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HomeMy WebLinkAbout08 - Property Tax Exchange for Newport Coast & Bay KnollsITEM 8 TO: Members of the Newport Beach City Council FROM: Dave Kiff, Assistant City Manager SUBJECT: Resolution 2001- _ -- Property Tax Exchange Agreement Between the County of Orange and the City of Newport Beach regarding the Newport Coast and Bay Knolls RECOMMENDED Adopt Resolution 2001 -_ relating to a Property Tax Exchange Agreement with ACTION: the County of Orange regarding the Newport Coast Annexation and Bay Knolls. BACKGROUND: State law (the Cortese - Knox - Hertzberg Local Government Reorganization Act of 2000 -- Government Code §56000 et seq.) governs the way cities, counties, and special districts address boundary issues like incorporations, annexations, detachments, changes in "spheres of influence ", mergers and consolidations, and combinations of these actions called "reorganizations." Readers can access the Act at www.leainfo.ca.gov. The Act describes the membership and role of the Local Agency Formation Commission ( LAFCO) in each county. Orange County LAFCO, a seven - member body that meets monthly in Santa Ana, addresses boundary changes for our region (www.oclafco.ca.¢ov). On September 26, 2000, the City Council adopted Resolution 2000 -81 directing City staff to process an annexation application for the Newport Coast, Santa Ana Heights, and the Bay Knolls community. The City filed its application to annex these territories on March 19, 2001 and anticipates a LAFCO hearing in September 2001 regarding the Newport Coast portion of this application. One of the last steps before LAFCO can hear the City's application for the Newport Coast annexation is the adoption by the City Council and the Orange County Board of Supervisors of nearly - identical resolutions directing the transfer and allocation after annexation of the 1% Basic Levy that all property owners pay. In most of Newport Beach, the city government itself receives about 17% of the 1% Basic Levy paid by Newport Beach property owners, with the remaining 83% going to schools, community colleges, the County of Orange, and special districts. On October 28,1980, the City and the County of Orange entered into a Masher Property Tax Transfer Agreement (MPTTA) governing the exchange of the 1% Basic Levy in future annexations. The MPTTA determines how the City and the County split that portion of the Levy that goes today to the County General Fund. The Agreement directs that the City and the County always follow the following ratio for any annexation: 0.51937804992 to the City and 0.48062195008 to the County. In most circumstances, the MPTTA would be appropriate to use for the Newport Coast. But the County and the City - in an attempt to assist the County in "getting out of the municipal service business" - have discussed providing a small incentive for Newport Beach to also annex smaller unincorporated islands between Newport Beach and Costa Mesa that remain under redevelopment (and thus have their property tax apportionments restricted). The resolution proposed for the property tax exchange in the Newport Coast (Attachment A) includes an adjustment to the 1980 MPTTA that would, if the City is successful in annexing Bay Knolls at a later date, provide that the property tax exchange for the Newport Coast would increase to: 0.52937804992 to the City and 0.47062195008 to the County. Because the County Board of Supervisors is directed by State Law to act on behalf of special districts to apportion property taxes from special purpose districts in an annexation, the proposed resolution directs the Board to also apportion 100% of the 1% Basic Levy now received by the Orange County Fire Authority the Orange County Library District to the City. Officials from the Fire Authority and Library District have previously agreed to this apportionment, since they no longer will provide any service (beyond the OCFA's provision of mutual aid) to the Newport Coast. Interested readers can look at Attachment B to see how the proposed resolution would affect the allocation of the 1 % Basic Levy in one of the larger tax rate areas (TRAs) in the Newport Coast before annexation, between the Newport Coast' s annexation and the annexation of Bay Knolls, and after an annexation of both the Newport Coast and Bay Knolls. THIS AGENDA This Agenda Item proposes the adoption of a resolution agreeing to the roughly ITEM: 52% (City) - 48% (County) Master Property Tax Transfer Agreement for the County General Fund share of the 1 % Basic Levy paid by the Newport Coast Community. It directs the County to adjust the Newport Coast split to roughly 53% (City) and 47% (County) upon annexation of the Bay Knolls community. Finally, it accepts the Board's apportionment of 100% of the property taxes currently allocated to the Orange County Fire Authority and the Orange County Library District to the City upon the Newport Coast's annexation. A similar resolution is set for the Orange County Board of Supervisors' Agenda on August 14, 2001. ATTACHMENTS: Attachment A— Resolution 2001 -_ "A PROPERTY TAX TRANSFER AGREEMENT WITH THE COUNTY OF ORANGE ON BEHALF OF THE COUNTY, THE ORANGE COUNTY FIRE AUTHORITY, AND THE ORANGE COUNTY LIBRARY DISTRICT RELATING TO THE NEWPORT COAST ANNEXATION" Attachment B - Tax Rate Area 55 -085 scenarios / Attachment A RESOLUTION 2001- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH RELATING TO A PROPERTY TAX TRANSFER AGREEMENT WITH THE COUNTY OF ORANGE ON BEHALF OF THE COUNTY, THE ORANGE COUNTY FIRE AUTHORITY, AND THE ORANGE COUNTY LIBRARY DISTRICT RELATING TO THE NEWPORT COAST ANNEXATION WHEREAS, the City of Newport Beach has proposed the annexation and/or reorganization of three separate territories adjacent to or within the City's sphere of influence. These territories are known as The Newport Coast ( "Newport Coast "), the eastern portion of Santa Ana Heights ( "Santa Ana Heights "), and Bay Knolls ( "Bay Knolls "); and WHEREAS, all or portions of Santa Ana Heights and Bay Knolls are within specific redevelopment project areas administered by the Orange County Development Agency (OCDA) which direct most property tax increment to the OCDA; and WHEREAS, in 1980, the City Council adopted a Master Property Tax Transfer Agreement with the County of Orange that directs that 0.51937804992 of the County General Fund share of the 1% Basic Levy be transferred to the City and 0.48062195008 remain with the County upon annexation of territory by the City; and WHEREAS, the Board of Supervisors has agreed to adjust the Master Property Tax Transfer Agreement according to the terms of this Resolution in order to assist the City of Newport Beach in funding municipal services to the Bay Knolls area that falls within the OCDA project area, now, therefore be it RESOLVED by the City Council of the City of Newport Beach that the City Council hereby: 1. Accepts that the property tax exchange for the Newport Coast Annexation will be in accordance with the Master Property Tax Transfer Agreement between the County of Orange and the City of Newport Beach (Board of i. J Supervisors' Resolution No. 80 -2093) between the effective date of the annexation of the Newport Coast and the effective date, if any, of the annexation of Bay Knolls by the City of Newport Beach. On and after the effective date of the annexation of Bay Knolls by the City of Newport Beach, the property tax exchange for the City of Newport Beach's annexation of the Newport Coast shall be as follows: • 0.52937804992 of the County General Fund share of the 1% Basic Levy be transferred to the City of Newport Beach; and • 0.47062195008 shall remain with the County. 2. Requests that 100 percent of the property tax revenues accrued to the Orange County Library District for the Newport Coast Annexation be transferred to the City of Newport Beach. 3. Requests that 100 percent of the property tax revenues accrued to the Orange County Fire Authority for the Newport Coast Annexation be transferred to the City of Newport Beach. ADOPTED this 14t" day of August, 2001. GAROLD B. ADAMS Mayor of Newport Beach LaVonne Harkless City Clerk of Newport Beach Attachment B After Annexation After Annexation Receiving Agency Today of the Newport of the Newport CoasH Coast Bay Knolls Irvine Ranch Water District 0.1733 0.1733 0.1733 OC General Fund 0.0554 0.0266 0.0260 OC Library District 0.0149 0.0000 0.0000 OC Fire Authority 0.1011 0.0000 0.0000 City of Newport Beach 0.0000 0.1448 0.1454 Education Revenue Augmentation Fund 0.1417 0.1417 0.1417 OC Flood Control District 0.0177 0.0177 0.0177 OC Harbors, Beaches, and Parks CSA 0.0137 0.0137 0.0137 OC Vector Control District 0.0010 0.0010 0.0010 OC Transportation Authority 0.0025 0.0025 0.0025 OC Cemetery District 0.0004 0.0004 0.0004 Coast Community College General Fund 0.0866 0.0866 0.0866 Newport-Mesa Unified School District 0.3109 0.3109 0.3109 OC Department of Education 0.0125 0.0125 0.0125 OC Sanitation District 0.0225 0.0225 0.0225 TRA Totals' 0.9542 0.9542 0.9542 ' will not equal 1.0 due to rounding - TRAs are caculated to 11 decimal places