979-80 fiscal year to the 1988-89 may,by a resolution adopted by the vote of a majority of I nue AsCal year,inclusive. its members,request the Legislature to amend Sections 2 fore, "Sec. 3. (a) Notwithstanding any other provision of and 3 of this act, ficial law, the allocation of property tax revenue to the City of Anderson in Shasta County in fiscal year 1989-90, and in "Sec. 5. It is the intent of the Legislature not to each fiscal year thereafter, shall be at least the same validate in the future any other mistake in the allocation' amount as was allocated in the 198748 fiscal year. of property tax revenue unless the mistake is the result of "(b) This section shall be repealed as of the earlier date written advice from the Department of Finance with of the following: respect to the particular allocation." ing §§ 98.7 to 98.10. Repealed by Stats.1994, c. 1167 (A.B.3347), § 2 Historical and Statutory Notes ion ;id Section 98.7 was amended by Stats.1988, c. 573, § 5, Section 98.10, added by Stats.1987, c. 921, § 2, related .a- prior to repeal. See, now, Revenue and Taxation Code to allocation of property tax assessed value attributable to he § 96.7• unitary property. See, now, Revenue and Taxation Code „i- Section 98.9 was amended by Stats.1987, c. 921, § 1; § 100.1. Stats.1988,c.571, § 2; Stats.1989,c. 963, § 3; Stats.1991, c. 465 (S.B.53), § 1; Stats.1993, c. 1045 (A.B.1108), § 1, Legislative intent of enactment of Stats.1994, c. 1167 prior to repeal. See, now, Revenue and Taxation Code (A.B.3347),see Historical and Statutory Notes under Rev- a § 100. enue and Taxation Code § 95. 3. n. Article 5 JURISDICTIONAL CHANGES AND NEGOTIATED TRANSFERS Section Section 99. Jurisdictional changes; city incorporations; 99.03. Riverside County; jurisdictional changes; district formations; notice; valuation re- qualifying cities providing own fire pro- ports; renegotiation of revenues; mas- tection services. ter property tax transfer agreements. 99.1. Ventura County; regional sanitation dis- 99.01. Jurisdictional changes; special districts trict; transfers of revenue; allocation providing services not previously provid- adjustments; board resolutions for ex- ed by a local agency. changes of revenues; notifications; 99.02. Transfers or exchanges of revenues; local hearing; limitations. agencies; adjustments; notice; hearing; 99.2. Construction of § 99 amendments. conditions for reallocations. 99.3 to 99.9. Repealed. Article 5 was added by Stats.199.1, c. 1167 (A.B.3347), § 3. § 99. Jurisdictional changes; city incorporations; district formations; notice; valuation reports; renegotiation of revenues; master property tax transfer agreements For the purposes of the computations required by this chapter: (1) In the case of a jurisdictional change, other than a city incorporation or a formation of a district as defined in Section 2215, the auditor shall adjust the allocation of property tax revenue determined pursuant to Section 96 or 96.1, or the annual tax increment determined pursuant to Section 96.5,for local agencies whose service area or service responsibility would be altered by the jurisdictional change, as determined pursuant to subdivision (b) or (c). (2) In the case of a city incorporation, the auditor shall assign the allocation of property tax revenues determined pursuant to Section 56842 of the Government Code and the adjustments in tax revenues that may occur pursuant to Section 56845 of the Government Code to the newly formed city or district and shall make the adjustment as determined by Section 56842 in the allocation of property tax revenue determined pursuant to Section 96 or 96.1 for each local agency whose service area or service I�I responsibilities would be altered by the incorporation. Additions or changes indicated by underline; deletions by asterisks * * * 1 i rRo— 111 Cock 44 In the case of a formation of a district as defined in Section 2215, the auditor shall assign the allocation of property tax revenues determined pursuant to Section 56842 of the Government Code to the resolution, ; district and shall make the adjustment as determined by Section 56842 in the allocation of property tax an exchang( revenue determined pursuant to Section 96 or 96.1 for each local agency whose service area or service jurisdiction: responsibilities would be altered by the formation. will be alter annual tax (b� Upon the filing of an application or a resolution pursuant to the Cortese-Knox Local Government pursuant to l�e$rganization Act of 1985 (Division 3 (commencing with Section 56000) of Title 5 of the Government adjustment., Code),but prior to the issuance of a certificate of filing,the executive officer shall give notice of the filing (d) W,th to the assessor and auditor of each county within which the territory subject to the jurisdictional change is located. This notice shall specify each local agency whose service area or responsibility will be altered and any loc: by the jurisdictional change. agreement. (1)(A) The county assessor shall provide to the county auditor, within 30 days of the notice of filing, a (e) Excel report which identifies the assessed valuations for the territory subject to the jurisdictional change and property to the tax rate area or areas in which the territory exists. agencies a, Equaliz(B) The auditor shall estimate the amount ofpropertytax revenue generated within the territory that by resoatio; g ry by resolutic is the subject of the jurisdictional change during the current fiscal year. agencies an (2) The auditor shall estimate what proportion of the property tax revenue determined pursuant to (f) For tl paragraph (1) is attributable to each local agency pursuant to Section 96.1 and Section 96.5. and each fis (3) Within 45 days of notice of the filing of an application or resolution, the auditor shall notify the after Janua; governing body of each local agency whose service area or service responsibility will be altered by the have been amount of, and allocation factors with respect to, property tax revenue estimated pursuant to paragraph amount of 1 (2) that is subject to a negotiated exchange. pertaining t (4) Upon receipt of the estimates pursuant to paragraph (3) the local agencies shall commence received by negotiations to determine the amount of property tax revenues to be exchanged between and among the property to local agencies. This negotiation period shall not exceed 30 days. however,in projected P The exchange may be limited to an exchange of property tax revenues from the annual tax increment 54790.3 of t generated in the area subject to the jurisdictional change and attributable to the local agencies whose The prow service area or service responsibilities will be altered by the proposed jurisdictional change. The final fiscal year exchange resolution shall specify how the annual tax increment shall be allocated in future years. (5) In the event that a jurisdictional change would affect the service area or service responsibility oformation( For t m mation t : on' or more special districts, the board of supervisors of the county or counties in which the districts are January 19' located shall, on behalf of the district or districts, negotiate any exchange of property tax revenues. the 1979-80 (6) Notwithstanding any other provision of law, the executive officer shall not issue a certificate of the Goverm filing pursuant to Section 56828 of the Government Code until the local agencies included in the property (h) For t tax revenue exchange negotiation, within the 30-day negotiation period, present resolutions adopted by change, oth each such county and city whereby each county and city agrees to accept the exchange of property tax auditor shal revenues. its predece. (7) In the event that the commission modifies the proposal or its resolution of determination, any local predecessor agency whose service area or service responsibility would be altered by the proposed jurisdictional schools whc: change may request, and the executive officer shall grant, 15 days for the affected agencies, pursuant to determined paragraph (4) to renegotiate an exchange of property tax revenues. Notwithstanding the time period (1) The g specified in paragraph (4), if the resolutions required pursuant to paragraph (6) are not presented to the areas or sei executive officer within the 15-day period, all proceedings of the jurisdictional change shall automatically tax revenue be terminated. adopted by (8) No later than the date on which the certificate of completion of the jurisdictional change is recorded shall furnisl with the county recorder, the executive officer shall notify the auditor or auditors of the exchange of C subject to r, property tax revenues and the auditor or auditors shall make the appropriate adjustments as provided in (2) In the subdivision (a). date of the (c) Whenever a jurisdictional change is not required to be reviewed and approved by a local agency board of edi formation commission, the local agencies whose service area or service responsibilities would be altered If the jurisd by the proposed change, shall give notice to the State Board of Equalization and the assessor and auditor 60 days aftc- of each county within which the territory subject to the jurisdictional change is located. This notice shall exchanged. specify each local agency whose service area or responsibility will be altered by the jurisdictional change (3) Upon and request the auditor and assessor to make the determinations required pursuant to paragraphs (1) Board of E and (2) of subdivision (b). Upon notification by the auditor of the amount of, and allocation factors with provided in respect to, property tax subject to exchange, the local agencies, pursuant to the provisions of paragraphs (4), (5), and (6) of subdivision.(b), shall determine the amount of property tax revenues to be exchanged (i) For pv between and among the local agencies. Notwithstanding any other provision of law,no such jurisdiction- county not al change shall become effective until each county and city included in these negotiations.agrees,.by community ' _ Additions or changes Indicated by underline; deletions by asterisks * . * be exchangt 112 'I�i 155 Ca.Cd _. REVENUE ANL. "IAAA1'1ViN l.vi/G t assign-the Code to the resolution, to accept the negotiated exchange of property tax revenues. The exchange may;be limited to ►roperty,tax an exchange of property tax revenue from the annual tax increment generated in the area subject to the a or service jurisdictional change and attributable to the.local agencies whose,service area.or service.responsibilities will be altered by the proposed jurisdictional change. The final exchange resolution shall specify how the annual tax increment shall be allocated in future years. Upon the adoption of..the.resolutions required Government pursuant to this section, the.adopting agencies shall notify the auditor who shall make-the appropriate Government adjustments as provided in subdivision (a). of the filing ional change (d) With respect to adjustments in the allocation of property taxes pursuant to this section, a county 11 be altered and any local agency or agencies within the county may develop and adopt a master property tax transfer agreement. The agreement may be revised from time to time by the parties subject to the agreement, e of filing, a (e) Except as otherwise provided in subdivision (f), for the purpose of determining the amount of change and f property tax to be allocated in the 1979-80 fiscal year and each fiscal year thereafter for those local agencies that were affected by a jurisdictional change which was filed with the State Board of Equalization after January 1, 1978, but on or before January 1, 1979. The local agencies shall determine �mtory that by resolution the amount of property tax revenues to be exchanged between and among the affected agencies and notify the auditor of the determination. pursuant to M For the purpose of determining the amount of property tax to be allocated in the 1979-80 fiscal year and each fiscal year thereafter,for a city incorporation that was filed pursuant to Sections 54900 to 54904 dl notify the after January 1, 1978,but on or before January 1, 1979, the amount of property tax revenue considered to tered by the have been received by the jurisdiction for the 1978-79 fiscal year shall be equal to two-thirds of the A) paragraph amount of property tax revenue projected in the final local agency formation commission staff report pertaining to the incorporation multiplied by the proportion that the total amount of property tax revenue received by all jurisdictions within the county for the 1978-79 fiscal year bears to the total amount of 1 commence property tax revenue received by all jurisdictions within the county for the 1977-78 fiscal year. Except, d among the however, in the event that the final commission report did not specify the amount of property tax revenue projected for that incorporation, the commission shall by October 10, determine pursuant to Section ax increment 54790.3 of the Government Code the amount of property tax to be transferred to the city. mcies whose The provisions of this subdivision shall also apply to the allocation of property taxes for the 198041 e. The final fiscal year and each fiscal year thereafter for incorporations approved by the voters in June 1979. uture ' years. utureility of (g) For the purpose of the computations made pursuant to this section, in the case of a district formation that was filed pursuant to Sections 54900 to 54904, inclusive, of the Government Code after districts are January 1978, but before January 1, 1979, the amount of property tax to be allocated to the district for .ax revenues. the 1979--80 fiscal year and each fiscal year thereafter shall be determined pursuant to Section 54790.3 of certificate of the Government Code. the property (h) For the purposes of the computations required by this chapter, in the case of a jurisdictional s adopted by change, other than a change requiring an adjustment by the auditor pursuant to subdivision (a), the property tax auditor shall adjust the allocation of property tax revenue determined pursuant to Section 96 or 96.1 or its predecessor section, or the annual tax increment determined pursuant to Section 96.5 or its ,ion, any local predecessor section, for each local school district, community college district, or county superintendent of jurisdictional schools whose service area or service responsibility would be altered by the jurisdictional change, as pursuant to determined as follows: time period (1) The governing body of each district, county superintendent of schools, or county whose service ;sented to the areas or service responsibilities would be altered by the change shall determine the amount of property automatically tax revenues to be exchanged between and among the affected jurisdictions. This determination shall he adopted by each affected jurisdiction by resolution. For the purpose of negotiation, the county auditor ;e is recorded shall.furnish the parties and the county board of education with an estimate of the property tax revenue exchange of subject to negotiation. is provided in (2) In the event that the affected jurisdictions are unable to agree, within 60 days after the effective date of the jurisdictional change, and if all the jurisdictions are wholly within one county, the county i local agency board of education shall, by resolution, determine the amount of property tax revenue to be exchanged. ild be altered If the jurisdictions are in more than one county, the State Board of Education shall, by resolution,within ►r and auditor 60 days after the effective date of the jurisdictional change, determine the amount of property tax to be its notice shall i exchanged. :tional change j (3) Upon adoption of any resolution pursuant to this subdivision, the adopting jurisdictions or State aragraphs (1) Board of Education shall notify the county auditor who shall make the appropriate adjustments as n factors with provided in subdivision (a). of paragraphs be exchanged (i) For purposes of subdivision (h), the annexation by a community college district of territory within a h jurisdiction- county not previously served by a community college district is an alteration of service area. The ns agrees, by community college district and the county shall negotiate the amount, if any, of property tax revenues to t * be exchanged. In these negotiations, there shall be taken into consideration the amount of revenue Additions or changes indicated by underline; deletions by asterisks 113 r-.,f-,,e •oa v n__4 received from the timber yield tax and forest reserve receipts by the community college district in the exchange wit area not previously served. In no event shall the property tax revenue to be exchanged exceed the conclude agree amount of property tax revenue collected prior to the annexation for the purposes of paying tuition eVen though su expenses of residents enrolled in the community college district, adjusted each year by the percentage cy formation c, change in population and the percentage change in the cost of living, or per capita personal income, mug and sett whichever is lower,less the amount of revenue received by the community college district in the annexed Addition �h1993j g area from the timber yield tax and forest reserve receipts. view deed. Q) At any time after a jurisdictional change is effective, any of the local agencies party to the Trial court e agreement to exchange property tax revenue may renegotiate the agreement with respect to the current mence negotiai fiscal year or subsequent fiscal years, subject to approval by all local agencies affected by the based on 1993 renegotiation. �Ad��t (Added by Stats.1994, c. 1167 (A.B.3347), § 3.) (App. 2 Dist. 1360, review d, Historical and Statutory Notes 4. Certificat( 1989 Legislation them with some financial relief as each county faces After" apphe Sections 1 and 2 of Stats.1989, c. 602, provide: severe service reductions due to the 1992-93 fiscal crisis. city has been f. "However, the bill contains several drafting errors re- (L my as LAI "Section 1. Any actions previously taken by a city, , g county ass8sso county, special district,or local agency formation commis- garding annexation procedures and the question of fund- pleteness, and sion, including the governing board or any officer thereof, ing for medical care for inmates in immediate need of to implement Section 99 of the Revenue and Taxation medical attention. Moreover, uncertainty exists as to E Code for purposes of completing an exchange of property whether the booking fee criteria may apply to city arrest- § 99.01. Jul tax revenues in the case-of a jurisdictional change are mg agencies. l hereby confirmed, validated, and declared legally effec- "I believe that it is critical that counties be afforded the tive. fiscal relief provided under this bill. Therefore, I am (a) For th, "Sec. 2. It is the intent of the Legislature that this directing my administration to draft language which will district provi act shall respond to the opinion of the Attorney General eliminate the ambiguous language in SB 1559 for enact- by any local (No. 88-501, December 7, 1.988). that property tax ex- ment early next year. This legislation would delete any reference to annexation from the provisions of SB 1559, (1) The sl change agreements between local agencies not reached within a 30-day negotiating period are void." clarify that cities shall not be liable for medical costs a PPortionmei which accrue as a result of a city peace officer transport- area or servi The Senate Journal for the 1991-92 Regular Session, 8295, contained the following signature letter dated mg an arrested person to the hospital prior to booking (2) The ex page g � them into the county jail and will make other necessary Sept. 14, 1992, from the Governor regarding S.B.1559 technical revisions. The California State Association of from the ann (Stats.1992, c. 697): Counties has committed to supporting such legislation." to those logia "I have signed Senate Bill 1559 but I also urge follow- (3) Notwit up legislation. 1994 Legislation Former § 99 was amended b "This bill would revise several provisions of existing law y Stats.1988, c. 160, § 166; affected by t to provide counties with relief from certain criminal jus- Stats.1988;c. 190, § 4; Stats.1992,c. 697(S.B.1559), § 15; (4) If a sp lice state-mandated programs, including a provision to Stats.1992, c. 1369 (A.B.3027), § ,12, prior to repeal by more ServicE B Stats.1994,c. 1167(A. .3347),§ 2. See,now,.this section. allow a county sheriff to refuse to accept for booking any resolution pr person who is in need of immediate medical.attention. Legislative intent of enactment of Stats.1994, c. 1167 the area sub This bill would also provide several amendments to the (A.B.3347),see Historical and Statutory Notes under Rev- revenue for i provisions of SB 2557, including one to allow a county to enue and Taxation Code § 95. recover booking costs from a convicted person arrested by Derivation: Former § 99, added by Stats.1979, c. 282, (b) The pr a state arresting agency. Finally, this bill would revise § 59, amended by Stats.1979, c. 1161, § 6.6; Stats.1980,c. shall apply. procedures for incorporation of county territory in order 801, § 11; Stats.1981, c. 714, § 397; Stats.1981, c. 713, not be affect• to make such incorporation revenue neutral for the coun- § 8; Stats.1982,e.271, § 1; Stats.1983,c.828, § 1; Stats. ty 1983,c. 1305,§ 6; Stats.1988,c. 160,§ 166; Stats.1988,c. f (Added by S' "SB 1559 is a comprehensive measure which will enact 190, § 4; Stats.1992, c. 697, § 15; Stats.1992, c. 1369, reasonable provisions for counties in order to provide § 12. 1994 Legish Notes of Decisions Legislative i (A.B.3347),see Agreement for transfer of property tax revenues 1 expiration of the 30-day negotiation period. 71 OpAtty. enue and Taxa Certificate of filing 4 Gen. 344, Dec. 7, 1988. Duty to negotiate 3 3. Dutynegotiate Time for agreement 2 to g otiate § .99.02. Tr. City subject to application to annex unincorporated territory has statutory duty to enter into genuine and vigorous negotiations with affected county concerning (a) For thf 1. Agreement for transfer of property tax revenues property tax revenue exchange agreement, even though years therea In a city annexation proceeding,the city and county are there is no statutory duty to reach agreement; therefore, adopted and : not required to reach an agreement for the transfer of writ of mandate requiring city to negotiate in good faith property tax property tax revenues. 71 Op.Atty.Gen.344,Dec.7,198& might be appropriate. Greenwood Addition Homeowners increment de 2. Time for agreement Ass'R v. City of San Marino (App. 2 Dist. 1993) 18 allocation we agreem p 1 App.4th 1360, review denied. In a city annexation proceeding,a property tax transfer While city subject to application to annex incorporated (b) Comm( agreement is void i;f reached by the city and county after territory is required to negotiate property tax revenue its governing Additions"or changes Indicated by underline; deletions by asterisks * * * A 114 e &{strict in the exchange with county,-it -is.not required to reach.or completeness or,if 30 days pass,itis aompted for filing by iged exceed the conclude agreement as to property tax revenue exchange, operation of.law,,!affected. city and county•commence f paying.-tuition even though.such agreement is precondition to local agen- 30day.negotiadon period to determine property tai rave- the percentage cy formation commissions(LAFCO)issuing certificate of nue-exchange and IAFCO issues ceitificitte of filing.of income, filing and setting application for hearing. Greenwood accepted application and then sets application for hearing emonal Addition-Homeowners Assn v.Cityof San Marino(App.2 within 90 days. however;.certificate of filing may not be t in the annealed Dist. 1993) 18 CaLRptr2d 350, 14'Ca1.AppAth 1360, re- issued until city and county adopt resolutions agreeing to view denied. accept property tax revenue exchange. Greenwood Addi- es party to the Trial court erred in ordering city and county to recom- tion Homeowners Assn v.-City of San Marino (App. 2 t to the current mence negotiations as to property tax revenue exchange Dista 1993) 18 CaLRptr2d 350,.14 Cal.App.4th 1360, re- affected b the based on 1993 revenue information pursuant to application view denied. Y to annex unincorporated territory filed in 1990. Green- wood Addition Homeowners Ass'n v. City of San Marino Certificate of filing issued by local agency formation (App. 2 Dist. 1993) 18 Cal.Rptr2d 350, 14 Cal.App.4th commission (LAFCO) is precondition of LAFCO's setting 1360, review denied. application to annex unincorporated territory to city for hearing, and property tax revenue exchange agreement 4. Certificate of riling between affected county and city is precondition of LAF- :ach county faces After application to annex unincorporated territory to CO's issuing certificate of filing; absent either agreement ,92--93 fiscal crisis. city has been filed with local agency formation commission or certificate of filing, LAFCO is powerless to proceed to (LAFCO), LAFCO gives notice to affected agencies and to hearing. Greenwood Addition Homeowners Assn v. City {ratting errors re- county assessor and auditor, reviews application for com- of San Marino (App. 2 Dist. 1993) 18 Cal.Rptr.2d 350, 14 question of fund- pleteness, and accepts it for filing upon determination of CalApp.4th 1360, review denied. remediate need of dnty exists as to )ply to city arrest- § 99.01. Jurisdictional changes; special districts providing services not previously provided by a local agency es be afforded the Therefore, I am (a) For the purposes of Section 99, in the case of a jurisdictional change that will result in a special nguage which will district providing one or more services to an area where those services have not been previously provided •B 1559 for enact- by any local agency, the following shall apply: would delete any Bions of SB 1559, (1) The special district referred to in this subdivision and each local agency that receives an for medical costs apportionment of property tax revenue from the area shall be considered local agencies whose service officer transport- area or service responsibility will be altered by the jurisdictional change. prior to booking ' (2) The exchange of property tax among those local agencies shall be limited to property tax revenue e other necessary from the annual tax increment generated in the area subject to the jurisdictional chane and attributable ate Association of � g � � g such legislation." ! to those local agencies. I (3) Notwithstanding the provisions of paragraph (5) of subdivision (b) of Section 99, any special district 988,c. 160, § 166; affected by the jurisdictional change may negotiate on its own behalf, if it so chooses. 7(S.B.1559), § 15; (4) If a special district involved in the negotiation (other than the district which will provide one or )rior to repeal by more services to the area where those services have not been previously provided) fails to adopt a ,now,this section. resolution providing for the exchange of property tax revenue, the board of supervisors of the county in ,tats.1994, c. 1167 the area subject to the jurisdictional change is located shall determine the exchange of property tax Notes under Rev- revenue for that special district. Stats.1979, c. 282, (b) The provisions of subdivisions (a), (b), (c), (d), and 0) of Section 99 not in conflict with this section 6.6; Stats.1980, c. shall apply. The jurisdictional changes described in subdivisions (e),(f), (g), (h), and (i) of Section 99 shall Stats.1981, c. 713, not be affected by the provisions of this section. C.828,§ 1; Stats. (Added by Stats.1994, c. 1167 (A-B.3347), § 3.) 166; Stats.1988,c. tats.1992, C 1369, Historical and Statutory Notes 1994 Legislation Derivation: Former§ 99.1,added by Stats.1980,c.801, Legislative intent of enactment of Stats.1994, c. 1167 § 11.5,amended by Stats.1980,c. 1220, § 4; Stats.1983,c. (A.B.3347),see Historical and Statutory Notes under Rev- 1305, § 7. •riod. 71 OpAtty. enue and Taxation Code § 95. § 99.02. Transfers or exchanges of revenues; local agencies; adjustments; notice; hearing; x unincorporated conditions for reallocations into genuine and !ounty concerning (a) For the purposes of the computations required by this chapter for the 1985-86 fiscal year and fiscal hent, even though years thereafter, in the case of any transfer of property tax revenues between local agencies that is ,ement; therefore, adopted and approved in conformity with subdivisions(b) and(c),the auditor shall adjust the allocation of tiate in good faith property tax revenue determined pursuant to Section 96.1 or its predecessor section, or the annual tax iition Homeowners increment determined pursuant to Section 96.5 or its predecessor section, for those local agencies whose 2 Dist. 1993) 18 allocation would be altered by the transfer. vview denied. annex incorporated (b) Commencing with the 1985-86 fiscal year, any local agency may, by the adoption of a resolution of perty tax revenue its governing body or governing board, determine to exchange any portion of its property tax revenues ' * Additions or changes indicated by underline; deletions by asterisks 115 COUNTY COUNSEL'S OFFICE CONTRA COSTA COUNTY 651 Pine Street, 9th Floor Martinez CA 94553 (510) 335-1833 Fax(510) 646-1078 To: All Commissioners Contra Costa Local Agency Formation Commission From: Dennis Gravt19 Commission Couns Date: September 2 , Re:. Property tax distribution for the proposed consolidation of the Orinda and Moraga Fire Protection Districts The Issue: The proposed consolidation of the Orinda and Moraga Fire Protection Districts is the first true consolidation that this Commission will have considered in at least 10 years (and possibly the first ever).' This proposal raises an issue of first impression regarding the method of distribution of property taxes for a true consolidation 2: Upon a consolidation, should the Commission determine the distribution of property taxes under Government Code 56842 or is the distribution to be according to a property tax exchange agreement negotiated between the districts under Revenue and Taxation Code section 99(b)? Because of legal uncertainty as to the resolution of the issue and because of the potential precedential effect of this proposal for future consolidations, the issue is placed before the Commission. This memorandum will provide the Commission with what I believe to be the applicable theory. The attached memorandum from the attorney for the Cities provides the argument for the ' A distinction is made between a "true consolidation" and a reorganization which essentially has the same effect. In a true consolidation, a new successor district is created by combining two similar districts which cease to exist. (Gov. C. Sec. 56030.) Although there apparently have been no such boundary changes in this County, the Commission has on several occasions reached a largely equivalent result by a reorganization that dissolves one district and annexes its territory to an adjacent district. z In a brief survey of other jurisdictions, we were unable to find any other LAFCO that had carefully considered and resolved this issue. t Commission determining the distribution of property taxes under Government Code 56842. Although the basic scheme of the property tax distribution law can be interpreted to favor a property tax exchange agreement negotiated between the districts under Revenue and Taxation Code section 99(b), this is a close r issue and, in my opinion, a court could reasonably rule either way. Discussion: Under Proposition 13, the amount of property taxes collected in an area is limited to one percent of the assessed value. Because there is a maximum amount of property tax revenues that can be obtained in an area, if one local agency is to gain taxes, another must Lose. The basic concept of the law governing property tax revenue redistribution upon boundary changes is generally to transfer the amount of property tax revenues that one agency (eg, the county) spent on providing the services that are to be assumed by another agency (eg, a district). While the Legislature could have set forth a statutory formula to determine that amount for all boundary changes, it did not. Rather, the Legislature evidently recognized that a statutory formula often would fail to accommodate all the circumstances encountered in boundary changes so as to arrive at a fair amount of property tax revenues to be transferred.3 Accordingly, the law does not simply provide a statutory formula but rather that the amount of property tax to be transferred for boundary changes be determined by good faith negotiations between the affected agencies that have been receiving property tax revenues. It takes two to negotiate, however, and the property tax negotiation scheme would not work for incorporations or ab initio formations of new districts because there is no second agency with which to negotiate. Thus, the Legislature had no alternative but to provide a statutory formula (implemented by LAFCO, an independent party) when two agencies are not involved in a boundary change. (See R+TC Sec. 99(a)(2),(3), Gov. C. Sec.. 56842.) 3 A negotiated property tax exchange agreement recognizes that it often may be difficult (or even impossible) to arrive at a fair amount of property tax revenues to be transferred. Even if the full amount of taxes spent on the services to be assumed by another agency can be determined under proper cost.accounting principles, circumstances often may justify transferring less than that amount. For instance, a cost accountant might be able to allocate $10 of a total $100 county service area budget to a specific area that is annexed to a city that will now provide the service to the area. But, the county service area may not be able to decrease its expenditures by that $10 because of economies of scale, etc. For example, if 2 employees provide a service in a county service area and 10% of that area is annexed to a city, the service area could not remove one of the employees and still provide the service to the remaining 90% of the area. Since the county service area must still pay the same amount for its employees, it may not be feasible to transfer 10% of the property taxes in the area to the annexing city. 2 The problem in the present case is that Revenue and Taxation Code Section 99(a) simply refers to incorporations and formations, without distinguishing the typical initial formation of a district from the present circumstance where a consolidation of two existing districts technically also results in the formation of a new successor district. Although no such distinction is,made in the Legislation, in the case of a consolidation there are two districts that have been receiving property taxes and should be able to negotiate and agree to a transfer of property taxes to the successor district (as is done in the similar situation of a reorganization in which the territory of a dissolved district is annexed to the territory.of a similar continuing district). (R+TC Sec. 99(a)(1),(b).) An interpretation that limits LAFCO to applying the statutory formula of Government Code 56842 in an initial district formation and not the formation of a successor district upon a consolidation arguably better accords with the aforenoted statutory scheme because there are two districts to negotiate and, unlike the application of the Section 56842 statutory formula, a property tax exchange agreement allows for special circumstances to be negotiated between the two agencies.° Given the apparent intent of the Legislature to allow such flexibility, the exception for application of the Section 56842 formula arguably is best construed narrowly to apply only to initial formations and not to the formation of.a successor district upon a consolidation.5 Conclusion: Notwithstanding the forgoing analysis, there are good arguments for interpreting the law as authorizing LAFCO-to determine the property tax distribution under Government Code Section 56842, and it is uncertain how the courts would ultimately resolve this matter. Given.the. uncertainties.and the potentially precedent setting effect of this issue, it is appropriate for the Commission to weigh the arguments and any practical/legislative/administrative concerns and determine its jurisdiction on this matter. The Commission may have practical/legislative/administrative concerns that would favor one result over the other and, indeed, the Commission's administrative determination on this issue should be given considerable deference,by the courts. cc: Annamaria Perrella, Executive Officer C:fdconsptx.doc Although one might expect that the tax revenue of the consolidated districts would simply be transferred to the successor district in most consolidations, as previously indicated the general scheme of the law contemplates that there may be circumstances which would argue against applying such a statutory formula. 5 This interpretation also recognizes that, because there are two agencies to negotiate, for property tax distribution purposes consolidations are less like an incorporation or initial district formation and more like a reorganization in which the territory of a dissolved district is annexed to the territory of a similar continuing district. 3 09%18/96 10;46 FAI 1 510 376 2034 TOWN OF MORAGA 002/004 MCDoxouoa. xoLL&" 8c ALLEx ,wu.e000Ke4.1• tww•Oa""' A eNTOrtGLtONaL CO��owwTlC}M, "Not"T%T%.•eaw /rKa,aaTTtwOoa re.elKM.te+erLL ATTORNEYS . e.-e4L.-oTre w.rs:sanaw w.u.saa w.Ket.eaci ...act.4Ta«a Nuc a aaCGl Lewes 0.awn ' fte-Le C."*OLE "Lut"v Lx-"It _ T..CT�!a ..WM V00-ftC V w a.2""_`e ase" . 666 GLo1TOL FKLt.6"./LAO• ToonM*P-rc. � V•NLR•aJ'[.Lc.4 ap.MOL MWOT 'T(a��aearOK ..Mina L-•KM(IK[. *f—L TMKN eater.�rteew+�w aa[a.TaNe�f• taGleAMONTO.CI�LIC'OA4rlla6�ea y.,.ATTew.lnta•. ..e..acr�al•cHaa an.a y MCT'. acrwc.a a[LU"T e..a C a.tCKvLW MNM4[Kly. .yttYrt.KttAOK.J4. .{Q/I��A-'J000 - acrTTr atrecCTca awl/a[[QT" aua a..1.KC OMiI.L.a R.a2 r awry a.aw.aLT Ia4.aTT w1a..o.csa,.TOlra TtLCOaalR.;t9161 N[.C.t.L.rO. .a.,[tyap,.. amM' dkVPCYT u•.necuuLa.Lca,A aeeK.cLaeel.eT "-I1-%%MMowwa.4 &AW ft[rr/[LL GKaR t< L eruw LIST SAP(CC:[stoterw4 teWNTaLaeo•eaaa JACaaswo" JA"%4*K4c.caaT rP'RT..�e.ta TOO"-&L*" ea+e C.Kraety' [-CwA ff V tTK. c"off".rcwt ,ueTr ace -*a P&M -Loww�00-Vec.Tca[. j"C a.rAnmea "*T R W.WX coat t,aa,T. e�K k ne toTaaDJ"I"t A C&COLC ft""" �"roc t.+ ea+/aele V-KQLLAOM 4Ft WPCCtat-www " ACK-Ok K-OWKC"Wo" WJS"L KC,•aCMK we wjl A .060--R k%ASTOK l.•caL%M aTtT.fw L. C-WCW-MrLAew[ M.00KOVaK September 11, L996 Mr. Ross Hubbard Town Manager Town of Moraga 2104 Donald Drive ` P.O.Box 188 M,oraga, California 44556 ' Mr. William Lindsay City Manager - City of Odnda 26 Orinda.Way -0rinda,(California 94363 Re: Necessity of exchange agreement for fire district formation- Dear Messrs.Hubbard and Lindsay: We understand that LAFCo counsel has ined that the proposed:fire district formation will require a property tax agreement. We tame this opportunity to explain counsel's position and to offer a response. Under state statute,in the case of a change of organization other than a city incorporation or a distrid fornrtativn, the allocation of property tax revenue is to be determined pursuant to ai property taus exchange agreennent. (Rev. &Tax. Code,§99,subds. (a)(1),(b).) However,in the case of a district formation, the county auditor assigns the propertytax revs iues to be allocated to the new district according to the procedures contained in section 56842 of the Government Code, not according to an exchange agreement: (Rev. &Tax. Code,§99,subd.(a)(3).) r TJK.rn-er•tca a2:C[klwa••a.O%sa.vC,=M TC. t.t•ae.Orr.aC . Re &aa Tr* tWJ...atiow XrM tT.ZJ(TC a/10 • �Ya.aR T.a.11tp w4{►a.aalPVt7l • v4.w.r O.C-uk oa.lt.0-61S asw,ar.-ssM . ..eat aro_AT00 TC&'.A' P'Ca Mal ov—ftzaa T[Let:artR• MW aaa..m+ 2 d S ti%U W12:60:60 96, TT d3S Q9/18/96 10:47 FAX 1 510 376 2034 TOWN OF KORAGA Ia 003/004 Mr.Ross Hubbard Mr. William Lindsay 'September 11, 1996 Page 2 LAFCo counsel claims the auditor's obligation to-assign revenue in a district formation without an exchange agreement applies only in an initial formation of a district,-not the formation of a successor district upon a consolidation. .Me do not share " opinion. First;nothing in the language of the statute-suggots LAFCo:couns&s inteipretatibr} The statue stages that iri the case of a fmmatian, the auditor determines the allocation without a property taxzgTeen=t. The statute says nothing about whether this applies only to a formation in the initial instance or to all formations. OFormatioe is defined'as the "formation, incorporation, organization or creation of a district" regardless of it r,esulting.from a prior change of organization,such as a dissolution. (Gov. Code,§56039.) If the Legislature `had int ended the exclusion from the. exchange agreement requirement to apply just to initial formations,it would have said so. It did not. Second, exempting only initial formations from the requirement of a tax exchange agreement conflicts with the language of Government Code section 56642 regarding the allocation of revenues. Under section 56UZ the amount of property tax revenue to-be exchanged is determined pursuant to 'that section if"the proposal includes the formation of a district." (Gov.Jcode, 9 56M 6ubd. (a)(2) [emphasis added].) In other words,for any proposal that includes a district formation,no inatter how inany�changes of organization stake up the proposal,.the exchange of tax revenue is determined pursuant to section 56642. Requiring an exchange agreement except for initial district formations contradicts.this clear language of section 56842 On the other hand,not. requiring an exchange +agreement for any district formation harmonizes all of the wards to both applicable statutes without rendering any words superfluous. We believe such an interpretation would be favored.by the courts over L.AFCo counsel's interpretation. For these reasons, we believe that because the proposed change of organization. includes a district formation,the county auditor.is obligated to assign the property tax revenues to be allocated to the new district according to the procedures contained in section 56842 of the Government Code, and that no exchange agreement is required. (Rev_ k Tax.Code, 99,subd. (a)(3).) £.d OUS HBHW WdT2:E9 96, Ti d3S 10:-48` PAX 1- 510 376 2034 TOWN OF M0RAGA (0004/004. Mr. Ross Hubbard Mr. William Lindsay September 11,1996 Page 3 Under section 56M where the proposal would transfer all of an affected agency's Service responsibilities to the proposed district,such as here, LAFCo first must request the auditor to determine.the amount of property tax revenue generated for the affected service providers by tax rate area and to .transfer that inf=mtion of LAFCo. (Gov.-Code,§56842,subd. (d).) 'Then, when the LAFCo,executive director records a certificate of completion for-the proposal, atfle:audltor,shall transfer that&1 ount to die new f urlscUction.'. (Gov. Code,§ 55842,subd..(e).). Because there is no discretion in the amount . of revenue to be transferred to the new distdc� there is no requirement or need for a tate revenue exchange agreement Please feel free to'cor<#act me if you have any further questions regarding this issue. V truly yours,. Harriet A_ Steiner HAS:DAPanaa ac Michelle Kenyon •v•d DUS USS U W22:6e 96, 11 d3S Request to Speak Form ( THREE (3) MINUTE LIMIT) Complete this form and place it in the box near the speakers' rostrum before addressing the Board. , Name: !hone: /�idress: Cittrat Lt 1 am speaking for myself_or orpnizatiorn. Game of o�n�za�tioN CHECK ONE: 1 wish to speak on Agenda Item # Date: L-I--9 G, My comments will be: general _fbr aga1nd . _ 1 wish to speak on the subject of . not wish to speak but leave these comments for the Board to consider: Request to Speak Form _rz) D, ( THREE (3) MINUTE LIMIT) Complete this form and place It in the box near the speakers' rostrum before addressing the Board 1 am speaking for myself_ organization: iT/ ds� %�0�1�,�'� Mme of oraani�atioN CH ONE: v �� 1 wish to speak on Agenda Item # " � -- " My comments will be general for agains# _ 1 wish to speak on the subject of 1 & fot wish to speak but leave these comments for the Board to consider.