ADMINISTRATIVE REPORT
MEETING DATE: October 22, 2025 AGENDA CATEGORY: Consent - Agreements TO: Honorable Mayor and City Council
FROM: Christian Clegg, City Manager
DATE: October 7, 2025
SUBJECT: Letter Agreement with County of Kern
(Extending term of the Master Tax Sharing Agreement No. 15-277 to May 4, 2027) for transfer of tax revenues upon annexation.
RECOMMENDATION:
Staff recommends approval of the letter agreement and extension.
BACKGROUND:
California Revenue and Taxation Code require cities and counties to agree on how specific revenues from taxes will be split or shared upon annexation of land into the City’s jurisdiction. State law further allows a county and a city to develop and adopt a master tax sharing agreement to comply with the requirement.
A master tax agreement provides the city, county and property owners with certain assurances that the annexation process will move forward expeditiously, while providing for a fair and equitable tax sharing arrangement that allows both jurisdictions to provide services to the property upon annexation. Absent a master tax agreement, the city and county would be required to individually negotiate a tax sharing agreement for each proposed annexation. When comparing these options, a master tax sharing agreement is generally viewed as being the most efficient means by which to comply with state law.
The City and the County of Kern have utilized a master tax sharing agreement to determine revenue sharing for most annexations that have occurred since 1995. In 2012, a disagreement arose between the City and County regarding allocations of certain revenues outlined within the tax sharing agreement in place at that time. An out -of-court settlement resulted in a master tax sharing agreement which was initially approved in 2015, and extended by mutual agreement for an additional five -year term in 2020 (Agreement No. 15 -277(1)/Kern County Agreement No. 830 -2015). The current master tax sharing agreement is set to expire on November 4, 2025.
Staff from the City Manager’s Office and County Administrative Office recently determined that it is in the best interest of all parties, including future property owners wishing to annex into the City, to extend the current master tax agreement for a period of eighteen (18) months. As proposed, no changes to the existing fiscal arrangement would occur and the proposed extension simply extends the agreement to May 4, 2027.
Upon conclusion of the extension term, a new master tax sharing agreement or other arrangement will be required to facilitate tax sharing for future annexations.
FISCAL IMPACT:
The master tax sharing agreement will continue to provide the city with approximately $10.70 per $100 of property tax revenue al located to local taxing entities under Proposition 13 for areas annexed under this agreement. The agreement also allocates ten (10) percent of its sales and use tax revenue. This sharing of sales and use tax applies only to the Bradley Burns sales tax rev enue and does not apply to the Bakersfield Public Safety and Vital Services Measure (Measure N) funds.
COUNCIL GOAL:
Innovative and Efficient City Government
ATTACHMENTS:
Letter Agreement Extension to Agreement No. 15-277(1)