Item #02
Date: September 20, 2022
To: Mayor and City Council
From: Jennifer Styczynski, Finance Director
Jim Schaad, City Manager
Subject: Repayment Agreement Between the County of Yuba and the City of Marysville Recommendation:
Pass a Motion 1) approve Resolution No. 2022-XX and 2) authorize the Mayor, or designee to execute the Repayment Agreement Between the County of Yuba and the City of Marysville for repayment of overcharged Property Tax Administration Fees (PTAF) and calculation of Vehicle License Fees (VLF).
Rationale for Recommendation:
Due to an audit by the State Controller’s Office for Yuba County’s processes for apportioning and allocating property tax revenue, incorrect calculations were identified. This has resulted in a repayment agreement for funds being due to the City. The purpose of the agreement is to make all reimbursements and debt being retired in full as agreed by the County and City. The payments to be made by the County under this agreement are in full satisfaction of the amounts owed by the County to the City.
Background:
In June 2022, the County of Yuba received a draft audit of the Apportionment and Allocation of Property Tax Revenues from July 1, 2014, through June 30, 2021. The results identified calculation errors in the collection of PTAF fees from the City and errors in the VLF calculation.
Discussion & Analysis:
The City has received a copy of the Audit Report from County of Yuba. There were two findings in the audit. The first one deals with the County over collecting PTAF fees for the years 2017-18 through 2020-21. For that time period, the City was overcharged in the amount of $134,394.64. Additionally, the County corrected this error for fiscal year 2021-22 and the City was not overcharged for that timeframe.
The second finding deals with errors in the VLF calculation for the years 2015-16 through 2020-21. The factors for the City resulted from the incorrect assessment value used for the calculation. This resulted in the shifting of too much revenue to the Educational Revenue Augmentation Fund (ERAF) in the amount of $256,019.31. Due to the timing of the audit and findings, the VLF calculation for fiscal year Item #02
2021-22 was not adjusted resulting in an addition amount owed to the City of $50,100.60. The total net amount owed to the City due to both of these findings is $440,514.55.
In lieu of the County and ERAF paying the entire balance owed to City and placing a potential burden on ERAF funding to schools, staff from the City and County have instead agreed to the following repayment terms:
• The County will make a total direct payment of $134,394.64 to the City for the PTAF funds no later than December 9, 2022;
• Repayment of VLF funds will be made in six payments over three years through the City’s semiannual December and April Property Tax Apportionments totaling $306,991.91; • The first repayment will be included in Payment #1 of the 22-23 First Property Tax Apportionment;
• No interest will be charged on the amount owed.
Legal Review:
The City Attorney has reviewed the proposed agreement.
Fiscal Analysis:
The repayment of these funds will add $236,434.59 to the fiscal year 2022-23 General Fund, $102,039.98 to the fiscal year 2023-24 General Fund, and $102,039.98 to the fiscal year 2024-25 General Fund.
Attachments:
1) Resolution No. 2022-XX
2) Repayment Agreement Between the County of Yuba and the City of Marysville