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