1980-1028_ORANGE, COUNTY OF_Master Property Tax Transfer Agrr
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MASTER PROPERTY TAX TRANSFER AGREEMENT
BETWEEN THE COUNTY OF ORANGE AND THE CITY OF
SAN JUAN CAPISTRANO
TO PROVIDE FOR PROPERTY TAX EXCHANGE
IN AREAS ANNEXED BY THE CITY
5 THIS AGREEMENT is entered into this 28th day of October ,
6 1980 , by and between the County of Orange, hereinafter "COUNTY", and the
7 City of man Juan Capistrano hereinafter "CITY", as follows:
8 1. The purpose of this Agreement is to provide a uniform and pre -
9 dictable method of exchanging property tax revenues between CITY, COUNTY,
10 and certain special districts governed by the Board of Supervisors when
111 CITY annexes an area previously unincorporated. This Agreement is
12 entered into pursuant to section 99(d) of the Revenue and Taxation Code.
13 (Hereafter statutory references are to the Revenue and Taxation Code
14 unless otherwise indicated.)
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2. This Agreement covers any completed and effective annexations tol
CITY filed with the State Board of Equalization between January 2, 1978,
and July 24, 1979, as well as those pending uncompleted and future annex
1811 tions subject to the tax reallocation provisions of section 99. Any
1911 annexations completed on or before July 24, 1979 which have heretofore
2011 been assigned to an existing tax rate area by the State Board of Equali-
211 zation are excluded from this Agreement.
2211. 3. For any annexations to CITY filed with the State Board of Equali�
2311 zation between January 2, 1978 and January 1, 1979 and between January 2,1
2411 1979 and July 24, 1979 which were made effective on the tax rolls respec-
25 tively for fiscal years 1979-80 and 1980-81 the redistribution of taxes -.--
2 26 will first be effected beginning with the proceeds of the fiscal_ 1980-81
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Q 28 For any annexations filed with the State Board of Equalization
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i after July 24, 1979 the redistribution of property tax revenues will begin)
2 in the fiscal year in which the tax roll is first changed to reflect the
.3 annexation, i.e., the fiscal year in which the annexation is effective for
4 property tax purposes pursuant to Government Code Section 54902.
5 4. This agreement may be amended at any time by the mutual consent
6 of the parties. Any such amendment will apply only to those annexations
7 completed thereafter.
8 5. The historic tax ratio between CITY and COUNTY shall be used as
9 a basis to redistribute property tax revenues among the County general
10 fund, certain special districts and CITY.
11 The historic CITY -COUNTY tax ratio is .43893097836.56106902164. It
12 was arrived at in the following manner:
13 a. The County Auditor -Controller has determined the 1979-80
14 property tax allocations to various jurisdictions in accordance with
,z"0 15 section 97.5.
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16 b. The total property tax allocation for CITY and the total
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18 calculated. The above ratio represents the percentage of each to the,
19 total of the two.
20 The above historic tax ratio shall remain constant through -
21 out the term of this Agreement and is to be used for all annexations
22 covered by this Agreement without regard to the year they take place.
23 6. For the purpose of determining the redistribution of property
24 tax revenues in newly annexed areas pursuant to this Agreement, property
25 contained in each proposed annexation shall be determined to be developed/
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a. Annexations filed with the Local Aqency Formation Commission
after the effective date of this Agreement:
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Prior to the filing of a resolution or petition for annexa -
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tion with the Local Agency Formation Commission, the property
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proposed for annexation shall be determined to be developed/substan-
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tially developed or undeveloped as follows:
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(1) (a) If the property is residential in nature, is wholly
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subdivided and at least 75 percent of the subdivided lots
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have existing residential structures on them, the property
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shall be deemed developed/substantially developed.
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(b) If the property is wholly residential in nature, is
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wholly subdivided and less than 25 percent of the subdivided
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lots have existing residential structures on them; and there
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are no parks, park sites, school sites, or other public
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improvements or facilities on the property (excluding street
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highways, utility lines), the property shall be deemed
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undeveloped.
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(c) If the entire property is being used for agriculture:
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purposes, the property shall be deemed undeveloped.
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(d) If the property has no parks, park sites, school
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sites, ail exploration or production facilities, or other
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structures, improvements or facilities on it, whether public
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or private, it shall be deemed undeveloped.
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(2) I£ the property fails to fall into any of the categories
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defined in subparagraph a.(1) above, then the property shall be
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deemed and treated developed/substantially developed or undeve-
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loped if the County'Administrative Officer and the City Manager,
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or their designees, agree in writing.
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(3) If such written agreement is not reached within thirty
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days following the City Manager's written request to the County
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Administrative Officer and the annexation is under one hundred
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acres, then the Local Agency Formation Commission shall determin
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whether or not the property is to be deemed and treated as deve-
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loped/substantially developed or undeveloped. Such determinatio
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may be made by the Local Agency Formation Commission at the time
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of its final determination regarding the annexation. In making
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the above determination regarding the status of the property the
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Local Agency Formation Commission shall consider the recommenda-
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tions of both COUNTY and CITY, if any, and shall consider the
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following factors if -applicable:
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(a) The ratio of assessed value of improvements to
assessed value of land;
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(b) The density of population;
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(c) The extent of commercial, residential and industrial
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development;
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(d) The extent of public facilities, improvements and
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properties;
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(e) Existing COUNTY and proposed CITY land use standards
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for the property to be annexed and surrounding areas; and
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(f) Any other factors it deems appropriate.
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CITY and COUNTY shall file resolutions with the Local
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Agency Formation Commission pursuant to section 99(b) agreeing
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to be bound by its determination whether the property is deve-
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loped/substantially developed or undeveloped.
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(4) If such written agreement is not reached within thirty
days following the City Manager's request to the County Admini-
strative Officer and the annexation is one hundred acres or more,
such determination shall be made by the Executive Officer of the
Local Agency Formation Commission on the basis of the same
matters required to be considered by the Commission. Such deter•
mination shall be made prior to the filing of the resolution or
petition for annexation with the Commission.
b. Annexations colleted or filed with the Local Agency Formation
Commission on or before the effective date of this Agreement:
Attached hereto, Exhibit A, is a list of any annexations
covered by this Agreement which have been completed or were filed
with the Local Agency Formation Commission on or before the effective
date of this Agreement. Said annexations shall be treated as deve-
loped/substantially developed or undeveloped as indicated in said
exhibit.
7. In the case of annexations to CITY of unincorporated areas the
following methods will be used to make the section 99 adjustments to the
allocation of property tax revenues made pursuant to section 97(a), and
the proportions allocated pursuant to section 98(e), to the County general
fund; certain special districts governed by the Board of Supervisors; and
CITY.
a. If the area to be annexed is developed/substantially deve-
loped the amount allocated to the CITY and County general fund with
respect to each new tax rate area pursuant to section 97.5(a) in the
first fiscal year in which the annexation is effective for tax pur-
poses is determined as follows. In each new tax rate area within
the area annexed the amount which would have been allocated to the
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County general fund under sections 97(a) and 98(e), assuming CITY is
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entitled to a zero allocation, shall be divided between CITY and the
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County general fund on the basis of the CITY -COUNTY historical tax
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ratio. Additionally in each new tax rate area the amount which woul
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have been allocated, pursuant to sections 97(a) and 98(e), assuming
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CITY is entitled to a zero allocation, to any special district
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governed by the Board of Supervisors which transferred complete ser -
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vice responsibility to CITY as a result of the annexation, shall be
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determined. Said amount shall be divided between CITY and the Count
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general fund on the basis of the historical CITY -COUNTY tax ratio.
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In the event any special district governed by the Board of Supervi-
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sors has transferred partial, but not complete, service responsibi-
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lity to CITY the transfer to COUNTY and CITY from said district unde
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this paragraph shall be as agreed by CITY and COUNTY.
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b. If the area to be annexed is undeveloped the amounts alloca-
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ted to the CITY and County general fund shall be determined in the
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same manner as subparagraph "a" above, provided that the amount
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allocated to the County general fund in each new tax rate area
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pursuant to section 97.5(a) in the first fiscal year and each year
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thereafter shall be at least equal to the allocation to the County
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general fund in the same geographical area in the fiscal year prior
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to that in which the annexation is effective for tax purposes.
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8. The amounts allocated pursuant to paragraph 7 in the first fis-
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cal
year shall form the basis for allocations in subsequent fiscal years
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as
otherwise provided by sections 97, 97.5 and 98; provided that the
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amounts guaranteed to the County general fund in subparagraph 7b shall be
ignored in determining the amount of property tax revenue allocated in
the prior year for purposes of sections 97(a) and 98(e). Attached hereto,
Exhibit B, is an illustration of the calculations contained in paragraphs
7 and 8 as applied to a hypothetical annexation.
9. Annexations of one hundred acres or more which are developed/
substantially developed are excluded from this Agreement. The parties
shall negotiate a separate agreement for such annexations.
10. Annexations of one hundred acres or more which are undeveloped
are subject to this Agreement provided the parties may negotiate a sepa-
rate agreement for such annexations.
11. The parties shall take all actions necessary to effectuate this
I Agreement, including the filing of resolutions pursuant to section 99(b)
agreeing to accept the exchange of property taxes provided for herein.
12. The provisions of this Agreement will determine the adjustments,
pursuant to section 99, resulting from annexations to CITY. It is under-
stood that any such determination will be subject to subsequent adjust-
ment, as provided by applicable statutes, in the event all or any portion
of the annexed territory is subsequently included in another jurisdic-
tional change.
13. This Agreement shall commence the date last executed below and
(continue in effect until terminated iri the following manner. Either
party may terminate this Agreement on at least six months' written notice
provided that this Agreement will continue to apply to any annexations
filed with the Local Agency Formation Commission prior to the date such .
notice is given.
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14. The terms "property tax revenues", "jurisdiction", and "juris-
dictional change" as used herein shall have the same meaning as contained
in section 95. The term "special district" shall have the same meaning
as contained in sections 2215 and 2216.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year dated below:
Signed and certified that a copy
of this document has been delivered
to the Chairman of the Board
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V JUNE ALEXANDER
Clerk of the Board of Supervisors
APPROVED AS TO FORM:
JADRIAN KUYPER, COUNTY COUNSEL
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Dated: 1�e
DATED: December 3, 1980
APPROVED AS TO FORM:
C y Attorney
COUNTY OF ORANGE, a political
subdivision of the State of
Calif or 'a
0�4,tBy
Chairman of its Board of
Supervisors
"COUNTY"
CITY OF SAN JUAN CAPISTRANO
-8- Cii`ry'rZLerIx C�
Annexation Title
EXHIBIT A
CITY Of SAN JUAN CAPISTRANO
Date Recorded Status
Mogan Annexation 11/17/78 Developed
Exhibit B
. ' Page 1 of 4
Illustration of Property Tax Redistribution Following a City Annexation
1. In fiscal year 1 the city exists entirely in tax rate area (TRA) 1-001. 2 TRA's
(88-001 and 88-002) represent the unincorporated area adjacent to the city and
are classified as undeveloped under paragraph 6.
2. During fiscal year 1 an annexation is completed prior to January lst so that it
is effective for the fiscal year 2 tax roll, creating TRA's 1-002 and 1-003 on
the fiscal year 2 tax roll. No other jurisdictional changes took place.
3. Growth in assessed value from fiscal year 1 to fiscal year 2 is 10% for the
geographic area represented by TRA 1-002 and 10% for the balance of 88-001.
Growth in assessed value from fiscal year 2 to fiscal year 3 is 110% for TRA 1-002.
4. The historical City -County ratio is .5 : .5.
5. Pertinent calculations in fiscal year 1:
1-001
City
County General Fund
All Special Districts
Schools
88-001
City
County General Fund
Special District A
Special District B
Schools
(services not assumed)
Rev. & Tax. Code Sec.
98(e) 97.5
factors amount
.16
.16 N/A
.08
.60
1.00
.00
$ -0-
.20
240
.05
60
.10
120
.65
780
1.00
$1,200
a. Special District A represents a Special District governed by the Board
of Supervisors whose service responsibilities are fully assumed by the
city due to the annexation.
Exhibit B
Page 2 of -4
b. The city did not exist in TRA 88-001 in fiscal year 1 and therefore
has no factors or amounts allocated to it.
6. A portion of TRA 88-001 representing 25% of the assessed value in year 1 will,
due to the city annexation, become TRA 1-002 in year 2. The pertinent calcula-
tions for fiscal year 1 would be as follows;
Balance of 88-001
City
98(e)
97.5
County General Fund
factors
amount
1-002
.05
45
City
.00
$ -0-
County General Fund
.20
60
Special District A
.05
15
Special District B
.10
30
Schools
.65
195
1.00
$ 300
Balance of 88-001
City
.00
$ -0-
County General Fund
.20
180
Special District A
.05
45
Special District B -
.10
90
Schools
.65
585
1.00
$900
1-002
City
County General Fund
Special District A
Special District B
Schools
88-001
City
County General Fund
Special District A
Special District B
Schools
Footnotes
Exhibit B
• Page 3 of 4
Auditor -Controller does sections 97, 97.5,
98 and 99 calculations
Fiscal Year 1
98(e) 97.5
factor amount
Fiscal Year 2
98(e)(1) 97(a)(2) 98(e)(3) (4)
factors amount amount Total
(1) Section 98(e) factors from the predecessor TRA are used for new TRA 1-002. The
County General Fund factor of .20 plus the Special District A factor of .05 equal
.25 which is split between City and County General Fund in the historical ratio
of .5 : .5.
(2) The section 97(a) amount is the section 97.5 amount of the prior year. The
section 97.5 amount for 1-002 was -0- in the prior year. The section 97.5 amount
for 88-001 was the entire fiscal year 1 amount for that TRA.
(3) For 1-002, because there was no prior year section 97.5 amount, the entire allo-
cation for all entities is made under section 98(e). For 88-001, because the
assessed value has decreased, the amount calculated under section 98(e) is
negative and reduces the section 97(a) amount to arrive at the total.
The portion of 88-001 which became 1-002 was $300 in year 1 x 10% increase = $330
in year 2.
The portion of 88-001 not annexed was $900 in year 1 x 10% increase = $990 in
year 2. Compared to $1,200 of year 1 results in $(210) for year 2.
(4) In TRA 1-002, City and County General Fund amounts after section 97(a) and
section 98(e) calculations were $41.25 each. Paragraph 7b provides the County
General Fund shall not receive less than the section 97.5 amount for the year
prior to the annexation (that is $60). Accordingly the City and County General
Fund amounts were adjusted.
.125
$
-0-
$ 41.25
$ 22.50
Did
not exist
.125
-0-
41.25
60.00
.00
-0-
-0-
-0-
.10
-0-
33.00
33.00
.65
-0-
214.50
214.50
1.00
$
-0-
$ 330.00
$330.00
.00
$ -0-
.00
$
-0-
$ -0-
$ -0-
.20
240
.20
240
(42.00)
198.00
.05
60
.05
60
(10.50)
49.50
.10
120
.10
120
(21.00)
99.00
.65
780
.65
780
(136.50)
643.50
1.00
$1,200
1.00
$1,200
$(210.00)
$990.00
(1) Section 98(e) factors from the predecessor TRA are used for new TRA 1-002. The
County General Fund factor of .20 plus the Special District A factor of .05 equal
.25 which is split between City and County General Fund in the historical ratio
of .5 : .5.
(2) The section 97(a) amount is the section 97.5 amount of the prior year. The
section 97.5 amount for 1-002 was -0- in the prior year. The section 97.5 amount
for 88-001 was the entire fiscal year 1 amount for that TRA.
(3) For 1-002, because there was no prior year section 97.5 amount, the entire allo-
cation for all entities is made under section 98(e). For 88-001, because the
assessed value has decreased, the amount calculated under section 98(e) is
negative and reduces the section 97(a) amount to arrive at the total.
The portion of 88-001 which became 1-002 was $300 in year 1 x 10% increase = $330
in year 2.
The portion of 88-001 not annexed was $900 in year 1 x 10% increase = $990 in
year 2. Compared to $1,200 of year 1 results in $(210) for year 2.
(4) In TRA 1-002, City and County General Fund amounts after section 97(a) and
section 98(e) calculations were $41.25 each. Paragraph 7b provides the County
General Fund shall not receive less than the section 97.5 amount for the year
prior to the annexation (that is $60). Accordingly the City and County General
Fund amounts were adjusted.
Ex:_ihi±
Pagc 4 Lf S
Auditor -Controller does sections 97, 97.5,
98 and 99 calculations
Footnotes
(1) 98(e) factors from prior year are used.
(2) The 97(a) amount is the 97.5 amount of the prior year before
the paragraph 7b adjustment. -
(3) Because County General Fund share under the historical ratio now exceeds
the amount guaranteed under paragraph 7b, no adjustment is necessary.
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Fiscal
Year 3
(3)
98(e)(1)
97(a)(2)
98(e)
factors
amount
amount
Total
1-002
City
.125
$ 41.25
$ 45.38
$ 86.63
County General Fund
.125
41.25
45.37
86.62
Special District A
.00
-0-
-0-
-0-
Special District B
.10
33.00
36.30
69.30
Schools
.65
214.50
235.95
450.Q5
1.00
$330.00
$363.00
$693.00
Footnotes
(1) 98(e) factors from prior year are used.
(2) The 97(a) amount is the 97.5 amount of the prior year before
the paragraph 7b adjustment. -
(3) Because County General Fund share under the historical ratio now exceeds
the amount guaranteed under paragraph 7b, no adjustment is necessary.
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RESOLUTION OF THE BOARD OF SUPERVISORS OF
ORANGE COUNTY, CALIFORNIA
December 23, 1980
On motion of Supervisor Anthony, duly seconded and carried, the
following Resolution was adopted:
BE IT RESOLVED that this Board hereby authorizes the Clerk of the
Board, on behalf of the Board of Supervisors, to execute the Master
Property Tax Transfer Agreement between the County of Orange and the City
of San Juan Capistrano;
BE IT FURTHER RESOLVED that the exchange of property tax revenues ford
the annexations listed in Exhibit A of the Master Property Tax Transfer
Agreement is in accordance with the terms of said Agreement; and
BE IT FURTHER RESOLVED that the Clerk of the Board is directed to
notify the Executive Officer of the Local Agency Formation Commission and
the Auditor -Controller of the Board's determination.
AYES: SUPERVISORS PHILIP L. ANTHONY, HARRIETT M. WIEDER, EDISON W.
MILLER, THOMAS F. RILEY AND RALPH -B. CLARK
NOES: SUPERVISORS NONE
ABSENT: SUPERVISORS NONE
STATE OF CALIFORNIA )
ss.
COUNTY OF ORANGE' )
I, JUNE ALEXANDER, Clerk of the Board of Supervisors of Orange County, California,
hereby certify that the above and foregoing Resolution was dpi and regularly adopted by
the said Board at a regular meeting thereof held on the .2`t '..day.:pf- 1lecember
19_8 o and passed by a unanimous vote of sai 1
IN WITNESS WHEREOF, I have hereunto set my handiand seal this 2,3rd'•:day of
December , 1980 ` =
\
Resolution No. 80-2092 Clerk o¢'the Board of SupXvisors of
AB 8 Master Property Tax M County--" M: .
Transfer Agreement - City tib
of San Juan Capistrano
To:
Mayors, Council Members
& City Managers
U llr /
Orange County Division / ,
League of California Cities
Memorandum
Date: January 29, 1991
From: Ronald Bates
President
Subject: County of Orange Action on
Master Property Tax Transfer
Agreements with Cities
The attached letter was sent to the Board of Supervisors and a representative of the Orange County
Division testified before the Board today on a proposal to terminate the Master Property Tax
Transfer Agreement between the County of Orange and the City of Anaheim. This agreement is
one of 27 identical agreements between the County and the cities that spell out the transfer of
property taxes in the event of annexations. The agreements were the result of nearly two years of
negotiations between the County and the cities in 1979 after passage of AB S.
Following testimony by the Division and the City of Anaheim, the Board deadlocked 2 to 2 and the
staff recommendation failed. However, the attached Agenda Item Transmittal from the County of
Orange indicates the issue will most likely surface again in the future when annexations are
proposed from other cities.
Division staff will be in contact with the County staff to detem-iine their intentions in relation to the
other 26 Master Property Tax Transfer Agreements and any further pending proposal to change the
County's position on them. If you have any questions, or care to discuss this item, please contact
me personally or Bill Hodge at the Division office.
attachments
-211/9
X 5�o-i 5✓
LF NGUE OF
C:ALIFOR.\LA,
CITIES
ANAHEIN7
BREA
BCEN:A PARK
COSTA %IESA
CYPRESS
DANA POINT
FOUNTAIN VALLEY
FU'LLERTON
C,ARDEN GROVE
HGNTINGTON BEACH
IRVINE
LAGUNA BEACH
LACUNA NIGUEL
LA, HABRA
L1 PALMA
LOS ALAMITOS
N7ISSION VIF.JO
NE.'WPORT BEACH
ORANGE
PI,ACENTIA
SAN CLENIESTE
SAN JUAN CAPISTRANO
SANTA ANA
SEAT. BEACH
STANTON
TL STIN
VILLA PARK
VESTNIINSTER
VORBA LINDA
ks'. GE COUNTY DIVISI0
('000'E� 75:ANl'AANAIMU1,FVA11I), SI ITE nn. �ASL1%N �. I: ALIFIMNI
'rELE111IONF:: 17111'17':-0077 F. -\V 71 h 053.160
January 29, 1991
Supervisor Gaddi Vasquez, Chairman
Orange County Board of Supervisors
10 Civic Center Plaza
Santa Ana, CA 92701
SUBJECT: Master Property Tax Agreement with Anaheim (Agenda Item S50F)
Dear Chairman Vasquez:
Several times over the past few months, Orange County cities have indicated an
interest and willingness to work with the County on fiscal issues that affect the
viability of local government. We recognize that our fortunes are more intertwined
than ever given the state's awkward fiscal condition and the move toward tapping
local revenues through new fee authority to pay for state -mandated programs.
Cities have consistently expressed an interest in working with the County, which
you acknowledged in your speech when you became Chairman of the Board.
Now, when we have yet to hear from the County, a proposal surfaces off the
regular agenda that indicates the County staff is seeking your approval to undue
Master Property Tax Agreements that cities and the County literally spent years
negotiating. The item before you today comes with absolutely no discussion or
indication from County staff that such a proposal was even in the works. This
issue is far too significant for both cities and the County to have it sail past your
Board with barely a cursory review.
The Orange County Division believes this issue should be discussed and explored
before the Board takes action to approve the recommendation before you today.
This Master Agreement was the result of a nearly two-year process of negotiations
in the wake of AB 8 and has stood the test of time as a viable agreement for both
cities and the County. The agenda item clearly conveys the staff s intent to
terminate the Master Property Tax Agreement as it applies to cities across the
County.
PRESIDENT. It„nxbl B.,-. C: n.11 M.mber, Ins Alann mn FIRST VICE PRESIPENT. S.IIy Ann. Shendan, Me—r, Lvin.
SECOND NICE: PRESIDENT: S,nn D,.hl, %, 11ry Tem. Sm CI ... nle; RAST PRESIDENT: 1'mnrin MrGuip.n, C —il M.mb.r, Snnl. An.
511711: U.Alit I. DIRECTOR_ I—l", I].0, C- d M.mb.r, N.wp.n Ilnrh; RESO A-11ONS CONIMI1TEE C.IIAIR: Rhmul. flrl:un., P.nunal Wn.b.c I0n... P.,4
EXECUTIVE DIRECTOR, Rllhwn E. Ih,ly.
• • Page 2
Supervisor Gaddi Vasquez
January 29, 1991
We hope the Board will seize this opportunity to take a major step toward working
together with cities as local governments so that we can all better understand how
we can create a revenue system that will guarantee local governments --both cities
and counties --strong fiscal autonomy in the future. Thank you for your
consideration.
Sincerely,
Ronald Bates, President
Orange County Division
cc: Board Members
Orange County Cities
a
AGENDA ITEM TRARSMITTAL
AGENCY DEPTSt
CLERK USE ONLY
CAO REVIEW
CONSENT 7 YES
I—XI Concur
J CJ J
1
- NO
Do Not Concur
Exempt
TO: BOARD OF SUPERVISORS COUNTY OF ORANGE
CQffit'�JYTIff{Je?MATION
$34-3727
FROM: County Administrative Office
Nancy Liao
834-5969
MEETING DATE
SUBJECT
SUPV DIST.
January 29, 1991
MASTER PROPERTY TAX AGREEMENT WITH ANAHEIM
3 & 4
SUMMARY OF REQUEST (Description for agenda)
County Administrative Office requests the Board of Supervisors to terminate the
Master
Property Tax Agreement with the City of Anaheim.
IIS
ADDITIONAL DATA:
Proposition 13, adopted by the voters in June 1978, limited the total amount of
ad valorem j
property tax which may be collected by all local taxing agencies combined to 1%
of market
value (plus debt service).
i
(Continued)
i
PREVIOUS RELEVANT BOARD ACTIONS ON THIS SPECIFIC ITEM:
j N/A
FUNDING SOURCE(S)
CURRENT YEAR COST
ANNUAL COST
BUDGETED?
Lj YES L NO
N/A
N/A
N/A
N/A
WILL PROPOSAL REQUIRE ADDITIONAL PERSONNEL?
CONSISTENT WITH BOARD POLICY?
XNO PERMANENT
El
IF YES, STATE NUMBER _ _ LIMITED TERM
YES NEW ITEM
OR EXCEPTION
RECOMMENDED ACTION
1. Terminate the Master Property Tax Agreement with the City of Anaheim.
2. Direct the County Administrative Officer to notify the City of this action
in writing.
CONCURRENCES (If applicable)
ATTACHMENTS
Eileen T. Walsh WE Ernie Schne"tWDEPARTNEN, ADTNOR D REPRESENTATIVE
Director, Public Finance & Advocacy County Administrative Officer
owi cexi,w., R. os
AIT - MASTER PROPERTY TAX AGREEMENT WITH ANAHEIM
Page 2
Additional Data: (Continued)
Assembly Bill 8, enacted as an urgency measure on July 24, 1979, established
a long-term formula for allocating the 1% property tax among local taxing
agencies.
When a jurisdictional change (city incorporation, district formation,
annexation, etc.) is proposed, AB 8 requires that a determination be made as
to how much property tax, if any, should be exchanged among local agencies
whose service areas or service responsibilities will be affected.
In the event of a city incorporation or certain district formations, the
Local Agency Formation Commission (LAFCo) makes this determination based on
a formula contained in the Government Code.
When jurisdictional changes other than city incorporations and district
formations are proposed, however, those agencies whose service areas or
service responsibilities will be altered are required to determine the
amount of property tax to be exchanged between them. This means that in the
case of a city annexing county property, the city and county must negotiate
to determine how much of the property tax will go to the city, and how much
will remain with the county. In order to facilitate this process, AB 8
allowed local jurisdictions to sign "master property tax agreements" that
would automatically make this determination.
Acting on that permission, the County of Orange and the Orange County
Chapter of the League of Cities reached accord on language for a master
property tax agreement in 1980. Essentially, the language provided as
follows:
1. In annexations under 100 acres that are determined to be "developed",
the property tax would be split based upon the historic ratio between
the city and county, i.e., the split that existed as of 1979.
2. In annexations under 100 acres that are determined to be "undeveloped"
the county would retain the base property tax it received in the prior
fiscal year. The city would receive any incremental increase until
such time as the historic ratio was achieved.
3. Annexations over 100 acres that are determined to be "developed" would
not be covered by the master agreement and would have to be separately
negotiated.
4. In annexations over 100 acres that are determined to be "undeveloped",
the "undeveloped" provisions in #2 above would •apply unless both
parties mutually agreed to suspend the master agreement and negotiate a
separate one.
0
AIT - MASTER PROPERTY TAX AGREEMENT WITH ANAHEIM
Page 3
Additional Data: (Continued)
0
The master agreement language contained definitions of "developed" and
"undeveloped", and provided that if the City Manager and County
Administrative Officer could not concur on which of those definitions
applied to proposed annexations, greater than 100 acres, the LAFCo Executive
Director would make the determination. The agreement also provided that the
agreement could be terminated by either city or county upon written notice.
The County signed agreements with all twenty-six cities that incorporated
all of the above terms. The only difference among the twenty-six agreements
was the specific city/county historic ratio that would apply. Of the recent
incorporations, only Laguna Niguel has entered into a similar agreement with
the County.
When the master property tax agreement was negotiated in 1980, Orange County
was in a very different fiscal situation than it is today. A large portion
of the county was still unincorporated, federal revenue sharing still
existed, and the state had not yet begun its "shift" of unfunded mandates to
the counties. Given that state of affairs, having an "automatic" way of
handling proposed annexations seemed a proper and efficient way to proceed.
Unfortunately, since that time much has changed. The County's
unincorporated area has dwindled, resulting in revenue losses that far
outweigh the reduction in service costs. Revenue sharing is gone, and the
State, in an effort to balance its own budget, has shifted costs to the
counties. Now some annexations are becoming detrimental financially to the
County.
In general, the distinction between "developed" and "undeveloped" areas as
contained in the master agreement is an appropriate one. Immediate fiscal
impacts on the County would most likely occur due to annexation of developed
areas generating large amounts of property tax, sales tax, and other
revenues -- while planning issues would be of greater concern in annexations
of large undeveloped areas. However, it, should be noted that annexation of
undeveloped areas may also have future fiscal impacts on the County if the
area in question is planned to contain significant revenue -generating land
uses. Each proposal therefore needs to be analyzed individually to
determine the nature and magnitude of both fiscal and non -fiscal impacts.
For the most part over the last ten years, city annexations have been
small --often county "islands" and under 100 acres. Under those conditions,
the property tax agreements have served the County's interests. In the
immediate future, however, the County is facing large annexations that could
have a significantly detrimental effect on the County's ability to conduct
its business. Under the terms of the master property,.tax agreement, if
these areas are determined to be "undeveloped" the property tax shift
associated with these annexations would be "automatically" determined unless
both parties agree to suspend the agreement.
AIT - MASTER PROPERTY TAX AGREEMENT WITH ANAHEIM
Page 4
Additional Data: (Continued)
Unfortunately there is little incentive for the city to agree to such a
suspension, leaving the County with no further options if a city declines.
For these reasons, staff recommends termination of the master property tax
agreements in certain circumstances which are in the best interest of the
County. Under these circumstances, the city and county must negotiate the
property tax exchange before the annexation can proceed. This allows the
County to bring all of the critical issues to the table prior to approving a
property tax exchange agreement.
One of these potential annexation requests is imminent: the proposed
annexation of Mountain Park Specific Plan by Anaheim. The proposed project
of 1546.5 acres includes 7,966 dwelling units as well as neighborhood
commercial land uses. The existing Master Property Tax Agreement could
eliminate the County's flexibility to negotiate a more equitable tax revenue
split with the City. Under its terms, if the property is determined to be
"undeveloped" the potential property tax exchange resulting from the
annexation would proceed in the same fashion as with an empty lot in the
middle of town. While the Mountain Park Specific Plan property does not
appear to fit the Master Property Tax Agreement's definition of
"undeveloped", in view of the additional proposed development, staff finds
that application of the master property tax agreement in this case is wholly
inappropriate regardless of how the Mountain Park Specific Plan property is
defined. Staff therefore recommends that your Board terminate the agreement
to allow for negotiations to proceed with Anaheim for this and any future
annexations.
Termination of the Anaheim Master Property Tax Agreement will allow the
County to establish the best possible fiscal position in the event this
annexation proceeds, and at the same time continue the efforts to maintain
the land use compatability of regional infrastructure planned for the area.
Consistent with our earlier correspondence and direction given by your Board
at the December 5, 1990 incorporation hearings, staff will analyze and
recommend similar re-evaluation of the Master Property Tax Agreement, as
appropriate, regarding any future major annexations to other cities.
keefe/a12280
0 0
f�\ R. E. THOMAS
Z �CC�ODUNTY ADMINISTRATIVE OFFICER
NTY OF [ EGEIV WWIVIIC CENTER PLAZA
L OF ON
2 I '7 i+ Vw y+SYy■A�INV`IT A'�ryMA{N A,CALIFORNIA 92701
Z"� JAN .8 9 jWRVF'6VDE:]834-2345
s 3 M^NCaE
CITY OF
SAN JUAN AB2-A6
�I'°vG
COUNTY ADMINISTRATIVE OFFIC�FAPiSTRt
December 31, 1980
Ms. Mary Ann Hanover
City of San Juan Capistrano
32400 Paseo Adelanto
San Juan Capistrano, California 92675
Dear Ms. Hanover:
Enclosed please find a signed copy of the Master Property
Tax Transfer Agreement approved by the Board of Supervisors
and a copy of the Board resolution whereby the County agrees
to accept the exchange of property tax revenues in accordance
with the terms of the Agreement.
Thank you very much for your assistance and cooperation in
this matter.
Ve�rryy; truly yours, George A. Rebella
Staff Analyst
kg
Enclosure
32400 PASEO ADELANTO
SAN JUAN CAPISTRANO. CALIFORNIA 92675
PHONE 493-1171
December 10, 1980
Mr. Richard Kelly
County Administration Office
10 Civic Center Plaza
Santa Ana, California 92701
Re: Property Tax Allocation Agreement
Dear Mr. Kelly:
Enclosed are two copies of the Master Property Tax
Transfer Agreement between the County and City, which was
approved by the City Council at their meeting of December 3, 1980.
Following approval by the Board of Supervisors, it
would be appreciated if you would forward a fully executed copy
of the Agreement to this office.
For your information, a Resoltuion accepting the
Property Tax Revenue Exchange for the Mogan Annexation is
scheduled for our City Council Meeting of December 10th.
Very truly yours,
MARY ANN NOVER, CMC
City Clerk
MAH:jm
Enclosures
cc: LAFCO
Director of Administrative Services
0 0
AGENDA ITEM December 3, 1980
TO: James S. Mocalis, City Manager
FROM: E. Phillip Hale, Assistant City Manager/
Director of Administrative Services
SUBJECT: Property Tax Allocation Agreement - Mogan Annexation
STTTTATTnm-
A special provision of Assembly Bill 8 adopted by the State
Legislature on July 24, 1979 directs that City annexations cannot
become final until the City and County agree on a method of
sharing the property tax revenue derived from an annexed area.
Accordingly, attached is an agreement between the City and
the County of Orange for allocating property tax revenue for the
Mogan Annexation which was approved by the City Council and re-
corded on September 14, 1978.
FINANCIAL CONSIDERATIONS:
The redistribution of property taxes as the result of the
Mogan Annexation, will be determined by the County Assessor
pursuant to the State Revenue and Taxation Code.
ALTERNATE ACTIONS:
1. Approve the attached Master Property Tax Agreement
and authorize its execution by the Mayor.
2. Delay approval of the Master Property Tax Agreement
pending further study.
RECOMMENDATION:
1. Approve the Master Property Tax Agreement and authorize
its execution by the Mayor and City Clerk.
Respectfully submitted,
E. Phillip 4ale
EPH:ol
H-1
attachment
FOR CITY COUNCILAGENDA ..
E,
U NTY Chi= Rr_CEIVE.D
3 / RANCaL
CIT, 1,C17
SA.N ,!U,'•N
COUNTY ADMINISTW(VEU-IMICN,j
October 27, 1980
TO: City Managers of Orange County
SUBJECT: Property Tax Allocation Agreement
R. E. THOMAS
COUNTY ADMINISTRATIVE OFFICER
HALL OF ADMINISTRATION
10 CIVIC CENTER PLAZA
SANTA ANA. CALIFORNIA 92701
TELEPHONE: 834-2345
AREA CODE 714
00-A16
Attached are two copies of the proposed agreement for allocating property
tax revenues after new municipal annexations. Also attached is a copy of
the transmittal letter from Ralph B. Clark to the Board of Supervisors, and
a list for your city of pending or completed annexations subject to negotiation.
The determination as to whether your pending or completed annexations are
"developed" or "undeveloped" as defined in the proposed agreement should be
made prior to submitting the agreement to your Council for approval. In
order to expedite this matter, please forward to the attention of Richard
Kelly of my staff your determination of the status of each annexation.
Following a brief review, we will contact you regarding the content of
"Exhibit A" to be included with the submittal of the proposed agreement to
your Council.
Following Council action, please forward two signed copies to Mr. Kelly for
placing on the agenda of the Board of Supervisors.
Hopefully, the process described above will help expedite this important
matter to an early and equitable conclusion.
Sincerely,i
Pf/ /
R.boma�-�`
County Administrative Officer
RHK:sg
Attachments
cc: Chairman of the Board