Glossary of Terms
Accrual - Revenues earned or expenses incurred which impact the City’s net income, but in which cash related to the transaction has not yet changed hands.
Appropriated - Money set aside by formal action for a specific use Box Culvert – Drainage feature to facilitate moving storm water runoff Capital Development/Project – A long-term development or project that is meant to expand, maintain, or improve upon facility and infrastructure owned by the City.
Capital Improvement - The addition of a permanent structural change or the restoration of some aspect of a property that will either enhance the property's overall value, prolongs its useful life, or adapt it to new uses.
Chip Seal - A two-step process which includes first an application of asphalt emulsion and then a layer of crushed rock to an existing asphalt pavement surface. A chip seal gets its name from the “chips” or small crushed rock placed on the surface.
Easement – A right to cross or otherwise use someone else's land for a specified purpose. The easement can include surface, subsurface use, above the surface as in the case of utility lines, or a combination thereof.
Federal Fiscal Year – see below for definition of fiscal year. The Federal Fiscal year begins October 1st of each year and ends September 30th.
Fiscal Year – The 12-month period used by the City and State for the purposes of tracking the City’s revenues and expenses, it begins on July 1st of each year and ends on June 30th of the following year.
Overlay – The process of placing a layer of asphalt concrete over an existing pavement structure.
This is different than a total replacement or reconstruction of the pavement structural section and is typically done when there is only minor to modest damage to the existing pavement substructure.
Private Development/Project – Any new construction or addition to an existing development or building on private property, whether residential or commercial, not owned by the City.
Projection - An estimate or forecast of a future funds based on a study of present information.
Reclamite – An emulsion of specific petroleum oils and resin designed to be sprayed on to a road surface, the emulsion penetrates the road surface and strengthens the bond and extends its useable life.
Right-of-Way - A type of easement that permits travel through someone else’s land to get somewhere else. It can be offered to one person, several people, or the public.
Road, Arterial – A high-capacity urban road that sits below freeways/motorways on the road hierarchy in terms of traffic flow and speed.
Road, Collector – A low-to-moderate-capacity road which serves to move traffic from local streets to arterial roads, generally to provide access to residential properties.
Scope – A detailed outline of all aspects of a project, including all related activities, resources, timelines, and deliverables, and identifies key stakeholders.
Utility Undergrounding – The process of moving existing above-grand utilities to below ground level.
REPORT TO CITY COUNCIL
Approved by: Council Meeting of: June 16, 2022
_________________________________ Agenda Number: ___________ Arnoldo Rodriguez, City Manager
SUBJECT:
Request for approval of a 6-month Tax Sharing Agreement (Agreement) between the City of Madera and the County of Madera specifically for the Villages at Almond Grove Annexation.
RECOMMENDATION:
Approve a resolution approving a 6-month agreement for the Villages at Almond Grove Annexation.
SUMMARY:
Historically, the City and County have entered into multi-year a tax sharing agreement (MTSA) to streamline compliance with the annexation requirements found in State law and to address various other issues as desired by both parties. The previous agreement expired on June 6, 2022. Since the MTSA has expired, the City and County must prepare an agreement for each individual annexation.
Thus, the City of Madera is seeking to approve a 6-month Tax Sharing Agreement (Agreement) between the City of Madera and the County of Madera for the Villages at Almond Grove Annexation in order to allow this project to proceed.
The property owners of the property depicted on Exhibit “B” of Attachment 2 seek to have approximately 1843 acres annexed into the City of Madera and an application for such annexation has been filed with the Madera County Local Agency Formation Commission (LAFCO). LAFCO has named the proposed annexation as the “Villages at Almond Grove-Annexation 2022-001” (Villages at Almond Grove Annexation).
DISCUSSION:
The State laws that govern the annexation of property require that there be an agreement between a city and county regarding the disposition of property taxes generated by the affected properties.
This agreement may be reached on a project-by-project basis, even though many cities and counties prefer to enterinto "master tax sharing agreements" in order to streamline annexation proceedings.
Although the State's requirement is to identify how property taxes will be allocated, the parties to a Tax Sharing Agreement may include any issues which they believe are pertinent. Issues that have B-1
commonly been addressed in the past include sales tax sharing, development project referrals, jail booking fees, etc.
Key provisions of the proposed Agreement and related resolution include the following:
Agreement is for a term of 6 months, expiring on December 31, 2022. The terms of the Agreement, in regards to the exchange tax property tax revenues, are the same as the MTSA that expired on June 6, 2022.
The County retains the base property tax revenue, which is property tax amount allocated to that jurisdiction in the fiscal year immediately preceding the tax year in which the annexation occurs, and the annual increment is shared with the City receiving one-half (½) of the increment and the County receiving one-half (½) of the increment. The Agreement and all of the covenants and conditions set forth in the Agreement may be modified or amended only by a writing duly authorized and executed by the parties. Minor changes of technical or clerical nature that are in substantial conformance with the intent of the Agreement may be made subject to review and approval by the City Manager.
If this Agreement is not approved, the City will be unable to annex the property included in the Villages at Almond Grove Annexation into the City limits and the proposed development could not proceed.
It is noted that the County Board of Supervisors will also consider this Tax Sharing Agreement.
FINANCIAL IMPACT:
There are no additional financial impacts from the approval of this tax sharing agreement with the County.
CONSISTENCY WITH THE VISION MADERA 2025 PLAN:
The recommended action supports the Well Planned Community Vision Statement. "Sound planning helps Madera celebrate its past, balance its present with available resources and infrastructure and anticipate its future with coordinated planning and interagency cooperation guided by a shared vision."
ALTERNATIVES:
The Council may elect to not to approve the 6-month Tax Sharing Agreement between the City of Madera and the County of Madera specifically for the Villages at Almond Grove Annexation.
ATTACHMENTS:
1. Resolution
2. Proposed Tax Sharing Agreement between the City of Madera and the County of Madera for the Villages at Almond Grove Annexation
RESOLUTION NO. ____________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MADERA, CALIFORNIA, APPROVING A 6-MONTH TAX SHARING AGREEMENT
BETWEEN THE CITY OF MADERA AND THE COUNTY OF MADERA FOR THE
VILLAGES AT ALMOND GROVE ANNEXATION
WHEREAS, the Master Tax Sharing Agreement (MTSA) between the City of Madera and the County of Madera expired on June 6, 2022; and
WHEREAS, since the MTSA has expired, the City and County must prepare an agreement for each individual annexation; and
WHEREAS, the City of Madera is seeking to approve a 6-month Tax Sharing Agreement (Agreement) between the City of Madera and the County of Madera specifically for the Villages at Almond Grove Annexation.
NOW, THEREFORE, THE COUNCIL OF THE CITY OF MADERA hereby resolves, finds, determines and orders as follows:
1. The above recitals are true and correct.
2. The Council approves the Tax Sharing Agreement for the Village at Almond Grove Annexation between the City of Madera and the County of Madera for a six-month term through December 31, 2022. The Mayor is authorized to execute the Agreement as reviewed by the City Manager and approved as to form by the City Attorney.
3. Minor changes of technical or clerical nature that are in substantial conformance with the intent of the Agreement may be made subject to review and approval by the City Manager.
This resolution is effective immediately upon adoption. * * * * * * *
MADERA COUNTY CONTRACT NO. _________________
(Tax Sharing Agreement Under Revenue and Taxation
Code Section 99: Villages at Almond Grove Annexation)
THIS TAX SHARING AGREEMENT is made and entered into this ____ day of _________________, 2022 by and between the CITY OF MADERA (“CITY”) and the COUNTY OF MADERA (“COUNTY”), and is subject to the following terms:
RECITALS
A. The parties previously executed a Tax Sharing Agreement (“the Previous Tax Sharing Agreement”) on June 6, 2017, and that Agreement was extended several times and finally expired on June 6, 2022 (also known as Madera County Contract No. 10896-C-2017). The Previous Tax Sharing Agreement addressed tax sharing (both property tax and sales tax), land use planning, police protection, public library and related matters in which the parties had a mutual interest.
B. The property owners of property identified on Exhibit “A” and depicted on Exhibit “B” seek to have approximately 1843 acres annexed into the City of Madera and an application for such annexation has been filed with the Madera County Local Agency Formation Commission(“LAFCO”). LAFCO has named the proposed annexation as the “Villages at Almond Grove-Annexation 2022-001” (hereafter the “Villages at Almond Grove Annexation”).
C. On May 4, 2022, the City Council of the CITY adopted its Resolution 22-60, supporting the Villages at Almond Grove Annexation.
D. The COUNTY is prepared to assert no opposition to the proposed Villages at Almond Grove Annexation, subject to the terms of this Agreement. //
E. COUNTY recognizes the need for orderly growth within and adjacent to CITY and for supporting appropriate annexations and promoting the concentration of development within the CITY.
F. The parties agree that this Agreement is intended as a property tax exchange Agreement applicable only to the property and tax rate areas encompassed within the Villages at Almond Grove Annexation, as shown on Exhibits “A,” and “B” for purposes of Revenue and Taxation Code Section 99.
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. The Recitals are true and correct.
2. DEFINITIONS. Unless the particular provision or context otherwise requires, the definitions contained in this section and in the Revenue and Taxation Code shall govern the construction, meaning, and application of words used in this Agreement. a. “Base property tax revenues” means Property tax revenues allocated by tax rate equivalents to all taxing jurisdictions as to the geographic area comprising a given tax rate area annexed in the fiscal year immediately preceding the tax year in which Property tax revenues are apportioned pursuant to this Agreement, including the amount of State reimbursement for the homeowners’ and business inventory exemptions.
b. “Property tax increment” means that portion of the levied taxes in excess of the amount specified in Section 2.a., above, attributable to the Villages at Almond Grove Annexation tax rate areas, described in Section 3.b.
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c. “Property tax revenue” means base Property tax revenue, plus the Property tax increment for a given tax rate area.
d. “Tax rate equivalent” means the factor derived for an agency by dividing the property tax levy for the prior fiscal year computed pursuant to § 97 of the Revenue and Taxation Code by the gross assessed value of the agency for the prior fiscal year.
3. EXCHANGE OF PROPERTY TAX REVENUES TO BE MADE UNDER § 99 OF THE REVENUE AND TAXATION CODE.
a. The Property tax revenues collected in relation to the Villages at Almond Grove Annexations shall be apportioned between CITY and COUNTY as set forth in § 3(b) below. The parties acknowledge that, pursuant to §§ 54902, 54902.1 and 54903 of the Government Code and §§ 97 and 99 of the Revenue and Taxation Code, the distribution of such Property tax revenues will not be effective until the revenues are collected in the tax year following the calendar year in which the statement of boundary change for the Villages at Almond Grove Annexation is filed with the County Assessor and the State Board of Equalization.
b. In regards to the tax rate areas within the Villages at Almond Grove Annexation, COUNTY will retain all of its Base property tax revenues upon annexation. In addition, CITY shall receive one-half (1/2) of COUNTY’s share of the Property tax increment and COUNTY shall receive one-half (1/2) of the COUNTY’s share of the Property tax increment within said tax rate areas.
4. GENERAL PROVISIONS.
a. Term. This Agreement shall take effect upon being fully executed by both parties and shall remain in effect through December 31, 2022. b. Termination Due to Changes in Law. The purpose of this Agreement is to alleviate in part the revenue shortfall experienced by COUNTY, which may result from CITY’s annexation of revenue-producing or potentially revenue- producing properties located within the unincorporated area of COUNTY. The purpose of this Agreement is also to enable CITY to proceed with territorial expansion and economic growth consistent with the terms of existing law as mutually understood by the parties as well as to maximize each party's ability to deliver essential governmental services. In entering into this Agreement, the parties mutually assume the continuation of the existing statutory scheme for the distribution of available tax revenues to local government and that assumption is a basic tenet of this Agreement. Accordingly, it is mutually understood and agreed that this Agreement may, by mutual agreement be terminated should changes occur in statutory law, court decisions or State administrative interpretations which negate the basic tenets of this Agreement.
c. Modification. This Agreement and all of the covenants and conditions set forth herein may be modified or amended only by a writing duly authorized and executed by the parties.
d. Enforcement. COUNTY and CITY each acknowledge that this instrument cannot bind or limit themselves or each other or their future governing bodies in the exercise of their discretionary legislative power. However, each binds itself that it will insofar as is legally possible fully carry out the intent and purposes hereof, if necessary by administrative action independent of ordinances, and that this Agreement may be enforced by injunction to the extent allowed by law.
e. Entire Agreement; Supersession. With respect to the subject matter hereof, this Agreement supersedes any and all previous
negotiations, proposals, commitments, writings, and understandings of any nature whatsoever between COUNTY and CITY except as otherwise provided herein.
f. Notice. All notices, requests, certifications or other correspondence required to be provided by the parties to this Agreement shall be in writing and shall be delivered by first-class mail or an equal or better form of delivery to the respective parties at the following addresses:
COUNTY
County Administrative Officer
Madera County
200 West 4th Street
Madera, CA 93637
With Copy to
Clerk of the Board
Madera County Board of Supervisors
200 West 4th Street
Madera, CA 93637
APPLICANT
City Administrator
City of Madera City Hall
205 West 4th Street
Madera, CA 93637
g. Notice of Breach. Except as otherwise provided in this Agreement for a breach of its terms and conditions, the parties may enforce this Agreement in any manner authorized by law, following thirty (30) days written notice of a breach.
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IN WITNESS WHEREOF the foregoing Agreement is executed on the date and year first above-written.
ATTEST:
______________________________
Clerk, Board of Supervisors
Approved as to Legal Form:
COUNTY COUNSEL
By: ___________________________
ACCOUNT NUMBER(S)
______________________________
______________________________
COUNTY OF MADERA
_________________________________
Chairman, Board of Supervisors
CITY OF MADERA
By: ______________________________
(Signature)
_________________________________
(Print Name)
Title: _____________________________
J:\WDOCS\01246\027\AGT\00971991.PDF
EXHIBIT A