City of Gonzales
COMMUNITY DEVELOPMENT DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: August 7, 2023
FROM: Taven Kinison Brown, Community Development Director THROUGH: Carmen Gil, City Manager
SUBJECT: Gloria Road Agricultural Cooler Annexation Property Tax Transfer Agreement
RECOMMENDATION
It is recommended that the Gonzales City Council take the following actions:
• Receive the staff report;
• Consider and Adopt Resolution 2023-56 “A Resolution of the City Council of the City of Gonzales Approving A Property Tax Transfer for the Proposed Gloria Road Agricultural Cooler Reorganization Involving Annexation of 48.97 acres to the City of Gonzales and Detachment from the Monterey County Resource Conservation District and Gonzales Rural Fire Protection District”
BACKGROUND
On May 15, 2023, the City Council approved multiple actions to approve the Gloria Road Agricultural Cooler project and authorize the submittal of an application to the Local Agency Formation Commission (LAFCO) of Monterey County to consider the annexation of the proposed 48.97-acre project into the City of Gonzales and detachments from the Monterey County Resource Conservation District and Gonzales Rural Fire Protection District. The project is officially in an incomplete status because the proposal cannot be considered by LAFCO until a property tax transfer agreement with Monterey County has been approved by both the City and the County.
On Tuesday, July 25, 2023, the Monterey County Board of Supervisors approved the property tax transfer for the proposed “Gloria Road Agricultural Reorganization” by Resolution No: 23-__ (Still un-numbered AGENDA
ITEM
7 as of 08/01/2023). Approval by the Gonzales City Council is required to deem the application complete and proceed to a public hearing to likely take place in September 2023.
REVIEW AND ANALYSIS
The proposed annexation will result in the addition of 48.97 acres to the City of Gonzales. By law, the County and City are required to agree to a new tax transfer agreement for the property to be annexed to the City prior to the time that said reorganization is considered by LAFCO.
The Monterey County Board of Supervisors has approved the use of a “pro forma fair share tax transfer resolution” applicable to such reorganizations and is basically unwilling to deviate from the same. As such, the formula presented for Council consideration and approval is the same formula used in past annexations and by other cities since 1980. While there have been many conversations about amending the formula, no formal effort has been made to negotiate changes to the over-40-year-old formula. Such an effort is likely to take a significant amount of time and be a fairly complex negotiation process.
The established tax transfer formula as set forth in the resolution provides that the County and affected agencies will transfer a percentage of their “tax base revenue” based on the pro rata share of the City’s equivalent tax rate to the combined City/County equivalent tax rates. The formula also includes adjustments to accommodate State mandated shifts of County and City revenues to the Education Revenue Augmentation Fund (ERAF).
How the Recommendation Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Annexation and construction of the Cooler project will provide additional employment opportunities, promote a sustainable agricultural industry while creating a southern agricultural edge for the city to ensure that it keeps its small-town character.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment, and resources necessary to provide excellent services that enhance the quality of life of our diverse community.
Explain: The development of a strong industrial base will positively support the City’s General Fund on an annual basis, ensuring that the City can improve the quality-of-life services that are provided to the community.
City services will be delivered in a cost-effective, respectful and friendly manner to ensure the safety and well-being of the residents and the promotion of business, recreational, housing and employment opportunities in an environmentally sustainable manner.
Explain: See above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes No N/A
• Housing X Yes No N/A
• Recreation X Yes No N/A
• Environment X Yes No N/A
• Education X Yes No N/A
Explain: See Vision explanation above.
ALTERNATIVES
Alternatively, the City Council may choose not to adopt the proposed resolution. Should the City wish to renegotiate the 40-year-old tax sharing formula with the County of Monterey, this would result in significant delay to the Cooler and Annexation proposals moving through LAFCo. This action to delay would be counter to the applicant’s aggressive timing needs and coordination with growers and crop rotations and the utility of the new cooler investment in the community.
BUDGET IMPACT
According to the report completed by Willdan Financial Services related to the Rianda cooler project, it is projected that the City will receive $72,664 in annual revenue with $46,146 in expenses, resulting in a surplus of $26,518 per year. Additionally, the City would receive one-time revenues associated with permit fees and an anticipated $4,507,251 in one-time development impact fees (adjusted for any credits for identified improvements constructed by the applicant) upon full build-out of the project to offset the capital construction costs to accommodate future growth in the City of Gonzales.
CONCLUSION
Staff recommends approval of Resolution 2023-56 “A Resolution of the City Council of the City of Gonzales Approving A Property Tax Transfer for the Proposed Gloria Road Agricultural Cooler Reorganization Involving Annexation of 48.97 acres to the City of Gonzales and Detachment from the Monterey County Resource Conservation District and Gonzales Rural Fire Protection District”. Staff also supports greater conversations in partnership with the other Salinas Valley cities about working together with Monterey County to have meaningful discussions and amendments to the Tax Transfer Agreement Formula to reflect the many changes and challenges in local government administration that have occurred over the last 45 years since the passage of Proposition 13 in California.
Attachments:
1. Resolution No. 2023-56
2. Monterey County Approved Resolution for Tax Transfer (Pending Signature)