City of Lathrop
Property Tax Sharing Agreements with the
County of San Joaquin
APRIL 14, 2025
ITEM #5.1
Background
❑Since incorporation the City has entered into several tax sharing agreements with the County of San Joaquin (“County”) for the purpose of determining how property tax revenue will be divided after property is annexed into the City. Under the terms of the initial agreement, property tax revenues were split 90%-County/10%-City.
❑In 2016, the City and County entered into the current Master Tax Sharing Agreement, which expires on July 31, 2029. Staff proposes an extension to July 31, 2035.
❑In July 2024, City staff made a request to the County to meet and explore amending the current property tax sharing agreements. After analysis and negotiation meetings, the County Administrator and City Manager agreed to propose amendments to the County Board of Supervisors and the City Council.
Reason for Recommendation
❑The revised tax ratio will more equitably distribute property tax revenues between the City and the County based on service responsibility. The proposed agreements allow property tax revenue allocations to be split relative to the assignment of service responsibilities that come with annexations into the City. Without revision of the agreements, the City would be allocated service responsibilities without a corresponding allocation of revenues to pay for the services, in turn, homeowners and property owners would pay the price. Staff recommends the City Council authorize the proposed agreements and addendums.
Tax Rate Area 102-044
Singh Petroleum Example
0.0000%
5.0000%
10.0000%
15.0000%
20.0000%
25.0000%
30.0000%
35.0000%
Tax Rate Area Current Annexation
Singh Petroleum Example
90/10 SPLIT
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
60/40 SPLIT
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Effect on Revenue
❑For every $1,000,000 in valuation
❑Prior to Annexation
❑$1,000,000 X 1% Property Tax Rate = $10,000 Annual Split Amongst TRA Agencies
❑City Receives $0
❑Current 90/10 Split
❑$1,000,000 X 1% Property Tax Rate = $10,000 Annual Split Amongst TRA Agencies
❑City Receives $241.41
❑Proposed 60/40 Split
❑$1,000,000 X 1% Property Tax Rate = $10,000 Annual Split Amongst TRA Agencies
❑City Receives $965.63
Fiscal Impact
❑The proposed ratios will revise the formula within the tax rate area for incremental growth from either a 90%-County/10%-City tax or 80%- County/20%-City split to the proposed 60%-County/40%-City split. While this agreement has no immediate effect on property tax revenue received, it will allow more future property tax revenue collected to come to the City to pay for corresponding City services.
❑As a result of these addendums and agreements, the City will collect more than previously anticipated from future development of the designated areas, while homeowners and property owners will see no impact on their property tax bills.
Council Actions
Staff recommends the City Council:
❑Amend Property Tax Agreement (A-12-472) (Attachment F) to extend its term for an additional six (6) years, up to and including July 31, 2035, confirm the property tax allocation for Annexation Property Tax Base to remain 90%- County/10%-City and amend allocation of all Incremental Growth to an allocation of 60%-County/40%-City.
❑Add an addendum to Tax Allocation Agreement (A-23-6) (Attachment G) to add tax rate area (TRA) 007-089 to the list of TRAs included in Agreement (A23-6). ❑Add an addendum to Tax Allocation Agreement (A-96-341) (Attachment H) retaining the allocation of property tax for the West Lathrop Specific Plan Area and to remove specific TRA’s, since these are included in other tax allocation agreements pursuant to other amendments that accompany this report. ❑Approve a Tax Revenue Allocation Agreement (Attachment I) for the allocation of property tax for the North Central Lathrop Area.
❑Approve a Tax Allocation Agreement (Attachment J) for the allocation of property tax for the Singh Petroleum Area.